Neural Group Inc. · TSE:4056
Neural — Q1 2025 Earnings Presentation
33 slides from Neural's earnings presentation, May 12, 2025
Slide 1: Financial Results Briefing Material, Q1 ended March 31, 2025
Update the world for a better tomorrow Financial Results Briefing Material 8th term, Q1 ended March 31, 2025 Neural Group Inc. May 12, 2025 Copyright © Neural Group Inc. All Rights Reserved. 0
Slide 2: Q1 Earnings highlights and business strategy updates
Q1 Earnings highlights and business strategy updates • In FY2024, we returned to operating profitability for the first time in three years. In Q4, we achieved Review of the highest-ever quarterly revenue (¥995 million) and operating profit (¥117 million, operating margin FY2024 of 11.8%) since the c
Slide 3: Overview of Our Businesses, Growth strategy, FY2025 Q1 Financial Highlights
• Overview of Our Businesses Evolution of our growth strategy • Evolution of our growth strategy FY2025 Q1 Financial Highlights • FY2025 Q1 Financial Highlights Copyright © Neural Group Inc. All Rights Reserved. 2
Slide 4: Introduction to Neural Group – Our Mission
Introduction to Neural Group – Our Mission – “Update the world for a better tomorrow” We named our company "Neural Group" to express our desire to provide inspiring services that transcend boundaries across a wide range of fields through the development of cutting- edge technologies, including AI. W
Slide 5: Management team – driving the social implementation of AI technologies
Management team – driving the social implementation of AI technologies Founder & CEO, Roi Shigematsu, Advisor, Yutaka Matsuo • Partner at McKinsey & Company. • Professor, Artificial Engineering Research Center, • Led private equity investments at Bain Capital. Graduate School of Engineering, The Uni
Slide 6: Our core competence
Our core competence Listed on TSE in Early entry into Edge Strong in Video AI, August 2020, 2.5 AI as an NVIDIA Audio AI, LLMs, years after founding. METROPOLIS partner. and AI Agents. Sapporo Ministry of Land, Infrastructure, Transport and Tourism Sendai Nagoya Osaka Smart City Public-Private Hiros
Slide 7: Overview of Our Businesses
Overview of Our Businesses • Overview of Our Businesses • Evolution of our growth strategy FY2025 Q1 Financial Highlights • FY2025 Q1 Financial Highlights Copyright © Neural Group Inc. All Rights Reserved. 6
Slide 8: Business model at the time of IPO in August 2020
Business model at the time of IPO in August 2020 Business model at IPO: New technology and business development centered on Edge AI Develop advanced technologies in-house with a focus on Edge AI Provide AI licenses Accumulate feedback Research general societal Large companies and experiences needs b
Slide 9: 4 years after IPO, the business model has evolved to the next stage
4 years after IPO, the business model has evolved to the next stage. 【Continuous Innovations】 【Scaling Core Services】 Extend AI research capabilities to ＋ Take the lead in providing Secure LLMs and AI Agents. AI services to society. In addition to • Scaling up with Edge AI, focusing our sales networ
Slide 10: Our two business pillars – Innovations and Core Services
Our two business pillars – driving growth through both “Innovations” and “Core Services”. Innovations Core Services （AI algorithm research） （Social implementation of AI） closely collaborate ▪ Drive joint research on AI Agents ▪ Sell proven AI technologies and and LLMs with partners services ▪ Align
Slide 11: Expanding Core Services to meet broad market needs
Expanding Core Services to meet broad market needs FY2024 revenue composition 100% = ¥3,564 million Innovations Core Services 22% 78% and others and others • AI MD research activities have concluded, and its contribution to revenue has declined. • FOCUS CHANNEL technology has been applied to “Neural
Slide 12: FY2025 business growth strategy by business domain
FY2025 business growth strategy by business domain Strategic Revenue growth trends by domain*1 CAGR Direction (JPY Millions) 3,700 3,564 The achievements of new business creation over the 3,178 634 -16.6% past three years have 778 accumulated, enabling 2,878 theme selection in FY2025. 885 Focus will
Slide 13: Mapping of target technologies in each business domain
Mapping of target technologies in each business domain Innovations Core Services LLM Secure AI Agent Image Voice Research Program Edge AI 32 bn parameters LLM auto-generation recognition recognition Image Optimization Optimization Image Character AI Text Generation AI recommend & anime Inventory gen
Slide 14: NEURAL.LLM updates
Innovations NEURAL.LLM updates Announced in June 2023 Announced in April 2025 • ~3 billion parameters • 32 billion parameters • For R&D purpose • For commercial use Copyright © Neural Group Inc. All Rights Reserved. 13
Slide 15: NEURAL.LLM in action
Innovations NEURAL.LLM in action URL of the demonstration: https://youtu.be/QzmVgvwmilg Copyright © Neural Group Inc. All Rights Reserved. 14
Slide 16: Why we excel in LLM development and implementation
Innovations Why we excel in LLM development and implementation Edge devices for AI cameras Compact servers for NEURAL. LLM NVIDIA JETSON series NVIDIA A100 Rolling-out our strength • Started developing and operating Edge AI • Differentiated from overheated global LLM technologies ahead of the curve
Slide 17: Why a standalone LLM is needed
Innovations Why a standalone LLM is needed • When using LLMs or AI Agents in a corporate setting, it is necessary to input highly confidential information related to sales, finance, technology, and HR into the AI. • With cloud-based LLMs, it is difficult to use the most critical internal data for an
Slide 18: Our AI and services deployed across more than 12,000 locations
Core Services Our AI and services have been deployed across more than 12,000 private, public, and government locations. Examples of installation locations private Commercial facilities Logistics facilities Retail stores Residentials Office buildings Parking lots Soccer stadiums Sports facilities Exp
Slide 19: The Core Services area continues to maintain a steady growth rate
Core Services The Core Services area continues to maintain a steady growth rate Core Services area revenue growth rate (Year-over-Year) Solid customer demand and expansion across industries and regions have driven continued revenue growth for nine consecutive quarters. 175% 150% 138% 139% 140% 125%
Slide 20: Exceptional AI company with nationwide sales and large customer network
Core Services Exceptional AI company with nationwide sales and a large-scale customer network. Sapporo Sendai Nagoya Osaka Neural Group HQ in Tokyo Hiroshima Fukuoka Neural Marketing Tokyo HQ Miyazaki Takamatsu Neural Marketing Osaka HQ 12 locations 251employees *1 Japan and overseas group headcount
Slide 21: Partnered with many public and private organizations
Core Services Partnered with many public and private organizations to promote AI services through an extensive network. Industry groups General Incorporated Association Japan Parking Association Collaboration with corporations Smart City related Ministry of Land, Infrastructure, Transport and Touris
Slide 22: Our Core Services have broad and growing expansion potential
Core Services Our Core Services have broad and growing expansion potential. Current priority Area of coverage Pharmaceuticals Transportation / Transportation Manufacturing Infrastructure Public / Local Construction Real Estate / Government Healthcare / Electrical / Logistics Apparel / Telecom Financ
Slide 23: FY2025 Q1 Financial Highlights
Overview of Our Businesses • Overview of Our Businesses Evolution of our growth strategy • Evolution of our growth strategy • FY2025 Q1 Financial Highlights Copyright © Neural Group Inc. All Rights Reserved. 22
Slide 24: Consolidated financial results for Q1 ended March 31, 2025 – YoY
Consolidated financial results for the Q1 ended March 31, 2025 – YoY FY2024 FY2025 Increase/ Change in (JPY Millions) Q1 Actual Q1 Actual Decrease Percentage Revenue 780 825 +45 +5.7% EBITDA -63 26 +89 - Percentage of revenue - 3.2% Operating profit -100 -9 +91 - Percentage of revenue - - Ordinary i
Slide 25: Consolidated financial results for Q1 – by domain
Consolidated financial results for the Q1 ended March 31, 2025 – by domain (JPY Millions) FY2024 FY2025 Increase/ Change in Domain Q1 Actual Q1 Actual Decrease Percentage Innovations 177 150 -27 -15.2% Core 603 675 +71 +11.9% Services Total 780 825 +45 +5.7% Copyright © Neural Group Inc. All Rights
Slide 26: Historical quarterly revenue by domain
Historical quarterly revenue by domain (JPY Millions) Core Services Innovations Uncategorized +45 990 984 995 880 907 818 243 220 825 358 772 780 734 171 208 150 208 177 640 603 265 290 513 189 167 251 740 774 288 294 708 699 675 251 632 610 603 202 226 506 163 164 184 450 443 435 126 62 91 261 33 Q
Slide 27: Historical quarterly operating profit
Historical quarterly operating profit （JPY Millions） 117 86 74 59 44 25 27 23 12 5 -2 -5 -9 -22 -27 -34 -52 -71 -100 -119 -130 -164 +91 -188 -215 -221 +115 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 （2nd term）
Slide 28: Cost structure & sales comparison – SG&A and CoGS ratio
Cost structure & sales comparison – SG&A and CoGS ratio • CoGS ratio has remained stable at below 40% (gross margin of 60% or higher). • SG&A expenses include fixed costs such as personnel expenses, so the SG&A ratio tends to decrease from Q1 to Q4 as revenue increase. 150％ 136% 129% 123% 113% 103%
Slide 29: Historical performance data
Historical performance data （JPY Millions） FY2023 FY2024 FY2025 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 % of % of % of % of % of % of % of % of % of Actual revenue Actual revenue Actual revenue Actual revenue Actual revenue Actual revenue Actual revenue Actual revenue Actual revenue Revenue 603 100% 772 100% 818
Slide 30: FY2025 Q1 – Balance Sheet
FY2025 Q1 – Balance Sheet (JPY Millions) FY2025 March 31 Current Asset 1,297 of which, 523 Cash and Deposits Fixed Assets 1,426 Total Assets 2,723 Total Liabilities 2,123 of which, 1,740 interest-bearing debt Net Assets 599 Copyright © Neural Group Inc. All Rights Reserved. 29
Slide 31: Capital alliances with major operating companies
Capital alliances with major operating companies have been formed to create business synergies. Sony Corporation Kyodo News CROSS PLUS Tie-up April December December announcement 2023 2023 2023 Details of • Exchange of • Subsidiary Kyodo • Collaboration in the cooperation personnel, services News Di
Slide 32: Promoting capital and business alliances while expanding floating shareholders
Promoting capital and business alliances with operating companies while ensuring share liquidity by expanding floating shareholders Note: Based on shareholders' register as of December 31, 2024 General shareholders General shareholders floating shares*1 General shareholders floating shares floating
Slide 33: Disclaimer
Disclaimer Handling of the material This document contains forward-looking statements. These statements are based solely on the information available at the time the statements were made. Furthermore, such statements are not guarantees of future results and are subject to risks and uncertainties. Ac