Hennge K.k. · TSE:4475
Hennge K.k — Q4 FY09/2020 Earnings Presentation
70 slides from Hennge K.k's earnings presentation, Nov 13, 2020
Slide 1: 4Q FY09/2020 Consolidated Financial Results
Note: This is a translation of part of the original Japanese version and is provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail. 4Q FY09/2020 Consolidated Financial Results November 13,
Slide 2: Table of Contents
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Table of Contents 1. 4Q FY09/2020 Consolidated Financial Results 2. FY09/2021 Full-year Forecasts 3. Growth Strategy 4. Corporate Overview 5. Appendix 2
Slide 3: 4Q FY09/2020 Consolidated Financial Results (Financial Results)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results 4Q FY09/2020 Consolidated Financial Results (Financial Results) 3
Slide 4: Net Sales
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Net Sales (YoY, 12 months accumulated comparison, compared to 4Q FY09/2019 accumulated) Net sales increased by 21.2% YoY to 4.153 billion yen. Sales of HENNGE One, our key drive of growth, grew by 24.1% YoY. HENNGE One Professional s
Slide 5: Overview of Consolidated Financial Results
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Overview of Consolidated Financial Results (YoY, 12 months accumulated comparison, compared to 4Q FY09/2019 accumulated) (unit: million yen) 1. Net sales rose by 21.2% YoY to 4.15 billion yen. Sales of HENNGE One rose by 24.1% YoY to
Slide 6: Gross Profit
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Gross Profit (YoY, 12 months accumulated comparison, compared to 4Q FY09/2019 accumulated) Gross profit increased by 0.596 billion yen YoY to 3.417 billion yen. Gross profit margin was 82.3%, unchanged YoY and remains high. (unit: milli
Slide 7: Profit Attributable to Owners of Parent
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Profit Attributable to Owners of Parent (YoY, 12 months accumulated comparison, compared to 4Q FY09/2019 accumulated) SG&A to sales ratio decreased by 7.6pt YoY to 69.3% because money was not spent as planned. Profit attributable to ow
Slide 8: SG&A
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Structure of Operating Expenses (YoY, 12 months accumulated comparison, compared to 4Q FY09/2019 accumulated) SG&A to sales (unit: million yen) ratio 69.3% (SG&A to sales ratio) SG&A to sales YoY For other SG&A fees, office rents and r
Slide 9: SG&A
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Structure of Operating Expenses (QoQ compared to 2Q FY09/2020) (unit: million yen) QoQ (unit: million yen) For other SG&A fees, recruiting expenses has increased due to Other SG&A +17 proactively investing in sales recruitment. Adver
Slide 10: Net Sales and Operating Expenses
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Net Sales and Operating Expenses (unit: million yen) 10
Slide 11: Breakdown of Employees
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Breakdown of Employees 181 employees (Excluding part-time employees, as of 2020-09-30) 11
Slide 12: Number of Employees
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Number of Employees (unit: employee, Excluding part-time employees) 12
Slide 13: Cash Flow Statement
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Cash Flow Statement (YoY, 12 months accumulated comparison, compared to 4Q FY09/2019 accumulated) (unit: million yen) CF from operating activities increased by 0.77 billion yen. Most of our revenue came from upfront payments for annu
Slide 14: 4Q FY09/2020 Consolidated Financial Results (Business Activities)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results 4Q FY09/2020 Consolidated Financial Results (Business Activities) 14
Slide 15: Business Highlights
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Business Highlights ● Advertising and events ○ Online seminars with SaaS companies (Aug to Sep 2020) Held joint webinars with CloudSign, Cybertrust and Atlassian for HENNGE One ○ Hosting, sponsoring and participating in other online
Slide 16: Advertising and Events
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Advertising and Events Holding various online events Hanko-free and Make your work Zero Trust measures more open and secure! CloudSign × Cybertrust Atlassian × × HENNGE One HENNGE One * Hanko = stamps 16
Slide 17: New service
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results New service Release of ‘CHROMO’ (Aug 2020) Released ‘CHROMO’, a communication service that enables smooth two-way communication with community residents to municipalities nationwide. Municipalities Municipalities (Issues that municip
Slide 18: Business Investments & New Business Development
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Business Investments & New Business Development Aiming to expand into new business fields adjacent to its existing businesses, our focus is on business investment and new business development, along with R&D activities. One of the com
Slide 19: 4Q FY09/2020 Consolidated Financial Results (KPI Results)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results 4Q FY09/2020 Consolidated Financial Results (KPI Results) 19
Slide 20: HENNGE One KPI
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One KPI (YoY, compared to the end of 4Q FY09/2019) HENNGE One # of HENNGE One HENNGE One ARR contracted companies contracted users YoY +16.7% YoY +16.5% YoY +20.7% (as of 2020-09-30) (as of 2020-09-30) (as of 2020-09-30) (unit
Slide 21: HENNGE One KPI Highlights
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One KPI Highlights (compared to the end of previous fiscal year) 1. Average monthly churn rate over the past 12 months rose by 0.05pts to 0.16% compared to the end of FY09/2019 and remains low. 2. The number of user companies i
Slide 22: HENNGE One Gross Revenue Churn Rate
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One Gross Revenue Churn Rate Average monthly churn rate over the past 12 months for HENNGE One 0.16%, unchanged QoQ and remains high. A continuously stable and sustainable growth model has been achieved. * Gross Revenue Churn
Slide 23: HENNGE One Contracted Companies & Users
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One Contracted Companies & Users + 38 K users + 57 companies 23
Slide 24: HENNGE One ARR & ARPU
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One ARR & ARPU +20 yen per user +116 M yen 24
Slide 25: FY09/2021 Full-year Forecasts
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results FY09/2021 Full-year Forecasts 25
Slide 26: Our Policy of FY09/2021
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Our Policy of FY09/2021 The main elements of our policy regarding the consolidated financial outlook are as follows; Accelerate medium-term growth in HENNGE One ARR by aggressively investing in marketing and capture growth opportuniti
Slide 27: Overview of FY09/2021 Forecasts
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Overview of FY09/2021 Forecasts Accelerate medium-term growth in ARR from HENNGE One by investing aggressively in marketing and capture growth opportunities in the ‘new normal.’ (unit: million yen) 1. Sales of HENNGE One, which is ou
Slide 28: FY09/2021 Forecasts of Sales by Business
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results FY09/2021 Forecasts of Sales by Business Sales of HENNGE One is expected to grow by 21.3% YoY to 4.388 billion yen. Professional service (unit: million yen) (unit: million yen) HENNGE One and others 28
Slide 29: FY09/2021 Forecasts of Operating Expenses
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results FY09/2021 Forecasts of Operating Expenses Advertising expenses is expected to increase by 265.8% YoY to 0.615 billion yen. Operating expenses excluding advertising expenses is expected to increase by 13.6% to 3.916 billion yen. Opera
Slide 30: Changes in the Market Environment
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Changes in the Market Environment The number of companies using cloud services in Japan is expected to rapidly increase due to the impact of COVID-19. Domestic companies HENNGE Great East Japan Temporary cloud usage Approach early ad
Slide 31: Large-scale Digital Event
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Large-scale Digital Event (in FH of FY09/2021) The goal is to promote the future of SaaS in Japan and seize the opportunity by sharing the perspectives of both users and providers on SaaS utilization. Companies using the cloud Cloud
Slide 32: Growth Strategy
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Growth Strategy 32
Slide 33: Maximize LTV
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Maximize LTV LTV = ARR × Y × r Y = [Average contract duration in years] r = [Gross profit rate] ARR = N × n × ARPU N = [# of contracted companies] n = [Average # of contracted users per contracted company] ARPU = [Average Revenue Per
Slide 34: Maximize ARR
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Maximize ARR ARR = N × n × ARPU maximize N maximize n N = # of contracted n = Average # of contracted companies users per contracted company maximize ● Increase our sales force ● Target large companies ● Expand our business within th
Slide 35: Progress of Our Growth Strategy
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Progress of Our Growth Strategy (HENNGE One) With FY09/2021 as an inflection point, aim to accelerate ARR growth from FY09/2022 by focusing on increasing the # of contracted companies in the short term while increasing ARPU in the mid
Slide 36: Growth Strategy on and After FY09/2021
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Growth Strategy on and After FY09/2021 Create an inflection point in ARR growth by increasing the number of contracted companies (N) and ARPU. ARR Focus on raising ARPU and increasing the number of contracted companies(N) Mainly focus
Slide 37: Achieving a Passwordless World
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Achieving a Passwordless World Single-Sign-On (SSO) is a solution that eliminates the burden of managing multiple passwords. However, we will be introducing a next-generation technology that supports a secure, passwordless environmen
Slide 38: Growth Strategy on and After FY09/2021
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Growth Strategy on and After FY09/2021 Grow with the trend of businesses adopting SaaS as HENNGE One is an IDaaS. Currently integrates with over 150 Cloud services and more Establish SaaS platform 38
Slide 39: Corporate Overview
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Corporate Overview 39
Slide 40: Corporate Profile
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Corporate Profile Company name：HENNGE K.K. Executives: Kazuhiro Ogura Representative Director & Chief Executive Officer Kazuaki Miyamoto Representative Director & Executive Vice President Yoshiki Nagatome Kazuhiro Ogura Kazuaki Miyamoto
Slide 41: Locations
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Locations Japan Taiwan Nagoya branch office 2016/8 Tokyo Head office Osaka branch office 2015/6 Fukuoka branch office 2018/8 41
Slide 42: Liberation of Technology
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results VISION We want to deliver the power of technology to as many people as we can. Liberation of Technology テクノロジーの解放 42
Slide 43: History
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results History Our business domain is ever-changing, but our will remains steadfast. Linux server management eCRM software HENNGE One IoT as a Service Establishment software HDE Customers Care (f.k.a. HDE mail service) HENNGE Workstyle HDE
Slide 44: Sales Structure by Business
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Sales Structure by Business 87.1% of net sales comes from HENNGE One business. (as of 4Q FY09/2020 accum.) 44
Slide 45: HENNGE One
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One Identity as a Service (IDaaS) Provides centralized authentication to various SaaS-es, with Single-Sign-On (SSO) technology ID federation Access control Customizable policy Administrator Various cloud services Microsoft 365
Slide 46: HENNGE One Key Features
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One Provides a balanced work environment of both convenience and security through five key features 1. HENNGE Access Control Unknown device Deny 3. HENNGE Email DLP Local device Content filtering Delayed sending encryption File
Slide 47: HENNGE One Solid Customer Base
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One Solid Customer Base HENNGE One is used by 1,667 customers in various industries, and has 1.95 million users. (as of 2020-06-30) Breakdown by Contracted Users Size (ARR Basis) (as of 4Q FY09/2020) and more 47
Slide 48: Appendix (Total Addressable Market)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Appendix (Total Addressable Market) 48
Slide 49: Cloud Adoption Rate in Japan
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Cloud Adoption Rate in Japan Cloud adoption rate in Japane is 18％. There is enough market capacity to expand in Japan. (Reference: Press release ‘Latest Survey Finds Average Cloud Computing Adoption Rate of 18% in Japan’ in May 2020
Slide 50: HENNGE One Domestic Market Share
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results HENNGE One Domestic Market Share Cloud-type Single Sign-on Service Approx. 12.8 % of listed Japanese companies are using Based on HENNGE One shipment quantity （in-company investigation, as of 2020-09-30) Top Share Approx. 1,169 avera
Slide 51: Growth in # of Contracted Companies(N)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Growth in # of Contracted Companies(N) Lots of potential markets still exist within Japan, so we will first reach out to companies with 300+ employees for acquisition cost-effectiveness. (References: 'Economic Census -Activity Survey R
Slide 52: Growth in # of Contracted Companies(N)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Growth in # of Contracted Companies(N) We will focus on increasing our customers not only in Tokyo, but also in Tokai, Kansai, Kyushu area for first-mover advantage. Tokyo Osaka Fukuoka Nagoya 52
Slide 53: Appendix (Other)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Appendix (Other) 53
Slide 54: Impact of COVID-19
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Impact of COVID-19 Impact during FY09/2020 ○ As some events and seminars for customer acquisition were postponed, advertising expenses in FY09/2020 was lower than initially planned. ○ New orders in the second half of FY09/2020 were p
Slide 55: Recurring Revenue Ratio
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Recurring Revenue Ratio Recurring revenue ratio grew 1.1pt YoY to 97.1％. We will continue to achieve a strong and stable recurring revenue model. (unit: million yen) 55
Slide 56: Diversity & Inclusion
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Diversity & Inclusion We are focusing our efforts on the Global Internship Program (GIP) to not only provide career development opportunities for the most talented candidates from all over the world, but also to be the precedent organ
Slide 57: Appendix (Frequently Asked Questions)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Appendix (Frequently Asked Questions) 57
Slide 58: Frequently Asked Questions
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Frequently Asked Questions ● What kind of companies are ‘HENNGE One’ partners? Our partners are primarily Microsoft 365 and Google Workspace resellers. They are also companies that support system integration for a specific region or g
Slide 59: Past Materials (New Services, etc.)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Past Materials (New Services, etc.) 59
Slide 60: New Service
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results New Service Release of ‘HENNGE Workstyle’ (Feb 2019) Improve your workstyle through IoT and the Cloud 60
Slide 61: New Service
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results New Service Release of ‘Chromo Education’ (April 2019) Provide fast and reliable communication between local governments and their residents to protect our children. 61
Slide 62: New Plan
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results New Plan New plan of ‘HENNGE One’ (June 2019) 62
Slide 63: New Plan
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results New Plan Announcement of ‘HENNGE One for Education’ (Jun 2020) In response to ‘GIGA School Program’ advocated by the Japanese Ministry of Education, Culture, Sports, Science and Technology (MEXT), ‘HENNGE One for Education’ has becom
Slide 64: Past Materials (Our Surveys, etc.)
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Past Materials (Our Surveys, etc.) 64
Slide 65: Our Survey
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Our Survey SaaS usage survey to our clients (Dec 2019) On average, our clients are using 7 cloud services per company, and 24% of them are using 10 cloud services. (# of companies) (# of cloud services) Survey overview: SaaS usage su
Slide 66: Our Survey
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Our Survey Correlation between SaaS usage and remote work (Mar 2020) 17.2% of companies are using more than one SaaS, 65% of companies that are already using SaaS have adopted remote work, while only 12.7% of companies that are not u
Slide 67: Our Survey
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results Our Survey Correlation between remote work and VPN usage (June 2020) Q. Has your company used VPN in adopting remote Q. Has your company faced any problems with work during and after the state of emergency? VPN during and after the s
Slide 68: VPN Usage
HENNGE K.K. (4475:TYO) 4Q FY09/2020 Consolidated Financial Results VPN Usage VPN is a technology that grants secure access to company data from outside company premises in exceptional cases, to a configuration that was originally designed to only be used within company premises. We believe that the i
Slide 69: Disclaimer
Disclaimer This document has been prepared by HENNGE K.K. (the “Company”) solely for information purpose. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company in Japan, th
Slide 70: HENNGE
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