Slide 1: Presentation Material for FY04/2024 Full Year Financial Results
Presentation Material for FY04/2024 Full Year Financial Results June 14,2024 HEROZ, Inc. ｜4382｜ notice This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japan
Slide 2: Contents
Contents 1. Financial Highlights 2. Introduction to Our Group Businesses 3. Updates on Our Group Strategy 4. FY04/2024 Full-Year Performance (Consolidated) 5. Forecast of FY04/2025 Performance 6. Initiatives in each Business Segment 7. Frequently Asked Questions and Answers © 2024 HEROZ, Inc. 2
Slide 3: Financial Highlights
01 Financial Highlights © 2024 HEROZ, Inc. 3
Slide 4: Financial Highlights: FY04/2024 Full Year Performance Summary
※Please note that the consolidated financial statements are disclosed from the third quarter of the fiscal year ending April 30, 2023. Therefore, please note that comparisons with the previous period (cumulative total) are Financial Highlights based on figures that incorporate only six months of inc
Slide 5: EBITDA: Our Key Performance Indicator
Our Key Performance Indicator ◼ We have set EBITDA, a measure of cash generation, as a key performance indicator and aim to sustainably increase corporate and share value through EBITDA growth. ◼ Formula: Operating profit + amortization and other non-cash expenses (amortization of goodwill, security
Slide 6: Introduction to Our Group Businesses
02 Introduction to Our Group Businesses © 2024 HEROZ, Inc. 6
Slide 7: History of HEROZ
History of HEROZ ⚫ Sales Trends and Main History （Million of Yens） HEROZ was founded with the concept of “Surprise to the Heart", aiming to create services that will surprise the world. Newly added companies to 6,000 our group We believe that everyone has unique abilities, and through the creation o
Slide 8: Group Management Structure
Group Management Structure Group management structure after Tifana.com becomes a group company in March 2024 Combined sales of the five companies will be approximately 6 billion yen (forecast for the fiscal year ending April 2025) Listed on the TSE (securities code 4382) Fiscal year ending April 202
Slide 9: Group Business Structure
Group Business Structure ◼ We have two businesses: AI/DX Services and AI Security Services. ※1 MAU：Monthly Active User ※2 MPU：Monthly Paid User ◼ A.I. Squared and Tifana.com, which became group companies in FY4/2024, are classified as AI/DX Services ※3 ARPPU：Average Revenue Per Paid User AI/DX Servi
Slide 10: HEROZ Group Business Overview
HEROZ Group Business Overview Promote maximization of Supporting corporate AIX from the perspectives of Shogi population both individual AI solution development and AI SaaS Promoting social implementation of LLM through the introduction of SaaS Providing AI “Shogi Wars", solutions mainly in “Kishin
Slide 11: Updates on Our Group Strategy
03 Updates on Our Group Strategy © 2024 HEROZ, Inc. 11
Slide 12: Our Vision: Creating the future through AI Revolutions
Our Vision Creating the future through AI Revolutions © 2024 HEROZ, Inc. 12
Slide 13: HEROZ's thoughts of AI Revolution in the age of Generative AI
HEROZ’s thoughts of "AI Revolution" in the age of Generative AI HEROZ's vision is “Creating the future through AI Revolutions”. Creating With the evolution of Generative AI, we have entered an era in which AI has deeply penetrated our lives, Value automating and assisting us in various daily activit
Slide 14: AI Revolution we achieved in the Shogi world
AI Revolution we achieved in the Shogi world Shogi Wars, our core business, is not just a Shogi application, but a Gaming Platform that has contributed greatly to the revolution of the Shogi world itself through cutting-edge AI technology. ➢Total 8 mil users ➢500 thousands MAU ➢Played a total of ove
Slide 15: HEROZ Group Strategic Policy (HEROZ 3.0): Sell Work, not AI
HEROZ Group Strategic Policy (HEROZ 3.0): Sell Work, not AI ◼ Launch of HEROZ ASK and business integration with group companies led to growth in AI SaaS and recurring revenues. ◼ Through the remarkable progress of Generative AI, promoting value provision that goes beyond mere AI tools HEROZ 1.0 HERO
Slide 16: Strategies to achieve through Sell Work, not AI (AI BPaaS)
Strategies to achieve through “Sell Work, not AI” (AI BPaaS) By providing reasonable and higher quality labor sustainably with our AI, we will fundamentally solve the vicious cycle caused by labor shortages and create changes in the target markets that our group companies enter. Challenges facing th
Slide 17: Official release of HEROZ ASK
Official release of HEROZ ASK Officially releasing HEROZ ASK, an enterprise AI assistant SaaS using generative AI, in May 2024. Further enhancements will be made to promote AIX as the core SaaS for "Sell Work, not AI" by providing value that goes beyond the mere IT tools. About HEROZ ASK • AI Assist
Slide 18: Tifana.com Social Implementation of AI by AI Sakura-san
Tifana.com Social Implementation of AI by "AI Sakura-san” ◼ As an AI business, developed "AI Sakura-san" series as DX solutions that can be utilized in various issues faced by customers. ◼ “AI Sakura-san" is actively working in outdoor facilities, corporate chatbots, mental health care, etc. 【 Devel
Slide 19: AI Sakura-san won BOXIL SaaS AWARD Summer 2024
Selected as No. 1 in the "BOXIL SaaS AWARD Summer 2024" AI Sakura-san won "Good Service" and three other No.1 awards in the chatbot category in the “BOXIL SaaS AWARD Summer 2024” ■ She won "Good Service," "No. 1 in Service Stability," "No. 1 in Functional Satisfaction," and "No. 1 in Ease of Use" in
Slide 20: StrategIT officially launched JOINT iPaaS for SaaS
StrategIT officially launched “JOINT iPaaS for SaaS” ◼ StrategIT launches iPaaS platform "JOINT" for SaaS vendors as a new business axis. ◼ Shift to a stock-type revenue model while continuing conventional businesses such as SaaS integration development, API development support, and SaaS implementat
Slide 21: Service Introduction Video
Service Introduction Video Click below to watch the introductory video(Japanese Only) ： https://youtu.be/ug8iX5_mhKg?si=ZN5CMIjwtmf2uDxs ： https://youtu.be/Qnk6KDavah4?si=o6c9YF1D9S1RUgoD © 2024 HEROZ, Inc. 21
Slide 22: FY04/2024 Full-Year Performance (Consolidated)
04 FY04/2024 Full-Year Performance (Consolidated) © 2024 HEROZ, Inc. 22
Slide 23: Performance Summary (May 2023-April 2024)
Consolidated financial statements are disclosed from the third quarter of the fiscal year ending April 30, 2023. Performance Summary (May 2023-April 2024) Therefore, please note that comparisons with the previous period are based on figures that incorporate only 6 months of income statements of grou
Slide 24: Performance Overview (May 2023-April 2024)
Performance Overview (May 2023-April 2024) ◼ Net sales continued to grow significantly in the organic BtoB and BtoC businesses as the sales structure was strengthened and "Kishin Learning" performed Strong. ◼ AI2, which was acquired through M&A in November 2023, is included only for 5 months in the
Slide 25: Key Performance KPIs (by Quarter)
Key Performance KPIs (by Quarter) Net Sales EBITDA （Units: JPY Millions） （Units: JPY Millions） 1,400 300 1,296 ※ 279 281 1,100 1,217 1,209 258 256 1,200 1,118 1,114 250 ※Investments made to launch SaaS products 1,000 200 170 170 800 150 600 100 389 400 354 374 371 381 375 78 53 47 50 40 41 200 22 0
Slide 26: ARR amounts 3,357 mil JPY
Group-wide ARR of approximately 3.35 billion yen and continued growth ARR (By Quarter) ARR continues to grow （Units: JPY Millions） 3,400 YoY 3,357 18.7% YoY Growth Rate + +18.7％ Grouth 3,328 3,300 ARR amounts 3,357 mil JPY 3,200 ◼ Recurring revenue includes subscription sales in the BtoC and BtoB se
Slide 27: Recurring revenue shows a continuous increasing trend
Recurring revenue shows a continuous increasing trend. ◼ In May 2024, "HEROZ ASK" and "JOINT" were officially released. ◼ Expect full-scale increase in recurring-type sales from this fiscal year onward.. (Units: JPY millions) 1,400 Net Sales Recurring revenue Raito of Recurring revenue 100.0% 1,200
Slide 28: Recurring revenues are expected to continue to increase with product launches
Recurring revenues are expected to continue to increase with product launches Recurring revenue breakdown (by quarter) Details of revenues Future Outlook AI Squared package revenue. Expanding sales for call centers. YoY 900 (Units: JPY millions) +13.3% AI Squared recorded package sales for By coordi
Slide 29: Breakdown of SG&A expenses (Consolidated)
Breakdown of SG&A expenses (Consolidated) ■ Policy to control SG&A expenses through cost control. ■ The increase is due to investments in sales personnel and marketing related investments for the next fiscal year, including the launch of SaaS. Overall, the company will continue to strive for appropr
Slide 30: Cost of Sales Breakdown (Consolidated)
Cost of Sales Breakdown (Consolidated) ■ Aggressive hiring continues, mainly in engineering and business positions, for sales growth, and personnel expenses are steadily increasing at +24.0% YoY. ■ Achieve substantial growth for the group as a whole, while appropriately controlling outsourcing costs
Slide 31: Performance by Segments (May 2023-April 2024)
Performance by Segments (May 2023-April 2024) ■ AI/DX business continued to increase revenue through M&A and organic growth. EBITDA margin was also high at 37.4%. ■ AI Security business similarly maintained high profitability with an EBITDA margin of 41.3% FY04/2023 FY04/2024 YoY Full-Year Actual Yo
Slide 32: AI/DX Services Segment
AI/DX Services Segment ◼ This segment includes BtoC centered on Shogi Wars, BtoB for providing AI solutions to customers, SaaS implementation and SaaS-linked development business developed by StrategIT, and services in the contact center area developed by AI2. ◼ From the fiscal year ending April 202
Slide 33: AI/DX Segment: HEROZ's BtoB business sales growth
AI/DX Segment HEROZ's BtoB business achieved sales growth of slightly about 20% YOY HEROZ BtoB Business Sales BtoB Business Number of Active BtoB Quarterly headcount Trends Projects ・Although project orders were favorable, 4Q ・Net sales grew not due to specific high-unit- ・BtoB business model is bas
Slide 34: AI/DX Segment: BtoC Business continued to increase net sales
AI/DX Segment BtoC Business continued to increased Net sales BtoC business grew steadily due to the effects of increased attention to Shogi following Sota Fujii's first ever 8-kan championship, collaboration with the popular Shogi manga "Ban'ou", and the release of "Kishin Learning", an e-learning s
Slide 35: AI Security service Segment
AI Security service Segment ◼ This segment is developing the business of implementing the HEROZ Group's AI into the security business developed by Vario Secure. ◼ Recurring sales account for 87.4% of total sales, making it possible to generate stable sales. FY04/2024 Recurring sales ratio is high at
Slide 36: AI Security segment: Managed security services end-user base with low churn rate
AI Security segment Managed security services steadily increased end-user base with low churn rate Managed Security Services Churn Number of Managed Security Service End Rate Trends Users (at the end of each quarter) 3,091 Churn rate remains stable at below 1%. 3,038 • Steady quarterly 3,005 increas
Slide 37: Balance Sheet (as of April 30, 2024)
Balance Sheet (as of April 30, 2024) ◼ The cash and deposits currently held by the Company will be gradually appropriated for investments to realize the Company's mid- to long-term growth strategy. ◼ In intangible assets, there is a goodwill balance of about 1.9 billion yen. As of 4/30/2023 As of 4/
Slide 38: Forecast of FY04/2025 Performance
05 Forecast of FY04/2025 Performance © 2024 HEROZ, Inc. 38
Slide 39: Forecast of FY04/2025 Performance
Forecast of FY04/2025 Performance ■ Based on continued growth of existing businesses and the contribution of Tifana.com, a new group company, sales for the full year are expected to be 6 billion yen. ■ Operating profit is targeted at 500 million yen, given that the SaaS businesses of HEROZ ASK and J
Slide 40: Full-year forecast: Actual performance basis
Full-year forecast: Actual performance basis (excluding investment in SaaS-related products) ■ In FY4/2025, the company plans to increase investment in sales personnel, recruiting, and marketing related to new SaaS products, etc. ■ On the other hand, we will continue to strive for appropriate cost c
Slide 41: Initiatives in each Business Segment
06 Initiatives in each Business Segment © 2024 HEROZ, Inc. 41
Slide 42: Mortgage Fraud Detection AI System Begins Operation at Shizugin Credit Guarantee
HEROZ's Mortgage Fraud Detection AI System Begins Operation at Shizugin Credit Guarantee ◼ HEROZ and Shizugin Credit Guarantee Co., Ltd. to Implement Fraud Detection AI System for Use in Mortgage Loan Screening Operations. ◼ Practical application of fraud detection AI to begin in April 2024. Backgro
Slide 43: PJCS 2024 also introduces the Pokémon Battle Scope
PJCS 2024 also introduces the “Pokémon Battle Scope” ◼ Pokémon Battle Scope" was also used for the live streaming of the "Pokémon Japan Championships 2024" held on June 1 and 2. ◼ The system used in the Pokemon Ryuo Tournament has been improved and enhanced to double battle specifications. Developme
Slide 44: Kishin Analytics introduced for Shogi live broadcasts of the Meijin Tournament
Kishin Analytics" is introduced as the evaluation value of Shogi live broadcasts from the Meijin Tournament. ◼ Kishin Analytics," a Shogi AI analysis system, is now provided to the YouTube channel "Igo/Shogi ch Mainichi Shimbun" operated by the Mainichi Newspapers. ◼ Live streaming of the 82nd Meiji
Slide 45: Launched vulnerability assessment service
Launched vulnerability assessment service ◼ Comprehensive support for small and medium-sized businesses' security with the launch of vulnerability assessments and managed LAN/Wi-Fi Webアプリケーション診断 ペネトレーションテスト 脆弱性診断サービス プラットフォーム(ネットワーク)診断 スマートフォンアプリケーション診断 専用ツールによる Internet お客様の環境 自動診断 セキュリティエンジニア による手
Slide 46: AI SoC Project
AI SoC Project ◼ HEROZ's AI technology is used to promote a project to streamline network security operation and management tasks. ▍「AI SoC」 Project Project Summary Expected Benefits • Automation of technical support contact work previously • Achieve cost reduction and quality improvement. performed
Slide 47: Strengthen marketing initiatives
Strengthen marketing initiatives ◼ Solution website opened to the public and marketing measures strengthened. Aiming to increase demand through direct sales. ▍Solution site open to the public ▍Content Examples Consolidate cybersecurity-related content,Strengthen Archived Webinar Videos cross-selling
Slide 48: Value provided to future customers
Value provided to future customers • The sales style in this industry to date has been a system in which customers combine various functions to ensure security, but it has been difficult for our main customer base to select functions. • Going forward, we will provide optimal security packages to our
Slide 49: Vario Ultimate Zero service launched
Vario Ultimate Zero service launched ◼ Launched "Vario Ultimate ZERO," a zero-trust security service suited to the scale of small and midsize companies. ◼ From cloud computing to office environments, both security assurance and labor-saving operation and maintenance ▍Managed services for zero-trust
Slide 50: Frequently Asked Questions and Answers
07 Frequently Asked Questions and Answers © 2024 HEROZ, Inc. 50
Slide 51: Frequently Asked Questions and Answers
Frequently Asked Questions and Answers ◼ Some of the frequently asked questions and answers we receive in relation to our most recent financial results announcement. Q： Are there any factors that are likely to increase costs over the current fiscal year (ending April 2025), such as a significant inc
Slide 52: Notes
Notes ◼ The forward-looking statements contained in this material are based on information currently available to the Company, but are not guarantees of future performance and are subject to various risks and uncertainties. Actual results may differ from the forward-looking statements contained or d