Geechs : Consolidated Financial Results for 3Q FY2022

Disclaimer: This document is a translation of the original version in Japanese. In the case that there is any discrepancy between the original version and this document, the original Japanese version is assumed to be correct.

Consolidated Financial Results for the Third Quarter of

the Fiscal Year Ending March 31, 2022 [Japan GAAP]

			February 10, 2022
Company name	geechs inc.	Listing Market	TSE 1st Section
Stock code	7060	URL https://geechs.com
Representative	President & CEO	Naruhito Sonehara
Contact	Director CFO	Daisuke Sakuma	(TEL) [phone]

Scheduled date	of filing of quarterly report	:	February 10, 2022
Scheduled date	of commencement of dividend payment	:	-
Preparation of	supplementary explanatory materials	:	Yes
Results briefing to be held	:	None

(Figures are rounded down to the nearest million yen)

1. Consolidated Results for the Third Quarter (April 1, 2021 to December 31, 2021) of FY3/22

(1) Consolidated Results of Operation

(Percentages indicate year-on-year changes)

Net income

Net Sales

Operating income

Ordinary income

attributable to

owners of parent

Millions

%

Millions

%

Millions

%

Millions

%

of yen

of yen

of yen

of yen

3rd Quarter of Fiscal Year

4,015

107.7

861

121.9

862

135.5

533

141.5

Ending March 31, 2022

3rd Quarter of Fiscal Year

1,933

△29.2

388

△28.8

366

△33.1

221

△36.5

Ended March 31, 2021

(Note) Comprehensive income

3rd Quarter of Fiscal Year Ending March 31, 2022

533

(Millions of yen)

140.2%

3rd Quarter of Fiscal Year Ended March 31, 2021

221

(Millions of yen)

△36.1%

Net income

Diluted Earnings

per share

Per Share

Yen

Yen

3rd Quarter of Fiscal Year Ending March 31, 2022

50.91

50.10

3rd Quarter of Fiscal Year Ended March 31, 2021

21.18

20.81

(2) Consolidated Financial Position

Total assets

Net assets

Equity Ratio

Millions of yen

Millions of yen

%

3rd Quarter of Fiscal Year Ending March 31, 2022

5,717

4,289

74.7

Fiscal Year Ended March 31, 2021

6,486

3,830

59.1

(Reference) Shareholders' equity

3rd Quarter of Fiscal Year Ending March 31, 2022

4,272

(Millions of yen)

Fiscal Year Ended March 31, 2021

3,830

(Millions of yen)

2. Dividends

		Dividend per share
	1st Quarter-	2nd Quarter-	3rd Quarter-		Year-End		Total
	End	End	End
	Yen	Yen	Yen		Yen		Yen
Fiscal Year Ended	―	0.00	―		10.00		10.00
March 31, 2021
Fiscal Year Ending	―	0.00	―
March 31, 2022
Fiscal Year Ending
March 31, 2022					10.00		10.00
(Forecast)
(Note) Revisions to the most recently announced dividend forecast:	None

3.2022 Consolidated Financial Results Forecast (April 1, 2021 to March 31, 2022)

(Percentages indicate year-on-year changes)

									Net income
	Net Sales		Operating income	Ordinary income		attributable to		Net income Per
									owners of parent	Share
	Millions of		%	Millions of	%	Millions of		%	Millions of		%	Yen
	yen		yen	yen		yen
Full year	5,400	57.5	1,200	62.5	1,200	68.1	740	61.7	70.34

(Note) Revisions to the most recently announced financial results forecast : None

* Notes

(1) Changes in Significant Subsidiaries during the Period Under Review : None

(Changes in Specified Subsidiaries Resulting in Changes in the Scope of Consolidation)

Newly added ―

Excluded ―

1. Adoption of Special Accounting Methods for Preparing Quarterly Consolidated : None Financial Statements
2. Changes in Accounting Policies, Changes in Accounting Estimates, and Restatement of Corrections
   ① Changes in accounting policies due to revisions to accounting standards, etc. : Yes

②	Changes in accounting policies due to other reasons	:	None
③	Changes in accounting estimates	:	None
④	Restatement of prior period financial statements after error corrections	:	None

(4) Number of shares outstanding (common stock)

• Number of shares outstanding at the end of the period (including treasury stock)

• Number of treasury shares at the end of the period

• Average number of shares during the period (cumulative from the beginning of the fiscal year)

3rd Quarter of			Fiscal Year Ended
Fiscal Year Ending	10,560,640	shares	10,513,440 shares
March 31, 2021
March 31, 2022
3rd Quarter of			Fiscal Year Ended
Fiscal Year Ending	40,149	shares	40,104 shares
March 31, 2021
March 31, 2022
3rd Quarter of			3rd Quarter of
Fiscal Year Ending	10,489,195	shares	Fiscal Year Ended	10,438,455 shares
March 31, 2022			March 31, 2021

• This quarterly financial results report is exempt from quarterly review by certified public accountants or auditing firms.
• Explanation regarding the appropriate use of financial results forecasts and other special notes

The forward-looking statements in this document are based on information currently available to us and on certain assumptions that we believe to be reasonable. Actual results may differ materially due to a variety of factors.

• Contents of the attached materials

1. Qualitative Information Regarding Consolidated Results for the Period.........................	2
(1)	Explanation on the Results of Operation .....................................................	2
(2)	Explanation on the Financial Position .......................................................	3
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-Looking Statements.. 4
2. Quarterly Consolidated Financial Statements and Major Notes...................................	5
(1)	Quarterly Consolidated Balance Sheet ........................................................	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income ........................	7
(3)	Notes on Quarterly Consolidated Financial Statements.........................................	9
	(Note on Going Concern Assumption) ..........................................................	9
	(Notes in Case of Significant Changes on Shareholders' Equity) ..............................	9
	(Changes in Accounting Policies) ............................................................	9
	(Segment Information, etc.) ................................................................	10

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1. Qualitative Information Regarding Consolidated Results for the Period

(1) Explanation on the Results of Operation

The forward-looking statements in the text are based on our judgment as of the end of the current quarter consolidated accounting period.

1. The status of business performance

Under our Grand Vision "Make the biggest impression in the 21st century," we aim to continuously increase corporate value by leveraging our IT Freelance database, human resources infrastructure such as the development of IT engineers who are active globally, proactively grasping the lifestyles of people who are rapidly changing due to the spread of the Internet and corporate behavior, and continuing to grow through the creation and evolution of services that are responsive to change. The Group consists of four business segments, including three subsidiaries. Each business segment is classified into: [IT Freelance Matching Business], [Game Business], [x-Tech Business] and [Seed Tech Business].

From the first quarter of the current fiscal year, the name of the segment has been changed from the previous [IT Human Resource Development Business] to the [Seed Tech Business]. The change in the segment name has no impact on segment information.

During the nine months ended December 31, 2021 (April 1, 2021 to December 31, 2021), the outlook for the Japanese economy remained uncertain due to the spread of a new variant of the coronavirus, which had once calmed as a result of the progress in vaccination. With the rapid digital transformation amid the prolonged impact of the new coronavirus, we recognize that the need to strengthen IT skills among IT professionals and individuals is increasing further.

Under these circumstances, the Group continued to implement various measures based on the policies set forth in the Medium-Term Management Plan (G100) released on May 14, 2021 (from the fiscal year ending March 31, 2022 to the fiscal year ending March 31, 2025). We have built a business structure that will enable us to capture the demand of companies promoting digital shifts and individuals searching for new ways of working, to fulfill our role as a technology resource sharing platform.

Under these circumstances, the Group recorded net sales of ¥4,015 million (up 107.7% year on year), operating income of ¥861 million (up 121.9%), ordinary income of ¥862 million (up 135.5%), and net income attributable to owners of parent of ¥533 million (up 141.5%).

[Accounting Standard for Revenue Recognition] (ASBJ Statement No. 29, March 31, 2020) As a result of the adoption of the "Revenue Recognition Accounting Standard" and other standards, net sales increased by ¥705,988 thousand, while operating income, ordinary income, and income before income taxes increased by ¥148,797 thousand.

Results by business segment were as follows.

In the IT Freelance Matching Business, its performance increased considerably. More than 80% of IT Freelancers have introduced Remote Work, and the number of new IT Freelance registrations is steadily increasing as a result of an increase in matching between the Tokyo metropolitan area and regional bases.

In addition, as a result of expanding corporate advertising, investment, and strengthening sales enablement, the number of new client companies is also trending upward.

As a result, net sales in this business segment for the first nine months of the fiscal year ending March 31, 2022 were ¥1,324 million (up 24.8% year on year) and segment income was ¥714 million (up 18.9%).

In the Game Business, the Group operates five titles, including "IDOLiSH7", which is distributed by BANDAI NAMCO Online Inc., and "My Hero Academy ULTRA IMPACT", which is distributed by BANDAI NAMCO Entertainment Inc., and develops four new titles. During the third quarter of the fiscal year ending March

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31, 2022, the Group delivered one new title and received an order for another title. In addition, the Group made preparations for overseas versions of its existing titles.

In the third quarter of the fiscal year ending March 31, 2022, it became possible to reasonably estimate the progress of fulfillment of performance obligations for one of the new titles under development which was previously recognized under the cost recovery method. Accordingly, revenue is recognized based on the degree of progress.

As a result, net sales in this business segment for the nine months ending December 31, 2022 were ¥2,351 million (up 300.4% year on year) and segment income was ¥472,103 thousand (up 1,000.9%).

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In the x-Tech Business, the Group aims to become a technology partner for business model transformation using [Technology x Data] utilizing cutting-edge technologies and methods, and mainly conduct app and video production utilizing AR (augmented reality) and other technologies, as well as digital marketing support and D2C support in the sports field (e.g., golf).

As a result, net sales in this business segment for the first nine months of the fiscal year ending March 31, 2022 were ¥243 million (up 17.6% year on year) and segment income was ¥11 million (segment loss of ¥6 million for the first nine months of the previous fiscal year).

In the Seed Tech Business, the Group provides on-demand programming school services and offshore development outsourcing business. In addition, we made preparations for the SaaS-type DX/IT Human Resource Development Service [sodatech] for corporations scheduled to launch next fiscal year.

As a result, for the nine months ended December 31, 2022, net sales in this business segment were ¥95,799 thousand (up 19.0% year on year) and the segment loss was ¥7,869 thousand (compared with a segment loss of ¥9,546 thousand in the same period of the previous fiscal year).

(2) Explanation on the Financial Position

(Current Assets)

The balance of current assets at the end of the third quarter of the current fiscal year was ¥5,387,947 thousand, a decrease of ¥527,543 thousand from the end of the previous fiscal year. This was mainly due to a decrease of ¥1,116,670 thousand in work in process, while accounts receivable and contract assets increased by ¥413,713 thousand.

(Fixed Assets)

The balance of non-current assets at the end of the third quarter of the current fiscal year was ¥329,317 thousand, a decrease of ¥241,495 thousand from the end of the previous fiscal year. This was mainly due to decreases of ¥59,144 thousand in buildings and structures (net), ¥61,330 thousand in lease and guarantee deposits, and ¥171,519 thousand in deferred tax assets, while there was an increase of ¥49,950 thousand in investment securities.

(Current Liabilities)

The balance of current liabilities at the end of the third quarter of the current fiscal year was ¥1,392,971 thousand, a decrease of ¥1,253,696 thousand from the end of the previous fiscal year. This was mainly due to ¥1,125,380 thousand decrease in advances received.

(Non-current liabilities)

The balance of non-current liabilities at the end of the third quarter of the current fiscal year was ¥34,828 thousand, an increase of ¥25,689 thousand from the end of the previous fiscal year. This was mainly due to ¥25,931 thousand increase in deferred tax liabilities.

(Net Assets)

The balance of net assets at the end of the third quarter of the current fiscal year was ¥4,289,463

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