BEENOS : Contents of the Question and Answer Section during the 3Q FY2023 Financial Results Briefing

This is a translation of the original Japanese release. The Japanese text shall prevail in case of any variance between this version and the Japanese text.

Contents of the Question and Answer Section during

the FY 2023 3Q Financial Results Briefing

The following is a summary of the questions asked and the responses given during the financial results briefing held on Tuesday 8 August. Some portions have been edited and modified for clarification.

（Regarding Global Commerce）

Q1. You said that Buyee recorded its highest number of orders in June. Is that expected to increase through 4Q and is the current environment forcing you to initiate promotions to drive GMV?

We anticipate that the growth in 4Q will persist, with orders increasing to the point where we expect to meet our GMV forecast of 70 billion JPY. That said, we are not conducting promotions out of necessity, but rather because we see this as an opportune time to accelerate growth. There are two primary reasons for our promotional efforts. First, we aim to solidify our leading position over our competitors. Given the ongoing activity among our competitors as the yen continues to depreciate, we have launched promotions to acquire new users and establish a stronger competitive advantage. The second reason is to reach our GMV forecast. Our promotional activities play a significant role in realizing this objective, so we hope you will maintain your high expectations for the coming period.

Q2. What costs contributed to lack of growth in OP margins despite GMV and sales doing well? Will this continue into the next fiscal year as well?

The primary reason is related to the promotions we have initiated. These discounts have reduced the Take Rate, and we have also allocated our resources to advertising. We believe that the application of AI is crucial for our endeavors to enhance OP margins, and we have a dedicated team focusing on how we can optimize the use of AI. Proactively, we have automated and mechanized operations on our platform and within our warehouse. We are confident that we can further enhance these operations through the effective application of AI.

Q3. I don't think you need to sacrifice your Take Rate through excessive promotions. What are your feelings on the matter?

We do not wish to create any misunderstandings, but our promotions are not excessive. We are managing

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our bottom line to ensure it remains at least 5% of our GMV, and our promotions are designed to maintain this margin. Although our goal is to achieve 100 billion JPY in GMV, our promotions are not our primary strategy to reach that target. As mentioned in a previous response, our promotions aim to solidify our position over our competitors. Through our early initiatives, we have successfully acquired a significant number of new users. Until now, we have been exploring more effective campaigns. Having identified some, we plan to continue launching campaigns in the future, while also diligently managing costs.

（Regarding Value Cycle and Entertainment）

Q4. Why are the other E-Commerce segments behind schedule and what are you doing to rectify it?

Value Cycle has lagged due to a decrease in purchases during the 2Q. While our purchasing rates are competitive within the industry, our customer service both in stores and online required enhancement. We have undertaken training sessions to address these weaknesses and are already observing improvements. In Entertainment, although we have secured new artists, we have not succeeded in signing any major

artists, causing us to fall behind our forecasted GMV. However, we are making progress with certain acquisitions and are confident that we can accelerate our growth in the future.

-END-

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