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Review of full-year financial results

The year ended September 2021

Individual smartphone ownership in Japan rose to 69.3% in 2020, as the quantitative expansion continued centered on Generation Z and the millennial generation, with the exceptionally high popularization rate of more than 90% of those in their 20s through 30s now owning a smartphone. At the same time, the individual objectives for smartphone use are also diversifying with the increasing usage rate of SNS (social networking services), meaning we are also seeing a profound qualitative change in use (source: “Communications Usage Trend Survey in 2020,” Ministry of Internal Affairs and Communications). As such, with the smartphone becoming a mainstream device to access the Internet, in the market for various services and applications, expansion into content such as video, music, and e-books is accelerating. Additionally, social media is being used not only for communication, but is also expanding into fields such as payments and purchases. As its influence is growing even stronger, demand for marketing support utilizing the individual characteristics of different media as well as data and AI is also increasing further.

COVID-19 had a significant impact on the Japanese economy through its global spread in 2020, and this has temporarily affected the Group’s business results. On the other hand, the COVID-19 pandemic has also been a catalyst for bringing about a massive wave of digital transformation (DX) across all industries, and even in the advertising industry, we have seen further growth in demand for digital marketing.

Amid this business environment, our mainstay Digital Marketing Business enjoyed increased revenue and profit due to the expansion of existing projects and new customer acquisition against the backdrop of increasing demand for digital marketing from the online shift in overall consumption and from promoting alliance operations with the Dentsu Group. The Media Platform Business suffered expanded deficit due to partial up-front investment to expand into new business segments, despite increased revenue. To expand into new business segments, we utilized our capital to make progress in business development in the sports domain, sharing asset domain, entertainment domain, and HR technology domain.

As a result, revenue increased to ¥21,384 million (up 19.2% year on year), non-GAAP operating profit increased to ¥3,796 million (up 54.8% year on year), operating profit increased to ¥3,650 million (up 60.5% year on year), and profit attributable to owners of parent increased to ¥2,604 million (up 77.8% year on year).

Concerning year-end dividend for the business year under review, after taking into consideration the above-mentioned business performance and the Company’s basic policy on profit distribution, the Company passed a resolution at the Board of Directors meeting held on November 25, 2021 to pay a year-end dividend of ¥3.4 per share. Based on this decision, total dividends paid will be ¥436 million.

Overview of consolidated full-year financial results

(units:\million)

  FY2017 FY2018 FY2019 FY2020 FY2021
Revenue 14,702 15,272 16,796 17,938 21,384
Non-GAAP Operating profit 2,325 1,011 2,065 2,452 3,796
Operating profit 2,248 977 183 2,274 3,650
Profit attributable to owners of the parent 2,211 847 -547 1,464 2,607
【Reference】Net Sales 72,375 72,443 76,501 76,489 97,606

-For FY9/17, AXEL MARK INC. is excluded from the consolidated results.
Consolidated profits and losses for FY9/16 and before, with which comparisons are made, are corrected
retroactively and presented after being reclassified as those of discontinued businesses.

The trend of consolidated full-year financial results

Revenue
Non-GAAP Operating profit
Operating profit
Profit attributable to owners of the parent

Financial results by segment

(units:\million)

    FY2017※ FY2018※ FY2019※ FY2020※ FY2021※
Revenue
Digital Marketing Business 13,833 14,234 15,079 15,807 18,869
Media Platform Business 1,163 1,324 2,005 2,487 2,885
Adjustment -294 -286 -289 -356 -370
  14,702 15,272 16,796 17,938 21,384
Non-GAAP Operating profit
Digital Marketing Business 5,468 4,026 4,775 5,248 6,991
Media Platform Business -1,324 -1,051 -901 -956 -1,110
Adjustment -1,820 -1,964 -1,809 -1,840 -2,085
  2,325 1,011 2,065 2,452 3,796
【Reference】Net Sales
Digital Marketing Business 72,549 72,177 75,311 74,728 95,605
Media Platform Business 1,163 1,324 2,005 2,487 2,885
Adjustment -1,336 -1,058 -815 -726 -884
  72,375 72,443 76,501 76,489 97,606
Revenue
Non-GAAP Operating profit

※Further, we have changed our policy and decided not to allocate corporate expenses that had been allocated to each segment, effective from FY9/18 onward. As a result of the change, Non-GAAP operating profits by segment for FY2017 have been revised retroactively based on the understanding that corporate expenses are not allocated. Though earning results before FY2016 have not been revised retroactively, these are recorded for your information.

Review of Digital Marketing Business in Fiscal Year Ended September 2021

Against the backdrop of increasing demand for digital marketing from the online shift in overall consumption, we expanded existing projects and acquired new projects while making progress in alliance operations with the Dentsu Group. Furthermore, we improved our profit and loss in the overseas Digital Marketing Business.

As a result, revenue is ¥18,869 million (up 19.4% year on year) and Non-GAAP operating profit is ¥6,991 million (up 33.2% year on year).

Revenue
Non-GAAP Operating profit
【Reference】Net Sales
Transaction of Domestic Brand Ad
Volume of clients in collaboration with Dentsu

Review of Media Platform Business in Fiscal Year Ended September 2021

Although revenue increased compared to the previous fiscal year, the deficit expanded due to partial up-front investment to expand new business segments.

As a result, revenue is ¥2,885 million (up 16.0% year on year) and Non-GAAP operating loss is ¥1,110 million (¥956 million last year).

Revenue
Non-GAAP Operating profit