Neural Group Inc. · TSE:4056
Neural — Q1 2024 Earnings Presentation
24 slides from Neural's earnings presentation, May 14, 2024
Slide 1: Financial Results Briefing Material 7th term, Q1 ended March 31, 2024
Update the world for a better tomorrow Financial Results Briefing Material 7th term, Q1 ended March 31, 2024 Neural Group Inc. May 14, 2024 Copyright © Neural Group Inc. All Rights Reserved. 1
Slide 2: FY2024 (7th term) Q1 earnings highlights and business strategy updates
FY2024 (7th term) Q1 earnings highlights and business strategy updates • Summary : Through the prior investments in development and sales personnel up to FY2023, we successfully built our proprietary AI services and expanded its sales structure. With the goal of monetization, FY2024 began in January
Slide 3: Historical revenue performance
Historical revenue performance (JPY Millions) +16% +10% 3,700 +185% 3,178 2,878 +33% +145% +418% 1,010 762 311 60 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024E (1st term) (2nd term) (3rd term) (4th term) (5th term) (6th term) (7th term) Copyright © Neural Group Inc. All Rights Reserved. 3
Slide 4: Quarterly revenue
Quarterly revenue (JPY Millions) 17% 29% 991 984 819 772 780 734 640 603 514 288 294 251 202 226 163 164 184 126 91 62 33 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 (2nd term) (3rd term) (4th term) (5th term) (6th term) (7th term
Slide 5: Latest updates from collaborations with partner companies
Latest updates from collaborations with partner companies 【Collaboration with Sony】 【 Collaboration with Kyodo News】 Starting March 12, we began offering the 1- Starting April 15, in our group's on-1 support service "KizunaNavi", which condominium signage service "FOCUS utilizes Edge AI technology a
Slide 6: Quarterly operating profit/loss
Quarterly operating profit/loss （JPY Millions） We started our business by developing AI We have shifted our business model We aim to turn algorithms and licensing them to companies. to focus on providing our proprietary AI services. scalable and profitable. Significant upfront investment in developm
Slide 7: Consolidated financial results for the Q1 ended March 31, 2024
Consolidated financial results for the Q1 ended March 31, 2024 FY2023 FY2024 Increase/ Change in (JPY Millions) Q1 Actual Q1 Actual Decrease Percentage Revenue 603 780 +178 +29.5% Gross profit 400 513 +114 +28.5% Percentage of revenue 66.3% 65.8% EBITDA -176 -63 +112 - Percentage of revenue - - Oper
Slide 8: Profit
Relationship between revenue and OP (FY2023–FY2024 monthly results) （JPY Millions） Monthly operating profit 100 Contribution 80 FY2023 margin of FY2024 60% operating profit 60 Profit increases by 60 40 with a sales increase of 100... 20 Monthly 0 50 100 150 200 250 300 350 400 450 500 550 600 revenu
Slide 9: Overview of cost optimization initiatives
Overview of cost optimization initiatives FY23 2nd half FY24 1st half FY24 2nd half 【R&D cost】 Platform standardization and R&D- Continuous effect driven labor saving and automation SG&A cost 【Rent】 optimization Integration and optimization Continuous effect （Organizational of domestic offices strea
Slide 10: Quarterly SG&A cost
Quarterly SG&A cost （JPY Millions） 728 706 -58 （Annualized: -234) 672 630 S FY2024 614 G year-end estimation & A Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY2023 actual FY2024 actual Copyright © Neural Group Inc. All Rights Reserved. 10
Slide 11: Quarterly CoGS
Quarterly CoGS (% of revenue) Agreement on procurement and installation Procurement： Installation： Strategic partnership concluded From January, sequential agreements on new on January 24, 2024 pricing with partner companies nationwide have begun 36.0% 34.5% 34.2% Effects to appear from Q2 onward G
Slide 12: Consolidated full-year financial estimate for FY2024
Consolidated full-year financial estimate for FY2024 Progressing smoothly FY2023 FY2024 Increase/ Change in (JPY Millions) Actual Estimate Decrease Percentage Revenue 3,178 3,700 +522 +16.4% Gross profit 2,063 2,550 +487 +23.6% Percentage of revenue 64.9% 68.9% EBITDA -490 180 +670 - Percentage of r
Slide 13: APPENDIX
APPENDIX Copyright © Neural Group Inc. All Rights Reserved. 13
Slide 14: Corporate overview
Corporate overview Company Name : Neural Group, Inc. Established : January 22, 2018 IPO : August 20, 2020 (TSE Growth : 4056) Business Description : Developing AI services based on image and video analysis using proprietary AI algorithms and terminal processing technology. Headquarter : Tokyo Midtow
Slide 15: We develop proprietary AI libraries/edge-related implementation technologies to enable AI smart cities
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 16: 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 17: Digi-Solution services introduced across Japan
Digi-Solution services introduced across Japan Key locations installed Bangkok Muroran city Traffic analysis at 3 CP Regional revitalization with AI- Group’s stores, “Lotus’” enabled urban development Kashiwa-no-ha smart city Outdoor AI safety surveillance for town mgmt. SMARK Isezaki Sugamo distric
Slide 18: Neural Group enhances urban spatial value through Edge AI
Neural Group enhances urban spatial value through Edge AI Deployed Edge AI cameras Visualize Edge AI camera in over 70 cities and sites Enhancing spatial value Communicate with Edge AI Monetize Edge AI signage Ads/ News media Installation, operation, and maintenance of signage at over Broadcasting a
Slide 19: Growth in the number of installed and deployed units of Digi-solution services
Growth in the number of installed and deployed units (cumulative) of Digi-solution services (Units) 2,958 2,644 2,286 1,988 1,738 2,084 Digi-look*1 1,835 1,531 1,520 1,265 1,254 1,024 980 806 547 406 644 106 317 301 *2 499 Sign-digi 103 121 185 105 95 526 496 454 456 473 499 87 97 485 Digi-park 90 3
Slide 20: Group employee numbers
Group employee numbers*1 From the second half of 2023 onward, the number of employees remained roughly flat. (Due to measures such as shifting office work to part-time staff and optimizing (Number of people) personnel allocation, the number of full-time employees slightly decreased). In the first ha
Slide 21: FY2024 Q1 – Balance Sheet
FY2024 Q1 – Balance Sheet (JPY Millions) FY2023 FY2024 March 31 March 31 Current Asset 1,593 1,572 of which, 913 795 Cash and Deposits Fixed Assets 1,738 1,628 Total Assets 3,332 3,201 Total Liabilities 3,084 2,642 of which, 2,712 2,193 interest-bearing debt Net Assets 247 558 Copyright © Neural Gro
Slide 22: Promoting capital and business alliances while ensuring share liquidity by expanding floating shareholders
Promoting capital and business alliances with operating companies while ensuring share liquidity by expanding floating shareholders General shareholders General shareholders floating shares*1 General shareholders floating shares floating shares 4.6% VC. angel 18.8% investor*2 29.6% 24.4% Total issue
Slide 23: 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 24: Update the world for a better tomorrow
Update the world for a better tomorrow Neural Group, Inc. 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. We aim to leverage edge AI tec