ＣＡＲＴＡ　ＨＯＬＤＩＮＧＳ（3688） – [Delayed]Financial Results for the 1st Quarter of the Fiscal Year Ending December 31, 2022 [Japanese Standards]

English Translation This is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail. Financial Results for the 1st Quarter of the Fiscal Year Ending December 31, 2022 〔Japanese Standards〕（Consolidated） CARTA HOLDINGS, Inc. Listed company name: Stock Code No.: Representative: Title Chairman and CEO Contact: Title Director and CFO 3688 URL: Name: Shinsuke Usami Name: Hidenori Nagaoka Listed stock exchange: TSE Prime Market https://cartaholdings.co.jp/en/ir/ TEL +81-3-4577-1453 May 13, 2022 Date to submit the Securities Report: Scheduled date of dividend payments: Availability of supplementary information Holding investors’ meeting: May 13, 2022 ― Yes Yes (For security analysts and institutional investors） （Rounded down to million yen） 1. Consolidated Financial Results for FY 2022 First Three Months (January 1, 2022 – March 31, 2022) (1)Consolidated results of operations (cumulative total) （The percentage indicates year-on-year change） FY 2022 first three months FY 2021 first three months （Note）Comprehensive Income: Net sales Operating income Ordinary income Net income ¥million 6,976 6,483 ％ 7.6 9.1 ¥million 1,541 1,675 ％ (8.0) 32.6 ¥million 1,884 1,988 ％ (5.2) 67.6 ¥million 1,975 1,344 ％ 46.9 94.0 FY 2022 first three months: ¥1,200 million (28.5)％ FY 2021 first three months: ¥1,678 million (895.9)％ Net income per share Diluted net income per share FY 2022 first three months FY 2021 first three months ¥ 77.01 53.34 ¥ 76.45 53.09 EBITDA ¥million 3,174 2,478 % 28.1 54.7 * EBITDA noted above (earnings before interest, tax, depreciation, and amortization) is calculated by adding interest expenses, depreciation, amortization, amortization of goodwill, loss on retirement of non-current assets, and impairment loss to the Company’s profit before income taxes. (2) Consolidated financial position Total assets Net assets March 31, 2022 December 31, 2021 （Reference）Owned capital: March 31, 2022: ¥28,003 million ¥million 52,254 55,376 December 31, 2021: ¥27,444 million Shareholders’ equity ratio Net assets per share ¥million 28,246 27,757 ％ 53.6 49.6 Yen 1,091.66 1,070.34 1 1Q end 2Q end Fiscal year-end Total Annual dividends 3Q end Yen ― ― Yen 25.00 27.00 Yen ― ― Yen 26.00 27.00 Yen 51.00 54.00 (Note) Revisions to dividend forecast for the current quarter: No 3. Forecast of Consolidated Financial Results for FY 2022（January 1, 2022 － December 31, 2022） Ordinary income Net income per share Operating income Net income Net sales EBITDA ¥million 28,300 ％ 9.6 ¥million 5,500 10.6 ％ ¥million 5,900 ％ 5.1 ％¥million 4,100 32.1 Yen 159.90 ¥million 7,600 % 13.4 (Note) Revisions to performance results forecast for the current quarter: No 2. Dividend status FY 2021 FY 2022 FY 2022 (Forecast) Full year ※ Notes (1) Changes in significant subsidiaries during the period : Yes (Change of specified subsidiaries that lead to a change in the scope of consolidation) Excluded from consolidation: 1 company (Name) Cyber Communications Inc. (Note) For details, please see “2. Consolidated Financial Statements (3) Notes to Condensed Interim Consolidated Financial Statements (Changes in Significant Subsidiaries during the Period)” on page 10 of the attached documents. (2) Application of special accounting methods for the preparation of quarterly consolidated financial statements Please see “2. Consolidated Financial Statements (3) Notes to Condensed Interim Consolidated Financial Statements (Adoption of Accounting Method Specific to Preparation of Quarterly Consolidated Financial Statements)” on page 10 of the attached documents. (3) Changes in accounting policies, changes in accounting estimates, corrections and restatements and retrospective restatements 1) Changes in accounting policy resulting from revisions to accounting standards 2) Changes in accounting policy other than above 3) Changes in accounting estimates 4) Retrospective restatements : Yes : Yes : None : None : None (4) Number of shares issued (common stock) 1) Number of shares issued and outstanding (including treasury stock) As of March 31, 2022 25,654,532 As of December 31, 2021 25,643,132 2) Number of treasury stock issued and outstanding As of March 31, 2022 2,234 As of December 31, 2021 2,234 3) Average number of shares during the period (quarterly consolidated cumulative accounting period) Three months ended March 31, 2022 25,648,498 Three months ended March 31, 2021 25,204,196 ※ Notice regarding audit procedures This financial result is excluded from audit procedures. ※ Explanations related to appropriate use of the performance forecast other special instructions (Note on forward-looking statements) Earnings forecasts and other forward-looking statements in this report are based on information currently available and certain assumptions judged to be reasonable. Therefore, these statements do not constitute a guarantee of achievement. Actual results may differ materially for various reasons. Please refer to “1. Qualitative Information on Quarterly Financial Results for the Period under Review (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information” on page 5 of the attached documents. (Supplementary materials) Supplementary materials on financial results are on our website (in English and Japanese). 2 Attachment Contents 1. Qualitative Information on Quarterly Financial Results for the Period under Review (1) Analysis of Operating Results (2) Analysis of Financial Position (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information 2. Consolidated Financial Statements (1) Consolidated Balance Sheets (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated Statements of Income) (Consolidated Statements of Comprehensive Income) (3) Notes to Condensed Interim Consolidated Financial Statements (Going Concern Assumption) (Notes on Significant Changes in the Amount of Shareholders’ Equity) (Changes in Significant Subsidiaries during the Period) (Adoption of Accounting Method Specific to Preparation of Quarterly Consolidated Financial Statements) (Changes in Accounting Policies) (Changes in Accounting Estimates) (Additional Information) (Segment Information) (Significant Subsequent Events) 3 1. Qualitative Information on Quarterly Financial Results for the Period under Review (1) Analysis of Operating Results With regard to the online advertising market where the Group operates its mainstay business, according to research by Dentsu Inc., in 2021, the impact of the novel coronavirus (COVID-19) eased in the second half of the year and the advertising market as a whole recovered significantly, with internet advertising spending reaching ¥2,705.2 billion, or an increase of 21.4% year on year, surpassing for the first time the total of traditional media advertising expenditures, which was ¥2,453.8 billion. In addition, internet advertising medium expenditures, which consists of internet advertising spending excluding internet advertising production costs and merchandise-related EC platforms within advertising expenditures in Japan, grew to ¥2,157.1 billion, or an increase of 22.8% year on year, driven by growth in video and social media advertising. Of this amount, performance-based advertising costs, which are the mainstay of transactions in internet advertising medium expenditures, amounted to ¥1,838.2 billion, or an increase of 26.3% year on year, accounting for 85.2% of total internet advertising medium expenditures. Under these circumstances, the Group worked to develop its business in the following three segments and has been promoting vertical integration throughout the Group to achieve sustainable growth: 1) the “Marketing Solutions Business” which provides advertising sales and solutions mainly through media communication; 2) the “Ad Platform Business” which operates ad distribution platforms; and 3) the “Consumer Business” which provides media solutions and operates its services in the EC, game, and HR fields. As a result, the Group posted net sales of ¥6,976 million, or an increase of 7.6% year on year, operating income of ¥1,541 million, or a decrease of 8.0% year on year, due to an increase in advertising expenses for the “TELECY” operational TV advertising platform and aggressive upfront investments in the D2C domain, ordinary income of ¥1,884 million, or a decrease of 5.2% year on year, and profit attributable to owners of parent of ¥1,975 million, or an increase of 46.9% year on year, mainly due to the recording of an extraordinary income from gain on sales of investment securities in the period under review. Financial results for each segment were as follows. Sales of each segment include intersegment sales and transfers. In addition, in the period under review, the “Partner Sales Business” segment has been renamed the “Marketing Solutions Business” segment and some business that was previously included in the “Marketing Solutions Business” segment and the “Ad Platform Business” segment has been reclassified between the two segments due to organizational restructuring. Therefore, the following year-on-year comparisons are based on figures for the same period of the previous fiscal year that have been reclassified to reflect the new reporting segment classification. 1) Marketing Solutions Business The Marketing Solutions Business sells advertising space and provides solutions mainly through media communication. The Group has been working to acquire new profit sources through initiatives in operational advertising and sales promotion/EC-related services, as well as expanding sales of our own products and solutions, while promoting operational efficiency to secure the existing media rep margins. As a result, the Marketing Solutions Business recorded net sales of ¥3,357 million, or an increase of 2.3% year on year, and segment income of ¥1,098 million, or a decrease of 1.8% year on year, in the period under review. 2) Ad Platform Business The Ad Platform Business operates “Zucks,” “PORTO,” “TELECY,” and others as operational advertising platforms, as well as “fluct” as media support services. We worked to improve and expand the functions of each platform and service, and also captured demand from corporate clients, which led to solid performance. As a result, the Ad Platform Business recorded net sales of ¥2,023 million, or an increase of 29.0% year or year, and segment income of ¥498 million, or an increase of 20.9% year on year, in the period under review. 3) Consumer Business In the Consumer Business, we operate sales promotion media centered on “EC Navi,” “PeX,” and “Digico,” as well as services in the EC, game, and HR domains. In media 4 solutions, we have worked to expand the scale of existing media, and in the EC, game, and HR domains, we have made aggressive upfront investments to promote the strengthening of initiatives in the growing D2C domain in particular. As a result, the Consumer Business recorded net sales of ¥1,603 million, or a decrease of 2.0% year on year, and segment loss of ¥55 million (segment income of ¥144 million for the same period of the previous fiscal year) in the period under review. (2) Analysis of Financial Position (Assets) Consolidated assets as of the end of the period under review totaled ¥52,254 million, a decrease of ¥3,122 million from the end of the previous fiscal year. This was mainly attributable to decreases in cash and deposits and investment securities. (Liabilities) Consolidated liabilities as of the end of the period under review amounted to ¥24,008 million, a decrease of ¥3,611 million from the end of the previous fiscal year. This was mainly attributable to decreases in accounts payable – trade, provision for bonuses and income taxes payable. (Net Assets) Consolidated net assets as of the end of the period under review stood at ¥28,246 million, an increase of ¥489 million from the end of the previous fiscal year. This was primarily owing to an increase in retained earnings due to the recording of profit attributable to owners of parent and a decrease in valuation difference on available-for-sale securities due to the sale of investment securities. (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information No revisions have been made to the full-year consolidated performance forecast announced in “Financial Results for the Fiscal Year Ended December 31, 2021” on February 14, 2022. 5 (Millions of yen) As of December 31, 2021 As of March 31, 2022 2. Consolidated Financial Statements (1) Consolidated Balance Sheets Assets Current assets Cash and deposits Accounts receivable – trade Securities Merchandise Supplies Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Intangible assets Goodwill Other Total intangible assets Investments and other assets Investment securities Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets Liabilities Current liabilities Accounts payable – trade Asset retirement obligations Provision for bonuses Provision for directors’ bonuses Provision for point card certificates Deposits received Income taxes payable Current portion of long-term loans payable Other Total current liabilities Non-current liabilities Long-term loans payable Asset retirement obligations Deferred tax liabilities Lease obligations Other Total non-current liabilities Total liabilities 6 21,031 18,349 175 50 288 2,675 (56) 42,513 1,290 1,836 2,853 4,689 5,235 229 1,423 (6) 6,883 12,863 55,376 16,899 162 1,237 9 466 3,444 1,356 117 2,587 26,280 63 238 725 16 296 1,339 27,619 19,100 18,480 180 61 797 2,381 (56) 40,943 1,374 1,768 2,740 4,509 3,797 200 1,434 (5) 5,426 11,311 52,254 15,864 162 8 － 444 3,465 192 100 2,956 23,194 49 238 187 26 312 814 24,008 (Millions of yen) As of December 31, 2021 As of March 31, 2022 Net assets Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Total accumulated other comprehensive income Share acquisition rights Non-controlling interests Total net assets Total liabilities and net assets 1,410 12,337 12,255 (0) 26,002 1,428 13 1,441 122 190 27,757 55,376 1,412 12,339 13,564 (0) 27,316 672 15 687 122 120 28,246 52,254 7 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated Statements of Income) (Millions of yen) Three months ended December 31, 2021 Three months ended December 31, 2022 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income and dividends income Gain on investments in partnership Foreign exchange gains Share of gain of entities accounted for using equity method Income from lease termination related a company Other Total non-operating income Non-operating expenses Interest expenses Loss on investments in partnership Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sales of investment securities Other Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Loss on valuation of investment securities Loss on change in equity Impairment loss Other Total extraordinary losses Profit before income taxes Income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent 6,483 800 5,682 4,007 1,675 21 2 226 5 54 18 327 0 13 － 14 1,988 248 0 248 33 9 11 74 2 131 2,104 760 1,344 (0) 1,344 6,976 735 6,241 4,699 1,541 25 － 68 68 188 22 374 0 20 10 31 1,884 1,022 － 1,022 11 － － － － 11 2,896 941 1,954 (20) 1,975 8 (Consolidated Statements of Comprehensive Income) (Millions of yen) Three months ended December 31, 2021 Three months ended December 31, 2022 Profit Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 1,344 341 2 (9) 334 1,678 1,678 (0) 1,954 (750) 1 (5) (754) 1,200 1,220 (20) 9 (3) Notes to Condensed Interim Consolidated Financial Statements (Going Concern Assumption) (Notes on Significant Changes in the Amount of Shareholders’ Equity) None None (Changes in Significant Subsidiaries during the Period) The Company carried out an absorption-type merger, effective January 1, 2022, in which the Company was the merging company and VOYAGE GROUP, Inc. and Cyber Communications Inc., its consolidated subsidiaries, were merged companies. Therefore, VOYAGE GROUP, Inc. and Cyber Communications Inc. have been excluded from the scope of consolidation. (Adoption of Accounting Method Specific to Preparation of Quarterly Consolidated Financial Statements) Tax expenses for the period are calculated by multiplying net income before income taxes for the period by the reasonably estimated annual effective tax rate after applying tax effect accounting which is calculated based on the estimated net income before income taxes for the entire fiscal year. (Changes in Accounting Policies) (Application of Accounting Standard for Fair Value Measurement, etc.) Effective from the beginning of the period under review, the Group has applied “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019, hereinafter referred to as “Fair Value Measurement Accounting Standard”), etc. In accordance with the transitional treatment stipulated in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the Group has decided to adopt the new accounting policy stipulated by the Fair Value Measurement Accounting Standard, etc. prospectively from the date of the change. There is no impact on the consolidated financial statements. (Changes in Accounting Estimates) None (Additional Information) (Application of the Accounting Standard for Revenue Recognition) Effective from the beginning of the period under review, the Group has applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. There is no impact on the consolidated financial statements. In addition, the Group applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 30, 2018) etc. from the beginning of the fiscal year ended December 31, 2019. 10 (Segment Information) I For the three months ended March 31, 2021 (January 1, 2021 to March 31, 2021) 1. Information on sales and income or loss by reportable business segment (Millions of yen)Reportable Segments Marketing Solutions Business Ad Platform Business Consumer Business Total Adjustment Consolidation (Note) Outside Sales 3,281 1,564 1,636 6,483 Sales Intersegment Sales or Transfer Total － 3,281 1,118 3 － 3 1,567 1,636 6,486 Segment Income (Loss) 411 144 1,675 (Note) Segment income (loss) is adjusted against operating profit in the Consolidated Statements of Income. － (3) (3) － 6,483 － 6,483 1,675 2. Information concerning impairment loss on non-current assets, goodwill and other items by reportable business segment (Material impairment loss on non-current assets) None (Material changes in goodwill) In the Consumer Business, as a result of reviewing the progress of rakanu Co., Ltd., a consolidated subsidiary, against its business plan and future business prospects, 74 million yen of the unamortized balance of goodwill recorded at the time of acquisition of the company’s shares was recorded as an impairment loss in the period under review as an extraordinary loss. (Material profit from negative goodwill) None II For the three months ended March 31, 2022 (January 1, 2022 to March 31, 2022) 1. Information on sales and income or loss, and information on disaggregation of profit, by reportable business segment (Millions of yen)Reportable Segments Marketing Solutions Business Ad Platform Business Consumer Business Total Adjustment Consolidation (Note) Sales Profit from contracts with customers Other profit Intersegment Sales or Transfer Total 3,357 － － 3,357 1,098 2,015 － 1,603 － 6,976 － 7 － 7 2,023 1,603 6,984 Outside Sales 3,357 2,015 1,603 6,976 Segment Income (Loss) 498 (55) 1,541 (Note) Segment income (loss) is adjusted against operating profit in the Consolidated Statements of Income. － － － (7) (7) － 6,976 － 6,976 － 6,976 1,541 11 2. Information concerning impairment loss on non-current assets, goodwill and other items by reportable business segment (Material impairment loss on non-current assets) None (Material changes in goodwill) None (Material profit from negative goodwill) None 3. Matters concerning changes etc. in reportable segments In the period under review, the “Partner Sales Business” segment has been renamed the “Marketing Solutions Business” segment and some business that was previously included in the “Marketing Solutions Business” segment and the “Ad Platform Business” segment has been reclassified between the two segments due to organizational restructuring. Segment information for the same period of the previous fiscal year has been prepared based on the classification method after the change. In addition, beginning in the period under review, due to reorganization, the method for allocating common expenses has been partially reviewed and the method of calculating income or loss by business segment was changed. However, since the impact of the partial revision of the method for allocating common expenses is minor, segment information for the same period of the previous fiscal year is presented based on the method used before the change. In accordance with the transitional treatment stipulated in Paragraph 28-15 of the “Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No. 12, March 31, 2020), information disaggregating revenue from contracts with customers for the same period of the previous fiscal year is not presented. (Significant Subsequent Events) Acquisition and retirement of treasury shares At the Board of Directors meeting held on May 13, 2022, the Company resolved to acquire treasury shares in accordance with Article 459, Paragraph 1 of the Companies Act and Article 46 of its Articles of Incorporation and to retire treasury shares in accordance with Article 178 of the Companies Act, as follows. (1) Reason for acquisition of treasury shares To enhance shareholder returns and improve share capital efficiency. (2) Details of the acquisition 1) Type of shares to be acquired 2) Total number of shares to be acquired Common shares of the Company 400,000 shares (maximum) (Ratio to total number of shares issued and outstanding (excluding treasury stock): 1.56%) ¥1,200 million (maximum) May 16, 2022 through August 15, 2022 Market on discretionary dealing contract regarding treasury shares acquisition purchases based Common shares of the Company 2,234 treasury shares currently held and all in shares accordance with (2) above August 31, 2022 acquired treasury 3) Total acquisition cost 4) Period of acquisition 5) Method of acquisition (3) Details of the retirement 1) Type of shares to be retired 2) Total number of shares to be retired 3) Retirement date 12