November 10, 2015 F@N Communications, Inc.Third Quarter of 2015: Key Points 4 Net sales of ¥9,501...

Third Quarter of 2015

Presentation of Results

November 10, 2015

F@N Communications, Inc.

Contents

Third Quarter of 2015 Performance Highlights …………………. 3

Management Indicators (Quarterly Basis) ……………….....….... 9

Overview by Main Service Area ……………….....……………… 20

Non-consolidated Businesses

・CPA Ad Network Business

・CPC/Targeting Ad Network Business

Consolidated Group Businesses….....….....….....….....….....…. 42

Stock Information….....….....….....….....….....…….....….....…… 46

Reference Materials on Former Service Areas….....….....…..... 48

Reference Materials….....….....….....….....….....…….....…........ 51

2

Third Quarter of 2015

Performance Highlights

3

Third Quarter of 2015: Key Points

4

■Net sales of ¥9,501 million and ordinary income

of ¥1,649 million were both new quarterly

records.

■As in the second quarter, these record results

were driven by the strong performance of A8.net.

■nend posted slightly higher results compared

with the previous quarter, and continued to

make structural changes.

Performance Highlights (Consolidated) Results of Operations

(¥ thousands) 2015 Q3 2014 Q3

Year-on-Year

Change

% of Net

Sales

Net sales 26,843,817 23,277,417 15.3% 100%

Operating income 4,669,096 4,303,952 8.5% 17.4%

Ordinary income 4,711,673 4,351,929 8.3% 17.6%

Net income 2,989,788 2,678,076 11.6% 11.1%

Ordinary income

margin 17.6% 18.7% -1.1 points -

Net income per

share ¥38.57 ¥34.82 10.8% -

Diluted net income

per share ¥38.37 ¥34.32 11.8% -

5

Performance Highlights (Non-consolidated) Results of Operations

(¥ thousands) 2015 Q3 2014 Q3

Year-on-Year

Change

% of Net

Sales

Net sales 25,232,074 21,990,610 14.7% 100%

Operating

income 4,488,157 4,180,391 7.4% 17.8%

Ordinary

income 4,545,723 4,243,497 7.1% 18.0%

Net income 2,888,497 2,600,029 11.1% 11.4%

Ordinary

income margin 18.0% 19.3% -1.3 points -

6

Consolidated Financial Statements

Balance Sheets

(¥ thousands) December 31, 2014 Third Quarter of 2015

Assets

Current assets 15,911,394 17,225,077

Cash and deposits 9,426,329 11,010,096

Notes and accounts receivable - trade 4,435,298 4,417,014

Securities 1,702,824 1,506,025

Other 367,594 306,784

Allowance for doubtful accounts (20,653) (14,843)

Fixed assets 2,443,533 2,381,556

Property and equipment 172,166 312,648

Intangible assets 211,099 259,717

Investments and other assets 2,060,267 1,809,190

Total assets 18,354,927 19,606,633

Liabilities and Net Assets

Current liabilities 6,298,662 5,684,866

Notes and accounts payable - trade 3,674,452 4,281,945

Income taxes payable 1,577,198 593,039

Other current liabilities 1,047,011 809,880

Long-term liabilities 153,941 138,240

Total liabilities 6,452,604 5,823,106

Total net assets 11,902,323 13,783,527

Total liabilities and net assets 18,354,927 19,606,633

Main component was

¥1,499,409 thousand in

investment securities.

Main component was long-term

guarantee deposits.

Main factors were dividend

payments of ¥1,160,677 thousand

and net income of ¥2,989,788

thousand.

¥140,481 thousand increase with

expansion of nend servers, etc.

7

Affiliate program payments

increased ¥607,492 thousand,

mainly reflecting growth in sales

of A8.net.

Consolidated Performance Forecast

(¥ millions)

2015

Full-Year

Forecast (% Change from

Same Period of Previous Year)

2015

Third Quarter

Actual

Ratio to

Full-Year

Forecast

Net sales 36,500 (14.1) 26,843 73.5%

Operating

income 6,500 (10.4) 4,669 71.8%

Ordinary

income 6,570 (10.4) 4,711 71.7%

Net income 4,220 (16.2) 2,989 70.8%

8

Note: Figures in the full-year forecast are after the revision on July 31.

2015

Forecast

2014

Actual

Year-end

dividend

per share ¥17 ¥15

Dividend Forecast

Management Indicators

(Quarterly Basis)

9

Management Indicators (Non-consolidated/Quarterly basis)

Net Sales, Ordinary Income and Ordinary Income Margin

2,185 2,411 2,486 2,631 2,613 2,630

2,842

3,279

3,726 3,930

4,342

5,038

5,935 6,195

6,950 7,486 7,553 7,998

7,674

8,523

9,034

362 428 445 478 473 459 478 553 693 712 808 932 1,163 1,176 1,292

1,482 1,468 1,407 1,386 1,537 1,622

16.6%

17.7% 17.9% 18.2% 18.1% 17.5%

16.8% 16.9%

18.6% 18.1%

18.6% 18.5%

19.6% 19.0% 18.6%

19.8% 19.4%

17.6%

18.1%

18.0% 18.0%

-3.0%

2.0%

7.0%

12.0%

17.0%

22.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Total net sales Ordinary income Ordinary income margin

(¥ millions)

10

Net sales and ordinary income were both record highs.

Management Indicators (Consolidated/Quarterly basis)

Net Sales, Ordinary Income and Ordinary Income Margin

2,185 2,411 2,486 2,631 2,711 2,763

2,988

3,403

3,906 4,183

4,624

5,331

6,238 6,527

7,311

7,937 8,028

8,713

8,271

9,070

9,501

362 428 445 478 451 414 435 509 661 699 791 924 1,189 1,219 1,299

1,528 1,523 1,596 1,463 1,598 1,649

16.6%

17.7% 17.9% 18.2%

16.7%

15.0% 14.6%

15.0%

16.9% 16.7% 17.1% 17.3%

19.1% 18.7%

17.8%

19.3%

19.0%

18.3%

17.7% 17.6%

17.4%

-3.0%

2.0%

7.0%

12.0%

17.0%

22.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Total net sales Ordinary income Ordinary income margin

Note: Data are non-consolidated to 2011 Q2 and consolidated from 2011 Q3.

(¥ millions)

11

Net sales and ordinary income were both record highs.


Number of Employees

147 143 136 137 138 145 150 158 166 166 172 178 188 195 203 218 224 226 233

248 245

37 41 40 36

46 41 34 28 24 22

22 21 22

28 30

25 30 32

33 26 30

10 7 6 4

5 9 7 9 6 12 14 15

18 17

17 19

23 26 25

31 29

0

50

100

150

200

250

300

350

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Temp staff Part-time Employees

12

The total number of employees on a non-consolidated basis was 304, a decrease of one from the previous quarter.


Number of Employees

147 143 136 137 168 174 182

203 211 212 222 229 236 239 252

267 271 270 281 295 291

37 41 40 36

51 46 40

33 27 25 22

23 24

32 33

28 33 36

38 34 41

10 7 6 4

5 9 8 11 8 16

18 19

20 19

17 20

24 29 27

31 29

0

50

100

150

200

250

300

350

400

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Temp staff Part-time Employees


13

The total number of employees in the Group was 361, an increase of 33 from the same period of the previous year.


Cost of Sales Ratio and SG&A Expenses Ratio

18.6 16.9 16.1 15.9 16.3 16.1 16.2 15.6 14.5 14.4 14.5 13.2 12.9 13.5 13.5 13.0 13.7 14.4

12.9 12.6 11.8

65.6 66.2 66.7 66.5 66.3 67.2 67.5 68.0 67.4 67.9 67.3 68.8 67.8 67.4 68.3 67.4 67.2 66.8

69.3 69.7 70.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Ratio of SG&A expenses to net sales Ratio of cost of sales to net sales

14

The cost of sales ratio increased 0.7 percentage points, but the selling, general and administrative (SG&A) expenses ratio decreased 0.8

percentage points.


Cost of Sales Ratio and SG&A Expenses Ratio

18.6 16.9 16.1 15.9 16.8 17.1 17.4 16.7 16.4 16.5 16.2

14.8 14.1 14.1 14.0 13.3 13.7 14.4 12.9 12.6 11.8

65.6 66.2 66.7 66.5 67.2 68.6 68.4 68.8

67.1 68.0 67.0 68.3 67.1 67.1 68.4 67.6 67.5 67.4 69.6 70.0 70.9

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Ratio of SG&A expenses to net sales Ratio of cost of sales to net sales


15

The cost of sales ratio increased 0.9 percentage points, but the selling, general and administrative (SG&A) expenses ratio decreased 0.8

percentage points.


Selling, General and Administrative Expenses

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Personnel expenses 230,629 246,968 229,500 240,786 246,362 243,723 241,463 251,135 253,151 264,027 255,549 280,387 287,559 309,138 309,286 334,606 354,545 388,948 317,848 359,874 362,987

Sales commissions 42,582 42,722 41,042 54,680 64,423 65,687 79,408 113,224 147,152 160,509 222,603 240,084 333,210 391,266 445,660 490,345 516,937 591,742 504,594 530,831 541,407

Advertising expenses 29,787 20,387 22,288 22,392 18,115 16,694 23,782 42,178 35,864 32,612 35,855 25,335 16,578 15,677 9,670 9,480 14,382 10,895 12,215 23,270 25,701

Other expenses 74,864 69,652 78,999 71,645 68,205 68,537 81,770 71,175 70,593 78,475 83,419 80,092 87,529 80,018 130,499 102,266 105,894 118,191 113,533 113,859 90,027

Rent 27,811 28,312 28,571 28,328 27,910 27,650 34,178 32,495 32,104 31,825 32,581 38,762 39,911 39,911 39,969 39,925 39,873 39,900 39,730 44,991 45,284

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000Rent Other expenses Advertising expenses Sales commissions Personnel expenses

(¥ thousands)

16

405,675

18.5%

10.5% 7.3%

6.9%

56.9%

408,045

17.1%

10.5% 5.0%

6.9%

60.5% 57.3%

7.1%

5.6% 10.3%

19.7%

400,403

417,834

17.1%

13.1% 5.4%

6.8%

57.6%

425,018

16.0%

15.2%

4.3%

6.6%

58.0%

422,291

16.2%

15.6% 4.0%

6.5%

57.7%

460,604

17.8%

17.2%

5.2%

7.4%

52.4%

510,209

14.0%

22.2%

6.4%

8.3%

49.2%

538,866

13.1%

27.3%

6.7%

6.0%

47.0%

567,450

46.5%

5.6%

5.7%

28.3%

13.8%

630,010

13.2%

35.3%

5.7%

5.2%

40.6%

664,663

12.1%

36.1%

3.8%

5.8%

42.2%

37.6%

43.6%

11.4% 5.2%

2.2%

764,789 836,013

37.0%

46.8%

1.9% 9.6%

4.8%

935,086

33.1%

1.0%

47.7%

14.0%

4.3%

976,624

34.3%

50.2%

1.0%

10.5%

4.1%

1,031,633

34.4%

50.1%

1.4%

10.3%

3.9%

1,149,679

33.8%

51.5%

0.9%

10.3%

3.5%

987,923

32.2%

51.1%

1.2%

11.5%

4.0%

1,072,829

33.5%

49.5%

2.2%

10.6%

4.2%

1,065,409

50.8%

34.1%

2.4%

8.4% 4.3%

There were no significant changes from the previous quarter.


Selling, General and Administrative Expenses

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3


Sales commissions 42,582 42,722 41,042 54,680 64,424 66,238 83,443 117,196 156,051 183,991 237,408 247,729 333,271 384,525 447,747 487,438 517,151 604,200 501,190 525,038 536,587

Advertising expenses 29,787 20,387 22,288 22,392 20,591 22,781 28,539 44,726 38,474 38,641 44,671 31,814 22,529 18,278 11,619 11,951 10,153 15,747 10,014 9,566 10,081

Other expenses 74,864 69,652 78,999 71,645 75,606 78,327 96,715 82,651 98,619 110,017 116,034 118,601 134,369 110,721 156,606 124,238 127,878 149,550 137,310 139,960 112,995

Rent 27,811 28,312 28,571 28,328 29,909 31,126 37,624 37,072 37,904 37,735 38,902 45,712 45,711 46,846 46,971 46,249 45,578 51,937 53,141 57,551 56,626

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000Rent Other expenses Advertising expenses Sales commissions Personnel expenses


(¥ thousands)

17

405,675

18.5%

10.5% 7.3%

6.9%

56.9%

408,045

17.1%

10.5% 5.0%

6.9%

60.5% 57.3%

7.1%

5.6% 10.3%

19.7%

400,403

417,834

17.1%

13.1% 5.4%

6.8%

57.6%

454,830

16.6%

14.2% 4.5%

6.6%

58.1%

471,074

16.6%

14.1% 4.8%

6.6%

57.9%

521,421

18.5%

16.0%

5.5%

7.2%

52.8%

566,996

14.6%

20.7%

7.9%

6.5%

50.3%

639,636

15.4%

24.4%

6.0%

5.9%

48.2%

692,112

15.9%

26.6%

5.6%

5.4%

46.5%

748,492

15.5%

31.7%

6.0%

5.2%

41.6%

787,686

15.1%

31.5%

4.0%

5.8%

43.7%

39.1%

879,243

37.9%

15.3%

2.6%

5.2%

922,225

39.2%

41.7%

2.0%

12.0%

5.1%

1,024,033

35.3%

43.7%

1.1%

15.3%

4.6%

1,058,076

36.7%

46.1%

1.1%

11.7%

4.4%

1,102,053

36.4%

46.9%

0.9%

11.6%

4.1%

1,258,002

34.7%

48.0%

1.3%

11.9%

4.1%

1,069,825

34.4%

46.8%

0.9%

12.8%

5.0%

1,141,458

35.9%

46.0%

0.8%

12.3%

5.0%

1,123,725

36.3%

47.8%

0.9%

10.1%

5.0%

There were no significant changes from the previous quarter.


Cost of Sales

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Transfer to other account 0 0 (3,202) (3,182) 0 (7,950) (6,405) (2,989) (6,717) (2,884) (2,420) 90 (5,228) (7,357) (10,313) (11,503) (5,690) (10,425) (21,052) (15,758) (24,282)

Overhead 17,457 24,082 19,521 20,082 17,921 18,738 19,140 21,926 26,937 29,994 35,938 41,925 54,258 81,231 122,691 127,933 113,944 136,372 166,080 150,707 218,546


Media expenses (incl. nend) 89,724 111,864 126,758 168,522 188,689 246,269 292,359 530,913 672,334 750,989 965,278 1,048,940 1,444,647 1,739,686 1,915,527 2,053,194 2,286,079 2,607,739 2,261,560 2,344,665 2,478,871

Moba8.net affiliated programs 408,663 398,215 397,431 394,566 350,547 321,155 337,862 318,329 334,663 322,894 323,690 452,249 523,567 432,744 501,358 554,618 479,584 416,629 392,986 427,852 368,231

A8.net affiliated programs 889,207 1,030,937 1,094,976 1,148,472 1,154,388 1,163,126 1,249,854 1,336,367 1,458,711 1,536,643 1,560,078 1,879,024 1,961,798 1,874,617 2,166,441 2,262,882 2,142,382 2,120,100 2,430,460 2,926,289 3,210,297

(1,000,000)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000A8.net affiliated programs Moba8.net affiliated programs Media expenses (incl. nend) Personnel expenses Overhead Transfer to other account

4,747,569 5,045,615

5,073,688 5,339,232

5,320,781

5,937,750

6,359,222 (¥ thousands)

Note: Media expenses include expenses for other companies’ media, nend and nex8.

Moba8.net

affiliated

programs

A8.net

affiliated

programs

Media

expenses

(incl. nend)

18

28.5%

62.0% 64.6%

25.0%

65.4%

23.7% 22.5%

65.6%

19.2%

63.3%

19.2%

61.3% 65.2%

17.6%

1,433,798

1,595,436

1,659,364

1,750,663

1,731,105 1,766,211

7.6% 9.6% 10.9% 13.9% 15.2%

23.8%

14.3%

59.9%

2,510,381

26.8%

13.3%

58.1%

2,669,573

27.7%

57.0%

12.0%

1,917,579

2,230,951

2,921,476

33.0%

11.1%

53.4%

3,464,827

30.3%

13.1%

54.2%

4,026,080

35.9%

13.0%

48.7%

4,175,503

41.7%

10.4%

44.9% 45.6%

10.6%

40.3% 40.7%

11.0%

44.8%

45.1%

42.2%

9.5%

39.7%

48.8%

7.8%

42.5%

7.4%

45.7% 49.3%

7.2%

39.5% 39.0%

5.8%

50.5%

The percentage of affiliate program payments to media was higher due to the increase in sales of A8.net.


Cost of Sales

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Transfer to other account 0 0 (3,202) (3,182) (3,766) (9,149) (7,039) (4,610) (6,963) (2,884) (2,420) 90 (5,228) (15,286) (10,313) (16,030) (11,882) (15,778) (27,600) (19,591) (24,282)

Overhead 17,457 24,082 19,521 20,082 65,157 61,870 49,158 49,782 50,387 47,797 50,086 53,697 66,541 95,241 136,481 140,800 128,387 152,976 183,567 170,335 237,116


Media expenses (incl. nend) 89,724 111,864 126,758 168,522 236,591 313,974 372,491 594,770 750,680 864,672 1,122,067 1,204,996 1,659,546 1,960,683 2,147,395 2,345,331 2,614,524 3,129,333 2,682,124 2,741,405 2,828,754

Moba8.net affiliated programs 408,663 398,215 397,431 394,566 349,994 320,232 337,235 317,307 331,691 323,522 322,583 453,356 437,186 404,245 501,055 554,355 478,888 415,362 392,287 427,125 367,442

A8.net affiliated programs 889,207 1,030,937 1,094,976 1,148,472 1,152,897 1,160,836 1,247,620 1,333,834 1,454,190 1,528,774 1,550,862 1,870,940 1,965,527 1,867,407 2,160,132 2,260,948 2,133,520 2,096,742 2,410,493 2,902,774 3,195,522

(1,000,000)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000A8.net affiliated programs Moba8.net affiliated programs Media expenses (incl. nend) Personnel expenses Overhead Transfer to other account

Notes: 1. Data are non-consolidated to 2011 Q2 and consolidated from 2011 Q3.

2. Media expenses include expenses for other companies’ media, nend, nex8, 8crops and adjapon.

(¥ thousands)

Moba8.net

affiliated

programs

A8.net

affiliated

programs

Media

expenses

(incl. nend)

19

28.5%

62.0% 64.6%

25.0%

65.4%

23.7% 22.5%

65.6%

19.2%

63.3%

16.9%

61.3% 61.0%

16.5%

1,433,798 1,595,436

1,659,364

1,750,663

1,820,568

1,894,155

7.6% 9.6% 13.0% 16.6% 18.2%

2,340,762

25.4%

13.6%

57.0%

2,620,747

55.5%

12.7%

28.6%

2,809,710

54.4%

11.5%

30.8%

2,045,229

3,100,115

50.0%

10.4%

36.2%

3,639,620

33.1%

12.5%

51.4%

4,185,324

39.7%

10.4%

47.0%

4,382,690

44.7%

9.2%

42.6%

5,002,440

42.9%

10.0%

43.2%

5,363,462

43.7%

10.3%

42.2%

5,423,399

48.2%

8.9%

39.3%

5,869,269

35.7%

7.1%

53.3%

5,753,806

46.6%

6.8%

41.9%

6,350,794

45.7%

6.7%

37.8%

6,735,111

42.0%

5.5%

47.4%

Overhead increased more than ¥60 million from the previous quarter. The increase was due to the transfer of certain depreciation expenses

that increased in significance from SG&A expenses to production costs, as well as an increase in nend data center usage fees.

Overview by Main Service Area

Non-consolidated Businesses

20

Net Sales by Reportable Segment

(Non-consolidated/Quarterly basis)

(¥ thousands) 2015 Q3

(July – September)

2014 Q3

(July – September) Change

CPA Ad Network

Business 4,971,972 3,792,644 31.1%

CPC/Targeting Ad

Network Business 3,974,879 3,669,348 8.3%

Others 87,538 91,377 -4.2%

Total net sales 9,034,391 7,553,371 19.6%

CPA Ad Network Business

55.0%

CPC/ Targeting

Ad Network Business

44.0%

Others 1.0%

21

Main services of CPA Ad Network Business: A8.net, Moba8.net, adcrops (adcrops is

consolidated)

Main services of CPC/Targeting Ad Network Business: nend, nex8

Main services of Others: Own media operations, advertising agency (own media

operations is consolidated), others

CPA sales grew more than 30%, but CPC/Targeting sales were weaker, with only a single-digit increase.

Net Sales by Reportable Segment


2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Others 89,484 96,468 93,138 144,786 117,870 127,346 112,660 169,153 164,559 165,140 92,956 127,849 122,862 104,114 71,681 89,287 91,377 80,463 81,074 98,673 87,538

CPC/TargetingAd Network Business

75,220 94,865 121,435 152,516 214,029 262,051 349,740 622,119 888,207 989,998 1,456,746 1,560,021 2,213,025 2,666,761 3,064,937 3,366,592 3,669,348 4,248,947 3,564,609 3,736,871 3,974,879

CPA Ad NetworkBusiness

2,020,585 2,219,830 2,271,582 2,333,769 2,280,644 2,240,661 2,379,953 2,487,907 2,673,301 2,775,629 2,792,570 3,350,975 3,599,183 3,424,497 3,814,324 4,030,415 3,792,644 3,668,624 4,028,801 4,687,647 4,971,972

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000CPA Ad NetworkBusiness

CPC/TargetingAd Network Business

Others

(¥ thousands)

22

2,185,290

2,411,165

2,486,156

2,631,072

2,612,544

2,630,060

92.5% 92.1% 91.4% 88.7% 87.3% 85.2%

3.4% 3.9% 4.9% 5.8% 8.2% 10.0%

3,279,176

83.7%

12.3%

19.0%

75.9%

2,842,354 3,726,068

23.8%

71.7%

3,930,767

70.6%

25.2%

64.3%

4,342,273

33.5%

5,038,846

31.0%

66.5%

5,935,071

60.6%

37.3%

6,195,373

43.0%

55.3%

6,950,944

44.1%

54.9%

7,486,295

45.0%

53.8%

7,553,371

48.6%

50.2%

7,998,035

53.1%

45.9%

7,674,491

46.4%

52.5%

8,523,192

55.0%

43.8%

9,034,391

44.0%

55.0%

There was little change from the previous quarter in the share of net sales by segment.

CPA Ad Network Business (Non-consolidated)

A8.net

Summary

2015 Q3


2014 Q3


Sales (¥ thousands) 4,477,676 3,146,091 42.3%

Number of operating

advertiser IDs 2,817 2,670 5.5%

Number of registered

partner sites 1,933,682 1,733,886 11.5%

23

The number of operating advertiser IDs increased by 147 from the same period of the previous year.


A8.net

Net Sales (Quarterly basis)

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

A8.net 1,436,429 1,641,714 1,705,769 1,773,484 1,783,041 1,778,460 1,894,620 2,025,098 2,197,465 2,322,848 2,339,940 2,745,582 2,902,077 2,835,422 3,148,168 3,301,007 3,146,091 3,125,125 3,503,249 4,115,450 4,477,676

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

(¥ thousands)

24

Sales were strong and set a new record.


A8.net

Ratio of Smartphones in Affiliated Programs (Monthly basis)

22.0% 24.0% 24.9%

27.7% 27.6% 28.9% 27.4% 28.6% 26.4%

29.2% 29.6% 30.1% 34.1%

36.5% 36.2% 36.7% 36.4% 36.0% 35.1% 35.5% 36.4% 40.9% 42.1% 42.8%

47.5% 50.5% 50.4%

48.3% 46.9% 45.9%

78.0% 76.0% 75.1%

72.3% 72.4% 71.1% 72.6% 71.4% 73.6%

70.8% 70.4% 69.9% 65.9%

63.5% 63.8% 63.3% 63.6% 64.0% 64.9% 64.5% 63.6% 59.1% 57.9% 57.2%

52.5% 49.5% 49.6%

51.7% 53.1% 54.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Ratio of affiliated programs using smartphones Ratio of affiliated programs using PCs

25

The ratio of affiliated programs using smartphones hasn’t grown as much as expected since passing 50%.

Note: The above affiliated program ratios are not final and are subject to change.


A8.net

Number of Operating Advertisers and Affiliate Sites (Quarterly basis)

2,301 2,364

2,296

2,161 2,145 2,195 2,192

2,239 2,262 2,310 2,306 2,322

2,399 2,469 2,502

2,594 2,670 2,739 2,718 2,757

2,817

971,978 1,009,775

1,049,691 1,089,921

1,126,018 1,165,584

1,213,751 1,257,833

1,300,197 1,343,387

1,401,024 1,457,994

1,509,483 1,559,613

1,621,513

1,677,815 1,733,886

1,790,719 1,842,805

1,892,566 1,933,682

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

500

1,000

1,500

2,000

2,500

3,000

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Operating advertiser IDs

Affiliate sites

Notes: 1. The number of operating advertisers is as of the final month of each quarter.

2. The number of overseas advertisers is included from 2014 Q3.

26

The number of operating advertisers increased by 60 from the previous quarter. The number of overseas operating advertisers

was 92.


A8.net

New Advertiser Start-ups and Cancellations

293 306

204 177

211 210 171

212 188

244

177 200 221 246

216 250 269 261

220 229 227

(313) (300) (282)

(372) (370)

(156) (169) (180) (163) (189) (194) (189)

(148) (174) (177) (159)

(184) (190) (237)

(189) (166)

49 57

10 60

143

(4) (5)

15

(2) (7)

13 6

4

(2) (6)

1

(9) (2)

(4)

(1) (1)

(400)

(300)

(200)

(100)

0

100

200

300

400

500

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

New start-ups Cancellations Change in inactive

Note: “Change in inactive” is the difference in number of customers who switched between “operating” and “inactive,” adjusted for the number of customers who

switched from “inactive” to “cancelled” included in the number of cancellations.

27

There were 166 cancellations, the fewest of any quarter this year.


A8.net

Average Monthly New Affiliate Site (AS) Registrations and Withdrawals

5,516

6,021

6,560 6,426

5,847 5,663

7,683

6,984 6,836 7,117

9,144

8,397

7,648 7,716

8,827 8,755 8,664 8,701 8,828

9,277 9,504

1,393 1,350 1,222 1,383 1,395 1,366 1,428 1,258 1,359 1,275 1,352 1,306

1,571 1,538 1,665 1,765 1,774 1,846 1,833 1,798 1,662

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

New AS registrations (monthly average)

Withdrawals (monthly average)

28

New AS registrations are trending gradually upward.


A8.net

Average Monthly Sales per Advertiser

208

231

248

274 277

270

288

301

324

335

338 394

403

383

419 424

393 380

430

498

530

0

100

200

300

400

500

600

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

(¥ thousands)

29

Set new record due to increase in the amount of affiliate program payments.


Moba8.net

Summary

2015 Q3


2014 Q3


Sales (¥ thousands) 493,619 645,614 -23.5%

Number of operating

advertiser IDs 1,180 1,089 8.4%


partner sites 258,365 243,062 6.3%

30

Significant 23.5% decrease from the same period of the previous year.


Moba8.net


2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

584,155 578,116 565,812 560,285 497,602 462,201 480,755 451,508 465,054 443,706 439,771 595,193 690,839 584,582 662,699 727,904 645,614 542,789 524,828 571,525 493,619

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

(¥ thousands)

31

Conditions remain challenging, but we think sales hit bottom in Q3.


Moba8.net

Number of Operating Advertisers and Affiliate Sites (Quarterly basis)

1,040 1,035 1,029

1,074 1,070 1,084

1,113

1,087 1,076 1,075

997

978 955 962

983

1,046

1,089

1,148 1,147

1,199

1,180

128,296

138,525

149,489

162,238 170,368

177,422 184,962

192,180 198,766

204,638 210,430

215,764

219,503

223,724

228,646

234,420

243,062 248,894

253,214

256,752 258,365

0

50,000

100,000

150,000

200,000

250,000

300,000

500

600

700

800

900

1,000

1,100

1,200

1,300

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Operating advertiser IDs Affiliate sites

Note: The number of operating advertisers is as of the final month of each quarter.

32

The number of operating advertisers decreased from the previous quarter.


Moba8.net

New Advertiser Start-ups and Cancellations (Quarterly basis)

164 174

118 139 134 136 143

108 102 108

70

105 86

102 107

151

121 144 134 137

116

(162) (179)

(124)

(94)

(138) (122) (114)

(134) (113) (109)

(148) (124)

(109) (95) (86) (88) (78) (85)

(135)

(85)

(135)

(200)

(150)

(100)

(50)

0

50

100

150

200

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

New start-ups Cancellations Change in inactive

33

There were many cancellations but relatively few start-ups.


Moba8.net

Average Monthly New Affiliate Site (AS) Registrations and Withdrawals

2,380 2,489

2,154 2,055

1,666

1,862

1,695

1,421

1,287

1,063

1,293

1,609

1,224

1,463 1,441

1,663

2,223

1,743

1,525

1,697

1,881

464 474 454 448 391 413

359 293

217 225 234 260 244 302

219 252

399 300 280

631

285

0

500

1,000

1,500

2,000

2,500

3,000

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

New AS registrations (monthly average) Withdrawals (monthly average)

34

The trend has not changed significantly.


Moba8.net


187 186 183 174

155

142 144 138

144 138

147

203

241

202

225 232

198

158 153

159

139

0

50

100

150

200

250

300

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

(¥ thousands)

35

The downward trend continued.


(8crops non-consolidated)


2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

4,697 36,285 42,289 70,401 119,580 138,023 166,017 186,837 235,978 270,506 381,200 424,949 700,184 545,952 494,204 426,840

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Notes: 1. The above figures are non-consolidated net sales of 8crops Inc. before elimination of consolidated intercompany transactions.

2. Sales of 8crops are recorded in “CPA Ad Network Business” in the consolidated sales of F@N Communications.

(¥ thousands)

36

Sales declined for the third straight quarter, and were near the level of Q3 in 2014.

CPC/Targeting Ad Network Business (Non-consolidated)

nend

Summary

2015 Q3


2014 Q3


Sales (¥ thousands) 3,645,248 3,624,961 0.6%

Number of operating

advertiser IDs 492 496 -0.8%


partner sites 449,554 240,144 87.2%

Note: Figures are those of nend only, and do not include other services.

37

Sales narrowly surpassed the level of the same period in 2014.


nend


2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

6,004 17,965 27,290 45,306 105,803 170,580 281,799 579,455 886,530 988,381 1,455,345 1,558,998 2,210,630 2,660,251 3,064,771 3,357,697 3,624,961 4,100,964 3,380,960 3,435,215 3,645,248

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

(¥ thousands)

38

Sales increased slightly compared with the previous quarter.


nend

Number of Operating Advertisers and Media (Quarterly basis)

85

114

144 150

208

265

308 332

421

472

492

464

496

475 475 484

492

2,157 4,011 7,376 14,039 20,709

29,020 40,513

65,754

92,123

122,264

154,550

196,261

240,144 290,397

343,917

397,761

449,554

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0

100

200

300

400

500

600

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Operating advertisers Cumulative media

Notes: 1. The number of operating advertisers is as of the final month of each quarter.

2. The method of calculating the number of operating advertisers was changed as of this presentation. Therefore, figures are different

from those disclosed in the past.

39

The number of operating advertisers increased by eight from the previous quarter. We are trying to increase the number of

operating advertisers.


nend


415 499

652

1,288 1,421

1,243

1,575 1,565

1,750 1,879

2,076

2,412 2,436

2,878

2,373 2,366 2,470

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

(¥ thousands)

40

Sales per advertiser were roughly the same as in the previous quarter.


nex8


2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

3,030 35,044 141,082 183,641 301,652 329,628

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

(¥ thousands)

41

Sales are rising steadily despite a number of challenges.

Consolidated Group Businesses

42

8crops Inc.

(¥ thousands) 2015

First Three Quarters

2014

Full Year

Net sales 1,466,996 1,776,840

Operating

income 152,069 202,506

Net income 92,555 126,561

Note: The above figures are before elimination of consolidated intercompany transactions.

43

Established: August 1, 2011

(Wholly owned by F@N Communications)

Main Business

Operation of adcrops CPI* advertising

services for smartphone applications

* Cost Per Install

Established: March 1, 2012

(Wholly owned by F@N

Communications)

Main Business

Design and operation of an integrated

platform for global ad networks,

multilingual affiliate services and a

media localization business

Ad Japon Inc.


(¥ thousands) 2015


2014

Full Year

Net sales 657,560 827,207

Operating

income 44,293 52,435

Net income 28,610 39,592

44

Established: September 12, 2000

Name changed from REALUS INC.

and business transferred from

meetLabo, Inc. on April 1, 2014

(Wholly owned by F@N

Communications)

Main Business

Operation of net media

FAN MEDIA INC.


(¥ thousands) 2015


2014

Full Year

Net sales 250,173 346,105

Operating

income

(loss) (11,017) (53,222)

Net income

(loss) (13,450) (43,886)

45

Stock Information

46

Stock Information

Number of Individual Shareholders and Percentage of Shares Held by Foreign

Shareholders

47

3,373

4,911

4,269

9,627

11,242

16,510

3.83% 5.07%

12.46%

17.47% 20.13%

17.25%

28.65%

23.20%

12.55%

16.14%

20.66%

26.82%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

12/2012 6/2013 12/2013 6/2014 12/2014 6/2015

Total number of shareholders

Percentage of shares held by foreign shareholders

Percentage of shares held by individual shareholders

Reference Materials on Former Service Areas

48

Reference：Net Sales by Service Area (Former Service Areas)


(¥ thousands) 2015 Q3


2014 Q3


Affiliate ad services

for PCs 4,477,676 3,146,091 42.3%

Affiliate ad services

for mobile devices 4,469,176 4,315,902 3.6%

F@N media business 0 0 -

Media ad sales to

other companies 87,538 91,377 -4.2%

Other sales 0 0 -

Total net sales 9,034,391 7,553,371 19.6%

Affiliate ad services for

PCs 49.5%

Affiliate ad services for

mobile devices 49.5%

Media ad sales to

other companies

1.0%

49

Reference: Net Sales by Service (Former Service Areas)


2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

Other sales 6 0 0 0 0 0 0 0 0 0 660 6,810 1,050 1,880 1,140 0 0 0 0 5 0

Other companies’ media 43,565 55,540 50,599 79,829 57,201 89,433 91,418 169,153 164,559 164,773 92,296 121,039 121,812 102,234 71,681 89,287 91,377 80,463 81,080 98,667 87,538

F@N media 45,913 40,927 42,539 64,957 60,668 37,914 21,241 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Mobile affiliated(Moba8, adocavo, nend)

659,376 672,982 687,248 712,801 711,632 724,253 835,073 1,084,924 1,364,043 1,443,151 1,909,376 2,165,414 2,910,132 3,255,834 3,729,953 4,096,000 4,315,902 4,792,446 4,090,161 4,309,068 4,469,176

PC affiliated (A8.net) 1,436,429 1,641,714 1,705,769 1,773,484 1,783,041 1,778,460 1,894,620 2,025,098 2,197,465 2,322,848 2,339,940 2,745,582 2,902,077 2,835,422 3,148,168 3,301,007 3,146,091 3,125,125 3,503,249 4,115,450 4,477,676

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000PC affiliated (A8.net) Mobile affiliated

(Moba8, adocavo, nend)F@N media Other companies’ media Other sales

(¥ thousands)

50

2,185,290

2,411,165

2,486,156

2,631,072

2,612,544

2,630,060

65.7% 68.1% 68.6% 67.4% 68.2% 67.6%

30.2% 27.9% 27.6% 27.1% 27.2% 27.5%

3,279,176

66.7%

29.4%

33.1%

61.8%

2,842,354 3,726,068

36.6%

59.0%

3,930,767

59.１%

36.7%

53.9%

4,342,273

44.0%

5,038,846

43.0%

54.5%

5,935,071

48.9%

49.0%

6,195,373

52.1%

45.8%

6,950,944

53.7%

45.3%

7,486,295

54.7%

44.1%

7,553,371

57.1%

41.7%

7,998,035

59.9%

39.1%

7,674,491

53.3%

45.6%

8,523,192

48.3%

50.6%

9,034,391

49.5%

49.5%

Reference Materials

51

Management Vision

52

F@N seeks to become one of the largest affiliated program

network corporate groups on the globe.

We will implement our affiliate program advertising model among advertisers,

affiliate site application developers (media), and consumers in order to build ad

networks that result in the largest and most optimized win-win relationships.

Our model will provide sustainable benefits such as the optimization of marketing

costs for advertisers, the maximization of profit for affiliate site application

developers, and the reduction of consumption costs and enhanced quality of

service for consumers.

We will continue to expand our global presence by involving ourselves in the

production, sales and consumption cycles best suited to the Internet Era, and

create added value that contributes to society.

Company Overview

53

■ Company name

■ Securities code

■ Fiscal year-end

■ Established

■ Capital

■ President and

Representative Director

■ Number of employees

■ Headquarters

■ Phone

■ Fax


2461 (Tokyo Stock Exchange, First Section)

December

October 1, 1999

¥1,124.3 million (As of September 30, 2015)

Yasuyoshi Yanagisawa

Non-consolidated: 304

Group total: 361 （As of September 30, 2015; includes part-time and temp staff)

Aoyama Diamond Building

1-1-8, Shibuya, Shibuya-ku, Tokyo 150-0002, Japan

+81-3-5766-3530 (IR)

+81-3-5766-3782

Disclaimer

54

Forward-looking statements such as the performance forecasts, other predictions of future events and

strategies published in this document are based on the Company’s judgment within the scope of events

foreseeable under normal conditions using data that were reasonably available at the time of

preparation. However, there is a risk that actual results may differ from the Company’s published

performance forecasts due to reasons including special events or outcomes that are unforeseeable

under normal conditions. The Company works to proactively disclose information that it considers

important for investors. However, we strongly advise that you not rely solely on the performance

forecasts in this document in making decisions. The Company makes every effort to ensure the

accuracy of published content, but takes no responsibility for errors in the information or damage

caused by downloading the data. These materials may not be reproduced or retransmitted for any

purpose without the prior written consent of the Company.

Contact


Phone: +81-3-5766-3530

E-mail: [email protected]

November 10, 2015 F@N Communications, Inc.Third Quarter of 2015: Key Points 4 Net sales of ¥9,501...

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Transcript of November 10, 2015 F@N Communications, Inc.Third Quarter of 2015: Key Points 4 Net sales of ¥9,501...