Heroz, Inc. · TSE:4382
Heroz — Q1 FY04/2023 Earnings Presentation
43 slides from Heroz's earnings presentation, Sep 9, 2022
Slide 1: Presentation Material for FY04/2023 Q1 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 FY04/2023 Q1 Financial Results
Slide 2: Contents
Contents １．Financial Highlights ２．HEROZ Group Strategy ３．VarioSecure, Inc. becomes a consolidated subsidiary ４．StrategIT, Inc. becomes a consolidated subsidiary ５．First Quarter Financial Report for the Fiscal Year Ending April 30, 2023 ６．Revision of the Forecast for the Fiscal Year Ending April 30,
Slide 3: Financial Highlights
[\ Financial Highlights HEROZ °
Slide 4: Financial Highlights
Financial Highlights ➢ Net sales: 375 million yen (+5.8%), EBITDA: 41 million yen (-12.5%), Operating income: 14 million yen (+56.4%) * ( ) is the comparison with the same period of the previous year FY04/2023 ➢ In AI (B to C) services, Shogi Wars has 6.7 million users and over 700 million total Fir
Slide 5: HEROZ Group Strategy
[\ HEROZ Group Strategy HEROZ °
Slide 6: Company Overview
2022 Company Overview Moved to the Tokyo Stock Exchange Prime Market 2021 Capital and business alliance with VarioSecure Inc. Name HEROZ, Inc. 2019 Location PMO Tamachi 2F, 5-31-17 Shiba, Minato-ku, Listed on the First Section of Tokyo Stock Exchange (TSE) Tokyo 2018 Listed on Tokyo Stock Exchange (
Slide 7: Our Vision
Our Vision Creating the future through artificial intelligence (AI) revolutions 7
Slide 8: HEROZ Group Strategy: To HEROZ 2.0
HEROZ Group Strategy ➡ To HEROZ 2.0 Based on the knowledge gained from our experience in solving individual customer issues, we will aim for SaaS-type business management driven by intelligence such as our data utilization and AI in the future.（HEROZ 2.0） HEROZ 1.0 HEROZ 2.0 × ●● prediction AI clien
Slide 9: Overall Group Strategy: AI SaaS
Overall Group Strategy：AI SaaS We will evolve the products of our company and group companies into more intelligent data-driven software by making the most of our accumulated expertise in advanced AI implementation and our strength as an engineering group. Pillars of Business AI SaaS Products Strate
Slide 10: Aspect of the SaaS market and our views of the major trends
Aspect of the SaaS market and our views of the major trends While the SaaS market in Japan is expected to grow steadily, there is still room for further penetration. To reach the approximately 10 trillion yen potential market, it is necessary to grasp the trends in the Japanese SaaS market. Enterpri
Slide 11: Our perception of the challenges of implementing SaaS
Our perception of the challenges of implementing SaaS By resolving trends that could be barriers to SaaS adoption through technology, we aim to materialize a latent market. Integration with legacy Need for integrated Diversification of needs systems management • Rapid changes in the business • Tradi
Slide 12: What we think AI SaaS should be like
What we think AI SaaS should be like We will support the provision of the ideal SaaS usage environment required by our clients by making full use of our accumulated know-how and technology client CRM HR mail Chat MA Automated and optimized Automated operations SaaS-to-SaaS collaboration Advanced Sec
Slide 13: VarioSecure, Inc. becomes a consolidated subsidiary
VarioSecure,Inc. becomes a consolidated subsidiary Please refer to VarioSecure's Q1 FY02/2023 financial results presentation for more information on the company. Please click on the link below. https://www.variosecure.net/ir/library3/ 13
Slide 14: Overview of VarioSecure Inc.
Overview of VarioSecure Inc. Name VarioSecure Inc. Established June 2001 capital 330.25 million yen Employees 76 Head Office Sumitomo Corporation Nishiki-cho Building 5F, Location 1-6 Kanda Nishiki-cho, Chiyoda-ku, Tokyo Osaka Office Osaka Office Location 1-2-19 Kitahorie, Nishi-ku, Osaka-shi, Osaka
Slide 15: VarioSecure, Inc. becomes a consolidated subsidiary
VarioSecure,Inc. becomes a consolidated subsidiary Today, we signed a capital and business alliance agreement with VarioSecure, Inc We will underwrite a third-party allotment of new shares to be conducted by VarioSecure in the later half of September to make it a consolidated subsidiary Last year's
Slide 16: Toward the Realization of an AI Security Company
Toward the Realization of an AI Security Company Provide customers with new safety and security in the age of zero-trust through the power of AI by utilizing a variety of corporate data. Supporting digital transformation by supporting corporate safety and security from the ground up Automation of on
Slide 17: AI Security Company's Growth Strategy
AI Security Company's Growth Strategy We will promote the following items jointly with VarioSecure to realize AI Security Company. ・ Mutual provision of management resources, including our AI technology and VarioSecure's industrial domain knowledge and Realization of data AI Security Company ・ Achie
Slide 18: Investment breakdown of the capital increase of VarioSecure, Inc.
Investment breakdown of the capital increase of VarioSecure, Inc. In order to realize the strategy, we will promote investment in the following items with the amount of VarioSecure's capital increase subscription by us Expected time of Specific Uses Amount expenditure New service planning, developme
Slide 19: (Reference) Business Overview - Services provided by VarioSecure
(Reference) Business Overview - Services provided by VarioSecure Services of Security Framework VarioSecure Building • Asset Systems Network Integration Services Management • Vulnerability Management indentific ation Vario Network Security Suite • Access Control • Intrusion VSR-VarioSecure Router Pr
Slide 20: (Reference) Providing services that make Internet use safe and comfortable
(Reference) Providing services that make Internet use safe and comfortable Service Category Managed Security Services Integration Services Installation support, operation and maintenance Service Form 24 hours/365 days, nationwide in Japan Equipment sales and construction Revenue Model Recurring type
Slide 21: (Reference) VarioSecure's business model
(Reference) VarioSecure's business model ◼ Provided mainly as an adjunct to the Internet connection Collective offer Proposal and Sales agency agreement (OEM/Distributor) Sales Support Internet connection ＋ Security Security Services Sales Services Agent Cutomers (Japanese Companies) Usage fees ￥ ￥
Slide 22: StrategIT Inc. becomes a consolidated subsidiary
StrategIT Inc. becomes a consolidated subsidiary 22
Slide 23: Overview of StrategIT Inc.
Overview of StrategIT Inc. Name StrategIT Inc. Our vision is to contribute to management improvement by integrating "Strategy" and "IT“ Establish July,2019 And our mission is to bring the power of SaaS to all companies Capital 24 million yen We aim to be a company that promotes the utilization and v
Slide 24: StrategIT Inc. becomes a consolidated subsidiary
StrategIT Inc. becomes a consolidated subsidiary On August 31, 2022, we acquired the shares of StrategIT from the two founders and the fund Shareholding ratio after the acquisition was 86.5%, making the company a consolidated subsidiary Dispatch of two part-time directors from the Company 2 founders
Slide 25: StrategIT's Business Overview
StrategIT’s Business Overview Develop various APIs (linked systems) for SaaS vendors to improve the convenience of SaaS, utilizing know-how gained through SaaS introduction consulting for BtoB. Business model to sell developed APIs to general companies through our SaaStainer (app store) １）Existing S
Slide 26: Strengths and Features with StrategIT
Strengths and Features with StrategIT Holds patent for "Master Hub," a development platform that brings together all the know-how required for SaaS collaborative development Operate "SaaStainer," an app store that provides SaaS-linked applications (recurring monthly fee model) ・Patented ”Master Hub”
Slide 27: FY04/2023 Q1 Performance
[\ FY04/2023 Q1 Performance 27 HEROZ
Slide 28: Our Key Performance Indicator: EBITDA
Our Key Performance Indicator ◼ We believe that EBITDA, as calculated below, is our key performance indicator performance indicator EBITDA = Operating Profit + Depreciation/Amortization Expenses ◼ Growing AI-related business requires investment in servers for advanced machine learning, etc., and inc
Slide 29: Performance Overview (May 2022-July 2022)
Peformance Overview (May 2022-July 2022) ◼ Our sales peaked in FY04/2020 and continued to decline until the previous fiscal year, but we have once again made a commitment as management to shift to a growth path and realized a 5.8% increase in sales in the first quarter of FY04/2023 compared to the s
Slide 30: Net sales and EBITDA Trends
Net sales and EBITDA Trends ◼ Sales of AI (BtoB) services increased 6.4% YoY as a result of a newly established sales and marketing organization and strengthened customer acquisition activities ◼ Sales of AI (BtoC) services increased due to the effects of event and additional functions in the mainst
Slide 31: COGS and SG&A Trends
COGS and SG&A Trends ◼ Until the previous fiscal year, the company had invested aggressively in cost of goods, general and administrative expenses, including depreciation associated with the purchase of servers and other equipment for machine learning, an increase in personnel hiring expenses, and a
Slide 32: Balance Sheet (as of July 31, 2022)
Balance Sheet (as of July 31, 2022) ◼ We plan to use the cash and deposits we currently hold for investments to realize our mid- to long-term growth strategy. ◼ As part of this effort, the company invested approximately 1.1 billion yen in the acquisition of StrategIT shares and the underwriting of a
Slide 33: Revision of Earnings Forecast FY 04/2023
Revision of Earnings Forecast FY 04/2023 33
Slide 34: Transition to Consolidated Financial Results
Transition to Consolidated Financial Results ◼ With the acquisition of StrategIT's shares on August 31 and the subscription to a third-party allotment of new shares by VarioSecure on September 27 (planned), we will shift to a consolidated financial statement ◼ In the consolidated financial results f
Slide 35: Revision of Full-Year Earnings Forecasts for the Fiscal Year Ending April 2023
Revision of Full-Year Earnings Forecasts for the Fiscal Year Ending April 2023 ◼ Full-year sales are expected to be 3.1 billion yen on a consolidated basis, compared to our initial forecast of 1.7 billion yen on a non-consolidated basis and 1.48 billion yen in last year's results ◼ Consolidated oper
Slide 36: Reference Materials
[\ Reference Materials HEROZ *
Slide 37: Global Leader in Mind Game AI
Global Leader in Mind Game AI Chess AI Shogi AI Go AI Deep Blue (’97) defeated a AI developed by our engineers who Google acquired Deep Mind (’14) professional Chess player was member of HEROZ at that time AlphaGo, developed by Deep Mind, defeated a professional Shogi defeated a professional Go play
Slide 38: AI SaaS (AI Software as a Service)
AI SaaS （AI Software as a Service) Developing our AI construction capabilities cultivated through machine learning using deep learning of vast Shogi game data in the construction, finance, entertainment, and other fields Structural design data, Shogi game records financial data, etc. AI SaaS for dee
Slide 39: Profitability of AI SaaS
Profitability of AI SaaS Research/develop Shogi AI Standardize AI technology accumulated through shogi AI AI SaaS（AI Software as a Service） Establish an infrastructure which allows HEROZ to provide AI services efficiently to solve various challenges in various Client’s data sent to HEROZ Output afte
Slide 40: Potential demand for AI in the construction domain
Potential demand for AI in the construction domain (one of our focus areas) ◼ 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 tech
Slide 41: 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 42: 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 43: Notes
Notes ◼ The forward-looking statements contained in this material are based on information currently available to the Company, but are not guarantees of future performance and are subject to various risks and uncertainties. Actual results may differ from the forward-looking statements contained or d