BEENOS : Contents of the Question and Answer Section during the 2Q FY2024 Financial Results Briefing

This is a translation of the original Japanese release. The Japanese text shall prevail in case of any variance between this version and the Japanese text.

Contents of the Question and Answer Section during

the FY 2024 Q2 Financial Results Briefing

The following is a summary of the questions asked and the responses given during the financial results briefing held on Wednesday 8 May. Some portions have been edited and modified for clarification.

（Regarding Global Commerce）

Q1. The future plans include expanding collaborations with various partners in the reuse business. Does this imply forming partnerships with domestic reuse businesses and expanding internationally using Buyee?

Your understanding is correct. Buyee already partners with numerous domestic reuse businesses, and we aim to further enhance these collaborations. Additionally, we will focus on integrating these products into overseas platforms through our cross-bordere-commerce support services.

Q2. While Buyee's distribution continues to grow towards the United States, is there also an increase in Mercari's distribution?

Our collaboration with Mercari is progressing well, but it's important to note that our partnerships with other e-commerce sites and platforms are also expanding smoothly.

Q3. What would be the impact on BEENOS's performance if Mercari were to withdraw from its US operations?

Our current collaboration with Mercari involves selling products listed on Japan's Mercari to overseas markets, including the United States, and does not involve handling products from Mercari US. As such, a withdrawal from the US market by Mercari would not impact our operations.

Q4. You achieved a 5% operating profit margin relative to GMV in the Q2. Can you maintain this margin while continuing to grow the GMV at the current rate?

We have improved the profit margin quarter over quarter through more efficient campaigning, and concurrently, Buyee has achieved a year-over-year growth rate of 40% in GMV. We view this as a positive development where both profits and GMV are growing. We are committed to continuing our efforts to maximize GMV while enhancing profit margins.

Q5. Is there an expected decrease in GMV in the second half of the year compared to the first half due to demand changes, or are you taking a conservative approach?

The first half included high-activity periods like W11 and the year-end sales season, during which we were particularly aggressive in our campaigns to maximize GMV. For the second half, we are planning our budget with a greater focus on profit, including tighter control of campaign spending, to achieve 5% operating profit margin to GMV for the full year. This approach makes our view on GMV conservative, setting a baseline for management while we aim to maximize distribution and secure profits.

Q6. Do you expect continued improvement in profitability quarter-on-quarter after the Q3?

While our goal is to maintain a 5% operating profit margin relative to GMV and to maximize distribution, we are not specifically targeting significant improvements in profit margins.

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（Regarding New Businesses）

Q7. How much do you expect this year's business development investment costs to decrease compared to the last year?

Last year, our costs exceeded 1.1 billion yen. For this year, we anticipate a reduction to approximately 880 million yen, which would mean a decrease of over 200 million yen.

Q8. The Cross Border EC support business appears to have been slow to start. When do you expect it to become profitable?

Our Cross Border EC support business is constantly evolving as we try various approaches. A significant shift occurred due to changes in the business strategy of a major Chinese platform, which impacted our initial plans. We have since pivoted to new initiatives, such as handling Korean products and initiating merchandise collaborations with overseas platforms. Although we have not yet reached the initially expected figures, we see ongoing potential in these areas and aim for profitability in the coming fiscal years. We will continue to refine our strategies in Cross Border EC support and plan to provide an update on our plans for the next year at the end of this fiscal year.

（Regarding the Revised Forecast）

Q9. You mentioned that the decrease in operating profit is due to additional costs related to business transfers and increased expenses due to the extension of the construction period for the head office relocation. Can you specify how much these amount to?

We anticipate additional costs totaling about 100 million yen for the business transfer and extended construction period of the head office relocation. These costs have been factored into our revised forecasts. These are one-time costs, and as the relocation is scheduled for the next fiscal year, similar expenses are expected then as well. Please consider this in your projections for the next fiscal year.

Q10. Could you explain more about the application of the pro forma standard taxation? Does it have a positive impact on net profit?

The application of pro forma standard taxation involves changing the tax regime based on the level of operating profit. When operating profits exceed certain thresholds, applying this taxation method can potentially increase net profit, despite a possible slight decrease in operating profit due to increased administrative expenses and taxes. Our decision to apply pro forma standard taxation prioritizes maximizing net profit. We anticipate that this could result in an approximate net profit increase of 100 million yen. However, it is important to note that despite these considerations and the ongoing business transfers and operational developments, we have not revised our net profit forecast. We appreciate your understanding of this financial strategy.

（Other Questions）

Q11. The briefing material mention "M&As aimed at achieving mid-term targets." What sectors are you considering for M&A and what scale are you looking at?

As outlined in our results briefing materials, we are considering mergers and acquisitions in sectors related to Cross Border E-Commerce and Entertainment E-Commerce. Our aim is to expand our product offerings, enhance our logistics capabilities, and broaden our customer base. As part of our mid-term goal to achieve 5 billion yen in operating profit, we are targeting M&As that could contribute significantly to this objective, ideally achieving over 1 billion yen in operating profit from these activities.

Q12. There has been an increase in companies enhancing shareholder returns. Are there any changes to your policy on this?

Despite being a growth-oriented company, we have consistently engaged in share buybacks. Our policy remains unchanged; we will continue to consider buybacks when deemed appropriate by management. However, we must also balance these actions with the need to fund mid- to long-term growth initiatives,

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ensuring that we maintain a healthy financial strategy.

Q13. Activist investors, as they are called, have recently been filing large shareholding reports. What is your approach to communication with such shareholders?

Our approach to shareholder engagement remains consistent and inclusive. We actively engage in constructive discussions with all shareholders, including activists, with the involvement of directors such as Miura and Naoi. Our focus during these discussions centers on strategies for sustainable long-term growth. We value these interactions as they contribute to refining our business strategies and aligning with our long- term objectives. We are committed to continuing these dialogues to foster a collaborative approach that supports the company's long-term success.

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