Heroz, Inc. · TSE:4382
Heroz — FY04/2022 Earnings Presentation
34 slides from Heroz's earnings presentation, Jun 10, 2022
Slide 1: Presentation Material for FY04/2022 Full Year Financial Results
Notice This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail. Presentation Material for FY04/2022 Full Year Financial
Slide 2: 1. Executive Summary
1. Executive Summary 2. Business Overview 3. FY04/2022 Full Year Performance 4. FY04/2023 Forecast 5. Growth Strategy 6. Reference Materials
Slide 3: Executive Summary of FY04/2022
Executive Summary of FY04/2022 ◼ Net sales were 1,482 million yen (-4.7% YoY), consisting of ◼ AI (B-to-B) services: net sales of 564 million yen(-17.4% YoY) ◼ AI (B-to-C) services: net sales of 918 million yen (+5.2％ YoY) ◼ In the AI (B-to-B) service, sales decreased 17.4% YoY due to the terminatio
Slide 4: Strategy of FY04/2023
Strategy of FY04/2023 ◼ In FY4/2023, in addition to stable growth of AI (B-to-C) services, we will strengthen sales and marketing functions for growth of AI (B-to-B) services, and as a growth investment, we will strengthen promotion of collaboration with VarioSecure Inc. ◼ Stable business growth mai
Slide 5: 2. Business Overview
1. Executive Summary 2. Business Overview 3. FY04/2022 Full Year Performance 4. FY04/2023 Forecast 5. Growth Strategy 6. Reference Materials
Slide 6: Company Overview
Company Overview 2022 Moved to the Tokyo Stock Exchange Prime Market Name HEROZ, Inc. 2021 Location PMO Tamachi 2F, 5-31-17 Shiba, Minato-ku, Capital and business alliance with VarioSecure Inc. Tokyo 2019 Listed on the First Section of Tokyo Stock Exchange (TSE) Established April 2009 2018 Listed on
Slide 7: Our Vision
Our Vision Creating the future through artificial intelligence (AI) revolutions 7
Slide 8: Global Leader in Mind Game AI
Global Leader in Mind Game AI Chess AI Shogi AI Go AI Deep Blue (’97) AI developed by our Google acquired Deep Mind defeated a engineers who was (’14) professional Chess member of HEROZ at that AlphaGo, developed by player time defeated a Deep Mind, defeated a professional Shogi professional Go play
Slide 9: B-to-B Services: Machine Learning by Replacing Shogi Game Records with Other Data
B-to-B Services: Machine Learning by Replacing Shogi Game Records with Other Data Structural design data, Shogi game records financial data, etc. HEROZ Kishin Deep learning and other machine learning: AI SaaS (AI Software as a Service) Shogi AI Construction AI, Finance AI, etc. AI Software：What is A
Slide 10: B-to-B Services: Profit Model and High Switching Costs
B-to-B Services: Profit Model and High Switching Costs Research/develop Shogi AI Standardize AI technology accumulated through shogi AI Establish “HEROZ Kishin”=AI SaaS （AI Software as a Service） Establish an infrastructure which allows HEROZ to provide AI services efficiently Client’s data sent to
Slide 11: B-to-B Services: Engines included in HEROZ Kishin and Examples of Applications
B-to-B Services: Engines included in HEROZ Kishin and Examples of Applications ◼ Create AI products by combining engines and achieve an efficient operating structure Know-how on AI-related technology development and and R&D capabilities service operations (deep learning, etc.) (massive servers, etc.
Slide 12: B-to-B Services: Areas of Focus and Examples of Services Provided
B-to-B Services: Areas of Focus and Examples of Services Provided ◼ Focusing on construction, finance, and entertainment for the foreseeable future ◼ Earning structure is initial setup fee and ongoing fees *Examples of clients served Construc Fi- Enter- -tion nance tainment Creation of high-quality
Slide 13: B-to-C Services: Fees from Application Users
B-to-C Services: Fees from Application Users Charging fees for B-to-C content which user AI ◼ Shogi Wars has grown into a solid revenue base through the distribution of brain games such as Shogi that utilize AI-related technologies. ◼ Shogi Wars is a platform that matches users with each other in re
Slide 14: 3. FY04/2022 Full Year Performance
1. Executive Summary 2. Business Overview 3. FY04/2022 Full Year Performance 4. FY04/2023 Forecast 5. Growth Strategy 6. Reference Materials
Slide 15: Our Key Performance Indicator
Our Key Performance Indicator ◼ We believe that EBITDA, as calculated below, is our key performance indicator EBITDA = Operating Profit + Depreciation/Amortization Expenses ◼ In AI-related businesses, investments in compute servers, etc. are required to engage in advanced machine learning, leading t
Slide 16: FY04/2022 Full Year Financial Performance
FY04/2022 Full Year Financial Performance ◼ Net sales: AI (B-to-B) service decreased from the previous year due to the termination of game operations with our AI and delays in acquiring initial setup fees. AI (B-to-C) service continued to generate stable growth from the previous year due to increase
Slide 17: Net sales and EBITDA Trends
Net sales and EBITDA Trends ◼ Sales of AI (B-to-B) services decreased due to the termination of some existing projects. However, the business is gradually recovering toward the end of the period, including a new project related to data analysis for future introduction of AI. ◼ Sales in AI (B-to-C) s
Slide 18: COGS and SG&A Trends
COGS and SG&A Trends ◼ Aggressive investments were made in SG&A, including an increase in depreciation and communication expenses (121 million yen) due to the purchase of equipment such as servers for machine learning, etc., an increase in personnel recruitment expenses (16 million yen), and an incr
Slide 19: Balance Sheet (End of April 2022)
Balance Sheet (End of April 2022) ◼ On September 10, 2021, we concluded a capital and business contract with VarioSecure Inc. and acquired its affiliated company shares (1,995 million yen (including related costs)). ◼ Cash and deposits will be used for investments to realize our Medium-term growth s
Slide 20: 4. FY04/2023 Forecast
1. Executive Overview 2. Business Overview 3. FY04/2022 Full Year Performance 4. FY04/2023 Forecast 5. Growth Strategy 6. Reference Materials
Slide 21: FY04/2023 Financial Forecast
FY04/2023 Financial Forecast ◼ Recognizing that demand is expected to continue to grow in the AI-related market ◼ We will continue to invest aggressively for the growth of AI (B-to-B) services by establishing a sales and marketing organization. ◼ we expect net sales of 1.7 billion yen and EBITDA of
Slide 22: AI (B-to-C) Services Strategy
AI（B-to-C）Services Strategy ◼ Stable business growth centered on Shogi Wars ◼ The service was launched on May 21, 2012. The number of users is steadily increasing and the number of games played between users exceed 700 million by April 2022. ◼ In addition to acquiring monthly users, our Shogi AI (Ki
Slide 23: AI (B-to-B) Services Strategy
AI（B-to-B）Services Strategy ◼ As a group of highly skilled engineers, we promote AI (B-to-B) services to solve various problems of our clients. ◼ On the other hand, since the company has not focused on customer acquisition activities due to its focus on its group of highly skilled engineers, sales g
Slide 24: 5. Growth Strategy
1. Executive Overview 2. Business Overview 3. FY04/2022 Full Year Performance 4. FY04/2023 Forecast 5. Growth Strategy 6. Reference Materials
Slide 25: Medium-to-long term Growth Strategy
Medium-to-long term Growth Strategy ・EBITDA ◼ We plan to expand AI (B-to-B) services by what we have cultivated in our AI (B-to-C) services. We aim to create industry-standard AI, to form an ecosystem based on it, and to expand across industries B-to-B AI B-to-B ongoing fee Provide AI services （prof
Slide 26: Initiatives Aimed at Achieving the Growth Strategy I: Collaboration with VarioSecure
Initiatives Aimed at Achieving the Growth Strategy Ⅰ ～ Collaboration with VarioSecure Inc. to Realize AI Security ～ By utilizing a variety of corporate data, we will provide customers with a new level of safety and security in the age of zero trust through the power of AI. And aiming to support corp
Slide 27: Initiatives Aimed at Achieving the Growth Strategy I: Implementation of our AI in VarioSecure's VSR
Initiatives Aimed at Achieving the Growth Strategy Ⅰ ～ Implementation of our AI in VarioSecure's VSR ～ ◼ Capital and business alliance with VarioSecure Inc, and joint development of services ◼ Through this alliance, we aim for further growth by establishing a system for continuous creation of new se
Slide 28: Initiatives Aimed at Achieving the Growth Strategy II: Kishin Analytics launched
Initiatives Aimed at Achieving the Growth Strategy Ⅱ ～ Shogi AI utilization platform "Kishin Analytics" launched～ ◼ “Kishin Analytics” is available from May 2022.The company launches "Kishin Analytics," a platform to support professional Shogi AI research using Shogi AI. ◼ Kishin Analytics" is a ser
Slide 29: Initiatives Aimed at Achieving the Growth Strategy III: Won the World Computer Shogi Championship
Initiatives Aimed at Achieving the Growth Strategy Ⅲ ～ Won the World Computer Shogi Championship "Developing the world's strongest AI ～ ◼ Team "dlshogi with HEROZ", consisting of HEROZ AI engineers, won the 32nd World Computer Shogi Championship in May 2022. ◼ The World Computer Shogi Championship i
Slide 30: 6. Reference Materials
1. Executive Overview 2. Business Overview 3. FY04/2022 Full Year Performance 4. FY04/2023 Forecast 5. Growth Strategy 6. Reference Materials
Slide 31: Potential AI Demand in Our Areas of Focus
Potential AI Demand in Our Areas of Focus ◼ We believe there is also significant potential demand for enhancing operational efficiency through AI in the construction industry, which is one of our areas of focus ◼ There will be a shortage of 110,000 construction technicians by 2025 (source: Human Tou
Slide 32: Japan: Potential AI Demand is Among the Largest Worldwide
Japan: Potential AI Demand is Among the Largest Worldwide ◼ Potential AI demand in Japan can be expected to be among the largest worldwide, as the working population is expected to decrease significantly going forward Projection of Population Age 15-64 (Median Prediction Interval, 2020=100) ◼ When d
Slide 33: Use of Our AI in DX
Use of Our AI in DX ◼ Domestic DX (digital transformation) is expected to accelerate due to the future decrease in the working population as well as the impact of the COVID-19 pandemic ◼ AI allows for DX of a wide variety of operations including those involving decision- making, which were previousl
Slide 34: Disclaimer
Disclaimer The contents set out in this material are prepared based on generally acknowledged economic, social and other conditions, and on certain assumptions deemed rational by HEROZ, Inc. and may therefore be subject to change without prior notice due to changes in the managerial environment or f