ITmedia Inc.

If an in-house system problem occurs due to a natural disaster such as an earthquake, power outage, terrorism, unexpected system failure, or unauthorized access, it may become difficult to provide users with a stable supply of information and to provide services to client companies, potentially having a material impact on the business, results of operations, and social credibility. Since business resources are concentrated in the Tokyo metropolitan area, the risk in the event of a large-scale disaster is also high. As countermeasures, the Group has implemented cloud-based system redundancy, unauthorized access countermeasures, and BCP formulation.

The Group holds a large volume of personal information such as member information and event participation application information, and if such information were to leak due to unauthorized access from outside or other causes, it could affect the business, results of operations, and social credibility. In addition, if regulations are tightened due to revisions to laws regulating the handling of personal information, this could also affect the business and results of operations. As countermeasures, the Group has obtained Privacy Mark certification, established personal information protection regulations, implemented data encryption, access authority management, and employee training, among other measures.

The Group utilizes major platforms such as search engines, portal sites, and SNS to attract users to its operated media, but if traffic acquisition effectiveness declines due to the rise of new platforms or changes in specifications or operating policies, the value of digital marketing products could decline, potentially having a significant impact on the business and results of operations. As a countermeasure, the Group has built a system to monitor platform trends and optimize traffic acquisition.

The volume of information on the internet continues to expand due to the spread of social media and the development of AI, and if the informational value of the Group's operated media declines relatively as a result, the value of internet advertising products could decline proportionately, potentially having a significant impact on the business and results of operations. As countermeasures, the Group is working to maintain and improve content quality by securing and developing highly specialized personnel, sharing systems and know-how, and improving productivity through technology including AI.

Multiple competitors already exist in the online media market, and new entrants, including major companies, are expected to continue entering the market. If the Group's services lose competitiveness due to service improvements by competitors or the emergence of new business models, this could affect the business and results of operations. As a countermeasure, the Group differentiates itself by maintaining the quality, quantity, and timeliness of highly specialized articles and by developing services that respond to customer needs.

The Group's revenue is heavily dependent on client companies' digital marketing investment, and if client companies' marketing activities contract due to deteriorating economic conditions, or if the added value of the marketing methods provided declines relatively, this could have a significant impact on the business and results of operations. As a countermeasure, the Group is diversifying its revenue model, such as by strengthening its lead generation model in response to the advertising model's greater sensitivity to economic conditions.

Securing and developing personnel with expertise in internet business across various job categories, including editorial writers, sales, technology, design, and management, is critical to the success of the business, and if the Group is unable to secure and develop personnel in line with business expansion, this could affect results of operations. As a countermeasure, the Group introduced a new personnel system from fiscal 2018, and has been promoting employees' motivation for growth and skill improvement through the development of recruitment policy, training, evaluation, and compensation systems.

While the Group recognizes that challenging new businesses and pursuing corporate acquisitions are essential for growth and securing earnings, if the initially expected results are not achieved, impairment of goodwill, losses on business divestiture, or losses on liquidation may occur, potentially affecting results of operations and financial condition. The book value of goodwill at the end of the fiscal year under review was ¥443 million. As a countermeasure, the Group has established a system to monitor the performance of all departments on a weekly basis and to promptly review strategy and implement countermeasures as necessary.