Slide 1: Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 August 8, 2023 MKSystem Corporation (stock code: 3910) 1
Slide 2: Table of contents
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 2 Table of contents 1 Group Overview and Business Activities・・・3P 5 Business Topics for FY3/23・・・・・・・・・・・・・・・ 28P 2 Consolidated Financial Results for FY3/23・・・6P 6 Growth Strategies・・・・・・・・・・・・・・・・・・・・・・35P
Slide 3: Company profile
Group Overview and Business Activities 3 Company profile ●Company name: MKSystem Corporation ●Representative: Noboru Miyake ●Location: Osaka Head office 30F, Umeda Center Bldg., 2-4-12, Nakazaki-nishi, Kita-ku, Osaka, Japan ●Bases: Tokyo; Nagoya; Fukuoka; Ninohe, Iwate Prefecture; and Matsuyama ●S
Slide 4: Mission and vision
Group Overview and Business Activities 4 Mission and vision MISSION VISION Management Philosophy Management Policies We provide cloud solutions that benefit you Provide comprehensive services in the field of the personnel and labor management Streamlines operations and supports the creation of add
Slide 5: Segment structure
Group Overview and Business Activities 5 Segment structure Divided our business into two segments: Shalom Business and CuBe Business Shalom Business ● ASP service ● System construction service Monthly system service fee and initial setup fee, etc. ● System product sale Sales of working time record
Slide 6: Table of contents
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 6 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for FY3/23・・・・・・・・・・・・・・・ 28P 2 Consolidated Financial Results for FY3/23・・6P 6 Growth Strategies・・・・・・・・・・・・・・・・・・・・・・35P
Slide 7: Results highlight (consolidated)
Consolidated Financial Results for FY3/23 7 Results highlight (consolidated) ● Sales up 4.5% YoY to 2,867 million yen along with the build-up of steady revenue streams Sales were 92.0% of the initial fiscal year forecast, a shortfall of 247 million yen ● Gross profit up 5.9% YoY to 1,349 million y
Slide 8: Financial summary (consolidated)
Consolidated Financial Results for FY3/23 8 Financial summary (consolidated) Sales increased 4.5% YoY to 2,867 million yen. Operating profit was 219 million yen due to improvement of operating margin. FY3/21 FY3/22 FY3/23 Vs. FY3/21 Vs. FY3/22 Net sales 2,439 2,742 2,867 +17.6% +4.5% Gross profit
Slide 9: Balance sheet (consolidated)
Consolidated Financial Results for FY3/23 9 Balance sheet (consolidated) Non-current assets up due to increased stock of software associated with developing new products. Stable financial base with an equity ratio of 59.4%. FY3/21 FY3/22 2Q FY3/23 FY3/23 Total current assets 1,172 1,056 1,154 1,23
Slide 10: Cash flows (consolidated)
Consolidated Financial Results for FY3/23 10 Cash flows (consolidated) Cash flow from operating activities increased 25.0% YoY to 617 million yen. Stable investment for product development. Dividend payment and debt repayment progressed as planned. FY3/21 FY3/22 1H FY3/23 FY3/23 Cash flows from op
Slide 11: Net sales (consolidated)
Consolidated Financial Results for FY3/23 11 Net sales (consolidated) 4Q consolidated sales increased steadily at 6.9% YoY. +6.9% 900 800 766 785 735 746 692 710 700 669 658 624 618 625 600 583 600 572 513 527 500 400 300 200 100 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY3/20 FY3/21 FY3/
Slide 12: Gross profit (consolidated)
Consolidated Financial Results for FY3/23 12 Gross profit (consolidated) Gross profit up 18.7% YoY. However, gross margin increased 4.7pt compared with the same period a year earlier due to lower amortization, partially offset by higher labor costs associated with the bolstering system development
Slide 13: Operating profit (consolidated)
Consolidated Financial Results for FY3/23 13 Operating profit (consolidated) Operating profit increased 282.9% YoY to 100 million yen, driven by increased sales and enhanced cost efficiency, which encompassed reduced depreciation expenses. 140 129 120 +282.9% 107 100 100 86 88 78 80 60 57 46 44 46
Slide 14: Number of employees (consolidated)
Consolidated Financial Results for FY3/23 14 Number of employees (consolidated) Continuing to hire new college graduates for strengthening capabilities for sales and developing technologies and products. Number of employees Composition of employees 139 146 143 BNC Sales 122 112 Management Marketin
Slide 15: Personnel and promotion expenses (consolidated)
Consolidated Financial Results for FY3/23 15 Personnel and promotion expenses (consolidated) Prioritized recruitment to strengthen sales and development systems. Continuing marketing expenditures for participation in major exhibitions and increasing promotions and other sales activities. Personnel
Slide 16: IDC and software amortization expenses (consolidated)
Consolidated Financial Results for FY3/23 16 IDC and software amortization expenses (consolidated) Internet Data Center (IDC) expenses rose in tandem with the growth in users and an increase in license fees. Software amortization expenses decreased due to the completion of amortization for some pr
Slide 17: Table of contents
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 17 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for FY3/23・・・・・・・・・・・・・・・ 28P 2 Consolidated Financial Results for FY3/23・・・6P 6 Growth Strategies・・・・・・・・・・・・・・・・・・・・・・35
Slide 18: Shalom Business highlights
Shalom Business 18 Business highlight ● Introductions*1 ● IDs issued*1 ● Registered companies*1 ● Registered employees*1 3,434 12,829 1,007,000 27.06 companies IDs companies million ● ARPU*2 ● ARPA*3 ● DAU*4 ● Cancellation rate*5 46,500 12,500 11,600 0.27 yen yen IDs % *1: Number of introductions,
Slide 19: Net sales (Shalom Business)
Shalom Business 19 Net sales 4Q steady revenue increased 10.0% YoY. Steady revenue was 85.6% of net sales. 700 *1 100.0 Steady revenue Other sales Steady revenue as pct. of net sales 85.6 90.0 600 81 88 80.0 78 102 87 50 500 70.0 83 74 64 79 80 94 55 60.0 400 87 67 78 50.0 300 40.0 502 517 522 456
Slide 20: Operating profit (Shalom Business)
Shalom Business 20 Operating profit A big increase because of a higher pct. of steady revenue and enhanced cost efficiency, which encompassed reduced depreciation expenses. 140 119 120 100 91 +164.3% 80 76 70 70 73 73 60 56 49 51 47 46 40 27 27 19 21 20 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Slide 21: Introductions of the Shalom series
Shalom Business 21 Introductions of the Shalom series The number of Shalom series, our core product, increased steadily. Number of introductions IDs issued +3.7% +6.7% 3,434 3,397 3,340 3,361 12,829 3,312 12,620 3,277 12,410 12,216 3,231 3,222 3,246 12,024 11,70911,831 3,171 11,449 3,131 3,147 11,
Slide 22: Electronic application
Shalom Business 22 Electronic application Electronic applications, the core function of Shalom, are on the increase. Employment insurance / Social insurance Labor insurance / Administration associations Employment insurance Social insurance Labor insurance Administration associations 2,400,000 80,
Slide 23: Supports labor insurance administration association operations
Shalom ShalomBusiness Business 23 労働保険事務組合機能 Supports labor insurance administration association operations Commerce and industry SR management 23.4% of the 2,192 labor insurance administration associations associations labor center No. of introductions No. of introductions have installed Shalom.
Slide 24: Introductions of MYNABOX series
Shalom Business 24 Introductions of MYNABOX series Steadily increasing number of products linked to the Shalom series Number of introductions of MYNABOX series Share of MYNABOX*1 +0.8% 1,865 41.7 1,854 1,860 1,853 41.6 1,839 1,835 41.5 41.5 1,814 1,804 1,804 1,785 41.3 1,772 1,769 1,769 41.2 41.1
Slide 25: Other products
Shalom Business 25 Other products Introductions of other products is also on the increase. WEB-based year-end tax adjustment system WEB-based tax return filing system for employees 5,908 companies 712 companies Shalom-linked cloud service 24,320 companies 15,580 companies 14,960 companies Net de K
Slide 26: Table of contents
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 26 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for FY3/23・・・・・・・・・・・・・・・ 28P 2 Consolidated Financial Results for FY3/23・・・6P 6 Growth Strategies・・・・・・・・・・・・・・・・・・・・・・35
Slide 27: Net sales and Operating profit (CuBe Business)
CuBe Business 27 Net sales and Operating profit Both sales and operating profit declined compared to the previous fiscal year, attributed to the delay of major development projects. However, the order backlog was up. Net sales Operating profit 700 60 628 615 600 50 48 550 561 500 40 33 400 30 19 3
Slide 28: Table of contents
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 28 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for FY3/23・・・・・・・・・・・・・・ 28P 2 Consolidated Financial Results for FY3/23・・・6P 6 Growth Strategies・・・・・・・・・・・・・・・・・・・・・・35P
Slide 29: Price revisions of major products
■Business Topics for FY3/23 29 Price revisions of major products Increased the monthly license fee by 500 yen for major products. ＼ NEW／ Previous prices New prices Additional licenses Additional licenses Basic license Basic license (for each license) (for each license) Lite Plan ¥10,500/month ¥5,500
Slide 30: FOREVER – The new Shalom Project
■Business Topics for FY3/23 30 FOREVER – The new Shalom Project Development work has started on FOREVER, a system that will follow Shalom V5.0. Transition of Shalom and FOREVER Sales of Shalom, a cloud-based application system for labor insurance procedures, started in 2007. Subsequent upgrades of t
Slide 31: New services: ShalomPost
■Business Topics for FY3/23 31 New services Introduced a version of "ShalomPost," a cutting-edge cloud storage service. What is “ShalomPost”? A storage service enabling labor offices and their advisory teams to securely store, organize, and distribute official documents, materials, videos, and vario
Slide 32: Promotion activities 1: HR EXPO 2022
■Business Topics for FY3/23 32 Promotion activities 1 The MKSystem booth at HR EXPO 2022 MKSystem again had a booth at the spring HR EXPO along with subsidiary Business Net Corp. Visitors learned about a variety of products, with ＼HR EXPO 2022／ emphasis on Shalom Company Edition. Visitors appreciate
Slide 33: Promotion activities 2: Seminars, updated websites
■Business Topics for FY3/23 33 Promotion activities 2 Seminars MKSystem holds online seminars on a regular basis for labor and social security attorneys and for companies. Seminars are widely recognized as a source of valuable and useful information. Seminars include people who are using MKSystem pr
Slide 34: Promotion activities 3: Labor Consultant Summit 2023
■Business Topics for FY3/23 34 Promotion activities 3 "Labor Consultant Summit 2023 in Nasu Shiobara" centered around the theme "SR DX," which embodies a digital transformation for our advisory clients driven by our users. Around 230 individuals in total participated in the two-day event held on Mar
Slide 35: Table of contents
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 35 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for FY3/23・・・・・・・・・・・・・・・ 28P 2 Consolidated Financial Results for FY3/23・・・6P 6 Growth Strategies・・・・・・・・・・・・・・・・・・・・・35P
Slide 36: Steady-revenue businesses
Growth Strategies 36 Steady-revenue businesses Steady revenue business that builds a solid profit base 1Q A business model based on the monthly fee-based service Additional sales Shalom generates stable income. (Set-up charges) 4Q 4Q Additional sales Continuing sales (Set-up (Monthly Monthly fees
Slide 37: Target markets
Growth Strategies 37 Target markets Our target extends to all companies that outsource/not outsource to labor and social security attorneys. Small payrolls Medium-size payrolls Large payrolls Of the 3.85 million potential client companies, labor and social security attorneys have formed administra
Slide 38: Target markets and strategies: labor and social security attorney market
Growth Strategies 38 Target markets and strategies 1 Labor and social security attorney market End-Mar 2023 Offices with our systems introduced*2 2,736 offices Vs. End-Sep 2022 +69 offices Large-scale offices Our market share 10.3％ (10 or more workers) 2,963 offices Number of clients registered in
Slide 39: Target markets and strategies: general corporate market
Growth Strategies 39 Target markets and strategies 2 General corporate market End-Mar 2023 Introductions in 62,820 companies with 100 or more the Shalom Business 155 companies employees 5,000 or more employees Introductions in 636 companies 2,000 to less than 5,000 employees the CuBe Business 93 c
Slide 40: Target markets and strategies: product strategies
Growth Strategies 40 Target markets and strategies 3 Product strategies For labor and social security attorney offices / labor insurance administration associations For general corporations ●For new customers ●For new customers Use campaigns and other measures A version for large companies to stre
Slide 41: Table of contents
Presentation Materials for the Earnings Briefing for the Fiscal Year Ended March 31, 2023 41 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for FY3/23・・・・・・・・・・・・・・・ 28P 2 Consolidated Financial Results for FY3/23・・・6P 6 Growth Strategies・・・・・・・・・・・・・・・・・・・・・・35
Slide 42: Our mainstay service (Shalom 1)
Service Overview 42 Our mainstay service (Shalom 1) A system for labor and social security attorney offices For number one and two tasks performed solely by social security attorney offices Tasks performed by labor and social security attorneys No. 1 tasks No. 2 tasks No. 3 tasks Preparation of re
Slide 43: Our mainstay service (Shalom 2): Plans and fees
■Service Overview 43 Our mainstay service (Shalom 2) Lite Plan Plans and fees ✓ Considering e-application software ✓ Tasks usually performed by one person Lite Plan Basic Plan House Plan ✓ Use of business process software for the Set-up charges: ¥50,000 Set-up charges: ¥100,000 Set-up charges: ¥1,50
Slide 44: Our mainstay service (Shalom Company)
■Service Overview 44 Our mainstay service (Shalom Company) ① A version of Shalom for companies that is fully compatible with making e-applications mandatory at large companies Allows performing internally all application procedures for unemployment and social security insurance Shalom Personnel mana
Slide 45: Our mainstay service (MYNABOX)
■Service Overview 45 Our mainstay service (MYNABOX) A personal ID number management system that can be used with Shalom Links with a variety of procedures and a use history and other capabilities Tax office MYNABOX Flowchart MYNABOX CL Flowchart (MYNABOX for Clients) Labor and social Business operat
Slide 46: Our mainstay service (Net de Komon)
■Service Overview 46 Our mainstay service (Net de Komon) A web application for use with Shalom Use with master data recorded in Shalom Net de Komon One step payroll calculation by Can be accessed anywhere and linking with work attendance anytime (Smartphone access) Concerned about erroneous Can proc
Slide 47: Our mainstay service (DirectHR)
■Service Overview 47 Our mainstay service (DirectHR) Centralized management using the cloud for all applications submitted by employees during their entire time at the company, including for events like childbirth. Smartphones and PCs can be used for applications. Handles everything from data input
Slide 48: Our mainstay service (eNEN)
■Service Overview 48 Our mainstay service (eNEN) Fully supporting year-end tax adjustment operations by reducing tax filling input and implementing progress management function 1. It makes the operation easy to understand! Enhanced control with authority settings The screen guides you “what to do,”
Slide 49: Our mainstay service (Cloud Pocket)
■Service Overview 49 Our mainstay service (Cloud Pocket) 介_Cloud Pocket For the safe and easy distribution and receipt of official documents. Greatly simplifies the distribution of job separation forms, benefit receipt qualification confirmation notices, workplace accident forms and other official f
Slide 50: Our mainstay service (ShaRobo)
■Service Overview 50 Our mainstay service (ShaRobo) An official Shalom RPA ShaRobo takes over the routine work (electronic application update, official document storage, etc.) normally the province of Shalom Automates the following processes Download official electronic application forms for just 25
Slide 51: Our mainstay service (CuBe Business)
■Service Overview 51 Our mainstay service (Contracted development type semi-customized services / CuBe Business) Business process design + semi-customized system development Accurate and flexible like the one for custom-built houses Used by half a million major company employees. Your IT partner for
Slide 52: Our mainstay service (GooooN / CuBe Business)
■Service Overview 52 Our mainstay service (GooooN / CuBe Business) A cloud service for personal job performance evaluation system that supports job performance management of half million employees at major companies GooooN coordinates three business operations, deepens communication with employees,
Slide 53: Forward-looking statements notice
The plans, estimates and other forward-looking statements contained in this material are forecast based on information available at the time this material was prepared, and these statements include risk and uncertainty. Actual performance may differ from these statements due to changes in business e