Plan expects the new business to contribute to profit from the fiscal year ending August 2021 onward

「We have decided to revise the timing of monetization more conservatively than initially assumed.」

「For the new business Bihada Navi, the timing of revenue generation has diverged from the initial plan as a result of the launch being postponed.」

「The company decided to withdraw from the OneRoof and CarryGo! services. In the entertainment and matching services business, it recorded an impairment loss of ¥45 million and an allowance for business withdrawal losses of ¥19 million as extraordinary losses.」

「EC sales were minor because no promotions were conducted, while an operating loss was recorded due to software amortization. In addition, ¥10 million was recorded for expenses incurred in considering M&A and market research expenses related to planning new businesses.」

「In operating the SNS service “OneRoof,” advertising expenses for acquiring new users were incurred ahead of revenue. Although the deficit narrowed following a review of other expenses, the company recorded an operating loss. As a result, revenue in the entertainment and matching services business for the three-month period ended 30 November was ¥28 million, up 4.9% year on year, and the operating loss was ¥33 million, compared with an operating loss of ¥41 million in the same period of the previous year.」

「Revenue from each service was limited because the company is not advertising at present, in order to improve and modify the services based on surveys and feedback collected after their release. Meanwhile, the company recorded an operating loss because fixed costs, including those for indoor golf stores and software depreciation, were incurred. As a result, SNS business revenue for the nine-month period ended 31 May was ¥2 million, down 67.5% year on year, and the operating loss was ¥99 million, compared with an operating loss of ¥104 million in the same period of the previous year.」

「The group recognizes that developing new earnings pillars is an important challenge. It is continuing to develop new services in addition to the SNS business after the six-month period ended 28 February, and considers the costs related to these new businesses to be necessary investments that are expected to continue to be incurred.」

「On the earnings front, the operating loss widened year on year, mainly because service development costs and setup costs for franchise stores were incurred. Both are upfront investments expected to contribute to earnings from the fiscal year ending August 2023 onward.」

「Because the release of “OneRoof” was postponed to improve service quality, revenue comprises only system usage fees from the social platform provided to business-to-business customers. On the earnings front, the operating loss widened year on year, mainly because service development costs and setup costs for franchise stores were incurred; both are upfront investments.」

「During the cumulative second quarter, we recorded system usage fees from the platform provided for BtoB use as revenue. On the profit front, we recorded an operating loss because development costs for 2 new SNS services were incurred ahead of revenue generation. As a result, revenue from the SNS business for the cumulative second quarter was ¥8 million, up 363.6% year on year, while the operating loss was ¥63 million (an operating loss of ¥7 million in the same period of the previous year). Both new SNS services are scheduled for release during the period.」

「During the three-month period ended 30 November, the company recorded system usage fees from the platform provided to business-to-business customers as revenue. On the earnings front, however, it recorded an operating loss because of upfront costs related to developing 2 new SNS services, including the rollout of the platform across multiple applications.」

「The company is making aggressive investments in the XR and SNS businesses as growth businesses. The SNS business is expected to contribute to earnings from the fiscal year ending August 2022, and the XR business from the fiscal year ending August 2023 onward.」

「The communication platform has been available for BtoB use since November 2020 and has generated a small amount of revenue from system usage fees. However, as we continue to modify the platform and develop additional functions, we expect to reach the break-even revenue level and contribute to profit in the next fiscal year.」

「Operating income declined year on year because advertising expenses increased across the company and depreciation expenses for software related to new-business system development were incurred ahead of the associated revenue. However, both are expected to contribute to earnings from the second half of the fiscal year onward.」

「Although the company forecasts a certain contribution from the new businesses to revenue and earnings, profit margins are expected to remain subdued for the time being because it plans to continue upfront investment in developing various systems and expanding sales channels.」

「However, during the nine-month period ended 31 May, all businesses recorded an operating loss as a result of continued upfront investment and deterioration in the business environment.」

「However, upfront investment continued in all businesses, and the company also recorded an operating loss in the six-month period ended 28 February.」

「We forecast a certain contribution to sales from the new businesses in the fiscal year ending August 2020, but plan to continue making upfront investments in areas such as system development and the expansion of sales channels. We expect a contribution to profit from the fiscal year ending August 2021 onward.」