■ Performance Trends of Koss Corp <6562>

5. Topics

(1) Acquisition of Social Wire as a consolidated subsidiary

In July 2024, the company formed a capital business alliance with Social Wire and made it a subsidiary. Social Wire engages in digital PR business such as press release distribution services, influencer PR services, anti-social check with business partners, and boasts the second largest market share after PR Times<3922>, a PR company in the industry, particularly in the release distribution business. The company will leverage the synergy of its own technological capabilities and Social Wire's expertise in the digital PR field to develop new products, promote cross-selling of products and services to customers of both companies, and drive sales through collaborative marketing initiatives. By the time of the earnings reports for the first quarter of the fiscal year ending March 2025, integration measures such as the integration of management systems including KPI monitoring, exchange of personnel such as the company's sales and engineers to Social Wire, introduction of JAPAN AI (Ltd)'s tools to Social Wire, and decision to introduce Social Wire's risk checking tool to the company have been announced.

Social Wire had been operating its main digital PR business as well as the shared office business, managing shared offices in 10 locations in Japan. However, due to the impact of the spread of the novel coronavirus and the entry of major real estate companies into the shared office business, its performance deteriorated, leading to its withdrawal from the business in March 2024. The company plans to review its business portfolio, strengthen its main digital PR business, and actively develop products for DX in the marketing areas of PR, publicity, sales promotion, BI/data analysis to expand in the market. We see significant potential for business expansion through collaboration with the company, and the future developments are highly anticipated. As of the end of the first quarter of the fiscal year ending March 2025, the dispatch of directors and employees from the company to Social Wire for the smooth progress of PMI* has been reported.

*Refers to the integration process to maximize the effects of the initial M&A plan, consisting of three stages: management integration, operational integration, and consciousness integration.

(2) Acquisition of Treasury Stock from SoftBank

In July 2024, the company announced the completion of the acquisition of its own shares from SoftBank<9434>. The total number of shares acquired was 5,625 thousand shares, equivalent to 31.15% of the company's total issued shares. Since 2014, the company has been implementing a capital business alliance with SoftBank in the Internet advertising business, mainly collaborating with SoftBank Mobile in the advertising platform business and achieving results such as joint development of new SSP*1 services and PMP*2 services. However, prompted by SoftBank's offer to sell the company's shares, the company decided to acquire its own shares, judging that maintaining a good relationship with SoftBank in terms of business results and ensuring good relationship with business even without capital relationship with SoftBank is possible. The company expects to maintain a good business relationship with SoftBank, including trade relations, and expects to continue the business alliance relationship even after the dissolution of the capital alliance.

Short for Supply Side Platform, it refers to a tool that supports the sale of media advertising space and maximizes advertising revenue.

Short for Private Market Place, it refers to real-time bidding online with limited trading partners.

Looking ahead to future performance and stock price trends, the company aims to enhance efforts towards shareholder returns and corporate value improvement by considering transfers to desirable companies based on write-offs and long-term holdings, allocation to funds for acquisitions, among other strategies.

(Writer: FISCO analyst Tomoichi Murase)