financial results briefing materials for the 1st half of the fiscal...

Copyright © aucfan Co., Ltd. All Rights Reserved.

Aucfan Co., Ltd.<3674>June 1, 2016

Financial Results Briefing Materials forthe 1st Half of the Fiscal Year Ended

September 30, 2016


2

Contents

2

3

Overview of Financial Results for the 1st Half of the Fiscal Year Ending September 30, 2016

4

Medium-Term Management PlanEntering “DASH! 2019”

1 Introduction

APPENDIX


Introduction１


4

Introduction

■In the fiscal year ending September 30, 2016, a new growth model has

been introduced to establish three distinct businesses based on data: (i) media, (ii) market place, and (iii) solution. A successful M&A was conducted. The full-year net sales, operating income, and ordinary income forecasts were revised upward.

■Unauthorized access and customer information leaks at subsidiary

NETSEA were exposed.

■Net income rose significantly, reflecting an appraisal gain associated

with the sale of shares in Grand Design & Company Co., Ltd., which was a consolidated subsidiary.


5

M&A

The Company acquired all shares in ReValue Inc., which engages in asset liquidation business, or the liquidation of assets of distribution and manufacturing companies, from Dream Incubator Inc. The Company is considering cooperating with Group companies and expanding into the Fintec field through the calculation of reasonable prices of inventories and stock liquidation, among other services, using the function of providing price information.

■”Notice Concerning the Acquisition of Shares in ReValue Inc.

(which has become a subsidiary)” on January 20, 2016

■“Notice Concerning a Business Acquisition by a Subsidiary” on April 26, 2016

A subsidiary acquired an outdoor event platform service business. The subsidiary will aggregate customer master data on market participants in its flea markets and events featuring brand-name products in the cloud and will promote the O2O (omnichannel) business, which will match places to users and to operators more efficiently. Making the most of the Internet, it will revitalize idle space and will promote the exchange of people as well as the exchange of goods.

■“Notice Concerning the Merger between Consolidated Subsidiaries of the Company” on May 24, 2016

The Aucfan Group decided to merge Eterment with SmartSourcing to develop the O2O support business strategically. The merger is intended to link Eterment IT products and system development capabilities and SmartSourcing’s sales capabilities and supporting capabilities.

<Reference>


6

Financial Highlights for the 1st Half of the Fiscal Year Ending September 30, 2016

■Both sales and income far exceeded our forecast. The full-year forecast has been revised upward.

(Unit: million yen)

First half of FY2015/9

(Consolidated results)

First half of FY2016/9(Consolidated results)

Year on year

Consolidated net sales 293 548 +87.3％

Net income 175 119 -31.9％

Consolidated net sales 583 1,062 +82.1％

Net income 178 262 +46.8％

Consolidated net sales 1,507 2,567 +70.3％

Net income 201 302 +50.0％

Q2 results

H1 results

Full-year

forecastRevised upward


Overview of Financial Results for the 1st Half of the Fiscal Year Ending September 30, 2016

２


8

Overview of Financial Results for 1st Half of the Fiscal Year Ending September 30, 2016 (1)

(Unit: million yen)First half of FY2015/9(Consolidated results)

First half of FY2016/9

(Consolidated results)

Year on year(%)

Consolidated net sales

583 1,062 +82.1

├Service fees 293 717 +144.4

├Internet advertising 188 123 ▲34.3

└Marketing support 101 221 +117.9

Consolidated operating income

78 205 +162.4

Consolidated ordinary income

76 211 +175.0

Consolidated net income

178 262 +46.8

■Service fee revenues, such as from the fees for NETSEA, increased steadily.

The forecast was also boosted by the strong performance of corporate sales from marketing support.


9

0 100 200 300 400 500 600

Results for H1 of

FY2016/9

(Consolidated)

Increase in SG&A

expenses

Decrease in income due

to higher cost of sales

Increase in income due

to sales factor

Results for H1 of

FY2015/9

(Consolidated)

▲15▲49

▲18

Personnel expensesDepreciationBusiness consignment expenses

＋424▲64＋119

Service feesInternet advertisingMarketing support

Overview of Financial Results for 1st Half of the Fiscal Year Ending September 30, 2016 (2)

+475

▲100

▲250

＜Major factors for change＞

■Sales remained strong. Expenses increased due to intensified promotional efforts,

rising sales staff and data-related personnel expenses, and the amortization of goodwill associated with the acquisition of NETSEA.

(Unit: million yen)

* “+” indicates factors that led to an increase in income, and “▲” indicates factors that led to a decrease in income.

Personnel expenses ▲44Advertising expenses ▲51 Business consignment expenses ▲28Amortization of goodwill▲44

Factor analysis of increase in expenses for operating income, etc.

78

205


10

Results Forecasts for the Fiscal Year ending September 30, 2016

（Unit: million yen）

FY2015/9(Consolidated

results)(A)


forecast)Before revision

(B)


forecast)After revision

(C)

Change (%)(C / A)

Net sales1,507 2,101 2,567 ＋70.3

Operating income

171 223 303 ＋77.6

Ordinary income

172 250 318 ＋84.1

Net income 201 237 302 ＋50.0

■The full-year forecasts are revised upward, reflecting expected increases

in service fee revenues from Aucfan and NETSEA and the addition of service fees from corporations and solution services at ReValue and SmartSourcing, which are consolidated from the second half.


Medium-Term Management PlanEntering “DASH! 2019”

３


12

Growth Model

Making the Group more powerful through reorganization from the second half of 2016

■Consists of three highly distinct businesses centering on DATA.

■All domains intertwine in a composite manner to realize further

growth.

Expanding users with businesses

that steer users towards each other;

providing merchandise

Developing API and tools to use B2C

trading data in corporate services

Providing comprehensive support for NETSEA for corporations,

ReValue, TATEMPO Guide, and SmartSourcing


13

5,455

8,571

10,433

12,295

13,554

14,715

15,066

291

331

402

454

512

579 637

0

100

200

300

400

500

600

700

4,000

6,000

8,000

10,000

12,000

14,000

16,000

March 31,

2013

September

30, 2013

March 31,

2014

September

30, 2014

March 31,

2015

September

30, 2015

March 31,

2016

千 Unique visitors

Number of general members

MEDIA

■Growth in the number of visitors increased. The

number of members also rose steadily.

Unique visitors(Unit: thousand people)

31,372 32,568

36,760

39,926

44,484

48,958 48,893 51,883

57,360

61,998

68,116

74,401

20,000

30,000

40,000

50,000

60,000

70,000

80,000

March 31,

2013

September 30,

2013

March 31,

2014

September 30,

2014

March 31,

2015

September 30,

2015

Number of premium members

Number of charged members

■The number of paying members,

such as the number of premium members, increased steadily due to the strengthening of the school business.

(Unit: p

eople

)

* The number of premium members indicates the number of Aucfan premium members that pay a monthly fee of 300 yen or 908 yen.* The number of paying members indicates the number of members, including members for paid services such as Aucfan Pro and option services, in addition to Aucfan premium members.

* Unique visitors indicate the monthly number of visitors to the Aucfan site. * The number of general members indicates the number of all registered members on the Aucfan site.

Number of general members(Unit: thousand people)


14

DATA

■Data linkage with data of

DataWeave of India, which has e-commerce price information overseas

Alliance for international EC price dataDataWeave can provide data that it has on EC prices of 1billion items in India, Indonesia, Malaysia, Singapore,Thailand, the U.S., and Vietnam, among other countries, tothe corporate customers of Aucfan.

■DataWeaveDataWeave based in India was founded in 2011. Since its foundation, it has grown rapidly by providing a platform that enables clients to analyze their competitors using data on websites. At present, DataWeave is providing a platform service, Price Weave, which analyzes massive non-structured data and displays dashboards and reports, and API for companies that want to have customized data. These services enable corporate customers to have a deeper understanding of their competitors and to check whether their branding is appropriate and whether they are providing optimum services to customers.

■Obtaining data at brick-and-mortar

stores and expanding O2O support business

Changes in LCD TV sales quantities Changes in electronic dictionary sales quantities

・ Sales volumes in March stand out. We assume that manyconsumers buy LCD televisions before they move.・Sales volumes on Saturdays and Sundays are more than salesvolumes on weekdays.

・Sales volumes of electronic dictionariesSales volumes in April and May stand out. We assume that manystudents buy electronic dictionaries at the beginning of a newacademic year.・Sales volumes on Saturdays and Sundays are more than salesvolumes on weekdays.

Aucfan has analyzed the cycles of the prices and sales volumes oftwo product categories based on home appliance POS data inJapan.The analysis has revealed that the sales volumes of LCD televisionsand electronic dictionaries change in a cycle of around one yearand in a cycle of seven days.


15

Company name: Eterment Co., Ltd.Representative: Hiroaki Ishimaru, Representative DirectorFounded: July 17, 2009Capital: 80.5 million yen Address: 1-14-6 Dogenzaka, Shibuya-ku, Tokyo

Business:Requirement definition, consulting, and customization for EC operators and the commissioned development of WEB and medical systems, such as TATEMPO Guide Next, a uniform management system for multiple Internet shopsAucfan made Eternet a subsidiary on October 1, 2015.

Best record in installing customized systems!!

Uniform management system for multiple Internet shops

SOLUTION

■Aucfan has merged with Eterment and SmartSourcing to incorporate the

appeal of Eterment’s products and its system development capabilities and SmartSourcing’s sales force and supporting capabilities so that Aucfan can strategically develop the domain of its corporate O2O support business based on TATEMPO Guide.

Company name: SmartSourcing, inc.Representative: Masahiro Ikenaga, Representative DirectorFounded: May 9, 2012Capital: 10 million yen Address: 1-6-1 Roppongi, Minato-ku, Tokyo

Business:Independent cloud sourcing for major clients; one-stop service from direction to Internet media business, cloud sourcing business, and commerce businessAucfan made SmartSourcing a subsidiary on April 13, 2016.*(Consolidation: April 1, 2016)

Providing independent cloud solutions to major clients


16

MARKET PLACE

■NETSEA in the primary distribution market and ReValue in the secondary

distribution market together expand sales channels and provide one-stop service up to selling off inventory

Price overseas

ToC price

ToB price

Using Aucfan data Appropriate decision-making

Evaluation of inventory, inventory-backed

loans

Corporate inventory

- Long-held inventory

- Returned goods

- Troubled goods

- Exhibits

- Outlets

Price forecasting

tools

Put up for auction

Invento

ry q

uantity

Time

Different roles- NETSEA: Usual wholesale of new products

- ReValue: Returned goods and surplus stock

Sharing buyer networks

(domestic and overseas) Increasing transaction value

Ordinary sales

Clearance sale

Disposal

Purchases

Bidding

Resale price difference tool

Overseas C

B / Small B- ReValue buyers

- NETSEA buyers

(320,000 companies)

- Aucfan members

(15 million UV/month)

DomesticC


17

Trends in transaction value(Unit: million yen)

148935

3,629

5,1476,206

6,0085,725

5,332

6,546

8,000

0

2,500

5,000

7,500

10,000

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

MARKET PLACE

KPI ■Transaction value increased steadily and is expected to reach 8 billion

yen at the end of the fiscal year.Became a subsidiary on July 1, 2015.


18

Slogan

Medium-Term Management Plan:

Entering “DASH! 2019”

From run-up to a jump


19

Medium-Term Management Plan: Entering “DASH! 2019”

201

1,507

302

2,567

３年間で戦略的投資フェーズ

2015年9月期（実績）

2016年9月期（計画）



Consolidated net sales (million yen)

Consolidated net income (million yen)

2019年9月期（参考）

成長加速フェーズ

DASH! 2019

FY2015/9(Results)

FY2016/9(Plan)

FY2017/9(Plan)

FY2018/9(Plan)

FY2019/9(Reference)

Strategic investment phase Growth acceleration phase


20

Aucfan’s mission

Creating a new age where everyone can buy and sell anything at any place.

20


APPENDIX４


22

Company Profile

Company nameAucfan Co., Ltd.

LocationHumax Shibuya Bldg. 6F, 1-14-6 Dogenzaka, Shibuya-ku, Tokyo 150-0043

FoundedJune 2007

Capital671,730,000 yen (as of March 31, 2016)

Employees86 (as of March 31, 2016) * Number of

employees on a consolidated basis

Head Office


23

Company History

2008

Apr. Head office is moved to Hiroo, Shibuya-ku, Tokyo.

MayMembers’ service Aucfan Premium is launched as a pay-per-use

service business.

Dec. Aucfan School auction class is launched.

2009 May Aucdata consumer trend analysis tool is launched.

2010

Jan. Aucfan Seminar auction correspondence class is launched.

Jul. Head office is moved to Dogenzaka, Shibuya-ku, Tokyo.

Aug. aucfan touch site for smartphones is launched.

2011

Sep.PrivacyMark by Japan Institute for Promotion of Digital Economy

and Community (JIPDEC) is obtained.

Oct. Mono Cheki smartphone app is launched.

Nov. Aucfan Pro integrated analysis tool is launched.

2012

May

CloudShop system, an SaaS multi-store compatible online

purchase comprehensive management service, is acquired from

Fintecs Corporation.

Jul.auc-checker, a new service that detects unauthorized auction

items, is launched.

Aug.Aucfan Town, a search service for second-hand buyers and

auction agency shops, is launched.

Sep. auc4G mobile internet subscription service is launched.

Dec.Global Aucfan, a comprehensive global ecommerce search site,

is launched.

2013

Apr. Aucfan is listed on Mothers Section of the Tokyo Stock Exchange.

Jun.Aucfan Shiire Mall, an exclusive platform that allows corporate

and individual trading, is launched.

Sep.Rakuichi Rakuza, Japan’s largest flea market business, is

acquired from Marketenterprise Co., Ltd.

Nov. A new corporate logo is unveiled.

2014

Feb.

Auction Listing University/Academy, a service to train Yahoo!

Japan online auction sellers, is launched in partnership with

Yahoo! Japan.

May

Auc-checker (beta), a detection and monitoring service for items

traded in online auctions, is launched.

Aucfan Points reward points program is launched.

2015

Jan.aucfan Touch site for smartphones is launched as official iOS au

content.

Feb.

Aucfan Pro price analysis tool is redesigned.

Most Recent Purchase Flash, a new service for users who buy

products on the Internet, is released.

Apr.

Aucfan service Raku Raku Oroshi cooperates with CtoJ purchase

and wholesale site.

Data coordination with MRT that provides a medical information

platform begins.

The smartphone site of aucfan.com is wholly redesigned.

Jun.

Grand Design, a subsidiary of Aucfan, enters a capital and

business alliance with transcosmos inc. for the development of

the Gotcha!mall shopping mall smart app for ASEAN.

Jul.Aucfan acquires shares of NETSEA Co., Ltd. (makes it a

subsidiary).

Sep.

Aucfan opens a Yahoo! Auctions course at PC School AVIVA.

Aucfan price search site begins data coordination with TAU,

which commands the largest market share in the purchase of

damaged cars.

Nov.Aucfan broadcasts goods being put up at Yahoo! Auctions live in

collaboration with Yahoo! Auctions and school.

2016

Jan. Aucfan acquires shares of ReValue Inc. (making it a subsidiary).

Feb.

The functions of Aucfan premium members are expanded, and

prices revised.

A new “Aucfan light members” service is released.

Auction Bid Reservation begins to be offered as a privilege of

Yahoo! premium members.

Mar.

Aucfan price search website starts a used car purchase service in

collaboration with TAU Corporation, which has the largest share

in the damaged car purchase market.

Apr.Aucfan acquires shares of SmartSourcing, inc. (making it a

subsidiary).

May

Aucfan Co., Ltd. begins data linkage with DataWeave of India,

which has e-commerce price information overseas.

Aucfan holds a tie-up seminar in collaboration with a Yahoo!

Auctions campaign.


24

Directors and Full-time Corporate Auditor

Executive Officers

Shinya SuzukiExecutive Officer, Manager of

Business Management

Department

2002 Joined Vagabond Co., Ltd.

2003 Joined Edge Co., Ltd. (now DataHotel

Co., Ltd.); involved in the operation and

supervision of corporate research business

and the launch and supervision of business

school for individuals and corporations

2009 Joined Aucfan Co., Ltd.

October 2012 Appointed an Executive Officer

(current position)

Takeshi TokunagaExecutive Officer, Manager of

Supervising NETSEA Co., Ltd.

Graduate of Kyoto University Faculty of

Science

Engaged in research on immunology at the

University of Tokyo Graduate School of

Medicine Doctoral Course

2008 Joined Mobile Support Co., Ltd.

2009 Joined All About, Inc.; involved in R&D

infrastructure organization and system

rebuilding for M&A operations

2013 Joined Aucfan Co., Ltd.

January 2014 Appointed an Executive Officer

(current position)

Ryuichi TokugamiExecutive Officer, Manager of

Supervising Technology

2002 Joined Tokyo Electric Power Company

2005 Launched MiningBrownie, Inc (registered in

US); appointed as CEO

2006 Launched MiningBrownie, Inc (registered in

Japan); appointed as CEO

January 2015 Joined Aucfan Co., Ltd.

July 2015 Appointed an Executive Officer (current

position)

Introduction of Officers

Shuichi TakenagaRepresentative Director

Graduate of Kyoto University Faculty of Law

2000 Launched small auction business as a sole proprietorship while he was

still a student of the university

2004 Founded Defactostandard, Ltd. and became its Representative Director

June 2007 Founded Aucfan Co., Ltd. in an incorporation-type company split and

was appointed the Representative Director (current position)

Kenichiro WaideExternal Director

Graduate of Keio University Faculty of Economics

1982 Founded General Solutions, Inc. (now FISCO IR)

Appointed Representative Director

2006 Founded Zaihon, Inc. Appointed Representative Director

December 2010 Appointed Director of Aucfan Co., Ltd. (current position)

Junji HamadaDirector, Manager of Business Administration Department

Completed Master’s Degree Program at Teikyo University Graduate School of

Economics

1992 Joined IDO Corporation (now KDDI Corporation)

2002 Joined E3 Networks Corp. (now Mitsui Bussan Secure Directions, Inc.)

2005 Appointed Director of Produce Association, Co., Ltd.

2006 Appointed Director of Fitech Laboratories, Inc.

2012 Joined Aucfan Co., Ltd. and became Manager of Business

Administration Department

December 2012 Appointed Director of Aucfan Co., Ltd. (current position)

Ryoichi HiranoFull-time Corporate Auditor

Graduate of Kyoto University Faculty of Law

1973 Joined Tokio Marine Fire Insurance Co., Ltd.

2003 Appointed Executive Vice President of Site Support Institute Co., Ltd.

2006 Appointed to the advisory board of CMIC Co., Ltd.

2007 Joined Grand Design & Company Co., Ltd. and appointed Executive Officer

2010 Appointed Director of Grand Design & Company Co., Ltd.

2013 Appointed Auditor of Grand Design & Company Co., Ltd. (current position)

December 2014 Joined Aucfan Co., Ltd and appointed full-time Corporate Auditor

(current position)


25

E-market place

Internet advertising revenue

(Auction) seller

1. Pay-per-auction advertising

2. Search advertising

3. Network advertising

Marketing support revenue

1. Pure advertising

2. Data solution

Individual (reseller)

Sole proprietor (Small B)

Business (B)

Merchandise/price database

Pay-per-use service revenue

Data accumulationConsumer (C)

(Auction) customer

MEDIA

■Operating an Internet media business, aucfan.com, which

has EC market price data in the past 10 years

http://www.fullspeed.co.jp/

http://www.fullspeed.co.jp/


26

■Using the crawler platform and the scraping (information

extraction) system based on the artificial intelligence of MiningBrownie, Inc.

Company name: MiningBrownie, Inc.Representative: Ryuichi Tokugami, Representative DirectorFounded: October 2006Capital: 13,800,000 yenAddress: 3-34-5 Nihonbashi Hamacho, Chuo-ku, Tokyo

Business:Development and provision of original crawler technology, text mining technology, scraping technology using machine learning, and Internet marketing tools using expertise in price research and price forecasting.* Aucfan made MiningBrownie a subsidiary on January 1, 2015.

Leading company in crawler and machine

learning

DATA

■Working to create the synergy effect of four axes with data

mining, machine learning, and web page analysis technology


27

Expand the supplierand buyer bases.

32万人

[Buyers]320,000 people

Manufacturers,

wholesalers,

importers, etc.

Distribution amount 8.0 billion yen Retailers, exporters,

etc.

[Suppliers]5,000

companies

Company name: NETSEA Co., Ltd. Representative: Shuichi Takenaga, Representative DirectorFounded: July 1, 2015Capital: 45,000,000 yen, including legal capital surplusAddress: 1-14-6 Dogenzaka, Shibuya-ku,

Tokyo Business: Market place business for B2B* Aucfan made NETSEA a subsidiary on July 1, 2015.

MARKET PLACE

■BtoB market place NETSEA

・Add to ranks of the 320,000 buyer members and expand the annual distribution amount of 8.0 billion yen (based on wholesale price) going forward.

・Aggressively enter the BtoB market, a new domain with a market size of 300 trillion yen.


28

MARKET PLACE

Company name: NETSEA Co., Ltd. Representative: Shuichi Takenaga, Representative DirectorFounded: July 1, 2015Capital: 500,000,000 yen, including legal capital surplusAddress: 1-14-6 Dogenzaka, Shibuya-ku,

Tokyo Asset liquidation business* Aucfan made ReValue a subsidiary on January 25, 2016.(ReValue was consolidated on March 31, 2016)

■Engages in asset liquidation business, or the liquidation of surplus

stock and return inventory in the distribution and manufacturing industries.

・Synergy between ReValue

BtoB Mall and Aucfan Group users

・Commencement of ABL

(asset based lending) using warehouses


29

Major Awards Won (1)

■Named to the Forbes Asia list of the “Asia’s 200 Best Under A Billion”

(200 best-performing Asian companies)

Ateam

Aucfan Co., Ltd.

COLOPL

euglena

F@N communications

Fisco

Jibannet

Jin Co.

Kitanotatujin Corporation

Livesense

M3

Mobile Create

Money Square Japan

Nihon M&A Center

NISSO Pronity

PR TIMES on September 26, 2014


30

Major Awards Won (2)

Aucfan gave a presentation for the final selection at the “Red

Herring Top 100 Asia Awards” held by Red Herring in Hong Kong

for a period of three days starting on Monday, August 25, 2014.

This presentation earned Aucfan the “2014 Red Herring Asia Top

100 Winners” award, which is given to the top 100 companies with

the strongest growth potential, latent power, and innovative

capabilities based on their respective financial performance ability,

the degree of technical innovation, management capabilities, and

business strategies, etc.

■About Red Herring

Red Herring is a provider of online news and magazines that is a

recognized authority among investors, business managers, and

engineers. Its publications influence technical innovations around

the world by always introducing technical trends and the latest

information capable of changing the overall economy. The Red

Herring Top 100 Asia Awards, hosted by Red Herring every year, is

an event in which the prestigious award of the same name is given

to the top 100 most promising and innovative companies capable

of leading Asia with their groundbreaking schemes and technology.

Companies that have received the Red Herring Top 100 Global

Award in the past include Google, Yahoo, Salesforce.com,

YouTube, eBay and twitter. For this reason, the award is

considered to be an authoritative gateway to success for venture

companies. Partial excerpt from an Aucfan press release dated September 1, 2014.

■Received the “2014 Red Herring Asia Top 100 Winners” award

financial results briefing materials for the 1st half of the fiscal...

Documents