ＢＡＳＥ（4477） – Q1 of Fiscal Year Ending December 2022 Materials for Financial Results Presentation

Q1 of Fiscal Year Ending December 2022Materials for Financial Results PresentationBASE, Inc.(Tokyo Stock Exchange Growth: 4477)May 12, 2022Table of Contents1. Corporate Profile2. Executive Summary4. Reference Materials3. Results for Q1 of the Fiscal Year Ending December 20221. Corporate Profile Mission4Service Outlineas well as purchasersBASE Group’s services aimed at empowering individuals and small teams, startups, 5Aim for The Next 10 Years Maximizing BASE Group’s existing assets to build a unique payment network, and become a payment company providing services to both merchants and purchasers(Note) Group asset figures as of February 202262. Executive Summary ConsolidatedExecutive SummaryTopicsCAGR +90.7%(Note1,2) ○ Continued high growth in GMV for BASE business at CAGR +53.8% and PAY businesses at ○ Commencement of the new “Monthly-Fee Plan” since April 18th in the BASE business+9.6% YoY environmentResults for Q1 of the Fiscal Year Ending December 31, 2022○ Consolidated net sales increased +12.3% YoY owing to increases in GMV for both the BASE and PAY business ○ EC-related sectors see effects of a reactionary decline following the recovery in offline consumption ○ Effects of reactionary decline seen in BASE business on both the shop and purchaser ends, with GMV growth remaining at ○ PAY business GMV continued to increase significantly at +55.5% YoY owing to continued growth by existing merchants and additional increases by new merchantsPolicies and Progress for Fiscal Year Ending December 31, 2022 ○ Continue forward-looking investments for medium to long term growth, regardless of the short-term business ○ Steady use of the monthly-fee plan mainly among existing shops with 1,907 shops applying as of the end of April ○ Establishment of a circa 20-member scout team, with full-scale launch of outbound sales since April aimed at acquisition ○ Release of extension functions to support the operational efficiency of shops with large sales, and standard functions to of shops with large sales assist in increasing shop sales (Note1) BASE’s GMV is based on the order date (order amount). PAY’s GMV is based on the payment date (payment amount)(Note2) 5 year compound average growth rate of the 1st quarter of each fiscal year 8BASEBusinessFY2022 Business EnvironmentEC-related sectors see effects of a reactionary decline following the recovery in offline consumption Effects of reactionary decline seen in BASE business on both the shop and purchaser ends, however maintains continuous forward-looking investments for medium to long term growth regardless of the short-term business environment Reactionary Decline From Recovery in Offline Consumption Impact on GMVShops Decrease in the number of active shops due to a decrease in new shop openings resulting from a slowdown in the demand for opening online shops Decline in active rate of existing shops due to decrease in operating frequency of online shops Slowed growth in the number of active shops per month Purchasers Decrease in online consumptions due toincrease in offline consumption bypurchasers Stagnant monthly average GMV per shop9Continued high growth in GMV for BASE business at CAGR +53.8%(Note1,2)BASEBusinessTrends in GMVQuarterly GMV(Million yen)28,199CAGR+53.8%3,27201QFY20171QFY20181QFY20191QFY20201QFY20211QFY2022(Note1) GMV is the order amount based on the order date(Note2) 5 year compound average growth rate of the 1st quarter of each fiscal year 1010Continued high growth in GMV for PAY business at CAGR +90.7%(Note1,2)PAY BusinessTrends in GMV Quarterly GMV(Million yen)16,849CAGR+90.7%06681QFY20171QFY20181QFY20191QFY20201QFY20211QFY2022(Note1) GMV is based on the payment date (payment amount)(Note2) 5 year compound average growth rate of the 1st quarter of each fiscal year11Policies for FY2022 (Excerpt from FY2021 Q4 Material) Continue to focus on the BASE business and continue to make upfront investments with the aim of medium- to long-term profit growth rather than short-term profits Increase in operating loss expected in the short term due to an increase in SG&A expenses resulting from the strengthening of recruiting activities and outsourcing expenses for product development and scout teams in connection with the new price plan for “BASE” and entry into the BNPL market.Consolidated Strengthened governance by reviewing the composition of the Board of Director Formulation of long-term strategy for ESG management Aim for sustainable growth in the medium to long term despite difficulties in calculating appropriate figures due to the introduction of a new price plan, and the impact of COVID-19 etc, resulting in no disclosure of the full year earnings forecast Scheduled offering of a monthly-fee based pricing plan in April (note) New establishment of scout team for the acquisition of large-scale shops Promotional expenses to be controlled to focus on cost efficiency Further enhancements in competitive functions for beginners, and expansion functions for large scale shops Strengthening product development hiring for BNPL, with a protype completion by the end of the year Focusing on increasing the number of new and repeat purchasers of “BASE” shops through quick payment functions using SMS authentication and point issuing functions Improving the support system for existing large-scale merchants Provide anti-fraud settlement functions to promote new merchant acquisition and continued use Aiming for full-scale launch of “PAY.JP Platform” for platform operators Begin preparations for the provision of new payment methods BASEPay IDPAY.JPOther(Finance) BASE BANK, Inc absorption merger by BASE, Inc (effective date January 1,2022) Start developing functions that will contribute to improving the take rate of the BASE business in the medium term 12(Note) Offered since April 18th 2022BASEBusinessPolicies for FY2022 (Excerpt from FY2021 Q4 Material) For Sales & Marketing, advertising expenses to decrease by improving the efficiency of marketing, while personneland outsourcing expenses for scout teams etc to increase In product development, personnel and outsourcing to increase due to the strengthening of recruitment activities for product personnel and the use of external resources with the aim of catering to a wider range of shop scales Sales & Marketing PoliciesProduct Development Policies SalesMarketingProductBefore No Sales Activities Improve brand recognition and acquisition through advertisements Coupon measures etcfor sales promotion Simple to use and easy standard functions for Beforeanyone to use, and extension functions offered to suit the needs of each shop Strengthening the hiring of product development personnel to expand servicesGoingForward Offering of new priceplan Utilize external resources to newly establish a 20 person scout team Aim at 300+ large-scale shops acquisition in the first year “Top of mind” brandrecognition to bemaintained Efficient marketing to cut costs and invest in scout teams for new large shop acquisition Focus on product development for a wider range of sales scales GoingForward Expand functions such as CRM, operational efficiency, sales promotion and design for large-scale shops Strengthen the development system by utilizing external resources in addition to strengthening recruitment activities 1313BASEBusinessMeasures for Maximization of GMV and Gross ProfitCommencement of the monthly-fee price plan and full-scale launch of outbound sales by the Scout Team from AprilMonthly-Fee PlanSalesMarketingProduct Development Establishment of a circa 20-member Scout Team Commencement of outbound sales since April Conducting TVCM and other brand recognition marketing measures to maintain brand recognition Release of extension functions to support the operational efficiency of shops with large sales, and standard functions to assist in increasing shop sales Current Situation Completion of system development for the implementation of the monthly fee price plan Commencement of the monthly-fee plan commenced since April 18th , as well as campaign measures implemented (note) Considerations for diversification of payment methods for monthly-fee plan Aim to acquire 300+ large-scale shops in the first year Scheduled implementation of marketing measures aimed at improving recognition for monthly-fee plans and functionsFutureMeasures Focus on product development for a wider range of sales scales Expansion of functions for shops with large sales such as CRM, operational efficiency, and design etc Continue to strengthenrecruitment for product personnel aimed at service expansion14(Note) 10% discount coupons distributed between April 25th to 28th to commemorate the offering of the monthly-fee price planBASEBusinessOffering of the Monthly-Fee PlanCommencement of the “Monthly-Fee Plan” since April 18th , in addition to the conventional “No Monthly Cost Plan” (Note1,2) Offering suitable price plans for those who want to easily start online shops with no risk, to those with high growth potential and large sales No Monthly Cost Plan Monthly-Fee PlanNEW3.0%(Note3)5,980Yen Per Month3.6%+40Yen(Note3)2.9%(Note3)Risk-free, “Pay as you sell” systemwith commissions charged only when sales are generated Payment of monthly fixed service fees allow for control over running costs ServiceCommissionPaymentProcessingCommissionFeatures(Note1) Conventional “No Monthly Cost Plan” offered as “Standard Plan”, and New “Monthly-Fee Price Plan” offered as “Growth Plan” (Note2) Same functions offered for both plans (Note3) Charged according to payment amount 1515BASEBusinessOffering of the Monthly-Fee Plan Increasing number of existing shops leading the total number of shops applying to the monthly-fee planNumber of Shops Using the Monthly-Fee Plan （Shops）Current Situation of Monthly-Fee Plan and Future Measures1,907 Current SituationFuture MeasuresNewShops Established Scout Team as per schedule, with outbound sales to acquire shops with large sales starting in April The ratio of large-scale shops(note1)comprising the number of new shops opened through organic channels increases Aim to increase the number of newshop openings through outbound sales by improving the acquisition efficiency of the Scout Team Aim to increase the number of shop openings through organic channels through marketing efforts to increase recognition of the monthly-fee planExistingShops Steady switch to monthly price plan by shops with large sales Improvement recognition of the monthly-fee plan for shops to use as needed, and reduce the risk of potential churn018 19 20 21 22 23 24 25 26 27 28 29 30April(Note1) Referring to shops with monthly sales over 1 million yen16BASEBusinessLaunch of the Scout TeamEstablishment of a circa 20-member Scout Team, consisting of both permanent and outsourced personnelFull-scale launch of outbound sales aimed at acquiring shops with large sales since April, while impact on Q2 performance is expected to be limited due to the required timeframe from opening to operation of a shop Headcount of Scout Team(Note1,2)(Persons)Examples of Newly Opened Shopsby Scout TeamsBebrainTsunan Sake BreweryFARM8 ONLINE STOREGenki0JanFebMarAprMay(Note1) Includes outsourced staff as well as external personnel from strategic partner companies (Note2) May headcount as of the 12th of May 17ONLYCHILDIkumoyaBASEBusinessProgress in Product DevelopmentExtension function to support the operational efficiency of shops with large sales volumes, operated by multiple staff membersStandard function to promote purchases by active purchasers and assist in increasing shop salesExtension Function “Staff Authority Management App”Standard Function“Cart Abandonment Prevention Mail”Multiple accounts can now be issued with the range ofEnables automatic sending of e-mails to remind purchasers ofaccessible information specified for each user incomplete purchasesSupports the secure and smooth operation of shops that Provided as a standard function to all shops to assist increase staff for sales expansion etc. improving shop sales 18BASEBusinessProgress in Product DevelopmentIntegration with TikTok scheduled from May 17th to support shops in attracting purchasers and promoting salesEnables automatic generation of TikTok video ads and easy distribution of ads193. Results for Q1 of the Fiscal Year Ending December 2022ConsolidatedFinancial Highlights for Q1 Results ending December 2022Consolidated net sales increased +12.3%YoY owing to an increase in GMV in both the BASE and PAY businessGMV(Note1) growth remained at +9.6% YoY as effects of reactionary decline following the recovery in offline consumption is seen on both the shop and purchaser endNet sales and gross profit increased YoY owing to increase in GMV Gross profit margin increased QoQ as a result of reduced cost of sales ratio(note2) ConsolidatedBASE BusinessPAY BusinessPAY business GMV(Note1) increased significantly at +55.5% YoY owing to continued growth by existing merchants and additional increases by new merchantsNet sales and gross profit on sales continued growth at +53.8% and +52.2% YoY respectively as a result of GMV growth (Note1) BASE’s GMV is based on the order date (order amount). PAY’s GMV is based on the payment date (settlement amount)(Note2) Ratio of the cost of sales over GMV (payment amount)21ConsolidatedFinancial Highlights for Q1 Results ending December 2022Consolidated net sales increased +12.3%YoY owing to an increase in GMV in both the BASE and PAY business SG&A expenses increased YoY due to active recruiting activities aimed mainly at product development personnel in the BASE business, resulting in an operating loss. However, losses narrowed QoQ as a result of lower SG&A expenses resulting from a decrease in promotional expense (Million yen)ResultsSame Period Last YearPrevious QuarterResultsYoYResultsQoQFY2022 1Q (January – March 2022)Net SalesGross Profit on SalesGross Profit RateSG&AOperatingProfitOrdinary ProfitNet Income2,5121,3822,2371,316+12.3%+5.0%2,7541,543-8.8%-10.4%55.0%58.8%-3.8pt56.0%-1.0pt1,6541,302+27.0%2,030-18.5%-272-267-299131240n/an/an/a-487-465-726n/an/an/a22ConsolidatedBalance SheetAs of the end of March 2022, cash and deposits were 22,004 million yen, maintaining a strong financial baseDecrease in current liabilities due to decrease in trade accounts payable resulting from a decrease in GMV in the BASE business As of Mar 31, 2022As of December 31, 2021Change from the end of the previous fiscal year(Million yen)Current assets(of which, cash and deposits)(of which, trade accounts receivable) (Note1)Non-current assets(of which, Investment securities)Total assetsCurrent liabilities(of which, trade accounts payable) (Note2)(of which, operating deposits) (Note3)Non-current liabilitiesTotal liabilitiesCapital StockCapital surplusRetained earningsValuation difference onavailable-for-sale securitiesTotal net assets28,20422,0045,89751915428,72413,8509,6933,8236213,9128,5547,364-1,112614,81231,43324,0536,63155818331,99116,82312,7453,7076116,8858,5527,362-813315,105-10.3%-8.5%-11.1%-6.9%-15.3%-10.2%-17.7%-24.0%+3.1%+0.6%-17.6%+0.0%+0.0%-+73.6%-1.9%(Note1)Trade accounts receivable: The unpaid portion of the settlement amount to be paid to our company by the settlement service company.(Note2)Trade accounts payable: In the BASE business, outstanding amount of settlement to be paid by our company to shops.(Note3)Operating deposits: Outstanding amount of settlement to be paid by our company to member merchants in the PAY business.23ConsolidatedGrant of Restricted Stock (RS)Grant of restricted stock to directors, senior executive officers, executive officers, and certain employees with the aim of providing incentives to increase corporate value over the medium to long term (note)Purpose of Grant【Employees】••Effect of Dilution•••••••Commitment of executives and employees to improve corporate value over the medium to long termTo share medium to long term value with shareholders Restricted Period Of Transfer 【Directors/Senior Executive Officers/Executive Officers】Transfer restriction lifted after 3 years following grant date Transfer restriction of 1/3 of the number of shares granted lifted after 1 year following grant dateRS compensation plan designed so dilution from potential shares to be granted over a 10-year period does not exceed 10% The number of potential shares is 5,133,749 (SO:5,108,000 shares, RS:25,749 shares), representing 4.6% of the total number of shares outstanding of 111,718,749 (as of 31st March 2022)With consideration of the 209,044 newly issued RS shares in May 2022, the 5,342,793 potential shares represent only 4.8% of the 111,923,793 shares issued and outstanding(Note) Grant effective 12th May 2022 24ConsolidatedTrends in GMVBASE business GMV(note) growth remained at +9.6% as effects of reactionary decline following the recovery in offline consumption is seen on both the shop and purchaser endPAY business GMV(note) continued high growth at +55.5% YoY, owing to continuous growth by existing merchants, as well as the addition of newly acquired merchants (Million yen)BASEPAYGrowth rate (YoY)48,018 45,048 42,868 41,579 38,110 36,577 16,293 13,446 14,693 16,849 +55.5%38,891 34,813 7,820 11,808 10,837 9,422 25,739 6,926 7,018 26,302 31,071 25,390 31,725 28,132 28,175 28,199 +9.6%19,137 19,551 16,724 17,588 6,244 6,324 15,00013,438 4,430 10,0009,007 10,480 11,263 12,211 12,532 45,00040,00035,00030,00025,00020,0005,00001Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY2022(Note) BASE’s GMV is based on the order date (order amount). PAY’s GMV is based on the payment date (payment amount).25ConsolidatedTrends in Net SalesConsolidated net sales increased +12.3%YoY owing to an increase in GMV in both the BASE and PAY business(Million yen)BASEPAY OthersGrowth rate (YoY)2,557 207 2,315 2,291 2,237 247 299 286 2,446 2,492 353 384 439 +53.8%+12.3%2,754 424 2,512 1,043 170 1,119 1,124 183 184 2,342 2,061 1,983 1,944 2,082 2,087 2,052 +5.5%2,306 923 169 764 120 643 752 871 931 933 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY2022262,5002,0001,5001,0005000ConsolidatedTrends in Ratio of Net Sales by BusinessSales composition ratio of the BASE business declined QoQ due to an increase in the PAY business BASEPAY Others15.7% 18.4% 16.3% 16.4% 16.4%8.1% 10.7% 13.1% 12.8% 14.4% 15.4% 15.4% 17.5%100%90%80%70%60%50%40%30%20%10%0%84.2% 81.5% 83.5% 83.2% 83.0%91.6% 89.0% 86.6% 86.9% 85.1% 83.7% 83.7% 81.7%1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY202227ConsolidatedTrends in Gross ProfitGross profit increased YoY owing to increases in GMV in both the BASE and PAY business Gross profit margin declined QoQ as a result of the lower sales composition ratio of the BASE business 1,8 00(Million yen)Gross profit on salesGross profit marginGrowth rate (YoY)1,608 +5.0%1,543 1,393 1,342 1,316 1,374 1,388 1,382 58.9% 57.2% 58.4% 57.6% 57.6%62.9%60.2% 58.6% 58.8%56.2% 55.7% 56.0% 55.0%609 644 648 527 449 1,6 001,4 001,2 001,0 0080060040020001Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY202228ConsolidatedTrends in SG&A Expenses • SG&A expenses decreased -18.5% QoQ due to decreases in promotional expenses for the BASE business • Promotional expenses decreased -46.7% QoQ due to decreases in sales promotions through coupons and brand recognition promotional measures in the BASE business • Personnel expenses increased QoQ due to active recruiting activities throughout the company • Other expenses increased QoQ due to increased costs in compensations and outsourcing, recruitment, and system expenses(Million yen)Other expensesPersonal expensesPromotional expenses2,030 1,686 1,658 1,608 1,654 1,092 581 915 825 707 1,302 576 456 405 404 319 350 380 451 375 452 495 533 616 754 278 805 294 676 151 968 410 858 286 245 260 277 291 299 230 251 246 266 272 653 294 214 143 460 64 225 169 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY2022(Note) Other expenses consist mainly of office expenses, system expenses, remuneration, outsourcing and recruitment expenses, and taxes.29ConsolidatedTrends in Number of EmployeesNumber of employees increased by +59 headcounts (+33.3%) YoYContinue to strengthen recruiting in product development personnel(Persons)236 211 193 197 177 162 147 148 152 132 136 116 121 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2019年12月期FY20192020年12月期FY20202021年12月期FY2021FY2022年202212月期(Note) The number of employees is the number of regular employees and contract employees, and does not include the number of Directors and temporary employees. However, the number of employees includes the number of persons seconded to subsidiaries as Directors.30ConsolidatedTrends in Operating Profit or LossOperating loss of -272 million yen (same quarter last year was +13 million yen) due to an increase in SG&A expenses in personnel and other expenses Operating loss narrowed QoQ due to a decrease in SG&A expenses resulting from lower promotional expenses(Million yen)1,051 Operating profitOperating profit (excluding promotional expenses)820 640534571 590 605 541 487 309 132 133 132 123 91 6713-203-144-161-28-343-220-283-272-4871Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2018FY2019FY2020FY2021FY2022(Note) Other expenses are SG&A expenses excluding promotional expenses and personnel expenses.31BASEBusinessTrends in GMVGMV growth remained at +9.6% as effects of reactionary decline following the recovery in offline consumption is seen on both the shop and purchaser endGMV decreased QoQ due to the decrease of GMV from sales promotion through coupons and seasonality etc in comparison to the previous quarter(Million yen)31,071 Growth rate (YoY)28,132 28,175 28,199 25,390 26,302 25,739 +9.6%31,725 10,480 11,263 9,007 12,211 12,532 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019(Note) GMV is based on the order date (order amount)FY2020FY2021FY20223232BASEBusinessTrends in GMVGMV of existing shops decreased QoQ due to the decrease of GMV from sales promotion through coupons and seasonality etc in comparison to the previous quarterGMV Trend (By Year of Establishment)(Million yen)Pre-2017201820192020202120222,900 4,215 1,148 5,892 1,123 20225,713 20217,528 8,668 8,511 9,000 8,557 9,209 5,346 5,065 4,449 4,589 4,335 4,653 4,599 4,332 4,394 4,021 7,515 20204,505 4,282 3,727 20193,574 20189,879 5,974 5,105 10,112 615 1,375 2,306 3,044 3,029 445 2,956 3,155 3,200 3,390 3,002 5,608 5,950 5,756 5,778 5,872 7,863 7,971 7,299 7,250 7,048 7,836 6,544 Pre-20171Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY2022(Note) GMV is based on the order date (order amount)33BASEBusinessTrends in GMVIncrease in number of monthly active shops remained at +6,000 shops YoY, and monthly average GMV per shop slightly decreased due to reactionary declines following the recovery in offline consumptionBoth number of monthly active shops and monthly average GMV per shop decreased QoQ due to the decrease of GMV from sales promotion through coupons and seasonality etc in comparison to the previous quarterMonthly GMV (Note1,2)Number of MonthlyActive Shops (Note1)Monthly Average GMVPer Shop(Million yen)(Thousand shops)(Thousand yen)9,399 8,579 60 20054 156 154 10,0007,5005,0002,500060504030201001501005001Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1QFY2019FY2020FY2021FY20221Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1QFY2019FY2020FY2021FY2022FY2019FY2020FY2021FY2022(Note1) BASE’s GMV is based on the order date (order amount).(Note2) Monthly GMV and the number of monthly active shops are the quarterly averages.34BASEBusinessTrends in GMV (Payment Amount), Take Rate and Net SalesGMV (payment amount)(Note) increased YoYTake rate remains unchanged QoQ(Million yen)SalesGMV (payment)Take rate (sales)27,582 24,661 24,488 23,956 29,865 26,308 26,476 26,563 8.3% 8.2%8.7% 8.5% 8.5% 8.5% 8.4% 8.1% 8.1% 7.9% 7.9% 7.7% 7.7%10,049 9,217 7,792 11,000 10,983 643 752 871 931 933 2,342 2,061 1,983 1,944 2,082 2,087 2,306 2,052 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q(Note1) Of the total amount of orders (GMV based on the order date), GMV (payment amount) is the amount that has been paid, and is recorded in the month of payment date. There is monthly time lag from order to settlement because the order date and settlement date are different. Also, the amount of GMV is different from the order amount (GMV based on the order date) because the amount that has not been paid due to cancellation is not included in GMV (payment amount).FY2019FY2020FY2021FY202235BASEBusinessTrends in Net Sales and Gross ProfitNet sales and gross profit increased YoY owing to increases in GMVNet sales and gross profit decreased QoQ due to decreases in GMVGross profit margin increased QoQ as a result of reduced cost of sales ratio(Note)(Million yen)2,342 2,306 SalesGross profit on salesGross profit margin2,061 1,983 1,944 2,082 2,087 2,052 67.9% 67.6% 67.8% 66.6% 66.8% 67.5% 66.1% 65.8% 65.8%63.9% 63.7% 64.1% 64.5%1,580 1,362 1,305 1,280 1,330 1,329 1,323 1,477 871 931 933 590 620 624 752 643 508 437 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY2022(Note) Ratio of the cost of sales over GMV (payment amount). Cost of sales ratio decreased as a result of changes in the payment methodologies and reduced costs for certain payments.36PAY BusinessTrends in GMVGMV continues to increase significantly YoY at +55.5% owing to continued growth by existing merchants and additional increases by new merchants+55.5%168 162 146 134 118 108 94 (Million yen)Growth rate (YoY)69 70 78 62 63 44 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY2022(Note) GMV is based on the payment date (payment amount).37PAY BusinessTrends in Net sales and gross profitNet sales and gross profit continued to increase YoY by +53.8% and +52.2% respectively owing to increase in GMV(Million yen)SalesGross profit on salesGross profit margin10.8%10.8%10.1%10.1% 10.0%9.7%10.2%353 439 424 384 10.1%9.6%299 286 9.7% 9.9% 10.0%247 207 169 170 183 184 50045040035030025020015010050010.1%120 12 18 17 19 18 21 24 28 29 34 38 42 2.0%44 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1QFY2019FY2020FY2021FY20223814.0%12.0%10.0%8.0%6.0%4.0%0.0%4. Reference Materials4-1. Historical Growth of BASE Group BASEBusiness“BASE” The Most Selected Service by Individuals and SMBsSince its foundation, “BASE” has focused on providing services to enable individuals and SMBs to easily set up online shops and install payment systems with a risk-free fee structureWith one of the largest number of monthly active shops, “BASE” has built a strong position in the long-tail market Risk-free Opportunities for All UsersLarge Number of Active Shops(Note2)（Thousand Shops）62 No initial or monthly costs, and fees are paid only when products are sold (Note1) Unique and easy to install payment system for all users Easy to operate standard functions, and extensions function to extend functionalities depending on needs(Note1)3.6%+40Yen payment processing fees and 3% service fee on the amount of products sold(Note2)Number of monthly active shops in the 4th quarter of each fiscal year 0FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY20214141BASEBusinessPlatform Growth with Shop GrowthIncreasing capacity to support shops, as a service used by shops with large salesBecoming a platform with many individuals and small teams with continuous growth Growth in Large-Scale Shops(Note1)Examples of Large-Scale ShopsNumber of Large-Scale Shops(Note2)（Shops）Monthly Average GMV Per Shop of the Top 3 Shopsx5.4×7.7IRIE BEACHadorable closet00FY2017 FY2018 FY2019 FY2020 FY2021FY2017 FY2018 FY2019 FY2020 FY2021(Note1) Large-scale shops refer to shops with more than 1 million yen sales per month (Note2) Number of monthly active shops in the 4th quarter of each fiscal year Senbei Brothers4242BASEBusinessPlatform Growth with Shop GrowthOffering numerous functions with high demand from shops with high growth potential and large sales to enhance operational efficiency, CRM, and designs Operational EfficiencyCRM (Client Relationship Management) DesignFunctions to support the operational efficiencyHelping shops build lasting relationships with Design features and services that meet theof shops with large sales and order volume, andpurchasers marketed through SNS and other needs of large-scale shops which place complicated back-office operations to help channels, contributing to an increase in new importance on expressing each shops’ worldview reduce the workload in operating an online shopand repeat purchasers and seek unique designs (Note) Example of selected functions among others 4343OtherBusinessGrowth in Financial ServicesPromoting faster cash flow for “BASE” shops by providing various financial servicesFinancial Services Offering for “BASE” Shops(Note)YELL BANK “BASE” forecasts future sales, and purchases the receivables enabling shops to raise funds without risk Growth of “YELL BANK”Total Transaction Amount (Yen)Number of TransactionsCAGR+109%User examples of“YELL BANK”Express Bank Transfers Shortening the standard deposit period of 10 days, enabling the transfer of funds 1 day after application BASE Card Spend proceeds from online shop sales at VISA member merchants nationwide (Note) “YELL BANK” and “BASE Card” are offered under other business, and “Express Bank Transfers” is offered under BASE business. They are developed and managed by the BASE BANK team440FY2019FY2020FY2021PAY BusinessGrowth in “PAY.JP”Solving issues for ventures and start ups in introducing online payment Steady growth maintained with continuous growth by existing merchants, and additional increases by new merchantIncrease in MerchantsGrowth in GMVMerchant Examples of “PAY.JP”（Merchants）（円）CAGR+34%Pre-2018201920202021000FY2018 FY2019 FY2020 FY2021FY2018 FY2019 FY2020 FY2021FY2018 FY2019 FY2020 FY202145Growth in “Pay ID” The only storefront type online shop creation service providing service to purchasersIncrease in the number of users expanded in line with the growth of “BASE”Growth in Registered Users of “Pay ID”Increase in GMV via Shopping App(Note1)（Persons）7.7Million(Note2)（Yen）CAGR+54%00FY2018FY2019FY2020FY2021FY2018FY2019FY2020FY2021(Note1) Provided as the “BASE” Shopping App until November 2021. Currently offered as the “Pay ID App” following the integration and renewal of the Shopping Service “Pay ID”(Note2) Number of registered users of “PayID” exceeded 8.0 million as of February 2022 46Growth of BASE Group Significant growth as a platform for the creation of new markets Consolidated Yearly GMV(Note)（Million Yen）BASEPAY169,041 0FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021(Note) BASE’s GMV is based on the order date (order amount). PAY’s GMV is based on the payment date (settlement amount)474-2. Future Growth of BASE GroupBASEBusinessMedium Term Management Strategies Aiming to maximize GMV and gross profit in the medium term, to become a platform to support all individuals and small teams （Scale of Sales）International Service SDomestic Service MMain Target Area (Note)Domestic Service CDomestic Service SIndividualsSmall TeamsLarge Corporates(Note) Long-tail markets defined as the focus area operated by individuals and small teams 49（Scale of Operation）BASEBusinessSupporting All Individuals and Small TeamsCommencement of the “Monthly-Fee Plan” since April 18th , in addition to the conventional “No Monthly Cost Plan” (Note1,2)Enabling the support of individuals and small teams who have not selected “BASE” due to pricingMaintaining a strong position in the long tail markets as a source of competitivenessConventional Plan(Unchanged)NEWMonthly-Fee PlanTargetIndividuals and small teams who want to operate an online shop with no riskIndividuals and small teams who can take risks to grow their online shopServiceCommissionPaymentProcessingCommission3.0%(Note3)5,980Yen Per Month3.6%+40Yen(Note3)2.9%(Note3)(Note1) Conventional “No Monthly Cost Plan” offered as “Standard Plan”, and New “Monthly-Fee Price Plan” offered as “Growth Plan” (Note2) Same functions offered for both plans (Note3) Charged according to payment amount 5050BASEBusinessSupporting All Individuals and Small TeamsUnique position with continued focus on targeting individuals and small teamsNew monthly-fee plan offering in addition to the conventional price plan enabling to target individuals and small teams operating shops which can take risks for higher growth Scale of Target UsersCompetitive LandscapeLarge CorporatesMedium Sized CorporatesSmall Shops（Less than 10 employees）Individual Business OwnersIndividuals Looking For a Side BusinessIndividuals andSMBs No Monthy CostslWith Monthy CostslEC Creation+PaymentEC Creation OnlyConventional PositionNew OfferingOnline shop creation service and payment functions provided with monthly costsOnline shop creationservice only withmonthly costs51BASEBusinessTotal Addressable MarketIn addition to new markets created by individuals and small teams, target market expands significantly with the use of platforms by shops with high growth potential and large salesTarget for Monthly-Fee Price PlanTarget for No MonthlyCost Price PlanExpansion of target market as individuals and small teamswith high growth potential and large sales use platforms JPY8Tn(Note3)(2030)New market creation as individuals andSMBs open online shopsJPY2Tn(Note2)(2030)Current Long-Tail MarketJPY300Bn（Nte1）JPY300Bn(Note1)（2020）(2020)Current Long-Tail Market(Note4)(Note1) Estimate by company based on assumption of GMV (order amount) of the BASE business in FY12/2020 accounting for approximately 1/3 of the long-tail market(Note2) Estimate by company based on long-tail market growth of 20% CAGR over 10 years (Note3) Reference to METI ”E-Commerce Market Survey” of 2020, estimate by company of market scale of in-house EC to grow at 8% CAGR over 10 years in the BtoC sale of goods EC space(Note4) FY12/2020 BASE business GMV (order amount) was JPY95.2Bn52BASEBusinessSupporting All Individuals and Small TeamsEnabling to support individuals and small team who can take risks to grow by offering a new price plan far cheaper than competitors Comparison of Fee Rates （Note）Serive SService CBASE（%）8.0%6.0%4.0%2.0%0.0%Offering price plans far cheaper than competitors1002505007501,0003,0005,000Monthly Average GMV per Shop（Thousand Yen）(Note) Comparison based on the lowest fee rate according to the scale of sales among the fee plans offered by each company (calculated by BASE)5353Aim to achieve high GMV growth rate(CAGR+40%), and GMV300,000 million yen in 2024 BASEBusinessMaximization of GMV Image of GMV Growth(Note1,2)(Million Yen)CAGR+40%300,000113,773FY2019FY2020FY2021FY2022FY2023FY20240(Note1)Expected figures after 2022(Note2)GMV is based on order date(order amount)5454BASEBusinessMaximization of GMV In addition to increasing the number of active shops per month, which has been a driver for growth, “BASE” aims to also increase the average monthly GMV per shop in order to maximize GMV growth Monthly GMV（Note1,2,3）（Yen）Number of active shops permonth（Note2,3）（Shop）CAGR+40%Monthly average GMV per shop（Note3）（Yen）CAGR+18%CAGR+17%000FY2019 FY2020 FY2021 FY2022 FY2023 FY2024FY2019 FY2020 FY2021 FY2022 FY2023 FY2024FY2019 FY2020 FY2021 FY2022 FY2023 FY2024(Note1)GMV is based on order date (order amount) (Note2) Monthly GMV and number of active shops per month are quarterly averages(Note3)Comparison of the 4th quarter of each fiscal year5555BASEBusinessIncreasing Factors in the Monthly Average GMV Per ShopThe number of large-scale shops(note1) is expected to increase with the offering of a monthly-fee based pricing plan etc, leading to a higher ratio of large-scale shops comprising the overall GMV, resulting in a higher Monthly average GMV per shopNumber of large-scale active shops per month (Note2)Percentage of large-scale shop GMV （Note2）Monthly average GMV per shop（Note2）（Shops）（%）（Yen）000FY2019 FY2020 FY2021 FY2022 FY2023 FY2024FY2019 FY2020 FY2021 FY2022 FY2023 FY2024FY2019 FY2020 FY2021 FY2022 FY2023 FY2024(Note1) Shops which monthly sales exceed 1 million yen (Note2) Q4 of each fiscal year5656BASEBusinessIncreasing Factors of Large-Scale Shops“BASE” has been selected by many large-scale shops, through providing lower fee rates (special rates) The offering of a new price plan which is even lower in fee rates as compared to current shops with special rates, therefore making expectations to acquire a larger number of large-scale shops Yearly average GMV of shopswhich are applied special ratesFee Rate ComparisonExpected Number of Large-Scale Shops（Yen）（%）（Shop）x5000その他のOther Shops ショップ特別料率Shops with Special Ratesショップ従来のConventional Plan料金プラン特別料率Special Rates （最安水準）(Lowest Level)新料金プランNew PricePlan0FY2019 FY2020 FY2021 FY2022 FY2023 FY20245757BASEBusinessStrengths as a Long Tail Market LeaderMaintaining high levels of take rate despite offering the lowest fee among competitors, by continuing to focus on long-tail markets Providing additional pay-as-you-go functions to expect increases in take rate Image of Future Take Rate Take Rate Comparison(Note)（%）5.9%FY2021FY2022FY2023FY2024 FY202X・・・・・・0BASE サービスA サービスB サービスCService C Service A Service B (Note) BASE’s take rate is estimated for FY2024. Competitor take rates calculated from publicly disclosed material by BASE58581.4% 1.2%0.9%（%）8.0%6.0%4.0%2.0%0.0%BASEBusinessMaximization of Gross ProfitGross profit expected to decrease in the short term due to the offering of a monthly-fee based plan, while medium-long term to be maximized Expected Gross Profit（Yen）従来プランのみConventional Plan Only 新料金プラン提供Both Plans Offered0FY2021FY2022FY2023FY2024FY2025FY20265959Entering the BNPL BusinessAim to provide BNPL functions by leveraging on Group assets in “BASE”, “PAY.JP”, and “Pay ID” Service infrastructure for providing BNPL to expand in line with growth in existing assetsIncreased Added Value and Competitiveness through the establishment of a Unique Payment Network Overcome issues of online credit card payments and improve the purchasers’ payment experience through BNPL Increase repeat purchases and average unit price by offering smooth payment and instalments etc. Secure competitiveness in shops, merchants, and purchaser acquisition by leveraging on Group assets Create future revenue streams through repayment instalments, and reduce payment fees paid to PSPsShopsPurchasersMerchants1.7 Million+ ShopsTo be introduced to 1.7 million shops on “BASE” 8.0Million+ UsersTo be introduced to all users“Pay ID” account users1,800+ MerchantsTo be introduced to allmerchants on “PAY.JP”(Note) Group asset figures as of February 202260ConsolidatedTrends in SG&AUp to 25 billion yen(note1) of forward-looking investments will be made over the next 3 years to maximize gross profitAim to return to profitability in FY2025, although the operating loss is expected to increase in the short term due to an increase in SG&A expenses as a result of strengthening of the scout team and product development related to the offering of the new price plan etc, and entry into the BNPL business Maintain a strong financial base with approximately 24 billion JPY in cash and deposits and 15.1billion in net assets as of December 31, 2021Expected SG&A（Note1）（Yen）プロモーション費Promotional Expense人件費Personnel Expense支払報酬・外注費Remuneration and Outsourcing expensesその他Other ExpenseExpected Operating Profit（Yen）営業損益Operating Profit営業損益（プロモーション費除く）Operating Profit (excluding Promotion)0FY2021 FY2022 FY2023 FY2024 FY2025 FY20260FY2021FY2022FY2023FY2024(Note1)Total amount of SG&A expected for the next 3 years (Note2) Other expenses consist mainly of office expenses, system expenses, remuneration and outsourcing expenses, and taxes.614-3. OthersManagement (Senior Executive Officers)Yuta Tsuruoka (Senior Executive Officer and CEO)Born in 1989. After experiencing back-end programming and direction of several Internet services when he was in university, he established BASE, Inc. in December 2012 at the age of 22. Based on its mission of “Payment to the People, Power to the People.” the company has developed a business focusing on the simplification of settlement and operates “BASE,” one of Japan’s largest e-commerce platforms.Shinichi Fujikawa (Senior Executive Officer and SVP of Development)After working at an FA equipment manufacturer and a Web production venture, he joined GMO Pepabo in 2006. In 2007, he independently began developing and operating a Twitter Web service client “movatwi” for mobile devices. He established Sousousha in 2010 and served as President and Representative Director until April 2012. He was appointed as CTO of our company in August 2014. In January 2018, he completed the doctoral course of the Graduate School of Media Design, Keio University. In July 2019, he resigned as CTO of our company and was appointed as EVP of Development. In March 2021, he was appointed as Senior Executive Officer of our company.Ken Harada (Senior Executive Officer and CFO)After graduating from School of Commerce, Waseda University, he was in charge of accounting and finance at a major general contractor from 2000. After that, he was in charge of operations such as accounting manager and management planning at mixi, Inc. from 2007, and joined FreakOut, inc. as a management manager in 2013, and conducted its IPO in June 2014. After the IPO, he oversaw and was in charge of overall accounting and finance, corporate planning, and IR operations. He joined our company as CFO in June2015 and was appointed as Director and CFO of our company in February 2016. He oversees overall corporate operations. In March 2021, he was appointed as Senior Executive Officer of our company.Kenji Yamamura (Senior Executive Officer and COO)After graduating from Ritsumeikan University, he worked at a food company and joined Recruit Co., Ltd. in 2004. He served as a business planning member and manager in the learning business, group purchase service “Ponpare,” CS promotion, EC business promotion office, “Air cashier,” etc. He joined our company in January 2017. He promoted “BASE” e-commerce platform business and strengthened the organizational structure, and was appointed as Director and COO of our company in June 2018. In March 2021, he was appointed as Senior Executive Officer of our company.63Strengthen Governance to Enhance Corporate Value over the Medium-Long Term• Strengthen the supervisory function of the Board of Directors by appointing a majority of outside directors (two internal directors and three outside directors)• Improve fairness and transparency of the process of selecting and dismissing management by appointing an outside director as the chairman of the Nomination and Compensation CommitteeBoard of DirectorsManagement Committee2 Directors3 Outside Directors4 Executive Officers SupervisorManagementStructureKen HaradaMasayukiShimuraMichiIijimaMisa MatsuzakiYuta TsuruokaRepresentative Director and CEODirector, Senior Executive Officer and CFOYutaTsuruokaSenior Executive Officer and CEOKenHaradaSenior Executive Officer and CFOKenji YamamuraSenior Executive Officer and COOShinichi FujikawaSenior Executive Officer and SVPoDReport for appointment and removal/remuneration billReport for appointment and removal/remuneration billNomination and Remuneration Committee（Majority of external directors, external director as Chairman)64Initiatives for Realizing a Sustainable SocietyFormulation of basic sustainability goals and identification of materiality issues as well as establishment of the Sustainability Committee(Note1)Aiming to create a society in which all people can play an active role by enhancing accessibility to payment and finance services(Note2)(Note3)(Note1) Established on 23rd March following resolution by the Board of Directors(Note2) Details of the materiality and specific initiatives are disclosed on the BASE corporate website (Note3) the most important materiality to be resolved through business is indicated by a large circle, and materiality that serves as the foundation to support business continuity and means to achieve the most important materiality are indicated by smaller circles 65BASEBusinessUnique Business Model to Empower Individuals and SMBsIncurring cost from the initial stage when products don’t sell is a risk for SMBs. The strengths of our services that it is easy to set up an e-commerce site and introduce a payment function, and that initial and monthly costs are free of charge, are a major differentiators from similar services.Survey on actual use of our cart-style online retail shop creation servicePlease reply with all of the online retail shop creation services you used when opening your online retail shop within the most recent year.0%10%20%30%40%50%45.4%BASEBASEService AService B16.6%8.2%Service C7.0%Service D5.4%Service E5.0%Service F4.3%Service GService H4.1%4.1%* Research from Macromill, Inc. (actual results from March 2022)66Profit and Loss Statement (By Segment)BASE2,3422,0611,9831,9442,0822,0872,3062,052(Million yen)SalesPAYOthersBASEPAYOthersBASEPAYOthersCorporateexpensesEntirecompanyGross profiton salesSegmentprofitOperatingprofitsFY2020FY2021FY20221Q2Q3Q4Q1Q2Q3Q4Q1Q933184618656-25-10-47-286241,5801,3621,3051,2801,3301,3291,4771,3232077217718-26-13-386402476246601-19-6-405342997287-19-14-44-3432867297-18-15-5413353103410-17-18-41384203820-6-12-334242342233-5-52439204414-4-13-76-283-220-487-272-264102-207-167-431-178(Note) Others include BASE Card67BASEBusinessKPI Trends in the BASE businessYearMonthQuarterly GMV(million yen)(Note1)Monthly GMV(million yen)Number of shops(Note1)Monthly GMVper shops(yen)Quarterly GMV(Settlement amount) (million yen)(Note2)(Note1)(Note1)201920202021MarchJuneSeptemberDecemberMarchJuneSeptemberDecemberMarchJuneSeptemberDecember2022March9,00710,48011,26312,21112,53231,07125,39026,30225,73928,13228,17531,72528,19910,3573,0023,4933,7544,0704,1778,4638,7678,5799,3779,39110,5759,39924,77026,07127,81128,53730,65849,71550,55351,55854,74258,83360,85662,04960,672121,218134,001135,000142,638136,262208,330167,417170,051156,734159,392154,329170,431154,927(Note2)7,7929,21710,04911,00010,98327,58224,66124,48823,95626,30826,47629,86526,563(Note 1) BASE’s GMV is based on the order date (order amount).(Note 2) Of the total amount of orders (GMV based on the order date), GMV (payment amount) is the amount that has been paid, and is recorded in the month of payment date. There is monthly time lag from order to settlement because the order date and settlement date are different. Also, the amount of GMV is different from the order amount (GMV based on the order date) because the amount that has not been paid due to cancellation is not included in GMV (payment amount).68PAY BusinessKPI Trends in the PAY businessyearmonthQuarterly GMV（million yen）201920202021MarchJuneSeptemberDecemberMarchJuneSeptemberDecemberMarchJuneSeptemberDecember2022March4,4306,2446,3246,9267,0187,8209,42211,80810,83713,44614,69316,29716,849(Note) GMV is based on the payment date (payment amount).69Ratio of Dilutive SharesSOBeginning balanceGrantedExercisedRenouncedEnding balanceFY20225,334,0000-218,000-8,0005,108,000Number of shares outstanding111,718,749Ratio of dilutive shares4.6%70Handling of these MaterialsThis document has been prepared by BASE, Inc. (the “Company”) solely for information purpose only. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company in Japan, the United States or any other jurisdictions. The information contained herein is based on current economic, regulatory, market trends and other conditions. The Company makes no representation or guarantee with respect to the credibility, accuracy or completeness of the information herein. The information contained herein may change without prior notice.Furthermore, the information on future business results are forward-looking statements. Forward-looking statements include but not limited to expressions such as “believe”, “expect”, “plan”, “strategic”, “expect”, “anticipate”, “predict” and “possibility”, as well as other similar expressions to explain future business activities, achievements, events and future conditions. Forward-looking statements are predictions about the future that reflect management’s judgment based on currently available information. As such, these forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those expressed in or suggested by the forward-looking statements. Therefore, you may not rely entirely on forward-looking statements. The Company does not assume any obligation to change or correct any forward-looking statements in light of new information, future events or other findings. This presentation is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. In giving this presentation, the Company does not undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. Information on companies other than the Company and information provided from third parties are based on public information or sources. The Company has not independently verified the accuracy and appropriateness of such data and indicators used herein, nor assume any responsibility for the accuracy and appropriateness of such data and indicators presented in this document.71