Needs Well, Inc. · TSE:3992
Needs Well — Q2 FY2022 Earnings Presentation
40 slides from Needs Well's earnings presentation, May 12, 2022
Slide 1: Financial Results for the Second Quarter of Fiscal Year 2022
Tokyo Stock Exchange Prime Market: Securities Code 3992 Needs Well Inc. Financial Results for the Second Quarter of Fiscal Year 2022 (October 1, 2021 – March 31, 2022) May 12, 2022
Slide 2: Agenda
1. 2022/9 2Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 3: Financial highlights: Double-digit Growth in Net Sales
1.1) Financial highlights 1 Double-digit Growth in Net Sales Expansion of sales channels through business alliances and strong performance in solutions business Net sales 3,253 million JPY YoY +15.4 ％ Ordinary profit Ordinary profit margin 374 million JPY YoY +24.3 ％ 11.5 ％ Net profit Net profit rat
Slide 4: Performance progression rate
1.2) Performance progression rate Net Sales 48% and Ordinary Profit 53% Progress vs. Upward Revision Business Systems SI: Strong performance in life insurance and telecommunications, developed new businesses for government ministries Solutions/Products, etc.: Remained strong due to the Revised Prese
Slide 5: Ordinary profit analysis
1.3) Ordinary profit analysis Ordinary profit increased 24.3% year on year due to Increased orders and acquisition of high-value-added projects ■ Increase ■ Decrease Unit: million JPY YoY +24.3% Dividend income increased, and HR Personnel-related development support expenses, etc. (bonuses subsidies
Slide 6: Profit & loss statement
1.4） Profit & loss statement Ordinary profit ratio was 11.5% (Up 0.8 pts YoY) FY2021/9 2Q Financial Results FY2022/9 2Q Financial Results Unit: million JPY Result Net Sales Result Net Sales Year-on-year Net sales 2,818 - 3,253 - 115.4% Business Systems SI 2,156 76.5% 2,467 75.8% 114.4% Infrastructur
Slide 7: Balance sheet
1.5） Balance sheet Equity ratio at 78.3% *Selection of significant entries only FY2021/9 FY2022/9 2Q Unit: million JPY Remained at a high level despite being down Result Result Year-on-year Cash and deposits 2,868 2,359 -509 1.9 pts year on year due to the acquisition of Accounts receivable 938 0 -9
Slide 8: Agenda
1. 2022/9 2Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 9: Forecast
2.1) Forecast Second upward revision to this fiscal year's results due to the results of the capital and business alliance, etc. Forecast of increase in revenue for 2 consecutive fiscal years & increase in profit for 11 consecutive fiscal years Infrastructure Services Connected Systems Unit: million
Slide 10: Dividends and shareholder returns
2.2) Dividends and shareholder returns FY22/9 forecast Dividend per share: 20.00 JPY/share 2 JPY increase in regular dividend Dividend increase for 4 consecutive fiscal years Dividend (JPY; regular and commemorative dividends) and payout ratio 49.3 ％ (Total 23.00) Payout ratio 39.0 ％ 5.00 41.6 % 32.
Slide 11: Agenda
1. 2022/9 2Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 12: Management philosophy
3.1) Management philosophy Management philosophy Contributing Broadly to the Economy and Society Business slogan Try & Innovation Constantly evolving, Needs Well continues to contribute broadly to the economy and society with challenges and innovations. Financial Results for the Second Quarter of Fi
Slide 13: Growth track
3.2) Growth track Apr 2022 Tokyo Stock Exchange Prime Market Oct 2021 Acquired 70% of Zeroichi Production’s total outstanding shares Net sales Oct 2020 Started Logistics, Connected Businesses Number of personnel Aug 2019 Started AI Business Jun 2019 Tokyo Stock Exchange 1st Section Jun 2018 Tokyo St
Slide 14: Medium-Term Basic Policy
3.3) Medium-Term Basic Policy Breaking away from the dispatch business, becoming a true system integrator Financial Results for the Second Quarter of Fiscal Year 2022 14
Slide 15: Our three strengths
3.4) Our three strengths Capacity for Financial sector accounts for 50% of net sales in financial system main service line, Business Systems SI. development Particularly advanced in life insurance and accident Capacity for insurance sectors. financial Strong performance record in developing systems
Slide 16: Performance targets
3.5) 1 Performance targets FY2023/9 Net sales 10.0 billion JPY Ordinary profit 1.0 billion JPY CAGR（compound annual growth rate） 10.0 CAGR（compound annual growth rate） 1.0 Billion JPY Billion JPY ２３．1 % ２４．８ % 2020 2021 2022 2023 2020 2021 2022 2023 Existing businesses M&A Existing businesses M&A Fi
Slide 17: Promotion policies: Sales growth
3.5) 2 Promotion policies: Sales growth Unit: billion JPY Logistics Business Market scale (our forecast) Logistics IoT software solutions market Logistics industry is facing a serious labor shortage +1.2 10.0 (WMS, etc.) as the selection of diversifying needs continues to 2023 103.0 bil. JPY increas
Slide 18: Growth strategy focus points
3.6) Growth strategy 1 Promote improvement of corporate value 2 Expand Logistics Businesses 3 Expand AI Business Focus 4 Expand nearshore development points 5 Establish business foundation 6 Expand Solutions Business 7 Increase direct sales to end users Financial Results for the Second Quarter of Fi
Slide 19: Promote improvement of corporate value
3.6) 1 Promote improvement of corporate value ⅰ Promote our management philosophy of “Contributing Broadly to the Economy and Society” through improvement of the NeedsWell Value • Institutional investor Capital • M&A • Individual investors • Media IR・PR policy • Promotes CI, VI CI: Corporate Identit
Slide 20: Prime Market listing criteria compliance
3.6) 1 Promote improvement of corporate value ⅱ Needs Well has chosen to be included in the Prime Market for the Tokyo Stock Exchange market restructuring in April 2022 Needs Well aims to satisfy all listing criteria by the end of September 2023 by improving corporate value based on our “Plan for Co
Slide 21: Acquire treasury shares
3.6) 1 Promote improvement of corporate value ⅲ Acquire treasury shares Needs Well believes that its current stock price is undervalued considering its profit levels and will purchase treasury shares for the following purposes: ・ Improvement of stock price and EPS ・ Execution of flexible capital pol
Slide 22: M&A, capital and business alliances
3.6) 1 Promote improvement of corporate value ⅳ Proactively pursue M&A, capital and business alliances, and the development of collaborative relationships Expanding sales channels, orders, products, and engineers for further growth Capital and business Capital and business Collaboration Share acquis
Slide 23: Expand Logistics Businesses
3.6) 2 Expand Logistics Businesses With the growing needs of an Internet-based society, IT resolves issues in logistics warehouses facing labor shortages Warehouse Management System realizes 3 smart aspects Manpower-saving, Visualization of issues Easy-to-operate system paperless system • Improvemen
Slide 24: Expand AI Business
3.6) 3 Expand AI Business Expand AI Business by expanding the Work AI lineup * Work AI is a general term for industry-specific AI solutions developed to support corporate DX by utilizing know-how in integration for AI, RPA, etc. AI Remote Education Speak Analyzer Quantitative visualization of busine
Slide 25: Expand nearshore development
3.6) 4 Expand nearshore development Nagasaki Development Center aims to maintain 100 employees in FY2024/9 Utilize nearshore bases to acquire highly competent personnel and provide solutions for labor shortages Nearshore utilization • Expand nearshore development system by accepting orders for out-o
Slide 26: Establish business foundation
3.6) 5 Establish business foundation Establishing a business foundation for stable development into the future as a listed company ▶▶▶ Service line composition Business Systems SI Service lines that establish • Expand into the financial sector by the business foundation accumulating business knowled
Slide 27: Expand Solutions Business
3.6) 6 Expand Solutions Business Expanding the Solutions Business to accelerate business expansion and increase added value Net sales composition ratio target 15.0% in FY2023/9 (FY2021/9 results: 10.8%) Expansion strategy Provide DX centered on solutions from Needs Well Coordinating peripheral syste
Slide 28: Increase direct sales to end users
3.6) 7 Increase direct sales to end users Stabilize orders and improve profitability, maintain and expand end user direct sales ratio to over 50% Maintain and expand existing users • Secure repeat customers End user composition ratio • Train highly skilled engineers and expand the scope of expertise
Slide 29: Agenda
1. 2022/9 2Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 30: Company profile
4.1) Company profile As of September,2021 Company Name Needs Well Inc Head Office 13F, New Otani Garden Court, 4-1 Kioi-cho, Chiyoda-ku, Tokyo, 102-0094 Japan Office - Shinjuku Office : 5F, South Tower, 13-15 Tomihisa-cho, Shinjuku-ku, Tokyo, 162-0067 Japan - Nagasaki Office: 5F, Meijiyasudaseimei N
Slide 31: Business fields
4.2) Business fields Needs Well provides total IT services through four services focused on Business Systems SI for finance. Financial Results for the Second Quarter of Fiscal Year 2022 31
Slide 32: Business system diagram
4.3) Business system diagram Clients Needs Well Subcontractor Business Direct transaction* /supplier Systems SI Infra- Partner structure company System Services End user integrator Connected Supplier Systems Manufacturer Solutions/ Products, etc. Order Provision of services/products, etc. * High lev
Slide 33: Personnel development: Strengthening new graduate hires
4.4) Personnel development 1 Strengthening new graduate hires Hire new graduates and develop professional human resources Aim to pass on corporate philosophy and culture and enhance engagement Compared to 2016 Number of new graduate hires 70 about 6.9 times 60 50 40 30 20 10 0 2016 2017 2018 2019 20
Slide 34: Strengthening collaboration with partners
4.4) Personnel development 2 Strengthening collaboration with partners Strengthen cooperation with core partners to develop and aim for prosperous coexistence Shared strategies / long-term trust / stable transactions Compared with FY2020/9 3Q Number of partner resources 900 about 1.9 times 800 700 6
Slide 35: Initiatives directly linked to business
4.5) 1 Initiatives directly linked to business Aim for sustainable management through business strategies that incorporate the perspectives of SDGｓ, ESG, and CSR Nearshore Development Promotion: Nagasaki Development Center to maintain 100 employees by 2024 Promote development by committing to QCD (q
Slide 36: Initiatives supported by systems and activities
4.5) 2 Initiatives supported by systems and activities Work style reform & personnel development • Promote a healthy work-life balance by incentive dates for paid leave, Premium Friday (leaving work early on the last Friday of the month), reducing overtime work, etc. • Expand selection of employees
Slide 37: Business results 1
4.6) Business results 1 Net sales Unit : million yen Operating profit Unit : million yen 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022 １Q 1,217 1,341 1,418 1,348 1,562 １Q 121 110 92 136 171 ２Q 2,470 2,724 2,809 2,818 3,253 ２Q 255 266 267 306 362 ３Q 3,801 3,739 4,097 4,078 4,2
Slide 38: Business results 2
4.6) Business results 2 Profit per share ROE unit：Yen unit：% 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022 １Q 9.88 9.04 7.04 10.52 12.36 １Q ２Q 20.85 22.02 21.19 23.81 25.58 ２Q ３Q 35.51 28.18 30.22 27.30 34.75 ３Q total 36.74 40.81 38.78 41.15 40.99 46.64 通期 36.7 24.8 20.2 18.8
Slide 39: Business results 3
4.6) Business results 3 Capital adequacy ratio unit：Yen Net assets per share unit：Yen 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022 １Q 66.7 68.5 71.3 74.5 77.3 １Q ２Q 62.8 65.4 73.6 75.7 78.3 ２Q ３Q 50.5 59.0 71.4 71.2 74.0 ３Q total 49.3 61.4 64.0 73.4 74.5 80.2 total 117.21 17
Slide 40: Corporate Communication Division contact
• All statements described herein have been prepared by Needs Well based on the currently available information. • Actual results may differ from forecasts due to various factors in the future. Corporate Communication Division e-mail: ir-contact@needswell.com