Neural Group Inc. · TSE:4056
Neural — Neural Pocket — FY2022 Earnings Presentation
72 slides from Neural's earnings presentation, Feb 10, 2023
Slide 1: Financial Results Briefing Material FY2022
Financial Results Briefing Material FY2022 (ended Dec 31st, 2022) Neural Pocket Inc. February 10, 2023 Translation of original Japanese version Copyright © Neural Pocket Inc. All Rights Reserved. 1
Slide 2: FY2022 ended Dec. full year highlights
FY2022 ended Dec. full year highlights Business scale Profitability Second half of fiscal year Net Sales Operating profit, +185% Growth Net income Annual revenue YoY% V-shape recovery in progress Corporate Overseas Biz Neural Marketing Inc. Overseas M&A execution expansion and PMI Initiated smart ci
Slide 3: Agenda
• AI Industry Trend and Company Advantage • FY2022 Highlights • FY2023 Business Growth Themes • AI Service Progress Copyright © Neural Pocket Inc. All Rights Reserved. 3
Slide 4: AI industry expected to grow to an overwhelming market size
AI industry is expected to grow to an overwhelming market size compared to other growth areas Global market size comparison (Billion USD) +1,718 2021 2030 1,812 +640 +553 679 702 +78 82 149 94 3 39 Web 3.0 Metaverse SaaS AI Emergen Research*1 Grand View Research*2 Allied Market Research*3 Grand View
Slide 5: AI industry shifting from selling AI tech to AI-enabled services
The AI industry is shifting from selling “AI tech itself“ to selling “AI-enabled services” AI tech provider:Selling AI itself Catering to the needs of individual companies, providing customized Project commission AI tech Sales of AI Revenue technology from clients experiments licenses share AI servi
Slide 6: AI technology is evolving along with the industry's growth
AI technology is evolving along with the industry’s growth Cloud AI Edge AI Conventional approach Our approach Original data (video, etc.) before AI analysis Metadata after AI analysis (text data) Real-time marketing and security data AI analysis in a large cloud server Shift Large scale Small scale
Slide 7: Adoption of edge AI technology is accelerating at global leading companies
Adoption of edge AI technology is accelerating at many global leading companies NVIDIA DRIVE AGX Xavier Accelerate development of Ethos NPU series, Edge- edge devices for autonomous oriented chips specializing in driving to achieve low latency deep learning to achieve high- and safety unaffected by
Slide 8: Edge processing is rapidly expanding
Edge processing is rapidly expanding Total data processed at the edge vs in the cloud*1*2 Growth forecast Through 2018 to 2025 Through 2018 to 2025 175 ZB Edge CAGR*4 131 +69% Cloud 32 ZB*3 3 CAGR*4 44 29 +6% 2018 2025 *1 Source for Edge share: What Edge Computing Means for Infrastructure and Operat
Slide 9: We enable smart cities with edge AI
We enable smart cities with edge AI – Our edge AI platform allows for the circulation and utilization of data in physical spaces Edge AI platform to manage smart cities AI technology Edge technology Privacy protection Smart City that Neural Pocket envisions Immediate parking, No restraints, Flowing
Slide 10: Neural Platform: environment for AI software development and operations
Neural Platform is a comprehensive environment to facilitate AI software development and day-to-day operations Functions Image and overview Functions Image and overview ▪ Manage and provide AI services ▪ Real-time management of (AI models), such as people flow operational (alive/ dead) status of Equ
Slide 11: Proprietary AI libraries and edge implementation technologies
We develop proprietary AI libraries/ edge-related implementation technologies to enable AI smart cities People attribute analysis People emotion and thought analysis Gender/ age Line-of-sight Facial expression, Voice/ emotion Natural language Facial recognition Fashion analysis estimation detection
Slide 12: AI libraries operate on a variety of technical standards
Our AI libraries operate on a variety of technical standards, contributing as an Edge AI Platform developer Examples of edge devices running our edge AI Processor JETSON Xavier NX JETSON Nano JETSON TX2 OS Language Processor OS Language Copyright © Neural Pocket Inc. All Rights Reserved. 12
Slide 13: Established position as an edge AI platformer
As business models in the AI industry diversify, we have established our position as an edge AI platformer Business model Edge AI Platformer AI service provider Cloud AI Service Selling AI-enabled services Scaling service AI tech provider Selling “AI tech itself” Commissioned Commissioned AI Develop
Slide 14: Accelerating growth since inception in the edge AI market
In the rapidly growing edge AI market, we have been accelerating growth since inception Company growth strategy and expansion progress Track record Net sales M JPY 3,500 Focus Channel Inc., NETTEN Inc. consolidation Annual growth rate 3,000 since company founding Sep 2022 2,500 Parking mobility solu
Slide 15: AI platforms expected to emerge from Asia
AI platforms expected to emerge from Asia, where the development of smart cities are most rapid U.S. companies are hesitant towards the usage of AI in physical spaces Withdrawal from face recognition In Japan, legislation for business (Jun, 2020) AI utilization and it’s implementation is in progress
Slide 16: Established Thai subsidiary in Nov. 2022
Established Thai subsidiary in Nov. 2022, to participate in greenfield type urban development popular across Southeast Asia Neural Pocket Thailand (Bangkok office) and CRC Tower where the base is located ©P&T Group ©P&T Group Company name Neural Group (Thailand) Co., Ltd. Representative Kazuma TAKEN
Slide 17: Vast infrastructure investment expected in Thailand and SE Asia
Vast infrastructure investment expected in Thailand and SE Asia Urban population growth Urban development market size (over the past 10yrs)*1 (over the past 10yrs)*1 (millions) (trillion dollars) 60.1x 3.9x Urban dev. 58.50 9.55 across ASEAN 2.47 0.97 Japan ASEAN Japan ASEAN i Concentrated investmen
Slide 18: Agenda
• AI Industry Trend and Company Advantage • FY2022 Highlights • FY2023 Business Growth Themes • AI Service Progress Copyright © Neural Pocket Inc. All Rights Reserved. 18
Slide 19: Highlights for FY2022 – Continued growth and overseas business expansion
Highlights for FY2022 ended Dec. – Continued growth and overseas business expansion Growth Profitability Sales Force Transforming business model Sustained high gross margins AI startup with large whilst rapidly growing topline allow for strong future profitability 80+ sales staff Net sales growth Gr
Slide 20: Sustained steady growth post Q1 acquisition of Neural Marketing
Sustained steady growth post Q1 acquisition of Neural Marketing Net Sales Annual net sales 311 762 1,010 2,878 (YoY growth +417.3%) (YoY growth +144.8%) (YoY growth +32.4%) (YoY growth +184.9%) (百万円) +338% (YoY growth) 991 734 640 513 288 294 251 226 202 163 164 184 126 62 91 33 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 21: Steady expansion of gross profit
Steady expansion of gross profit, which is the second most important performance indicator after sales Gross Profit Gross profit margin (% of net sales) 64% 65% 64% 81% 93% 93% 88% 81% 87% 77% 81% 64% 68% 65% 70% 61%*1 +334% (百万円) (YoY growth) 625 515 419 352 250 237 203 152 152 162 157 144 102 40 5
Slide 22: Business model transformed; profitability on V-shaped recovery path
Over 18 months, we have transformed the business model and profitability is on a V-shaped recovery path EBITDA Operating Profit*1 Net Income*1 (Million JPY) 139 125 126 118 102 91 88 63 52 52 44 45 -14 -88 -71 -76 -295 -933 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 FY2020 FY2021 FY2022 F
Slide 23: Trajectory of Neural Pocket Group full-time employees
Trajectory of Neural Pocket Group full-time employees*1 (# of staff) 182 168 52 38 42 34 25 18 Jun. Dec. Jun. Dec. Jun. Dec. Jun. Dec. FY2019 FY2020 FY2021 FY2022 (2nd term) (3rd term) (4th term) (5th term) *1 As of Dec 31st 2022. Excludes executives (full-time board directors, auditors, executive o
Slide 24: Net sales by service domain
Net sales by service domain (Million JPY) +339% 991 Digi-Solution Service Lifestyle/ Innovation Service 170 734 640 131 70 513 34 821 288 294 570 603 251 56 66 226 479 32 202 184 20 163 164 126 22 25 32 65 91 31 219 232 228 206 62 32 152 33 141 139 137 34 28 59 95 30 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 25: FY2022 ended Dec. financial results
FY2022 ended Dec. financial results • Progressive shift from fee-based to unit-based operations resulting in record sales • Achieved operating profits and net profits in H2 due to profitability improvement driven by sales growth • V shaped recovery in progress as the company Published Aug. achieved
Slide 26: FY2022 consolidated Balance Sheet
FY2022 (ended Dec.) consolidated Balance Sheet (Million JPY) FY2022 As of Dec 31st Total current assets 2,091 Cash and cash assets 1,112 Total non-current assets 1,831 Total assets 3,922 Total liabilities 3,460 Interest bearing debt 2,854 Total net assets 461 Copyright © Neural Pocket Inc. All Right
Slide 27: Neural Pocket Group (as of Dec. 31, 2022)
Neural Pocket Group (as of Dec. 31st, 2022) Ownership 100% 100% 100% Thailand Neural Marketing Inc.*1 Neural Engineering Inc. Neural Group (Thailand) Co., Ltd. Established Aug 20th, 2003*2 Oct 1st, 2021 Nov 4th, 2022 Business Development, fabless Installation, operation, and Sales of AI services and
Slide 28: Group operates 14 locations to support smart city development
Neural Pocket Group operates 14 locations internationally, possessing the necessary infrastructure to support the development of smart cities Neural Pocket Inc. locations Neural Marketing Inc. locations Bangkok Office*3 Niigata Branch Singapore Branch Nagoya Branch Sendai Branch Neural Marketing Inc
Slide 29: Introduced business units from the beginning of FY2022
Introduced business units from the beginning of the FY2022 • Business units allow for different business divisions to pursue scale, independent of each other • Broad executive team in place to lead each of the divisions Board of Directors CEO Technology Financial Marketing Digi-Solution Lifestyle De
Slide 30: General shares/floating shares increasing since IPO
General shares/ floating shares increasing since IPO (as of Dec. 31st, 2022) General shares/ floating shares*1 4.6% VC/ Angel 18.8% investors*2 24.4% 29.8% Total issued Total issued Total issued 13,784,000 14,013,200 12.6% 14,439,199 shares shares shares 61.5% 68.6% 8.7% 71.0% Management*3 Aug. 20th
Slide 31: Agenda
• AI Industry Trend and Company Advantage • FY2022 Highlights • FY2023 Business Growth Themes • AI Service Progress Copyright © Neural Pocket Inc. All Rights Reserved. 31
Slide 32: FY2023 Business growth themes
FY2023 ending Dec. Business growth themes Neural Pocket Group AI Digi-Solution • Management theme for FY2023 is “Scale and • Horizontal expansion across both the public and profitability” private sectors and install a total of 400 cumulative units by the end of FY2023 → Scale unit-based revenue whil
Slide 33: FY2023 Forecast – organic growth with profitability around break-even
FY2023 Forecast - Priority is placed on achieving YoY 40% organic growth, whilst profitability is planned at around break-even +39% 4,000 2,878 Net Sales 1,010 762 311 60 203 196 EBITDA 78 38 -182 -127 Operating 171 20 10 Profit -183 -133 -251 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Act. Act. Act.
Slide 34: Allocating profits generated towards upfront investments
Allocating profits generated towards upfront investments (Million JPY) EBITDA Operating Profit 208 404 Other 12 New development 31 Overseas 38 Sales staff bolstering 127 (New hires) 208 218 196 12 31 38 127 10 Company Investments Pro-forma Company Investments Pro-forma forecast EBITDA forecast EBITD
Slide 35: FY2023 consolidated forecast
FY2023 ending Dec. consolidated forecast FY2022 FY2023 ended Dec. ending Dec. Growth Growth (Million JPY) results forecast Value Percentage Net Sales 2,878 4,000 1,121 +38.9% Gross profit 1,910 2,650 739 +38.7% % of net sales 66.3% 66.2% EBITDA 38 196 157 +409.8% % of net sales 1.3% 4.9% Operating p
Slide 36: Rebranding the company name to Neural Group
Five years since founding, we aim to expand our business and contribute to society - Rebranding the company name to "Neural Group" Mar 30th To be resolved at the Feb 2023 general meeting of shareholders Jun 1st Name change effective Announcement date (plan) *1 Mar 2019 Series B Neural Group Inc. Jan
Slide 37: Executive team and Board of Directors
Executive team and Board of Directors Executive team (as of Feb 10th, 2023) Position Roles and Responsibilities Name CEO Director - Roi Shigematsu CFO Director President of Financial Management Division Ryosuke Tane Executive Director President of Marketing Division Masaaki Yamamoto Neural Marketing
Slide 38: Management team
Management team (expected as of Mar. 30th, 2023) Name Career overview Former Partner at McKinsey, working in 11 countries including Japan, Germany, and the U.S as Representative Director leader in IoT and AI field. Founded Neural Pocket in January 2018 with the goal of realizing the Roi Shigematsu d
Slide 39: Agenda
• AI Industry Trend and Company Advantage • FY2022 Highlights • FY2023 Business Growth Themes • AI Service Progress Copyright © Neural Pocket Inc. All Rights Reserved. 39
Slide 40: Digi-Solutions service lineup
Digi-Solutions service lineup – Providing a suite of packaged AI services Parking management system to Visualization .. of vehicles Visualization of people flow for Ready-to-install AI signage with eliminate waiting time through license plate analysis improved facility operations viewership and audi
Slide 41: Digi-Solutions unit installation (Cumulative)
Digi-Solutions unit installation (Cumulative) 1,531 units 1,265 units 806 DigiLook*1 980 units 547 317 644 units 106 406 units 485 526 496 SignDigi*2 384 185 units 301 103 121 95 units units 229 DigiPark/ DigiFlow 97 154 178 192 87 16 24 90 105 etc.*3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY2021 FY2022 *1 LED sig
Slide 42: Digi-Solution services introduced across Japan
Digi-Solution services introduced across Japan Sendai city Muroran city People flow in urban centers, Regional revitalization Hyogo Pref. evacuation center operation optimization with AI-enabled urban Prologis Park Inagawa 1&2 development License plate detection Kashiwa-no-ha smart city Outdoor AI s
Slide 43: Mitsubishi Estate: people flow detection in Marunouchi
Mitsubishi Estate: Detection of people flow across 3 major buildings in Marunouchi Total guest count and the number of guests staying within the building at any given time is visualized. Edge AI processors were connected to existing surveillance cameras across events spaces, entrances and exits, and
Slide 44: Huis Ten Bosch parking lot visualization
Huis Ten Bosch Amusement Park Parking lot visualization Where system was Edge AI cameras installed at the entrance/ exit of (4 cameras in total) and installed*1 webpage view for visitors displaying congestion in real time Parking lot No.1 Entry/ exit License plate detection camera detection camera V
Slide 45: Digi-Thru at Mitsui Fudosan's logistics facility
Introduction of "Digi-Thru" license plate detection to Mitsui Fudosan's logistics facility Edge AI cameras installed near entrances and exits detecting license plates of moving vehicles to visualize traffic volume, determine vehicle attributes, and analyze utilization. The data is used to eliminate
Slide 46: License plate detection at Prologis Park Inagawa
License plate detection at Prologis Park Inagawa ※Inside warehouse Image of truck license plate 9 10 11 5 16 detection 7 6 8 4 15 17 18 19 20 3 ※Inside warehouse 2 14 1 13 12 Prologis Park Inagawa I Prologis Park Inagawa II Truck traffic visualization via license plate detection utilizing 20 existin
Slide 47: Customer testimonials for Digi-Solutions
Customer testimonials for Digi-Solutions Tokyo Tatemono Co., Ltd. Digi-Park case example Enhancing customer experience and operations every day in large parking lots Reference: Available on our website from November 2, 2022. (https://digisolution.neuralpocket.com/usecase/tokyotatemono) Copyright © N
Slide 48: People flow analysis in Komoro City
Agreement and ongoing analysis of people flow to promote digital transformation in Komoro City Agreement signing ceremony, announced Feb 4, 2022 Activity image Toshihiro Koizumi, Mayor of Komoro (third row from the top, left), Hiroyuki Matsunaga, Deputy General Manager, Urban Verification of the eff
Slide 49: Oedo Line Tochomae Station: AI signages using local 5G
Oedo Line Tochomae Station: Installation of AI signages using local 5G 【Overview】 • Joint initiative with JTOWER, NTT East, and FCNT to verify use cases of new digital technology in train stations using 5G technology • Installed AI signage in stations to broadcast information to commuters and measur
Slide 50: DigiLook: Top share in Japan with 10,000+ LED signages
DigiLook: Top share in Japan with more than 10,000 LED signage installations #1 installations with more than 10,000 signages nationwide ➢ Unparalleled installation track record Experience in a wide variety of industries, including large corps, government offices, commercial facilities, and merchant
Slide 51: LED Vision installation cases
LED Vision installation cases LED vision, which excels in visibility and spatial presentation, is used in various scenes throughout the city to promote sales at facilities and stores, and as a medium for people to encounter new information. Government, For large scale business operators For SMEs mun
Slide 52: FC Imabari Stadium large scale LED
FC Imabari Stadium – Introduced large scale LED Introduced our LED Vision "DIGILOOK" at the Imabari Stadium in Ehime Prefecture LED vision length 96m (48m x 2 sets) Copyright © Neural Pocket Inc. All Rights Reserved. 52
Slide 53: Apartment Signage Focus Channel
Apartment Signage “Focus Channel” We deliver the advertiser's message to the residents of high-end urban apartments Entrance hall Elevator hall Lounge Reception Copyright © Neural Pocket lnc. All Rights Reserved. 53
Slide 54: Reaching approx. 200K residents of high-end urban apartments
Media characteristics We deliver the advertiser's message daily and repeatedly to approx. 200K residents of high-end urban apartments 420 buildings Approx. Approx. 80,000 households Impression Steady reach regardless of Apartment Signage Ads seasons and externalities Market No. 1 Frequency Located i
Slide 55: Audience attributes
Audience attributes Repeatedly reach a fashion-conscious and highly motivated segment of the business community Household income 70% of the residents exceed an annual household 20Mln~ 2000万円以上〜 Below 8Mln 800万円未満 income of 10 million yen. 7% 9% Most of the apartments are family-oriented, where there
Slide 56: Composition of apartment signage content distribution
Composition of apartment signage content distribution As a medium suitable for private spaces, we interweave facility announcements and content between advertisements Signage Ad distribution configuration Examples of installed signages Flyer racks are also set up near the signage where Top Bottom Ad
Slide 57: Advertisement impact: high brand lift effect
Advertisement impact High brand lift effect, contributing to improved recognition and understanding of products and services Understanding of characteristics of services Cognitive change regarding advertising and products (%) (%) approx. 2.8 X approx. 3.7 X Total 64% Total 62% 57 17% 32% Total 23% T
Slide 58: Product sample distribution and physical events
Product sample distribution and physical events for enhanced outreach Realizing sales promotion that go beyond announcements and product recognition via sampling, experiencing, and events チラシラック を活用し試供 品やサンプル 品を配布*1 Higher advertising effectiveness through Direct outreach to target customers with ex
Slide 59: AI application examples: implementation reports
AI application examples For larger advertisers we can provide implementation reports, including brand lift research, post ad delivery Includes delivery data, brand lift survey results, etc. Conversion measurement data with list of apartment addresses also available upon request. Copyright © Neural P
Slide 60: Collaboration with GROWTH taxi media
Collaboration with “GROWTH” taxi media • Collaboration with "THE TOKYO TAXI VISION GROWTH" (operated by News Technology Co., Ltd.), one of the largest taxi signage media in Japan • Started sales of "Executive Reach Plan," delivering information from living spaces to mobile spaces targeting affluent
Slide 61: Examples of broadcasted advertisements
Examples of broadcasted advertisements Copyright © Neural Pocket lnc. All Rights Reserved. 61
Slide 62: Region-specific Local Ads and collaboration with DigiLook
Providing region-specific “Local Ads” and collaboration with DigiLook Promote installation of signages in target Expansion of area-specific area advertising areas with many large condominiums and development of new advertising products Distribute advertisements of local businesses Golf studio Dentis
Slide 63: List of installed apartments
List of installed apartments The Tokyo Towers (Mid Tower) Urban Park Azabujuban Bellevue Chiyoda Iidabashi Deems Toyocho The Tokyo Towers (Sea Tower) Residia Nishi-Azabu Deems Otemachi North Deems Toyocho II The Tokyo Towers (Mid Tower) Clio Mita La Mode Gala Station Iwamotocho North Royal Parks Toy
Slide 64: List of installed apartments
List of installed apartments Kawadacho Garden / Building No.2 Castalia Nakanobu First Residence Nishi Arai Livio Tower Itabashi Castalia Shinjuku-Gyoen PROUD FLAT Togoshi-Koen Esty Maison Akihabara Residia Tower Kamiikebukuro (Tower Tower) Castalia Shinjuku Residia Minami Shinagawa II Comforia Asaku
Slide 65: List of installed apartments
List of installed apartments Cosmo High Ceresa YOKOHAMAEAST Regent Parks Chiba-Chuo Cosmo Sandic Residence Okurayama KDX Chiba Chuo Residence Tokyu Dwell Yokohama Hillside Garden SEASCAPE Chiba Minato Cosmo Kita Shin-Yokohama Station Front Hulic Residence Chiba-Chuo Balm Heights Shin-Yokohama Makuha
Slide 66: Vast potential of locations for Digi-Solution Services
There is vast potential of locations for Digi-Solution Services to be installed Figures represent # of locations within Japan Apartments Office Buildings Restaurants Large Scale Retail Stores ~200K ~10K ~700K ~130K Hotels Hospitals, Pharmacies Airports Fitness Gyms ~50K ~70K ~100 ~6K Electricity Dis
Slide 67: Appearances at seminars/events
Appearances at seminars/ events AI technology ▪ Tokyo Data Platform Convention Professional Advisor ▪ RX Japan NexTech Week2022【Fall】 Lecture title “Smart Cities Today” ▪ Macnica: Possibilities in Retail for Image Recognition AI Speaker on Image Recognition AI ▪ AI Innovation AWARD2022 “Future envis
Slide 68: Thailand: Presenting at exchange event hosted by Embassy of Japan
Thailand: Presenting at exchange event hosted by the Embassy of Japan between local conglomerates and start-ups Pictures from event JETRO Business Brief article Local Thai media coverage Takenaka (Neural Thailand, CEO) *1 JETRO (Japan External Trade Organization) Bangkok website URL https://www.jetr
Slide 69: Membership in public/private organizations related to AI and smart cities
Membership in many public/private organizations related to AI and smart cities Smart City related Ministry of Land, Infrastructure, Transport and Tourism Smart City Public-Private Partnership Platform Kamakura City Smart City Public Private Sector Research Association MaaS Social Implementation Prom
Slide 70: Company mission: Update the world for a better tomorrow
Company mission “Update the world for a better tomorrow” Copyright © Neural Pocket Inc. All Rights Reserved. 70 70
Slide 71: 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
Slide 72: Copyright © Neural Pocket Inc. All Rights Reserved.
Copyright © Neural Pocket Inc. All Rights Reserved. 72