Heroz, Inc. · TSE:4382
Heroz — Q3 FY04/2022 Earnings Presentation
25 slides from Heroz's earnings presentation, Mar 11, 2022
Slide 1: Presentation Material for FY04/2022 Q3 Financial Results
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 Japanese document, the latter shall prevail. Presentation Material for FY04/2022 Q3 Financial Results
Slide 2: Agenda
1. Business Overview 2. FY04/2022 Q3 Performance 3. Growth Strategy 4. Reference Materials
Slide 3: Company Overview
Company Overview 2021 Capital and business alliance with VarioSecure Name HEROZ, Inc. 2019 Listed on the First Section of Tokyo Stock Exchange (TSE) Location PMO Tamachi 2F, 5-31-17 Shiba, Minato-ku, 2018 Tokyo Listed on Tokyo Stock Exchange (TSE) Mothers Established April 2009 Capital and business
Slide 4: Our Vision
Our Vision Creating the future through artificial intelligence (AI) revolutions 4
Slide 5: Global Leader in Mind Game AI
Global Leader in Mind Game AI Chess AI Shogi AI Go AI Deep Blue (’97) AI developed by Google acquired Deep Mind defeated a engineers formerly (’14) professional Chess with HEROZ defeated AlphaGo, developed by player a professional Shogi Deep Mind, defeated a (Japanese Chess) professional Go player p
Slide 6: B-to-B Services: Machine Learning by Replacing Shogi Game Records with Other Data
B-to-B Services: Machine Learning by Replacing Shogi Game Records with Other Data Structural design data, Shogi game records financial data, etc. HEROZ Kishin Deep learning and other machine learning: MLaaS (Machine Learning as a Service) Shogi AI Construction AI, Finance AI, etc. MLaaS： What is Mac
Slide 7: B-to-B Services: Profit Model and High Switching Costs
B-to-B Services: Profit Model and High Switching Costs Research/develop Shogi AI Standardize AI technology accumulated through shogi AI Establish “HEROZ Kishin”=MLaaS （Machine Learning as a Service） Establish an infrastructure which allows HEROZ to provide AI services efficiently Client’s data sent
Slide 8: B-to-B Services: Engines included in HEROZ Kishin and Examples of Applications
B-to-B Services: Engines included in HEROZ Kishin and Examples of Applications ◼ Create AI products by combining engines and achieve an efficient operating structure Know-how on AI-related technology development and and R&D capabilities service operations (deep learning, etc.) (massive servers, etc.
Slide 9: B-to-B Services: Areas of Focus and Examples of Services Provided
B-to-B Services: Areas of Focus and Examples of Services Provided ◼ Focusing on construction, finance, and entertainment for the foreseeable future ◼ Earning structure is initial setup fee and ongoing fees *Examples of clients served Construc Fi- Enter- -tion nance tainment Creation of high-quality
Slide 10: B-to-B Services: horizontal x vertical expansion across industries
B-to-B Services: horizontal x vertical expansion across industries ◼ We aim to create industry-standard AI through horizontal and vertical expansion, applying into various industries ◼ After creating the industry-standard AI, we plan to form an ecosystem based on it Other industries Entertainment AI
Slide 11: B-to-C Services: Fees from Application Users
B-to-C Services: Fees from Application Users Charging fees for B-to-C content which user AI ◼ Leveraging AI-related technology to provide mind game mobile apps such as shogi ◼ Shogi Wars has remained cash cow backed by increase of paid users on a YoY basis ◼ Staying longer at home due to Covid-19 ha
Slide 12: 2. FY04/2022 Q3 Performance
1. Business Overview 2. FY04/2022 Q3 Performance 3. Growth Strategy 4. Reference Materials
Slide 13: Our Key Performance Indicator
Our Key Performance Indicator ◼ We believe that EBITDA, as calculated below, is our key performance indicator EBITDA = Operating Profit + Depreciation/Amortization Expenses ◼ In AI-related businesses, server investments, etc. are required to engage in advanced machine learning, leading to various de
Slide 14: Performance Overview (May 2021 - January 2022)
Performance Overview (May 2021 -January 2022) ◼ Net Sales:In the AI (BtoB) service, Net Sales in the third quarter (372 million yen) were almost the same level as the same period of the previous year, recovering from a decline due to the suspension of games with our AI in the entertainment area. In
Slide 15: Net sales and EBITDA Trends
Net sales and EBITDA Trends ◼ Net sales of AI (B-to-C) services increased compared with our forecast and the previous fiscal year led by “Shogi Wars” ◼ AI (B-to-B) services experienced a decrease following the termination of some existing projects, but new orders are expected to be received toward t
Slide 16: COGS and SG&A Trends
COGS and SG&A Trends ◼ SG&A expenses trended upward, with increases in depreciation and communications expenses due to the acquisition of servers for machine learning and other equipment (+104 millionyen year-on-year), personnel hiring expenses(+15 million yen), and R&D expenses (+34 million yen) (U
Slide 17: Balance Sheet (as of January 31, 2022)
Balance Sheet (as of January 31, 2022) ◼ On September 10, 2021, we entered into a capital and business alliance agreement with Vario Secure Inc. As a result, we acquired the shares of Vario Secure and positioned it as our affiliated company (19.95 million yen (including deal-related expenses)) ◼ We
Slide 18: 3. Growth Strategy
1. Business Overview 2. FY04/2022 Q3 Performance 3. Growth Strategy 4. Reference Materials
Slide 19: Medium-to-long term Growth Strategy
Medium-to-long term Growth Strategy ・EBITDA ◼ We plan to expand AI (B-to-B) services by what we have cultivated in our AI (B-to-C) services. We aim to create industry-standard AI, to form an ecosystem based on it, and to expand across industries B-to-B AI B-to-B ongoing fee Provide AI services （prof
Slide 20: Initiatives Aimed at Achieving the Growth Strategy
Initiatives Aimed at Achieving the Growth Strategy January 17, 2022 Collaboration with TASUKI Corporation to Accelerate Real Estate DX Promotion ◼ The creation of architectural plans and business income and expenditure statements in the construction of real estate is a challenge that tends to be per
Slide 21: 4. Reference Materials
1. Business Overview 2. FY04/2022 Q3 Performance 3. Growth Strategy 4. Reference Materials
Slide 22: Potential AI Demand in Our Areas of Focus
Potential AI Demand in Our Areas of Focus ◼ We believe there is also significant potential demand for enhancing operational efficiency through AI in the construction industry, which is one of our areas of focus ◼ There will be a shortage of 110,000 construction technicians by 2025 (source: Human Tou
Slide 23: Japan: Potential AI Demand is Among the Largest Worldwide
Japan: Potential AI Demand is Among the Largest Worldwide ◼ Potential AI demand in Japan can be expected to be among the largest worldwide, as the working population is expected to decrease significantly going forward Projection of Population Age 15-64 (Median Prediction Interval, 2020=100) ◼ When d
Slide 24: Use of Our AI in DX
Use of Our AI in DX ◼ Domestic DX (digital transformation) is expected to accelerate due to the future decrease in the working population as well as the impact of the COVID-19 pandemic ◼ AI allows for DX of a wide variety of operations including those involving decision- making, which were previousl
Slide 25: Disclaimer
Disclaimer The contents set out in this material are prepared based on generally acknowledged economic, social and other conditions, and on certain assumptions deemed rational by HEROZ, Inc. and may therefore be subject to change without prior notice due to changes in the managerial environment or f