mixi fy2013 q1-1

FY2012 First-Quarter Earnings Result Briefing Session(April 1st 2012 – June 30st 2012)

mixi Inc.http://mixi.co.jp

TSE Mothers 2121

The opinions and predictions provided in this document are based on the Company’s assessment at the time of preparation and no guarantee is provided in relation to the accuracy of the information contained herein. Please note that actual results and outcomes may differ from those

described herein due to changes in a variety of factors

http://mixi.co.jp

http://mixi.co.jp

Copyright (C) mixi, Inc. All rights reserved.

Profit/Loss

2

FY2012/１Q FY2011/１Q YoY change (%)

Sales

　Cost of sales

Gross profit on sales

　SG&A expenses

Operating profit

Ordinary profit

Net profit

3,539 2,986 18.5%

984 1,014 ▲3.0%

2,554 1,971 29.6%

1,665 1,632 2.0%

889 338 162.5%

871 279 212.2%

562 147 282.4%

Unit:JPY mn

Sales: +18.5% YoY due mainly to increase in charging revenues.Operating profit: +162.5% YoY as revenues rose.

Revenues from charges grew robustly.Smartphone ads showed healthy growth, but feature phone ads declined.


Sales trend (Quarterly)

3

2 ! 28 ! 16 !130 ! 135 ! 124 ! 159 ! 170 ! 182 ! 191 ! 198 ! 218 ! 237 ! 256 ! 266 ! 239 !233 ! 234 ! 244 !

508 ! 570 ! 611 ! 724 ! 845 ! 755 ! 805 !1,097 !

1,702 ! 1,857 !1,942 ! 2,034 ! 2,199 !

2,346 ! 2,373 ! 2,245 !

2,628 ! 2,487 !

2,012 ! 2,052 !

2,091 !

1,808 ! 1,426 !

0 !

1,000 !

2,000 !

3,000 !

4,000 !

1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q!

FY2009! FY2010! FY2011! FY2012!

Advertising!

Charges!

Find Job!!

Others!

* From the subject fiscal year, the accounting standards for advertising sales was changed from gross sales basis to a net sales basis

Unit:JPY mn

*SP ads = smartphone ads, FP ads = feature phone ads. We are now using the term FP ads for what we previously called MB (mobile) ads.

Smartphone ads showed healthy growth, but feature phone ads declined.


Breakdown of Advertising sales (Quarterly)

4

Unit:JPY mn

1,942 !2,034 !

2,199 !2,346 ! 2,373 !

2,245 !

2,628 !2,487 !

2,012 ! 2,052 ! 2,091 !

1,808 !

1,426 !

0 !

500 !

1,000 !

1,500 !

2,000 !

2,500 !

3,000 !

1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q!

FY2009! FY2010! FY2011! FY2012!

SP ads!

FP ads!

PC ads!

Other ads!

系列1!


Advertising topics：Enrichment of Smartphone ads

5

0

50

100

150

200

FY2011/1Q 2Q 3Q 4Q FY2012/1Q

Smartphone ad sales

Unit:JPY mn

＜Ordinary menu＞e.g., Intel

＜Social expanded ads＞

Expand

Homeview panelHome panel

We continue to fine-tune our smartphone advertising menu.Number of advertisers continues to show healthy growth.

Robust growth in charges of applications, particularly games.


Breakdown of Charges (Quarterly)

6

Unit:JPY mn

233 ! 234 ! 244 !

508 !570 !

611 !724 !

845 !755 !

805 !

1,097 !

1,702 !

1,857 !

0 !

200 !

400 !

600 !

800 !

1,000 !

1,200 !

1,400 !

1,600 !

1,800 !

2,000 !

1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q!

FY2009! FY2010! FY2011! FY2012!

App charges!

Premium!

Other charges!

系列1!

Number of mixi Game titles available for smartphones increasing.Paying UU grew robustly.

Copyright (C) mixi, Inc. All rights reserved. 7

Charges topics：Growing range of smartphone apps

0

175

350

525

700

Sep Oct Nov Dec Jan-12 Feb Mar Apr May Jun

Based on September 2011 = 100

Paying UU from Smartphone (mixi Touch)

0

200

400

600

Sep Oct Nov Dec Jan-12 Feb Mar Apr May Jun

Number of smartphone app titles

2,986

1,183

165

556

133 106

3,539

2,500

3,000

3,500

4,000

4,500

5,000

FY11 1Q sales

Increase in Appli revenues

Increased sales of

smartphone ads

Decline in featurephone advertising

Decline in PC advertising

Others

FY12 1Q sales

Unit：JPY mn

��


Increase/decrease factors for sales Waterfall diagram (YoY change)

8

3,805

140 92

287

55 166

3,539

2,500

3,000

3,500

4,000

4,500

5,000

FY11 4Q sales

Increase in Appli revenues

Increased sales of

smartphone ads

Decline in featurephone advertising

Decline in PC advertising

Others

FY12 1Q sales

Unir：JPY mn

��


Increased/decreased factors for sales Waterfall diagram (QoQ change)

9


Cost of Sales (Quarterly)

10

Unit:JPY mn

1Q# 2Q# 3Q# 4Q# 1Q# 2Q# 3Q# 4Q# 1Q# 2Q# 3Q# 4Q# 1Q#

FY2009# FY2010# FY2011# FY2012#

Others# 127## 135## 200## 196## 169## 227## 195## 247## 230## 229## 263## 289## 253##

Ad#program#expenses# >## >## 302## 449## 328## 276## 279## 222## 184## 157## 169## 144## 82##

Content#procurement#expenses# 110## 105## 107## 132## 82## 83## 83## 139## 84## 79## 69## 66## 44##

Personnel#expenses#for#development# 130## 134## 134## 140## 146## 156## 179## 197## 220## 235## 288## 308## 330##

DepreciaHon## 84## 86## 102## 110## 80## 92## 104## 115## 94## 107## 114## 115## 74##

Rental#charges# 169## 167## 160## 181## 176## 177## 191## 196## 200## 213## 213## 198## 199##

0##

200##

400##

600##

800##

1,000##

1,200##

1,400##


Selling,general and administrative expense (Quarterly)

11

Unit:JPY mn

1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q! 2Q! 3Q! 4Q! 1Q!

FY2009! FY2010! FY2011! FY2012!

Others! 146 ! 131 ! 176 ! 194 ! 181 ! 224 ! 330 ! 371 ! 409 ! 419 ! 431 ! 430 ! 298 !

Settlement fees! 29 ! 30 ! 34 ! 120 ! 148 ! 146 ! 208 ! 215 ! 196 ! 196 ! 298 ! 407 ! 414 !

Rents on properties! 131 ! 119 ! 107 ! 103 ! 93 ! 94 ! 93 ! 223 ! 133 ! 130 ! 130 ! 132 ! 137 !

Outsourcing! 137 ! 125 ! 133 ! 163 ! 130 ! 215 ! 133 ! 150 ! 176 ! 201 ! 138 ! 164 ! 120 !

Advertising! 11 ! 4 ! 10 ! 606 ! 43 ! 275 ! 193 ! 352 ! 146 ! 7 ! 106 ! 64 ! 22 !

Personnel! 361 ! 369 ! 398 ! 421 ! 458 ! 454 ! 468 ! 497 ! 570 ! 604 ! 687 ! 674 ! 671 !

0 !

200 !

400 !

600 !

800 !

1,000 !

1,200 !

1,400 !

1,600 !

1,800 !

2,000 !

・2Q [1H] earnings forecast

Sales:Progress in 1Q was in line with plan. We amend to lower our estimate of 2Q charges revenues, due mainly to new guidelines for social games.Operating profit:Big increase in 1Q reflects lower costs, as we internalized some operations to increase speed. In 2Q, we expect profit to fall because we project sales will fall.

・FY2012 estimates

We make no changes to our estimates of sales or profit in 2H. We plan to execute a variety of measures and investments.


Earnings forecasts

12

FY2012/1Q 2Q [1H] earnings forecast2Q [1H] earnings forecast FY2012 estimateactual previous estimate revised estimate Unchanged

Sales

Operating profit

Ordinary profit

Net profit

3,539 7,000～7,200 6,550～6,750 14,500～15,500

889 850～950 1,200～1,300 2,200～2,800

871 850～950 1,200～1,300 2,200～2,800

562 500～550 750～800 1,300～1,650

Unit:JPY mn


Our efforts to build our business

13

Copyright (C) mixi, Inc. All rights reserved. 14*Figures for Monthly Active Users is derived from company data.

No. of Monthly Active Users (MAU): 14.53million (June 2012)

No. of mixi Users

Unit：million users

12.00

14.00

16.00

Apr Jul Oct Jan-10 Apr Jul Oct Jan-11 Apr Jul Oct Jan-12 Apr

14.53

14.7714.80

15.1214.99

15.3815.20

14.9815.0915.1615.23

15.3515.2715.47

15.1515.37

14.55

14.81

14.5414.4614.64

14.4614.4614.30

14.1014.1113.8913.86

12.7012.84

12.5712.43

12.2212.0611.9911.9211.8911.91

11.71

0

2.00

4.00

6.00

8.00

Jul Aug Sep Oct Nov Dec Jan-12 Feb Mar Apr May Jun

7.887.70

7.347.05

6.426.19

5.57

5.064.81

4.484.19

3.80

Copyright (C) mixi, Inc. All rights reserved. 15*Figures for Smartphone Active Users is derived from company data.

Smartphone Monthly Login Users

Unit：million users

Smartphone Monthly Login Users：7.88million（June 2012）

*Figures up to June 2011 for the number of monthly smartphone log-in users are mixi Touch (browser) users only.

0

3.00

6.00

9.00

12.00


Growth in smartphone users

16

Jan-10 Mar May Jul Sep Nov Jan-11 Mar May Jul Sep Nov Jan-12 Mar May

Featurephone MAU（January 2007 – August 2010）Smartphone MAU（January 2010 – June 2012）

Growth in smartphones is fast, outpacing 2007-8 growth in feature phones.Unit：million users


Our efforts to build our business

17

Strengthening our business foundation

Strengthening our user base




Putting the users first

Introduction of unit system


Users first：Product development based on user’s perspective

19

Users are creating many different ways to use mixi.

・Users first: creating our services to reflect users’ request.

・Responding to user’s request input about each product.

・Providing UI/UX optimized for different kinds of users.

　Privacy settings Publicly disclosed range settings for mixi voice, an area where many users had expressed

their wishes to our support team.

SurveyRequest Interview

AB testLog analysis etc


Unit system: speedy planning, development and operation

20

Implementing unit system for all mixi functions.

・Optimizing systems in all products to meet user needs.

・Developing systems where small teams can exercise their own

judgment and take responsibility, for planning, development and operation of services.

Product unit examples

Voice

Messages

Diary

Games

Mall

Pages

Community

etc

News

Operation

Product unit

DevelopmentPlanning

Users

Responding to user input

・Devices ・Feeds

・Profiles ・Registration　・Search　・Design ・etc

e.g. Coordinating between product units for UI design.


Pursuing profits by having each product unit work as a virtual company to deal directly with users

21

CommunityVoice

Pages

Mall

News

etcMessage

Games

Diary

Product unit teamsSupport functions

Users

Home unit teams

Advertising functions

System functions

Management advancement

functions



Advertising

Charges

Other


・Thanks to viral effects, surpassed 1 million times in its first 24 hours.

・10% click-through rate to client sites.Copyright (C) mixi, Inc. All rights reserved. 23

Coca-Cola(Japan)Company,Limited“mello Yello”

“social ads”Diagnostic tie-ups that promote communication with friends.

“social expanded ads”Making possible a rich advertising experience in a smartphone environment.

Sony Marketing (Japan) Inc.

Advertising : Developing advertising products that work well on smartphones


Charges : expanding smartphone content, strengthening connections

・Key game titles released in April-June. ・Added “Started” Feed on a native Android app.・Added request notice received function on a native iOS app.

“Sengoku BUETER Kai”Klab Inc.

“RAGNA BREAK”CROOZ　Inc.

“Sengoku Royal ENISHI”DeNA Co., Ltd.

“Browser Sangokushi mobile”MarvelousAQL Inc.

“Kamen rider Legend”NAMCO BANDAI Games Inc.

テキス



Advertising

Charges

Other



Creating new businesses

26

Turning projects developed in-house into businesses　・Launched “Innovation Center”

Feasibility study

Two months～

Three-month KPI, decision whether to green-light

One month

　Development

Project moves from its original department to the Innovation Center, for brief,

intensive development

New productDepartmentSubsidiary

Seeking out ideas in-house,

moving quickly to probe

Two weeks – one month

Fast turnaround, from idea to probe


Appendix

27


Company name mixi, Inc.mixi, Inc.mixi, Inc.mixi, Inc.mixi, Inc.

Establishment June 3, 1999

Capital 3.76 billion yen

Location of main office Sumitomo Shibuya First Tower Building 7F, 1-2-20 Higashi, Shibuya-ku, Tokyo, 150-0011Sumitomo Shibuya First Tower Building 7F, 1-2-20 Higashi, Shibuya-ku, Tokyo, 150-0011Sumitomo Shibuya First Tower Building 7F, 1-2-20 Higashi, Shibuya-ku, Tokyo, 150-0011Sumitomo Shibuya First Tower Building 7F, 1-2-20 Higashi, Shibuya-ku, Tokyo, 150-0011Sumitomo Shibuya First Tower Building 7F, 1-2-20 Higashi, Shibuya-ku, Tokyo, 150-0011

Executive officers and directors

CEO and Founder Kenji Kasahara Outside Director Tatsuya Aoyagi

Executive officers and directors

Director Akinori Harada Corporate Auditor Takako KatoExecutive officers and

directors Director Yasuhiro Ogino Corporate Auditor Takayuki SatoExecutive officers and

directors

Outside Director Ichiya NakamuraIchiya Nakamura Corporate Auditor Hiroyuki Wakamatsu

Employees 494 (regular employee only)

Total number of shares issuedTotal number of shares issued 155,106 shares

Major Shareholders(As of March 31, 2012)

Kenji Kasahara 55.11%


MORGAN STANLEY & CO.LLCMORGAN STANLEY & CO.LLC 3.31%Major Shareholders

(As of March 31, 2012)Japan Securities Finance Co.,Ltd Japan Securities Finance Co.,Ltd 2.57%Major Shareholders

(As of March 31, 2012)Japan Trustee Services Bank, Ltd. (Trust account) Japan Trustee Services Bank, Ltd. (Trust account) Japan Trustee Services Bank, Ltd. (Trust account) 2.12%


GOLDMAN, SACHS&CO. REGGOLDMAN, SACHS&CO. REG 1.66%

* Besides the above, we own 5,800 shares of treasury stocks (3.74%)* Besides the above, we own 5,800 shares of treasury stocks (3.74%)* Besides the above, we own 5,800 shares of treasury stocks (3.74%)* Besides the above, we own 5,800 shares of treasury stocks (3.74%) As of Jun 30,2012

Company Overview

Social Networking Service (SNS) that allows users to manage a list of friends and acquaintances on a site for one-to-one communication and one-to-many communication (with registered friends, acquaintances, and other users )


Service Overview

29

mixi Diary This service allows users to post diaries on mixi, enabling communication through diaries.

Community Functionality for exchange of information within community concerning hobbies, other topics. Keyword-searchable.

mixi Voice（September 2009～） A communication tool that allows users to post “tweets” to easily convey their current status or thoughts to each other.

mixi Games（November 2011～）

Functionality to promote communication among mixi users through games; users can play games with their own friends, or with any other mixi users.

mixi Photo（June 2010～）

This service makes communication fun by allowing the sharing of photos with friends and acquaintances. Friends can also “like” or comment on photos, enhancing communication.

mixi Pages（August 2011～）

Functionality for merchants, brands, artists to deliver information to the public; possible to share information through friends and others.

46.6%! 53.4%!

0%! 25%! 50%! 75%! 100%!

Total users!

M! F!

15-17! 18-19! 20-24! 25-29! 30-34! 35-39! 40-44! 45-49! 50-!

Total users! 8.4%! 8.3%! 27.9%! 21.2%! 13.6%! 9.6%! 5.5%! 2.9%! 2.5%!

0%!

10%!

20%!

30%!


4.7%

5.5%

40.6%

11.0%

17.7%

6.1%

2.0%

5.1%

7.4%

User Attributes (Changed from Registered Users base to MAU base

Area Age

Gender

Hokkaido

Tohoku

Kanto

Koshinetsu/Hokuriku

Tokai

Kinki

Chugoku/Shikoku

Kyushu/Okinawa

Overseas


• Many users are switching from regular mobile phones to smartphones that have a large amount of data per page(On smartphones, certain uses through apps are not included in page view counts)

• Shift to a more convenient user interface has made it more difficult to track page views.

Page View Totals

Apr! May! Jun! Jul! Aug! Sep! Oct!Nov!Dec!Jan-1

0!Feb! Mar! Apr! May! Jun! Jul! Aug! Sep! Oct!Nov!Dec!

Jan-11!

Feb! Mar! Apr! May! Jun! Jul! Aug! Sep! Oct!Nov!Dec!Jan-1

2!Feb! Mar! Apr! May! Jun!

PV (FP)! 10.49!11.41!10.99!11.49!11.93!11.44!12.23!16.69!22.48!25.19!23.87!27.97!25.08!26.66!24.27!24.54!24.21!24.28!26.12!25.68!24.47!24.0!21.8!25.0!22.9!24.1!21.7!20.9!20.4!19.1!18.3!18.1!18.1!17.0!15.6!15.5!12.9!12.4!11.0!

PV (PC)! 3.97!4.28!4.07!4.08!4.09!4.52!5.49!5.45!5.13!5.32!4.79!5.33!4.95!5.35!4.89! 4.9! 4.62!4.56!4.51!4.34! 4.1! 4.10!3.80!4.44!3.92!4.11!3.72!3.44!3.38!3.36!3.37!2.88!2.82!2.56!2.33!2.40!2.18!2.21!2.02!

PV (Touch)! 0! 0.26!0.33! 0.4! 0.49! 0.6!0.699!0.9! 0.98!1.07!1.65!1.77!1.86!1.40!1.56!1.78!1.88!1.97!2.02!2.18!2.40!2.40!2.70!2.70!2.90!2.70!

0 !

5 !

10 !

15 !

20 !

25 !

30 !

35 !Unit：billion PV


Setting up a proper environment for social games

32

Social Game Platform CommitteeHow we responded on our

platform

“Complete Gacha guidelines”“Complete precedents concerning Gacha etc” “Random pay content rule”

“Guidelines for real money trade measures”Set new terms requesting alignment of app user environment on “mixi app guideline”

“Guidelines for in-game displays”

Scheduled to take effect September 1, 2012We plan to revise and update guidelines and rules as necessary

We have reworked our platform environment in keeping with guidelines from the Social Game Platform Committee.


Our initiatives to keep mixi healthy

33

Patrolling with both people and computers

・Unique oversight tools・Bayesian Filter・Patrol is at work 24 hours a day,365 days a year

Zoning of young users・Checking users who use mobile phone filters

・Limiting services to underage users

Educational efforts・Establishment of educational content within the service

・Symposiums, lectures

Establishing an environment with good circulation

mixi fy2013 q1-1

Business

q decline

q increase

q 4qfy20121q copyright

sales of adscopyright

pc ads

sp ads

smartphone mixi touchbased

juncopyright c mixi