Hennge K.k. · TSE:4475
Hennge K.k — Q1 FY09/2021 Earnings Presentation
70 slides from Hennge K.k's earnings presentation, Feb 10, 2021
Slide 1: 1Q FY09/2021 Consolidated Financial Results
sn ae | Note: This is a translation of part of the o: rginal Japane ands provided for referen < Purpos In the event of any disc sepancy between the Japane. original and this English ta in, the Japane. ls pee a a a a a a a a ) a Ca DD. | ) ee UD CD CD CD CD. GD | ) a CD. aD. | ) a CD GD. GD. | ) a. a
Slide 2: Table of Contents
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Table of Contents 1. 1Q FY09/2021 Consolidated Financial Results 2. FY09/2021 Full-year Forecasts 3. Growth Strategy 4. Corporate Overview 5. Appendix
Slide 3: 1Q FY09/2021 Consolidated Financial Results (Financial Results)
1Q FY09/2021 Consolidated Financial Results (Financial Results)
Slide 4: Net Sales
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Net Sales (YoY, 3 months accumulated comparison, compared to 1Q FY09/2020 accumulated) The net sales increased by 20.7% YoY to 1.134 billion yen. The sales of HENNGE One, our key driver of growth, grew by 20.6% YoY. HENNGE One Profes
Slide 5: Overview of Consolidated Financial Results
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Overview of Consolidated Financial Results (YoY, 3 months accumulated comparison, compared to 1Q FY09/2020 accumulated) 1Q FY20 1Q FY21 YoY YoY (%) FY2021 3mons accum. 3mons accum. Forecast 940 1,134 +194 +20.7% 4,841 23.4% 836 1,008
Slide 6: Gross Profit
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Gross Profit (YoY, 3 months accumulated comparison, compared to 1Q FY09/2020 accumulated) The gross profit increased by 0.18 billion yen YoY to 0.939 billion yen. The gross profit margin improved by 1.6pt YoY to 82.8%, and remains hi
Slide 7: Profit Attributable to Owners of Parent
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Profit Attributable to Owners of Parent (YoY, 3 months accumulated comparison, compared to 1Q FY09/2020 accumulated) The SG&A to sales ratio decreased by 16.4pt YoY to 65.1%. The profit attributable to owners of parent increased by 1
Slide 8: -8.4pt -3.9pt -4.9pt
(18.3%) -8.4pt (4.8%) -3.9pt (9.9%) -4.9pt (27.2%) +0.4pt (5.0%) +0.4pt (17.2%) -1.6pt
Slide 9: Structure of Operating Expenses
Structure of Operating Expenses (unit: million yen) 226 36 115 293 58 197 4Q FY20 207 54 112 308 57 195 1Q FY21 QoQ (unit: million yen) Other SG&A “19 " Advertising expenses +18 Se consignment and -3 staffing expenses Personnel +15 expenses R&D expenses . 4 . Cost of sales -2 V89S soles Jo SOD HENNG
Slide 10: Net Sales and Operating Expenses
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Net Sales and Operating Expenses (unit: million yen) @ Net Sales Other SG&A Advertising expenses Business consignment and staffing expenses 834 Personnel 760 a 351 ae 207 expenses ec” 219 Pate R&D expenses 244 em @ Cost of sales 36 1
Slide 11: Breakdown of Employees
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Breakdown of Employees HENNGE One Dev. / R&D 14.3% Others 21.2% Professional services 10.6% HENNGE One Sales 29.1% Business Dev. Overseas 2.1% HENNGE One Customer Success 22.8% (Excluding part-time employees, as of 2020-12-31) 1
Slide 12: Number of Employees
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Number of Employees 181 Others @ Professional services Business Dev. Overseas HENNGE One Customer Success @ HENNGE One Sales @ HENNGE One Dev. / R&D 154 27 FY2018 FY2019 FY2020 1Q FY21 (unit: employee, Excluding part-time employees)
Slide 13: 1Q FY09/2021 Consolidated Financial Results (Business Activities)
1Q FY09/2021 Consolidated Financial Results (Business Activities) 13
Slide 14: Business Highlights
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Business Highlights e Advertising and events O° O° Sponsoring and participating in some online events (Oct to Dec 2020) SoftBank World 2020, Digital Innovation 2020 Online, etc. Corporate advertising at SMBC Japan Baseball Series (No
Slide 15: Advertising and Events
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Advertising and Events Various advertising SMBC Japan Baseball Series Tokyo Station (Nov 2020) (Dec 2020) FISODY—T BIEEFATF ICO wie HENNGE 15
Slide 16: New Program
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results New Program Launch of HENNGE One Product Alliance Program (Nov 2020) We hope to solve the issues of ID/password management in user companies by proactively promoting technical cooperation on SSO integration with HENNGE One. o AWS OX
Slide 17: 1Q FY09/2021 Consolidated Financial Results (KPI Results)
1Q FY09/2021 Consolidated Financial Results (KPI Results) 7
Slide 18: One KPI
HENNGE One KPI HENNGE One contracted companies yoy +17,.8% (unit: companies) (as of 2020-12-31) (unit: users) HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results (YoY, compared to the end of 1Q FY09/2020) # of HENNGE One contracted users YoY +9. 2% (as of 2020-12-31) (unit: million ye
Slide 19: One KPI Highlights
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results HENNGE One KPI Highlights (compared to the end of the previous fiscal year) 1. Average monthly churn rate over the past 12 months rose by 0.06pts to 0.22%, compared to the end of FY2020 and remains low. 2. The number of user companie
Slide 20: One Gross Revenue Churn Rate
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results HENNGE One Gross Revenue Churn Rate Average monthly churn rate over the past 12 months for HENNGE One rose by 0.06pt QoQ to 0.22% and remains low. * Gross Revenue Churn Rate is calculated based on the decrease in contract value due t
Slide 21: One Contracted Companies & Users
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results HENNGE One Contracted Companies & Users 2,000 2,000,000 7,909,759 1:948,147(1,939,51 1.776,139 1,824,346 1,672,160 1,500 1,631,360 1,500,000 1,442,057 1,465,072 1,000 1,000,000 1,487 fm 1948 1,298 1,361 1,428 500 500,000 0 0 1Q FY19
Slide 22: One ARR & ARPU
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results HENNGE One ARR & ARPU 5,000 4,000 3,000 2,000 1,000 1,870 2,696 2,500 1,986 1,938 1921 1,961 a0 + 1 08 yen per user 1,500 3,793 4,000 3,060. 240mm 411 P87 2,907 > , +0.1 93. yen ~ |_| | 0 1QFY19 2Q FY19 3Q FY19 4Q FY19 1Q FY20 2Q FY2
Slide 23: Decrease in # of HENNGE One Contracted Users
100 18 28 Decrease in # of HENNGE One Contracted Users HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results The number of contracted users declined QoQ. This was mainly due to the cancellation of one customer (approx. 80,000 users) who had been using our service for relatively uncommon
Slide 24: FY09/2021 Full-year Forecasts
FY09/2021 Full-year Forecasts 24
Slide 25: Our Policy of FY09/2021
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 opportunit
Slide 26: Overview of FY09/2021 Forecasts
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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. FY2019 Result (unit: million yen) 3,427 (HENNGE One) 2,91
Slide 27: FY09/2021 Forecasts of Sales by Business
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results FY09/2021 Forecasts of Sales by Business The progress rate of HENNGE One’s sales of this Q was at 23.0% towards the full-year forecast. (unit: million yen) (unit: million yen) i 7 5,000 HENNGE One 5.000 Professional service and other
Slide 28: FY09/2021 Forecasts of Operating Expenses
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results FY09/2021 Forecasts of Operating Expenses The progress rate of the advertising expenses was at 8.8% towards the full-year forecast. The advertising expenses will increase mainly in the 2Q when our large-scale digital event is held. (
Slide 29: Changes in the Market Environment
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 A f Approach earl
Slide 30: Large-scale Digital Event 'HENNGE NOW!'
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Large-scale Digital Event ‘HENNGE NOW!’ Starting on February 15th, more than 40 companies, municipalities, and educational institutions will speak at this six-day event, which will feature over 50 sessions on DX, SaaS, security, the
Slide 31: Large-scale Digital Event 'HENNGE NOW!'
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Large-scale Digital Event ‘HENNGE NOW!’ Prokumo YAIHY Bciovosin peers DSS.. OC aast aWws desknetNEO e®% Chatwork (¥) GQ QO collaboflow OKWAVE LINE WORKS @ Marketo Engage X-point G+e Sc L@m 2 33 Dropbox DocuSign box @SmartDB @createrw
Slide 32: Growth Strategy
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Growth Strategy 32
Slide 33: Maximize LTV
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Maximize LTV LTV = ARR x Y xr Y = [Average contract duration in years] r = [Gross profit rate] ARR = N x n x 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) 1Q FY09/2021 Consolidated Financial Results Maximize ARR ARR = N x n x ARPU maximize N maximize 1 N = # of contracted n = Average # of contracted companies users per contracted company maximize ARR Increase our sales force Expand our business within the Tokai/Kansai/Kyushu are
Slide 35: Progress of Our Growth Strategy
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Progress of Our Growth Strategy (HENNGE One) With FY2021 as an inflection point, aim to accelerate ARR growth from FY2022 by focusing on increasing # of contracted companies (N) in the short term while increasing ARPU in the mid to l
Slide 36: Growth Strategy on and After FY09/2021
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 foc
Slide 37: Growth Strategy on and After FY09/2021
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Growth Strategy on and After FY09/2021 With IDaaS platform HENNGE One as our core business, we grows as SaaS adoption expands. ait slack zoom we . . - 6 Currently integrates with a ~ 160 over Cloud services 1 ei ir. aa and more Estab
Slide 38: Corporate Overview
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Corporate Overview 38
Slide 39: Corporate Profile
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Corporate Profile Company name: HENNGE K.K. Executives: Kazuhiro Ogura Representative Director & Chief Executive Officer Kazuaki Miyamoto : awe ; ~ Representative Director & Executive Vice President / Yoshiki Nagatome Director & Exec
Slide 40: Locations
Locations Japan Nagoya branch office 2016/8 Tokyo Osaka Head office branch office 2015/6 Fukuoka branch office 2018/8 | YW HENNGE HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Taiwan HENNGE Taiwan 2016 /10 40
Slide 41: Vision
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Visi We want to deliver the power of technology to as many people as we can. Liberation of Technology FID/OL—O fe a
Slide 42: History
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results History Our business domain is ever-changing, but our will remains steadfast. of. se . Linux server management software HDE Controller HENNGE One loT as a Service (f.k.a. HDE mail service) | HENNGE Workstyle eCRM software HDE Custome
Slide 43: Sales Structure by Business
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Sales Structure by Business 88.9% of the net sales comes from HENNGE One business. (as of 1Q FY2021) @ HENNGE One Professional service and others 43
Slide 44: Microsoft 365 Google Workspace
Microsoft 365 Google Workspace
Slide 45: One
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 . veirewn ete... EI 3. HENNGE Email DLP Local device S> ) O Allow o 9 Sy) " eBsShse 3
Slide 46: One Solid Customer Base
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results HENNGE One Solid Customer Base HENNGE One is used by 1,752 customers in various industries, and has 1.94 million users. Poh BSE! SOLA Semnio vs masses BIZREACH MISAWA #22 TODA “is ENTERTAINMENT CD, LTO. HK Tre Bee lz, IED, . > TOYOTA
Slide 47: Appendix (Total Addressable Market)
Appendix (Total Addressable Market) 47
Slide 48: Cloud Adoption Rate in Japan
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Cloud Adoption Rate in Japan Cloud adoption rate in Japan is 18%. There is enough market capacity to expand in Japan. 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 (Reference: Press release ‘L
Slide 49: One Domestic Market Share
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results HENNGE One Domestic Market Share Approx. | 3 . 2 % a of listed Japanese companies are using _ Based on HENNGE One shipments quantity rN {in-company investigation, as of 2020-12-31) 65.4: Top Share 1 1 O 7 P Approx. I, average users p
Slide 50: Growth in # of Contracted Companies (N)
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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. companies with 300 or more 12,223 employees c
Slide 51: Growth in # of Contracted Companies (N)
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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. 51 WW HENNGE
Slide 52: Appendix (Other)
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Appendix (Other) 52
Slide 53: Impact of COVID-19 on and After FY09/2021
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Impact of COVID-19 on and After FY09/2021 e Although we are slightly struggling with training new employees, the work-from-home style has taken root in our company. e We face delays in hiring international personnel and accepting int
Slide 54: Diversity & Inclusion
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 orga
Slide 55: Recurring Revenue Ratio
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Recurring Revenue Ratio The recurring revenue ratio decreased 1.9pt YoY to 96.8%. We will continue to achieve a strong and stable recurring revenue model. (unit: million yen) 5,000 3 . . ; e ° ° e ; 100% © Recurring revenue ratio ° .
Slide 56: Past Materials (New Services, etc.)
Past Materials (New Services, etc.) 56
Slide 57: New Service
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results New Service Release of HENNGE Workstyle (Feb 2019) Improve your workstyle through loT and the Cloud Agile Meeting ¢ @ Easy Check-in @ - =I a = tana eH date YW HENNGE 57
Slide 58: New Service
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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. ~ s CHROMO 58
Slide 59: New Plan
New Plan HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results New plan of HENNGE One (June 2019) HENNGE One Secure Access HENNGE One Standard HENNGE One Business SaaS OUYIIL t4 YAY ER BNAD MAEAB, TYKY—HOFSYe ve - 400: (6m) 11-F-/A (Fe) FIvAS HENNGE Access Control HENNGE Secure Browser
Slide 60: New Plan
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 become avai
Slide 61: New Service
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 municipalit
Slide 62: Achieving a Passwordless World
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 63: Business Investments & New Business Development
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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 co
Slide 64: Past Materials (Our Surveys, etc.)
Past Materials (Our Surveys, etc.) 64
Slide 65: Our Survey
HENNGE K.K. (4475:TYO) 1Q FY09/2021 Consolidated Financial Results Our Survey (# of companies) 14 12 oN BF DD 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. 2 3 4 5 6 7 8 9 10 #11 12 13 14 15 16
Slide 66: Our Survey
HENNGE K.K. (4475:TYO) 1Q FY09/2021 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) 1Q FY09/2021 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) 1Q FY09/2021 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
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,
Slide 70: HENNGE
) | HENNGE