Heroz, Inc. · TSE:4382
Heroz — Q2 FY04/2023 Earnings Presentation
34 slides from Heroz's earnings presentation, Dec 9, 2022
Slide 1: Presentation Material for FY04/2023 Q2 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 Q2 Financial Results
Slide 2: Contents
Contents １．Financial Highlights ２．HEROZ Group Strategy ３. Initiatives for Group Synergies ４．FY04/2023 Q2 Performance ５．Revision of Earnings Forecast FY 04/2023 2
Slide 3: Highlights
Highlights 3
Slide 4: Highlights
Highlights ➢ Net sales were 765 million yen (+5.0%), EBITDA was 94 million yen (+34.9%), and Operating profit was 37 million yen * Figures in parentheses ( ) are YoY comparisons. FY04/2023 ➢ AI (B to C) service using the world's best Shogi AI based on machine learning, in addition to the stable grow
Slide 5: HEROZ Group Strategy
[\ HEROZ Group Strategy HEROZ °
Slide 6: Company Overview
2022 Moved to the Tokyo Stock Exchange Prime Market Company Overview Acquires shares of VarioSecure, Inc. through third-party allotment and makes it a consolidated subsidiary Acquired shares of StrategIT Corporation and made it a consolidated subsidiary. Name HEROZ, Inc. 2019 Listed on the First Sec
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 Se
Slide 13: Initiatives for Group Synergies
Initiatives for Group Synergies 13
Slide 14: Group Structure
Group Structure With the consolidation of VarioSecure Inc. and StrategIT Inc. as consolidated subsidiaries, we have shifted to the group management structure. Total net sales of the three companies are approximately 4.5 billion yen .(sum of the most recent results) Listed on the TSE Prime Market (Se
Slide 15: Group Business Structure
MAU：Monthly Active User MPU：Monthly Paid User Group Business Structure ARPPU：Average Revenue Per Paid User AI/DX Service AI Security segment Service BtoC BtoB Business Contents Shogi SaaS business for Provide solutions to customer Support for SaaS Managed security and individuals, including "Shogi i
Slide 16: Pursuit of Group Synergies
Pursuit of Group Synergies With the transition to group management, establish a structure to realize group synergies. Establish the following structure Synergies among groups to realize the anticipated group synergies. envisioned to realize AI SaaS ・Group Strategy Meeting Monitoring the realization
Slide 17: FY04/2023 1st Half Performance
FY04/2023 1st Half Performance 17
Slide 18: Our Key Performance Indicator
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 i
Slide 19: Performance Overview (May 2022-October 2022)
Peformance Overview (May 2022-October 2022) ◼ Our sales peaked in FY04/2020 and have continued to decline through the previous fiscal year, but has once again shifted to a growth path, realizing a 5.0% increase in net sales in 1st Half FY04/2023 compared to the same period of the previous year. ◼ Op
Slide 20: Net sales and EBITDA Trends
Net sales and EBITDA Trends ◼ AI (BtoB) service sales increased 11.3% YoY on a Q2 standalone basis due to the effect of large project orders and increased recurring revenue following the establishment of a new sales and marketing organization. ◼ AI (BtoC) service sales increased 0.2% yoy in the 2Q o
Slide 21: 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 22: Balance Sheet (as of October 31, 2022)
Balance Sheet (as of October 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 o
Slide 23: Revision of Earnings Forecast FY04/2023
Revision of Earnings Forecast FY04/2023 23
Slide 24: Transition to Consolidated Financial Results
Transition to Consolidated Financial Results ◼ The Company shifted to consolidated accounts following the acquisition of StrategIT shares on August 31 and the subscription to a third-party allotment of new shares by VarioSecure on September 27. ◼ In the consolidated financial results for the second
Slide 25: Revision of Earning Forecast for FY04/2023
Revision of Earning Forecast for FY04/2023 ◼ Full-year forecasts were announced in the Sep. 9, 2022 financial results announcement in conjunction with the transition to consolidated accounting. However, due to the change in the accounting period of StrategIT and the increase in internal transactions
Slide 26: Trends in the Group's Business Performance
Trends in the Group's Business Performance ◼ For the current fiscal year (FY2023/4), the two consolidated companies will be consolidated only for the half-year period, and the forecasts for sales and EBITDA have been revised to 2.9 billion yen and 550 million yen, respectively. ◼ In the next fiscal
Slide 27: Reference Materials
[\ Reference Materials 27 HEROZ
Slide 28: 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 29: 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 30: 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 31: 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 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: 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