Heroz, Inc. · TSE:4382

Heroz — Q3 FY04/2024 Earnings Presentation

39 slides from Heroz's earnings presentation, Mar 8, 2024

Slide 1: Presentation Material for FY04/2024 Q3 Financial Results
Presentation Material for FY04/2024 Q3 Financial Results March 8,2024 HEROZ, Inc. ｜4382｜ 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 doc
Slide 2: Contents
Contents 1. Financial Highlights 2. FY04/2024 Third Quarter Performance (Consolidated) 3. Revision of Full-Year Earnings Forecasts 4. Initiatives in each business segment 5. Frequently Asked Questions and Answers © 2023 HEROZ Co., ltd. 2
Slide 4: Financial Highlights
※We disclose consolidated financial statements from the third quarter of the fiscal year ending in April 2023. Therefore, please note that the year-on-year comparison (cumulative) is based on the figures that include the profit Financial Highlights and loss statement of the subsidiary for only three
Slide 5: FY04/2024 Third Quarter Performance (Consolidated)
02 FY04/2024 Third Quarter Performance (Consolidated) © 2023 HEROZ Co., ltd. 5
Slide 6: Key Performance Indicator: EBITDA
Our Key Performance Indicator ◼ We have set EBITDA, a measure of cash generation, as a key performance indicator and aim to sustainably increase corporate and share value through EBITDA growth. ◼ Formula: Operating profit + amortization and other non-cash expenses (amortization of goodwill, security
Slide 7: Performance Summary (May 2023-January 2024)
Performance Summary (May 2023-January 2024) HEROZ Group Consolidated (FY04/2024 Q3) Net Sales EBITDA Operating Profit 3,631 mil yen 730 mil yen 402 mil yen YoY ＋93.2% YoY ＋107.0% YoY ＋105.6% AI SaaS KPI AI Security ARR Recurring Revenue Ratio Recurring churn rate 3,328 mil yen 63.9% 0.6% YoY ＋15.9%
Slide 8: Performance Overview (May 2023-January 2024)
Performance Overview (May 2023-January 2024) ◼ Thanks to the strengthening of our sales organization and the strong performance of Kishin Learning, both our organic BtoB and BtoC businesses have continued to experience significant growth in net sales. ◼ As of the current third quarter, we have incor
Slide 9: Key Performance KPIs (by Quarter)
Key Performance KPIs (by Quarter) Net Sales EBITDA (Units: JPY millions) (Units: JPY millions) 1,400 300 1,296 279 281 1,217 258 256 1,100 1,200 1,118 1,114 250 1,000 ※ 200 170 800 150 600 100 389 400 354 374 371 381 375 78 53 47 50 40 41 200 22 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q
Slide 10: Recurring revenue shows a continuous increasing trend
Recurring revenue shows a continuous increasing trend. ◼ In February, the paid versions of "HEROZ ASK" and "JOINT" were launched, and we expect a significant increase in recurring revenue in the future. ◼ Recurring revenue continues to show an increasing trend. (Units: JPY millions) 1,400 Net Sales
Slide 11: ARR achieved a growth of approximately 3.3 billion yen
ARR achieved a growth of approximately 3.3 billion yen. (Units: JPY millions) ARR ARR grows significantly 3,400 3,328 +15.9％ 15.9% YoY growth + YoY growth 3,200 ARR is 3,328 mil yen 3,000 2,958 ◼ Recurring revenue includes subscription 2,872 2,898 2,827 sales in the BtoC and BtoB segments of the 2,8
Slide 12: Recurring revenues are expected to continue to increase
Recurring revenues are expected to continue to increase With product launches Recurring revenue breakdown (by quarter) Details of revenues Future Outlook (Units: JPY millions) YoY AI Squared package revenue. Expanding sales for call centers. +15.6% AI Squared recorded package sales for contact cente
Slide 13: Breakdown of SG&A expenses (Consolidated)
Breakdown of SG&A expenses (Consolidated) ■ Policy to control SG&A expenses through cost control. ■ Increase in personnel and other expenses, mainly due to introduction of stock-based compensation plan. ■ Corporate human resources have increased slightly. (Units: JPY millions) 600 YoY +12.3% Third Q
Slide 14: Cost of Sales Breakdown (Consolidated)
Cost of Sales Breakdown (Consolidated) ■ Aggressive hiring continues, especially for engineering and business positions, to achieve sales growth ■ Achieve substantial growth for the group as a whole, while appropriately controlling outsourcing costs. (Units: JPY millions) 800 YoY +12.1% Third Quarte
Slide 15: Performance by Segments (May 2023-January 2024)
Performance by Segments (May 2023-January 2023) ■ AI/DX business continued to increase revenue through M&A and organic growth. EBITDA margin was also high at 38.1%. ■ AI Security business similarly maintained high profitability with an EBITDA margin of 43.2%. FY04/2023 FY04/2024 YoY Q3 Actual YoY Q3
Slide 16: AI/DX Services Segment
AI/DX Services Segment ◼ This segment includes BtoC centered on Shogi Wars, BtoB for providing AI solutions to customers, SaaS implementation and SaaS-linked development business developed by Strategit, and services in the contact center area developed by A.I. Squared. FY04/2024 Both BtoC and BtoB s
Slide 17: HEROZ's BtoB business continued to grow sales by more than 20%
AI/DX Services Segment HEROZ's BtoB business continued to grow sales by more than 20% in the 1st half of the year BtoB Business: Number of HEROZ BtoB Business Occupancies in the Fourth Half of the BtoB Quarterly staffing averages Net Sales Year ・In the first half of the current fiscal year, the ・The
Slide 18: BtoC business increased sales due to strong Kishin Learning
AI/DX Services Segment BtoC business increased sales due to strong Kishin Learning and various events. BtoC business grew steadily (YoY growth of 11.4%) due to the effects of increased attention to Shogi following the first-ever eight championships won by Ryuoh Sota Fujii and Meijin, collaboration w
Slide 19: AI Security service Segment
AI Security service Segment ◼ This segment is developing the business of implementing the HEROZ Group's AI into the security business developed by VarioSecure. FY04/2024 Recurring sales ratio is high at 87.1%. Q3 Actual （Units: JPY millions） Recurring Revenue Ratio ◼ Net sales generally progressed a
Slide 20: Managed Security Services steadily increased end-user numbers with low churn
AI Security Service Segment Managed Security Services steadily increased end -user numbers with low churn rates Managed Security Service Managed Security Service Churn Raito (by Quarter) Number of end users （by Quarter） Churn rate remains stable at below 1%. ・Steady increase in the number of users ・
Slide 21: Balance Sheet (as of January 31, 2024)
Balance Sheet (as of January 31, 2024) ◼ The cash and deposits currently held by the Company will be gradually appropriated for investments to realize the Company's mid- to long-term growth strategy. ◼ With the grouping of VarioSecure Inc. and StrategIT Inc, A.I. Squared Inc. ,there is a goodwill ba
Slide 23: Revision of the Financial Forecast for the Fiscal Year Ending April 30, 2024
Revision of the Financial Forecast for the Fiscal Year Ending April 30, 2024 ■ Partial upward revision of the full-year forecast for this fiscal year, based on the organic growth of the BtoB business and the fact that A.I. Squared will be made a consolidated subsidiary and its PL (for 5 months) will
Slide 25: Group Business Structure
Group Business Structure ◼ We have two businesses: AI/DX business and AI Security business. ※1 MAU：Monthly Active User ※2 MPU：Monthly Paid User ◼ A.I. Squared, Inc. will be classified as an AI/DX business ※3 ARPPU：Average Revenue Per Paid User AI/DX Services AI Security Segment BtoC BtoB Services Bu
Slide 26: From Digital Transformation (DX) to AI Transformation (AIX)
From Digital Transformation (DX) to AI Transformation（AIX） We have been helping companies DX in their core operations, but the asymptotic process of digitization was inevitable Going forward, we will support discontinuous change by maximizing the power of the Large Language Model (LLM). AI Transform
Slide 27: Classification of LLM services and HEROZ positioning
The classification of LLM services as seen by HEROZ and our positioning. The mainstream service in the current market is the construction service using Azure OpenAI. We looking ahead to future trends, offers customization to meet the individual needs of each company at a realistic cost using LLM. •
Slide 28: HEROZ ASK Early Access version (paid version) is released
“HEROZ ASK" Early Access version (paid version) is released. ◼ HEROZ ASK, an enterprise-oriented "AI Assistant" SaaS that utilizes generative AI, will be released in early access on February 1. ◼ The service is now available in a more advanced form as an Early Access version, with many features upda
Slide 29: HEROZ ASK is a product specialized in supporting actual business operations
HEROZ ASK is a product specialized in supporting actual business operations. ◼ HEROZ ASK is a service that addresses the challenges of using generated AI such as ChatGPT in business situations so that it can be used in actual business operations. ◼ The closed beta version of the service has been wel
Slide 30: StrategIT releases JOINT iPaaS for SaaS
StrategIT releases "JOINT iPaaS for SaaS". ◼ StrategIT released "JOINT iPaaS for SaaS," a new product for SaaS vendors that enables API integration with no code, on February 5. ◼ The product has been available as a beta version since November 2023, and has been improved through feedback from users a
Slide 31: Game production AI for Pokémon battles developed with The Pokémon Company
Game production AI specialized for Pokémon battles has been developed in collaboration with The Pokémon Company. ◼ HEROZ has co-developed "Pokémon Battle Scope," a game production AI specialized for Pokémon battles, with The Pokémon Company. ◼ Pokémon Ryuoh Tournament 2024" held on February 25, 2024
Slide 32: Participate in various organizations and trade shows to raise profile
Participate in various organizations and participate in trade shows to raise the profile of our initiatives within the industry ◼ From this fiscal year, we will communicate our BtoB initiatives more widely than ever through participation in various industry associations. ◼ Exhibit at the Constructio
Slide 33: Initiatives in AI Security Services
Initiatives in AI Security Services ◼ Provides services that make corporate Internet use safer and more comfortable. The company boasts the top share of the firewall/UTM operation and monitoring service market in Japan for small- and medium-sized enterprises, and the number of end-user companies con
Slide 34: Topics① Launched vulnerability assessment service
Topics① Launched vulnerability assessment service ◼ Strengthened one-stop corporate security support services with the launch of vulnerability assessment services. Diagnose and report on vulnerabilities in customer networks and applications. Flexible support for security enhancements based on vulner
Slide 35: Topics② AI SOC Project
Topics ② AI SOC Project ◼ Promoting a project to streamline network security operation and management tasks using HEROZ's AI technology. Full-scale verification of LLM utilization began in this quarter “AI SOC“ project • Automation of operational tasks and systemization of highly technical tasks wit
Slide 36: Topics③ VarioSecure's Services Qualified for IT Subsidy in Japan
Topics③ VarioSecure's Services Qualified for IT Subsidy in Japan ◼ VarioSecure's Information Security Service, "Security Help Pack," Now Available with IT Subsidy ◼ About IT Subsidy • Subsidy for small and medium enterprises (SMEs) to support the introduction of IT tools that meet their challenges a
Slide 38: Frequently Asked Questions and Answers
Frequently Asked Questions and Answers ◼ Some of the frequently asked questions and answers we receive in relation to our most recent financial results announcement. Q1. Questions regarding the customer base currently using the beta version of the HEROZ ASK and the size of companies that will be tar
Slide 39: 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

HEROZ — Q3 FY04/2024 Earnings Presentation on 6ix

Heroz — Q3 FY04/2024 Earnings Presentation

Slide 1: Presentation Material for FY04/2024 Q3 Financial Results

Slide 2: Contents

Slide 3: Financial Highlights

Slide 4: Financial Highlights

Slide 5: FY04/2024 Third Quarter Performance (Consolidated)

Slide 6: Key Performance Indicator: EBITDA

Slide 7: Performance Summary (May 2023-January 2024)

Slide 8: Performance Overview (May 2023-January 2024)

Slide 9: Key Performance KPIs (by Quarter)

Slide 10: Recurring revenue shows a continuous increasing trend

Slide 11: ARR achieved a growth of approximately 3.3 billion yen

Slide 12: Recurring revenues are expected to continue to increase

Slide 13: Breakdown of SG&A expenses (Consolidated)

Slide 14: Cost of Sales Breakdown (Consolidated)

Slide 15: Performance by Segments (May 2023-January 2024)

Slide 16: AI/DX Services Segment

Slide 17: HEROZ's BtoB business continued to grow sales by more than 20%

Slide 18: BtoC business increased sales due to strong Kishin Learning

Slide 19: AI Security service Segment

Slide 20: Managed Security Services steadily increased end-user numbers with low churn

Slide 21: Balance Sheet (as of January 31, 2024)

Slide 22: Revision of Full-Year Earnings Forecasts

Slide 23: Revision of the Financial Forecast for the Fiscal Year Ending April 30, 2024

Slide 24: Initiatives in each business segment

Slide 25: Group Business Structure

Slide 26: From Digital Transformation (DX) to AI Transformation (AIX)

Slide 27: Classification of LLM services and HEROZ positioning

Slide 28: HEROZ ASK Early Access version (paid version) is released

Slide 29: HEROZ ASK is a product specialized in supporting actual business operations

Slide 30: StrategIT releases JOINT iPaaS for SaaS

Slide 31: Game production AI for Pokémon battles developed with The Pokémon Company

Slide 32: Participate in various organizations and trade shows to raise profile

Slide 33: Initiatives in AI Security Services

Slide 34: Topics① Launched vulnerability assessment service

Slide 35: Topics② AI SOC Project

Slide 36: Topics③ VarioSecure's Services Qualified for IT Subsidy in Japan

Slide 37: Frequently Asked Questions and Answers

Slide 38: Frequently Asked Questions and Answers

Slide 39: Notes