Business risks

With respect to the matters described in the securities report, including those pertaining to the status of business and accounting, the Company recognizes the following factors as the main risks that may have a material impact on financial conditions, business performance and cash flows of the Group on a consolidated basis.
This description may contain forward-looking statements on future results and projections. These are based on information available to the Group as of June 30, 2024.

Financial risk Frequency or probability of occurrence Degree of impact Related opportunity and risk
(○ Opportunity, ● Risk)		 Key initiative
Dependence on specific services * 2 8
  • High dependence on specific services such as Yahoo! Shopping, which will cause impact in the case of suspension of the services, their poor performance, competition of their functions with the Company’s, etc.
  • Consider new businesses which will not depend on those services.
Business model 3 3
  • Differentiation from competitors by expanding original tracking technologies.
  • Difficulty calculating advertising effects due to the restrictions on cookie-based tracking.
  • Conduct surveys on trends in tracking regulations, browser vendors and the World Wide Web Consortium (an organization established to expand the standardization of various types of internet technologies).
  • Develop original tracking technologies and consider workaround measures.
Other associated company LY Corporation 1 8
  • Improvement of business results based on synergistic effects within the other associated company LY Corporation.
  • Arising of competitive relationship regarding business carried out by the Company’s group within the other associated company LY Corporation, or impact on business results accompanying termination of partnership due to change in management policy by the other associated company LY Corporation.
  • Damage to the interests of shareholders who are not major shareholders.
  • Regularly share information within the other associated company LY Corporation.
  • ・Have the reasonableness of trades between relevant parties discussed and considered by a special committee consisting of outside directors.
Group governance 1 8
  • Improvement of consolidated results through synergies with the Company’s group companies.
  • Degradation in the quality of management of the Group and negative effects on consolidated results due to the lack of governance on the part of the Company’s group companies.
  • Strengthen governance through weekly business reporting, monthly steering committee meetings and quarterly monitoring.
Business continuation/
Response to risks		 1 8
  • Difficulty continuing businesses due to the concentration of material resources (servers) and information systems in the event of large-scale natural disasters.
  • Facilitate the decentralization and multiplexing of data centers through the use of multiple cloud services.
  • Consider the possibility of deployment in other areas.
  • Clarify restoration measures to be taken in the case of failures.
Natural disaster 1 8
  • Impact on business performance due to suspension of services in the event of an emergency disaster.
  • Impact on business performance due to delays in post-disaster business recovery efforts.
  • Formulate a BCP with an awareness of remote work.
  • Periodic BCP training.
Management of personal information 1 8
  • Leakage of the personal information of users due to intentional attacks/errors of related parties of the Group or the contractor, attacks by a third party with malicious intent, or unforeseen situations.
  • Ensure compliance with operation rules for the maintenance and management of ISMS certification-based security levels.
  • Implement the full-scale security check process.
  • Continued education for employees.
Data governance 1 8
  • Increasing trust in data governance.
  • Loss of trust and customer churn due to problems in data acquisition methods and data management caused by poor data governance.
  • Development of operational rules for data governance and review of terms of agreement.
  • Educate employees on data governance.
Cyber security 1 8
  • Human errors in operations or intentional illegal acts, system failures due to natural disasters, cyberattacks including malware infections or targeted attacks, information leakage, data destruction or alteration, or service suspension due to the vulnerability of systems or products.
  • Establish an organization for system management and operate it continuously.
  • Implement backups periodically.
  • Check information on vulnerability and implement countermeasures.
  • Watch and prevent unauthorized external accesses through cyber attacks.
System failure 1 8
  • Disruption of sales data or overcharging due to calculation errors resulting from system malfunctions, specifications and operation errors.
  • Ensure that development processes are reviewed and tests are implemented.
  • Use data with high accuracy.
  • Conduct monitoring periodically.
Investment strategy 2 3
  • Expansion of business domains with M&A and new businesses.
  • Impact of delays in the recovery of the cost of investments and loans in M&A and new businesses, which may be caused by changes in the market or competitive environments, on consolidated results, growth, business expansion, etc.
  • Carefully study and consider synergies with the Group’s existing businesses, business plans, composition of finances, contractual relations, etc. in M&A and investment in new business.

*Although the financial risk of the” Dependence on specific services” have become apparent, in order to minimize the impact, the Company are taking measures such as continuous coordination with the target services and promotion of new businesses.

Frequency or probability of occurrence, and degree of impact

The criteria for selecting the levels of “frequency or probability of occurrence” and “degree of impact” are as follows.

Frequency or probability of occurrence

Level Criteria
1 (Low)
Occurrence around once every five years, or high probability of occurrence within the next five years
2 (Occasional)
Occurrence around once every one or two years, or high probability of occurrence within the next one or two years
3 (High)
Occurrence around once every six months, or high probability of occurrence within the next six months
4 (Frequent)
Occurrence around once every one or two months, or high probability of occurrence within the next one or two months

Degree of impact

Level Criteria
1 (Slight)
Risk to the effect of “there being some minor impact on business / the impact on business not being direct”
  • Impact on revenue
    Minor loss of around 1% regarding major management indicators such as net sales, or no direct impact
  • Impact on trustworthiness
    Very limited impact due to inquiries from customers and so on, or almost no impact, etc.
3 (Limited)
Risk to the effect of “there being a certain level of impact on business”
  • Impact on revenue
    Loss of around 5% to 10% regarding major management indicators such as net sales
  • Impact on trustworthiness
    Sustaining of certain degree of damage due to reporting of scandal or accident by some media outlets, limited impact from uproar caused by post of social media user or the like, leakage or loss of information that is not secret or confidential, minor suspension of services, etc.
8 (Significant)
Risk to the effect of “there being a major impact on business management over the long term / the continuation of major businesses being in danger”
  • Impact on revenue
    Loss of around 20% regarding major management indicators such as net sales
  • Impact on trustworthiness
    Sustaining of damage due to reporting and so on of scandal or accident by major media outlets, leakage or loss of information that is secret or confidential, major suspension of services, etc.
10 (Serious)
Risk to the effect of “the survival of business management being in danger”
  • Impact on revenue
    Massive loss of around 60% or more regarding major management indicators such as net sales
  • Impact on trustworthiness
    Sustaining of significant damage due to reporting and so on of scandal or accident by large number of major media outlets, large-scale leakage or loss of information that is secret or confidential, major suspension of services at level where recovery of such is difficult, etc.
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