Hennge K.k. · TSE:4475
Hennge K.k — Q2 FY09/2020 Earnings Presentation
57 slides from Hennge K.k's earnings presentation, May 2020
Slide 1: 2Q FY09/2020 Consolidated Financial Results
Note: This is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail. 2Q FY09/2020 Consolidated Financial Results May 2020 HENNG
Slide 2: Table of Contents
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Table of Contents 1. COVID-19 Impact and Responses 2. 2Q FY09/2020 Consolidated Financial Results 3. FY09/2020 Full-year Forecasts 4. Growth Strategy 5. Corporate Overview 6. Appendix 2
Slide 3: COVID-19 Impact and Responses
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results COVID-19 Impact and Responses 3
Slide 4: Our Business Model
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Our Business Model Our business model is characterized by the followings; ● Recurring revenue model 97.3％ of net sales is recurring revenue in this quarter. We have achieved a strong and stable recurring revenue model. ● Annual upfro
Slide 5: Impact of COVID-19
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Impact of COVID-19 While recruitment and customer acquisition activities will be affected to a certain extent in the short term, we anticipate that the demand related to diverse working styles will accelerate in the future over the m
Slide 6: Our Response to COVID-19
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Our Response to COVID-19 To prevent the spread of COVID-19 and to ensure safety, we are working on the followings; ● We have been experimenting with non-territorial office and remote work about one day a week for some employees. ● Af
Slide 7: Our Response to COVID-19
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Our Response to COVID-19 We want to deliver the power of technology to as many people as we can. ● Free online forum for information sharing and problem solving among Internal IT persons of HENNGE One user companies ● Free cloud-base
Slide 8: Financial Results
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results 2Q FY09/2020 Consolidated Financial Results (Financial Results) 8
Slide 9: Net Sales
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Net Sales (YoY, 6 months accumulated comparison, vs 2Q FY09/2019 accumulated) Net sales increased by 21.0% YoY to 1.953 billion yen. Net sales of HENNGE One, which is our key driver of growth, grew by 25.8% YoY. HENNGE One Profession
Slide 10: Overview of Consolidated Financial Results
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Overview of Consolidated Financial Results (YoY, 6 months accumulated comparison, vs 2Q FY09/2019 accumulated) (unit: million yen) 1. Net sales rose by 21.0% YoY to 1.95 billion yen . Net sales of HENNGE One rose by 25.8% YoY to 1.71
Slide 11: Gross Profit
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Gross Profit (YoY, 6 months accumulated comparison, vs 2Q FY09/2019 accumulated) Gross profit increased by 0.274 billion yen YoY to 1.596 billion yen. Gross profit margin improved by 0.2pt YoY to 81.7%. It remains at a high level. (u
Slide 12: Profit Attributable to Owners of Parent
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Profit Attributable to Owners of Parent (YoY, 6 months accumulated comparison, vs 2Q FY09/2019 accumulated) SG&A to sales ratio decreased by 6.2pt YoY to 75.2%. We continued the proactively investing into future growth. Profit attrib
Slide 13: SG&A: Structure of Operating Expenses
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Structure of Operating Expenses (YoY, 6 months accumulated comparison, vs 2Q FY09/2019 accumulated) (unit: million yen) SG&A to sales ratio 75.2 % (SG&A to sales ratio) SG&A to sales YoY ratio As for the other SG&A fee, Office rents
Slide 14: SG&A: Structure of Operating Expenses (QoQ)
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Structure of Operating Expenses (QoQ, vs 1Q FY09/2020) (unit: million yen) QoQ (unit: million yen) As for the other SG&A fees , traveling and transportation expenses and entertainment Other SG&A -32 expenses decreased due to COVID-19
Slide 15: Breakdown of Employees
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Breakdown of Employees HENNGE One Dev./ R&D Others 25 15.4% 22.2% 36 Professional services 162 HENNGE One Sales 11.1% 18 employees 44 27.2% Business Dev. Overseas 4 2.5% 35 HENNGE One Customer Success (Excluding part-time employees,
Slide 16: Business Results
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results 2Q FY09/2020 Consolidated Financial Results (Business Results) 16
Slide 17: Business Highlights
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Business Highlights ● Advertising and events ○ Proactively promotion and recruitment in Tokai and Kansai (Jan to Feb 2020) Participated in ‘Japan IT Week 2020 Kansai’ and started sponsoring ZIP-FM, a popular radio station in the Toka
Slide 18: Advertising and Events
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Advertising and Events Proactive promotion and recruiting in Tokai and Kansai (Jan to Feb 2020) In addition to strengthening relationships with partners and leveraging recruitment agents to enhance recruitment, we participated in ‘Ja
Slide 19: Our Response to COVID-19
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Our Response to COVID-19 Strengthened support for local governments/companies trying to fight against COVID-19 (from Feb 2020) For local governments Providing a free cloud-based communication platform to prevent the spread of COVID-1
Slide 20: Our Survey
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Our Survey Survey on correlation between SaaS usage and remote work (Mar 2020) According to our survey results, 17.2% of companies are using more than one SaaS, and 65% of companies using SaaS adopt remote working, while only 12.7% o
Slide 21: KPI Results
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results 2Q FY09/2020 Consolidated Financial Results (KPI Results) 21
Slide 22: HENNGE One KPI
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One KPI (YoY, vs the end of 2Q FY09/2019) # of HENNGE One # of HENNGE One contracted HENNGE One ARR contracted companies users YoY +19.3% YoY +24.5% YoY +23.0% (as of 2020-03-31) (as of 2020-03-31) (as of 2020-03-31) (unit: co
Slide 23: HENNGE One KPI Highlights
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One KPI Highlights (compared to the end of the previous fiscal year, vs the end of FY09/2019) 1. Average monthly churn rate over the past 12 months for HENNGE One rose by 0.06pt 0.18%. It remains at a low level. compared to th
Slide 24: HENNGE One Churn Rate
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One Churn Rate Average monthly churn rate over the past 12 months for HENNGE One rose by 0.05pt QoQ to 0.18%. It remains at a low level. We continue to achieve a stable and sustainable growth model. Average monthly churn rate
Slide 25: HENNGE One Contracted Companies & Users
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One Contracted Companies & Users + 48 thousand users + 61 companies 25
Slide 26: HENNGE One ARR & ARPU
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One ARR & ARPU +40 yen per user +0.166 billion yen 26
Slide 27: FY09/2020 Full-year Forecasts
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results FY09/2020 Full-year Forecasts 27
Slide 28: Overview of FY09/2020 Full-year Forecasts
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Overview of FY09/2020 Full-year Forecasts (unit: million yen) 1. There is no change to our full-year forecast from the announcement at the beginning of the fiscal year. 2. Net sales is expected to grow by 19.9% on a YoY basis. Operat
Slide 29: FY09/2020 Forecasts of Net Sales by Business
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results FY09/2020 Forecasts of Net Sales by Business The progress rate of this quarter’s net sales of HENNGE One towards the full-year forecast was 47.5%. HENNGE One Professional service and others (unit: million yen) (unit: million yen) Ful
Slide 30: FY09/2020 Forecasts of Operating Expenses
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results FY09/2020 Forecasts of Operating Expenses The progress rate of this quarter’s operating expenses towards the full-year forecast was 47.4%. Although there may be a decrease in upfront investments for future growth due to the postponem
Slide 31: Growth Strategy
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Growth Strategy 31
Slide 32: Maximize LTV
HENNGE K.K. (4475:TYO) Q2 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 33: Maximize ARR
HENNGE K.K. (4475:TYO) Q2 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 - Increase our sales force maximize - Increase our customer success power ARR - Expand our b
Slide 34: Progress of Our Growth Strategy
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Progress of Our Growth Strategy (HENNGE One) Focus on increasing # of contracted companies in the short term, while aiming to increase ARPU in the medium to long term. 34
Slide 35: Our Growth Strategy on and After FY09/2021
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Our Growth Strategy on and After FY09/2021 Because HENNGE One is an IDaaS, we will grow together with the SaaS adoption in business. Communication SaaS SaaS for File exchange sales/marketing SaaS SaaS for SaaS for HR accounting Estab
Slide 36: Corporate Overview
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Corporate Overview 36
Slide 37: Corporate Profile
HENNGE K.K. (4475:TYO) Q2 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 Director & Executive Vice Pr
Slide 38: Locations
HENNGE K.K. (4475:TYO) Q2 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 38
Slide 39: Liberation of Technology
HENNGE K.K. (4475:TYO) Q2 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 39
Slide 40: History
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results History Our business domain is ever-changing, but our will remains steadfast. Linux server management software Establishment HENNGE One HDE Controller eCRM software IoT as a Service HDE Customers Care (f.k.a. HDE mail service) HENNGE
Slide 41: Sales Structure by Business
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Sales Structure by Business 87.9% of net sales is that of HENNGE One business in this quarter. (as of 2Q FY09/2020) 41
Slide 42: HENNGE One
HENNGE K.K. (4475:TYO) Q2 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 LAN User man
Slide 43: HENNGE One Features
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One Also provides useful features that help companies to move their workload onto the cloud. 1. HENNGE Access Control Unknown device Deny 3. HENNGE Email DLP Local device Content filtering Delayed sending encryption File attach
Slide 44: HENNGE One Solid Customer Base
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One Solid Customer Base HENNGE One is used by 1,548 customers in various industries, and used by 1.824 million users. (as of 2020-03-31) 44
Slide 45: Appendix
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Appendix 45
Slide 46: Recurring Revenue Ratio
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Recurring Revenue Ratio Recurring revenue ratio grew 1.3pt YoY to 97.3％. We continue to achieve a strong and stable recurring revenue model. (unit: million yen) 46
Slide 47: HENNGE One Domestic Market Share
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results HENNGE One Domestic Market Share Cloud-type Single Sign-on Service About 12% of Japanese listed companies are Based on shipment quantity using HENNGE One （in-company investigation, as of 2020-03-31) Top Share Average of contracted us
Slide 48: Growth in # of Contracted Companies(N)
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Growth in # of Contracted Companies(N) As for the domestic market, there are still a lot of potential markets. First, we will focus on getting the reach of the companies with 200 or more employees due to acquisition cost-effectivenes
Slide 49: Growth in # of Contracted Companies(N)
HENNGE K.K. (4475:TYO) Q2 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 to get the first-mover advantage. Tokyo Osaka Fukuoka Nagoya 49
Slide 50: Past Materials
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Past Materials 50
Slide 51: Diversity Within Our Organization
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Diversity Within Our Organization We are putting effort into our Global Internship Program. We promote diversity to make our company more resilient to changes. (unit: employees) Application (accum.) 140 countries & regions (approx.)
Slide 52: New Service
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results New Service Release of HENNGE Workstyle (Feb 2019) Improve your workstyle through IoT and the Cloud 52
Slide 53: New Service
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results New Service Release of Chromo Education (April 2019) Improve communication and engagement between local governments and their residents, especially for kids. 53
Slide 54: New Plan of HENNGE One (from June 2019)
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results New Plan of HENNGE One (from June 2019) 54
Slide 55: Our Survey
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results Our Survey SaaS usage survey to our clients (Dec 2019) According to our survey results, our clients are using 7 cloud services per company on average, and 24％ of our clients are using more than 10 cloud services. (# of companies) (#
Slide 56: Disclaimer
HENNGE K.K. (4475:TYO) Q2 FY09/2020 Consolidated Financial Results 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
Slide 57: HENNGE
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