Mksystem Corp. · TSE:3910
Mksystem — H1 FY3/23 Earnings Presentation
55 slides from Mksystem's earnings presentation, Nov 25, 2022
Slide 1: Presentation Materials for the Earnings Briefing
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 November 25, 2022 MKSystem Corporation (stock code: 3910) 1
Slide 2: Table of contents
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 2 Table of contents 1 Group Overview and Business Activities・・・3P 5 Business Topics for the First-half of FY3/23・・・28P Consolidated Financial Results for the First-half Growth Strategies・・・
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 First Half of the Fiscal Year Ending March 31, 2023 6 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for the First-half of FY3/23・・・28P Consolidated Financial Results for the First-half Growth Strategies・・
Slide 7: Results highlight (consolidated)
Consolidated Financial Results for the First-half of FY3/23 7 Results highlight (consolidated) ● 2Q sales up 8.0% YoY to 710 million yen along with the build-up of steady revenue streams 1H earnings reached 42.9% against the full-year earnings forecast (1H of the previous fiscal year: 42.9%) ● Gro
Slide 8: Financial summary (consolidated)
Consolidated Financial Results for the First-half of FY3/23 8 Financial summary (consolidated) 2Q sales up 8.0% to 710 million yen 2Q operating profit: 46 million yen due to improvement of operating margin 2Q FY3/22 1Q FY3/23 2Q FY3/23 YoY change Vs. 1Q FY3/23 Net sales 658 625 710 +8.0% +13.7% Gr
Slide 9: Balance sheet (consolidated)
Consolidated Financial Results for the First-half of 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 57.8% FY3/21 2Q FY3/22 FY3/22 2Q FY3/23 Total current assets 1,1
Slide 10: Cash flows (consolidated)
Consolidated Financial Results for the First-half of FY3/23 10 Cash flows (consolidated) Cash flow from operating activities increased 16.4% YoY to 245 million yen Bank loans were used as one source of funds for ongoing expenditures for software development. FY3/21 1H FY3/22 FY3/22 1H FY3/23 Cash
Slide 11: Net sales (consolidated)
Consolidated Financial Results for the First-half of FY3/23 11 Net sales (consolidated) 2Q consolidated sales increased steadily at 8.0% YoY +8.0% 800 766 735 692 710 700 669 658 624 618 625 600 600 572 583 513 527 500 400 300 200 100 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY3/20 FY3/21 FY3/2
Slide 12: Gross profit (consolidated)
Consolidated Financial Results for the First-half of FY3/23 12 Gross profit (consolidated) Gross profit up 3.7% YoY. However, gross margin declined 2.0pt compared with the same period a year earlier as the cost of sales rose due to labor costs associated with the bolstering system development. 400
Slide 13: Operating profit (consolidated)
Consolidated Financial Results for the First-half of FY3/23 13 Operating profit (consolidated) Operating profit increased 17.1% to 46 million yen because of sales growth and cost controls, including for the cost of sales. 140 129 120 107 100 86 88 80 +17.1% 60 57 46 44 46 39 40 31 30 26 20 0 -9 -6
Slide 14: Number of employees (consolidated)
Consolidated Financial Results for the First-half of 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 146 147 139 122 BNC Sales 112 Ma
Slide 15: Personnel and promotion expenses (consolidated)
Consolidated Financial Results for the First-half of 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 acti
Slide 16: IDC and software amortization expenses (consolidated)
Consolidated Financial Results for the First-half of 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 amortiz
Slide 17: Table of contents
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 17 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for the First-half of FY3/23・・・28P Consolidated Financial Results for the First-half 6 Growth Strategie
Slide 18: Shalom Business highlight
Shalom Business 18 Business highlight ● Introductions*1 ● IDs issued*1 ● Registered companies*1 ● Registered employees*1 3,361 12,410 987,000 24.73 companies IDs companies million ● ARPU*2 ● ARPA*3 ● DAU*4 ● Cancellation rate*5 46,300 12,500 11,600 0.25 yen yen IDs % *1: Number of introductions, I
Slide 19: Shalom Business net sales
Shalom Business 19 Net sales 2Q steady revenue increased 12.7% YoY Steady revenue was 86.5% of net sales 700 Steady revenue Other sales*1 Steady revenue as pct. of net sales 100.0 86.5 90.0 600 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 40.0 475 483 502 440 445 456
Slide 20: Shalom Business operating profit
Shalom Business 20 Operating profit A big increase because of a higher pct. of steady revenue and cost controls, including for the cost of sales 140 119 120 100 91 80 76 +86.1% 70 70 56 60 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 FY3/20 FY3/21 FY3/22 FY3/23 Unit: M
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 +3.5% +6.0% 12,410 12,216 3,340 3,361 12,024 3,312 11,709 11,831 3,277 11,449 3,231 3,222 3,246 11,241 3,171 10,922 10,693 3,131 3,147 10,488 3
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 70,0
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 C
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 +1.4% 1,854 1,860 41.7 1,839 41.6 1,835 1,804 1,804 1,814 41.5 41.5% 1,785 41.3 1,772 1,769 1,769 41.1 1,702 1,684 1,68
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 4,669 companies 561 companies Shalom-linked cloud service 15,982 companies 12,487 companies 9,229 companies Net de Kom
Slide 26: Table of contents
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 26 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for the First-half of FY3/23・・・28P Consolidated Financial Results for the First-half 6 Growth Strategie
Slide 27: CuBe Business net sales and operating profit
CuBe Business 27 Net sales and Operating profit Expect operating profit growth in FY3/23 due to a large volume of orders for the second half Net sales Operating profit 700 60 628 615 48 50 600 550 40 33 500 30 400 20 300 10 226 0 200 -10 -7 100 -20 0 -22 -30 FY3/20 FY3/21 FY3/22 1H FY3/23 FY3/20 F
Slide 28: Table of contents
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 28 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for the First-half of FY3/23・・28P Consolidated Financial Results for the First-half 6 Growth Strategies
Slide 29: Price revisions of major products
■Business Topics for the First-half of 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
Slide 30: FOREVER – The new Shalom Project
■Business Topics for the First-half of 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. Subseq
Slide 31: Promotion activities 1
■Business Topics for the First-half of FY3/23 31 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. V
Slide 32: Promotion activities 2/New products
■Business Topics for the First-half of FY3/23 32 Promotion activities 2/New products 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 p
Slide 33: Table of contents
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 33 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for the First-half of FY3/23・・・28P Consolidated Financial Results for the First-half Growth Strategies・
Slide 34: Steady-revenue businesses
Growth Strategies 34 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 35: Target markets
Growth Strategies 35 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 administrat
Slide 36: Target markets and strategies: labor and social security attorney market
Growth Strategies 36 Target markets and strategies 1 Labor and social security attorney market End-Sep 2022 Offices with our systems introduced*2 2,667 offices Vs. End-Mar 2022 +48 offices Large-scale offices Our market share 10.1％ (10 or more workers) 2,963 offices Number of clients registered in
Slide 37: Target markets and strategies: general corporate market
Growth Strategies 37 Target markets and strategies 2 General corporate market End-Sep 2022 Introductions in 62,820 companies with 100 or more the Shalom Business 154 companies employees 5,000 or more employees Introductions in 636 companies 2,000 to less than 5,000 employees the CuBe Business 87 c
Slide 38: Target markets and strategies: Product strategies
Growth Strategies 38 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 39: Table of contents
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 39 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for the First-half of FY3/23・・・28P Consolidated Financial Results for the First-half 6 Growth Strategie
Slide 40: Financial summary (consolidated) forecast FY3/23
Consolidated Earnings Forecast for FY3/23 40 Financial summary (consolidated) Forecast 14% sales growth due to increasing application service provider (ASP) sales Forecast an 88% increase in operating profit in part because of a higher operating margin resulting from cost controls FY3/23 FY3/22 Yo
Slide 41: Dividend forecast for FY3/23
Consolidated Earnings Forecast for FY3/23 41 Dividend forecast for FY3/23 Our basic policy is to pay dividends while placing emphasis on the consistent distribution of earnings to shareholders The FY3/22 dividend was based on this earnings distribution policy (Yen) 20.0 60.0% Annual dividend per s
Slide 42: Table of contents
Presentation Materials for the Earnings Briefing for the First Half of the Fiscal Year Ending March 31, 2023 42 Table of contents 1 Group Overview and Business Activities・・・・3P 5 Business Topics for the First-half of FY3/23・・・28P Consolidated Financial Results for the First-half Growth Strategies・
Slide 43: Our mainstay service (Shalom 1)
Service Overview 43 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 44: Our mainstay service (Shalom 2)
■Service Overview 44 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 45: Our mainstay service (Shalom Company Edition 1)
■Service Overview 45 Our mainstay service (Shalom Company Edition 1) 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 Pers
Slide 46: Our mainstay service (Shalom Company Edition 2)
■Service Overview 46 Our mainstay service (Shalom Company Edition 2) ① Benefits of using Shalom and a large customer base KAGOME CO., LTD. PERSOL HOLDINGS CO., LTD. Evaluation: All (2017) Down by 800 hours Improves quality of business processes Reduction in time needed (2018) Improvements Results El
Slide 47: Our mainstay service (MYNABOX)
■Service Overview 47 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 48: Our mainstay service (Net de Komon)
■Service Overview 48 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 49: Our mainstay service (DirectHR)
■Service Overview 49 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 50: Our mainstay service (eNEN)
■Service Overview 50 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 51: Our mainstay service (Cloud Pocket)
■Service Overview 51 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 52: Our mainstay service (ShaRobo)
■Service Overview 52 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 53: Our mainstay service (CuBe Business)
■Service Overview 53 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 54: Our mainstay service (GooooN / CuBe Business)
■Service Overview 54 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 55: Forward-looking statements
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