Cybertrust Japan Co.ltd. · TSE:4498

Cybertrust Japan Co.ltd — FY2023 Q2 Earnings Presentation

59 slides from Cybertrust Japan Co.ltd's earnings presentation, Oct 25, 2023

1. Slide 1: FY2023 Q2 Financial Results

   Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. FY2023 Q2 Financial Results Second Quarter of the Fiscal Year Ending March 31, 2024

2. Slide 2: Executive Summary

   ▌Executive Summary FY2023 Q2 Increase in both sales and profit compared to the same period of the Financial Results previous year Achieved record high net sales and operating income for the second quarter Authentication and Made good progress due to factors such as iTrust-based identity verification

3. Slide 3: Agenda

   ◼ FY2023 Q2 Financial Summary Agenda ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 3 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

4. Slide 4: FY2023 Q2 Financial Summary

   ◼ FY2023 Q2 Financial Summary ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 4 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

5. Slide 5: FY2023 Q2 Consolidated Results (6 months)

   ▌FY2023 Q2 Consolidated Results (6 months) Year-on-year increase in both sales and profits, record high Q2 net sales and operating income 2,981 million yen Net sales rose 3.6% YoY to Operating income increased 3.7% YoY to 425 million yen ◼ Strong build-up of recurring service sales under Authenticat

6. Slide 6: Trend in Quarterly Sales by Transaction Type

   ▌Trend in Quarterly Sales by Transaction Type Growth driven by Record high Q2 recurring service sales ratio of 67.0% high growth-driver services (Millions of yen) Professional services 1,729 1,661 Licenses 1,536 1,560 1,537 Recurring services 1,468 1,468 1,443 1,408 490 1,367 497 1,234 401 374 1,221

7. Slide 7: Sales by Service Segment

   ▌Sales by Service Segment ◼ Authentication and Security Strong performance by recurring services such as significant growth in iTrust, a high-growth-driver service, due to expansion of digital transformation market Net sales including recurring sales posted steady growth year on year, rising 9% ◼ Li

8. Slide 8: Overview by Service Segment

   ◼ FY2023 Q2 Financial Summary ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 8 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

9. Slide 9: Authentication and Security Services Performance and Initiatives

   ▌Authentication and Security Services | Performance and Initiatives by Service Segment Recurring services grew led by high-growth-driver service iTrust (Unit: Millions of yen) Recurring service sales ratio of 83.4% (+0.5pt YoY) Authentication and security service net sales FY22 H1 FY23 H1 YoY Change

10. Slide 10: Quarterly Trend in KPI of High-Growth-Driver Service iTrust

    ▌Quarterly Trend in KPI of High-Growth-Driver Service iTrust Number of iTrust transactions (number of paid API use) (Number of transactions) 6,559,760 Number of transactions 6.55 million per quarter *In Q2, identity verification using Individual Number Cards grew more than expected due to benefits s

11. Slide 11: Initiatives to Expand Scope of Use of iTrust

    ▌Initiatives to Expand Scope of Use of iTrust First use of electronic consent forms in Collaboration aimed at the spread of Examples of use in local governments the healthcare industry! electronic seals iTrust (Identity Verification) iTrust (Digital Signature) iTrust (Electronic Seal) Adoption of el

12. Slide 12: Overview by Service Segment

    ◼ FY2023 Q2 Financial Summary ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 12 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

13. Slide 13: Linux Support Progress and Initiatives

    ▌Linux Support Progress and Initiatives Increase in number of contracts for CentOS extended support, aiming for preparations for Q4 Extended support demand for CentOS7 expected to be Increase in number of contracts up to more than triple with major companies - (Linux systems) Comparison of “installe

14. Slide 14: Initiatives Aimed at Expansion of Sales of Linux Support

    ▌Initiatives Aimed at Expansion of Sales of Linux Support Start of provision of CentOS Extended Support LITE Start of provision of Linux Live Patch Service CentOS Extended Support LITE Linux Live Patch Service Can be implemented from a single server for Providing live patches enabling security updat

15. Slide 15: AlmaLinux Progress and Initiatives

    ▌AlmaLinux Progress and Initiatives Amicable problem resolution with RedHat Promotion of joint development with AlmaLinux Build strong partnerships in the domestic market with AlmaLinux, which is the strongest candidate for a successor to CentOS 23/5 Partnership announcement concerning AlmaLinux Exp

16. Slide 16: Overview by Service Segment

    ◼ FY2023 Q2 Financial Summary ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 16 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

17. Slide 17: IoT Services Performance and Initiatives

    ▌IoT Services | Performance and Initiatives by Service Segment Although EMLinux support grew, professional services remained flat (Unit: Millions of yen) ■ EMLinux support contracts increased, and recurring service sales IoT service net sales grew FY22 H1 FY23 H1 YoY Change (Sales by transaction typ

18. Slide 18: EMLinux Initiatives to Address Security Risks in Supply Chains

    ▌EMLinux Initiatives to Address Security Risks in Supply Chains Obligations on manufacturers are being clarified and expanding in scope Start of provision of EMLinux supporting security legislation Environment surrounding supply chain security EMLinux SBOM vulnerability management on a device basis

19. Slide 19: Overview of Others

    ◼ FY2023 Q2 Financial Summary ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 19 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

20. Slide 20: Cybertrust Japan's Initiatives Driving OSS Security

    ▌Cybertrust Japan’s Initiatives Driving OSS Security First support for global standardization as a thought leader Expansion of impact of security in the Cybertrust Japan is focusing on three of the software supply chain ten streams of the OSS Security Mobilization Plan Improved SBOMs Digital Softwar

21. Slide 21: FY2023 Full-Year Forecast

    ◼ FY2023 Q2 Financial Summary ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 21 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

22. Slide 22: FY2023 Full-Year Forecast

    ▌FY2023 Full-Year Forecast High growths in excess of 20% in net sales and in excess of 30% in operating income Recurring growth is expected to continue with high-growth-driver services YoY change FY22 FY23 Change Rate of change Unit: Millions of yen Net sales 6,167 7,500 +1,332 +21.6% Operating inco

23. Slide 23: FY2023 Dividend Forecast

    ▌FY2023 Dividend Forecast As of the beginning of FY2023, Cybertrust forecasts to pay 17.50 yen per share as dividend, which is the same amount as that it paid in FY2022. Cybertrust’s basic dividend policy is to pay dividends from the surplus, once a year, as year-end Dividend dividend in a stable an

24. Slide 24: APPENDIX

    ◼ FY2023 Q2 Financial Summary ◼ Overview by Service Segment  Authentication and Security Services  Linux/OSS Services  IoT Services  Overview of Others ◼ FY2023 Full-Year Forecast ◼ APPENDIX 24 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

25. Slide 25: Numeric data

    Numeric data 25 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

26. Slide 26: Forecast for the Year Ending March 31, 2024 (Sales by Service)

    ▌ Forecast for the Year Ending March 31, 2024 (Sales by Service) Authentication and security Linux / OSS IoT (Millions of yen) (Millions of yen) (Millions of yen) 3,900 1,900 1,700 3,543 +10.1% +31.3% +44.5% (YoY) (YoY) (YoY) 1,447 1,176 FY22 FY23 FY22 FY23 FY22 FY23 Contract development recovered,

27. Slide 27: Composition ratio of major products to recurring service sales

    ▌ Composition ratio of major products to recurring service sales of Authentication and Security service Device-based ID, iTrust has grown steadily, following server certificates. 100% 0.4% 1.1% 2.6% 4.4% 6.1% 7.4% 9.6% 12.3% 15.5% iTrust 90% Continued high growth and expansion of the revenue scale i

28. Slide 28: Cost structure

    ▌ cost-structure Amortization expenses increased due to capital investment required for continuous growth of recurring services. Changes in Costs and expenses (Consolidated) (Millions of yen) Capital investment policy Operating Operating 425 Aggressive investment in facilities and self-developed sof

29. Slide 29: Consolidated PL (Detailed Sales by Service)

    ▌ Consolidated PL (Detailed Sales by Service) Consolidated Financial Results (Millions of yen) FY20 FY21 FY22 Net sales 4,895 5,731 6,167 Authentication and security services 2,925 3,359 3,543 License 126 203 155 Professional services 592 567 448 Recurring service 2,205 2,588 2,939 Linux/OSS service

30. Slide 30: Consolidated BS

    ▌ consolidated BS (Millions of yen) End of Mar. 2021 End of Mar. 2022 End of Mar. 2023 YoY comparison Current assets 3,124 4,613 5,401 +788 Cash and deposits 1,962 3,577 4,366 +788 Trade notes and accounts receivable 893 861 878 +16 And Contract Assets Fixed assets 2,725 2,606 2,465 △141 Property, p

31. Slide 31: Major Consolidated Management Indicators

    ▌ Major Consolidated Management Indicators Net sales Book value per share (BPS) Return on equity (ROE) (Millions of yen) (Unit: yen) (%) 6,167 699.26 13.8 5,731 610.12 12.2 526.35 11.2 4,895 FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 Operating income and operating income margin Earnings per share

32. Slide 32: Corporate Information

    Corporate Information 32 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

33. Slide 33: Corporate Philosophy and Mission

    ▌ Corporate Philosophy and Mission Security and Trust We will realize a Safe and Secure Digital Society As a socially responsible company, We recognize that “responding to the Sustainable Development Goals (SDGs)” is a key management issue. Through our business and corporate activities, we work to r

34. Slide 34: SDGs Initiatives

    ▌SDGs Initiatives Contributing to the Realization of a Sustainable Society Along with Business Growth Social Issues Addressed through Business Activities Social Issues Addressed through Corporate Activities By promoting trust services to support DX Achieving corporate growth by creating resilient or

35. Slide 35: About Us

    ▌ About Us Company Name Cybertrust Japan Co., Ltd. ■Certification services and security solutions businesses ■Develop Linux OS, use OSS for enterprise Business Activities Software development, support and consulting services Date of Establishment June 1, 2000 ■IoT related business and embedded Linux

36. Slide 36: Business Overview

    Business Overview 36 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

37. Slide 37: Issues Solved by Cybertrust and Value Provided

    ▌ Issues Solved by Cybertrust and Value Provided Providing essential trust services in the era of digital transformation (DX) people, experiences and things Issues for digitalization Identity theft ⚫ Longest operation track (people, infrastructure connecting New safe and secure civil things) record

38. Slide 38: Business Overview

    ▌Business Overview Cybertrust provides original Trust services for solving DX issues by combining Authentication and security and Linux/OSS technologies. Trust Services Authentication/security IoT Linux/OSS digital authentication expertise Embedded Linux Linux/OSS expertise Operating domestic certif

39. Slide 39: Overview of Authentication and Security Services

    ▌ Overview of Authentication and Security Services Providing trust services for areas such as digital certificate, digital Identity verification and digital signature - the ‘ID cards’ of the digital economy An operation track record as Japan’s first commercial certification authority and one conform

40. Slide 40: Overview of Linux / OSS Services

    ▌ Overview of Linux / OSS Services Japan’s only Linux/OSS distributor run by a group of engineers active in the global OSS community Application Application General Siers Building application systems on operating systems Application domain Linux distributions Functions needed for the Linux kernel ar

41. Slide 41: Overview of IoT Services

    ▌ Overview of IoT Services Providing technology expertise ranging from Linux operating systems for IoT devices to authentication and lifecycle management providing secure operation of IoT devices used to verify IoT device authenticity enabling lifecycle management of IoT devices Linux/OSS technology

42. Slide 42: Medium-Term Management Plan

    Medium-Term Management Plan 42 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

43. Slide 43: BizX 20/40 (Medium-Term Management Plan)

    Re-post : FY2023 Q1 Financial Results ▌BizX 20/40 (Medium-Term Management Plan) Medium-Term Achieve dramatic growth in performance over three years from FY2022 Management Plan through initiatives to address the five key themes for business transformation 1 Organization growth and human 2 3 New marke

44. Slide 44: BizX 20/40 (Medium-Term Management Plan)

    Re-post : FY2023 Q1 Financial Results ▌BizX 20/40 (Medium-Term Management Plan) Net sales target to be achieved by FY2024: 10.0 billion yen Operating income of 2.0 billion yen or more by FY2024 Aim for 20% growth in CAGR centered on recurring • Operating margin goal of 20 to 24% sales of various ser

45. Slide 45: BizX 20/40 (Medium-Term Management Plan)

    Re-post : FY2023 Q1 Financial Results ▌BizX 20/40 (Medium-Term Management Plan) Aim for net sales of 10 billion yen and operating income of 2 billion yen in 2024 through stable, high-revenue services and high-growth-driver services High-growth-driver services iTrust Linux support High-growth-driver

46. Slide 46: iTrust (Identity Verification) Business Model

    High-growth-driver services Re-post : FY2023 Q1 Financial Results Authentication ▌1. iTrust (Identity Verification) Business Model and Security Adoption of Individual Number Cards to Increase in online identity verification Increase in iTrust transactions continue usage Expectations on increased usa

47. Slide 47: iTrust (Digital Signature) Business Model

    High-growth-driver services Re-post : FY2023 Q1 Financial Results Authentication ▌2. iTrust (Digital Signature) Business Model and Security Expansion of scope of use of digital Further progress in digitalization Increase in iTrust transactions signatures Digitalization advancing as society breaks aw

48. Slide 48: Realize Growth of Recurring Business through Paid Support Business

    High-growth-driver services Re-post : FY2023 Q1 Financial Results ▌ 3. Realize Growth of Recurring Business through Paid Support Business Linux/OSS Two pillars Indicators for business Paid Linux/OS Support expansion Growth from increase in number of [1] International collaborations new contracts and

49. Slide 49: Realize Growth of Recurring Business through Expansion of EMLinux Business

    High-growth-driver services Re-post : FY2023 Q1 Financial Results IoT ▌ 4. Realize Growth of Recurring Business through Expansion of EMLinux Business Increase in number of EMLinux contracts Transition to recurring business Adopted by IoT device developers to comply with IoT security requirements bot

50. Slide 50: Collaboration with OSS Global Community Leading to Business Expansion

    Re-post : FY2023 Q1 Financial Results ▌Collaboration with OSS Global Community Leading to Business Expansion Cybertrust Japan’s concept regarding Contributing to and driving forward OSS Achievement from collaboration with OSS community activities Security Mobilization Plan OSS community Provision of

51. Slide 51: Glossary ①

    ▌ Glossary ① Term Description Digitized identity certificates that properly certify and identify targets. These certificates verify the authenticity of digital certificate people, goods, etc. by examining and issuing them by a certification authority as a reliable third-party organization. Preventin

52. Slide 52: Glossary ②

    ▌ Glossary ② Term Description A digital certificate that installs a certificate on the user’s device (such as a PC or smartphone) to authenticate the Client certificate user as the authorized user. There are two main types: User certificates and device certificates. Issued to information devices suc

53. Slide 53: Glossary ③

    ▌ Glossary ③ Term Description RHEL Abbreviation for Red Hat Enterprise Linux. A Linux distribution developed and sold by Red Hat for business use. CentOS Community-based free LinuxOS that is highly compatible with RHEL A nonprofit organization of users, developers and fans created mainly to develop,

54. Slide 54: Glossary ④: Security-Standard FIPS 140-3

    ▌ Glossary ④: Security-Standard "FIPS 140-3" Summary Standard for cryptographic modules established by the National Institute of Standards and Technology (NIST:National What is FIPS 140-3? Institute of Standards and Technology) that was certified in March 2019. Functions as a standard for realizing

55. Slide 55: Product name comparison table

    ▌ Product name comparison table Function Official product name Abbreviations in this document 【Authentication and Security] SSL/TLS server certificate SureServer SureServer device authentication Cybertrust Device ID Device ID Certification bureau outsourcing services Cybertrust Managed PKI Managed P

56. Slide 56: Product and Service Introduction Pages

    ▌ Product and Service Introduction Pages Product and service introduction page URL CyberTrust Co., Ltd. Web website https://www.cybertrust.co.jp/(Link) 【Authentication and Security] SureServer service https://www.cybertrust.co.jp/sureserver/(Link) Cybertrust Device ID Service https://www.cybertrust.

57. Slide 57: Press Release List (FY23 Q2～)

    ▌ Press Release List ( FY23 Q2～ ) 07.05 07.18 08.02 08.08 Cybertrust Japan to DX ongoing customer Cybertrust Japan Collaborates with Cybertrust Japan Launches iTrust Cybertrust Japan Adopts Persefoni's management operations for financial Accessilens to Improve Website certificate for e-seal, enablin

58. Slide 58: Disclaimer

    ▌ Disclaimer ◼ The materials and information provided in this presentation contain ‘forward-looking statements’. ◼ They are based on current expectations, forecasts and risk-bearing assumptions, and involve uncertainties that could lead to results that differ materially from these statements. ◼ Thes

59. Slide 59: Security and Trust

    Security and Trust Copyright Cybertrust Japan Co., Ltd. All rights reserved. 59 Copyright Cybertrust Japan Co., Ltd. All rights reserved.

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