【Financial Analysis User Base Q1 2021 Consideration of favorable factors】

In recent years, business models have been changing due to the rapid evolution of technology. In the past few years, there has been an increase in the number of subscription-based business models (continuous billing model) (* called recurring in English) that are based on the premise of continuous usage rather than a sell-out business model. Netflix, a video distribution service company, and Amazon, an online shopping site, are representative of subscription-based business models.

As the number of new business models increases, the name of the business model is also changing. Companies that are developing subscription-based business models are called Saas, Software as a Service companies. To put it simply, it is a web service that allows the use of software via the Internet, and it is a form of service provision of the product or system itself. Netflix and Amazon mentioned above are American companies, but Saas companies exist in Japan as well. For example, freee is an accounting software service provider, and Sansan is a business card management service provider. Among the above, I am focusing on Userbase Inc., a company that continuously creates high-quality economic information content to support decision-making in corporate activities in an age of information overload. With the mission of "changing the world with economic information," Userbase Inc. is a company that provides the social economic media NewsPicks and the economic information service SPEEDA.

On May 13, 2021, Userbase Inc. announced its consolidated financial results for the first quarter of 2021. Sales were 3.965 billion yen, up 25% YoY, operating profit was 739 million yen (vs. a deficit of 263 million yen a year earlier), and ordinary profit was 677 million yen (vs. a deficit of 317 million yen a year earlier). Operating profit for the first quarter was 53.6% of the full-year forecast, suggesting that the company performed well overall. I would like to focus on the first two of the company's three main services, SPEEDA, NewsPicks, and FORCAS, and examine the reasons for their strong performance.

First is the SPEEDA business. This service provides an economic information platform that solves the information gathering problems of businesspeople and accelerates the evolution of companies. Sales increased 20% YoY to 1.596 billion yen, and MRR increased 15% YoY to 485 million yen.

One of the reasons for the strong performance was that the company was able to curb the worsening trend in the churn rate. Due to the impact of Corona, there were a certain number of cancellations from small and medium-sized companies that are susceptible to business sentiment from the second quarter of 2020, but the revenue team has become very strong, which has prevented this from happening, according to President Sakuma. In particular, the company has strengthened its Customer Success team, which provides support for customers to continue using the service, and the team's thorough approach to customer success is having a positive impact.

The other is the expert research business. This business is a service that can provide added value to customers who are already using SPEEDA. As you can see from the numbers, it seems to be starting up smoothly. We have high expectations for this business as we will be investing in it in the future.

Next is the NewsPicks business, which is a social-type economic media and news site. Users are called "pickers" and can freely express their opinions on media content. The number of registered members is 6.17 million, or about 10% of the working population of 66 million (*1), and the number of paying members is 181,000. As for the results of this business, sales increased 54% YoY to 1.938 billion yen, and Monthly Recurring Revenue (MRR) increased 38% YoY to 254 million yen. There are two reasons for the strong performance.

One was the expansion of corporate business: AlphaDrive Consulting, the service that develops NewsPicks for corporate clients, supports organizational revitalization and new business development. Not only did the new coronavirus increase the need for trustworthy information, but it also seems to have increased demand for companies to DX and look for tips on how to survive.

Another is video advertising: as NewsPicks' video programs gained recognition, video advertising for program sponsors and advertisers was strong. Since we are in the process of considering raising the unit price of advertising, we can say that there are high expectations for further growth rates.

The results for Q1 FY2021 can be said to have mainly consisted of the above factors. In a subscription-based business model, it is important to keep users paying monthly or yearly fees without having them cancel their subscriptions, so the key to achieving continuous growth in the future is the amount of content and human resources. Therefore, the key to achieving continuous growth in the future lies in the amount of content and human resources. To achieve this, it is essential to provide content that will not bore users and to secure human resources to improve the platform and strengthen the team. We look forward to further growth. *1 Source: Statistics Bureau, Ministry of Internal Affairs and Communications Statistics Bureau Home Page/Labour Force Survey/Monthly Results -March 2021- The Statistics Bureau and the Director-General for Policy Pla www.stat.go.jp *2 ABM Account Based Marketing A marketing method that is implemented based on a specific company. * Source of attahced ducments: Q1 2021 report of Uzabase., Inc. [Q1 Highlights] Net sales: 3.965 billion yen (+25% YoY) Operating income (loss): 739 million yen (vs. 263 million yen loss in the same period last year) Ordinary income: 677 million yen (vs. a loss of 317 million yen in the same period last year) EBITDA 8.3 billion yen Final profit/loss 482 million yen (vs. 473 million yen loss in the same period last year) [KPI] MRR 883 million yen ARR 10.607 billion yen (+24% YoY) By Product Newspicks Net Sales 1.938 billion yen (+54% YoY) MRR 254 million yen (+38% YoY) EBITDA 324 million yen (+43% YoY) FORCAS / Other B2B Net sales 438 million yen (+33% YoY) MRR 107 million yen (+33% YoY) INITIAL 37 million yen (+38% YoY) EBITDA 12 million yen SPEEDA Net sales 1.596 billion yen (+20% YoY) MRR 4.85 billion yen (+15% YoY) / Churn rate 1.3 EBITDA ratio 34.3% (-5.5% YoY) Full year guideline Net sales: 15.6 billion yen (+13% YoY) Operating income: 1.38 billion yen (13.3 times YoY) Ordinary income: 1.24 billion yen (vs. 281 million yen loss in the previous year) Analyst forecast Net sales 15,594 million yen Operating income: 1,427 million yen Ordinary income: 1,290 million yen