Neural Group Inc. · TSE:4056

Neural — Neural Pocket — Q1 2023 Earnings Presentation

56 slides from Neural's earnings presentation, May 12, 2023

Slide 1: Financial Results Briefing Material FY2023 Q1
Financial Results Briefing Material FY2023 Q1 (ended Mar 31st, 2023) Neural Pocket Inc. Translation of original Japanese version May 12th, 2023 ※Effective June 1, 2023, Neural Pocket Inc. is scheduled to change its name to Neural Group Inc. Copyright © Neural Pocket Inc. All Rights Reserved. 1
Slide 2: FY2023 Q1 ended Mar. highlights
FY2023 Q1 ended Mar. highlights Top line growth Corporate Overseas Accelerate collaboration Making progress towards Signing of business alliance across biz, services, and annual business plan agreement with CP Group technology through (major Thai congl.) affiliate Net Sales +17% Capital and Overseas
Slide 4: Announced capital and business alliance with Sony Corporation
Announced capital and business alliance with Sony Corporation *1,2 • Issued 690,000 new shares of common stock through third- party allotment Capital • Raised 670 Mln yen (payment completed May 12) alliance • Sony’s ownership will be 4.56%, becoming the Company's third largest shareholder. + • Excha
Slide 5: Aim of capital and biz alliance: Signage industry experiencing tail winds
Aim of capital and biz alliance: Signage industry experiencing tail winds Key growth drivers of Domestic digital signage market trend*1 Digital Signage Market (Bln JPY) 1 Digital substitution of labor Annual growth • Tasks traditionally performed by people automated or digitized 20 Bln JPY • Evoluti
Slide 6: Aim of capital and biz alliance: Signage biz and our vision
Aim of capital and biz alliance: Signage biz and our vision • Creating new advertising market and exciting urban spaces through the dev. of next-generation digital signage using AI technology • Business development in Japan and Southeast Asia • Develop and commercialize new businesses through collab
Slide 7: Aim of capital and biz alliance: AI-based human attitude detection biz
Aim of capital and biz alliance: AI-based human attitude detection biz • As remote communication becomes more commonplace, work with Sony to explore and commercialize new services on a phased basis • Plans to develop new technology to interact with people through attitude detection and language gene
Slide 8: Promoting capital and business alliances while ensuring share liquidity
Promoting capital and business alliances with operating companies while ensuring share liquidity by expanding floating shareholders Estimation taking into account the allotment to Sony Corporation (Payment procedure completed on May 12) ※Based on shareholders' register as of Dec 31, 2022 General sha
Slide 10: Highlights from FY2023 Q1 ended Mar.
Highlights from FY2023 Q1 ended Mar. Top line growth Profitability Sales force Although sales are weighted Maintaining high gross profit AI startup with toward Q3-Q4, growth continues margins ready to scale large 100+ sales team Net sales growth Gross profit margin Group employees*1 +17% 64% 227人 (+
Slide 11: Net sales trajectory toward full-year sales of 4.0 billion yen
Business progressing toward full-year sales of 4.0 billion yen where sales are weighted toward the second half of the year, Net sales trajectory Act. Act. Act. Act. Forecast Annual net sales 311 762 1,010 2,878 4,000 (YoY growth) (+417.3%) (+144.8%) (+32.4%) (+184.9%) (+38.9%) +17% (YoY growth) 991
Slide 12: Trajectory of full-time employees
Trajectory of full-time employees*1: Plan to expand intensively in the first half of FY2023, with focus on the sales force of Neural Marketing. Moderate hiring expected in the second half of FY2023. +45 Headcount increase overview • Neural Marketing Inc. +39 227 (# of staff) • Neural Pocket Inc. +3
Slide 13: Net sales by service domain
Net sales by service domain (million JPY) +17% 991 Digi-Solution Services Lifestyle Services 170 734 640 131 603 70 84 513 34 821 288 294 570 603 251 56 66 226 519 32 202 479 184 20 163 164 126 22 25 32 65 62 91 31 232 228 219 206 28 32 141 152 33 139 137 34 59 95 30 3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 14: FY2023 Q1 consolidated statement of income
FY2023 Q1 ended Mar. consolidated statement of income FY2022 FY2023 Q1 Q1 Increase Increase (million JPY) ended Mar. ended Mar. Value Percentage Net sales 513 603 89 +17.4% Gross profit 351 387 36 +10.2% % of net sales 68.5% 64.3% EBITDA -41 -188 -146 - % of net sales -8.1% -31.2% Operating profit -
Slide 15: FY2023 Q1 consolidated balance sheet
FY2023 Q1 ended Mar. consolidated balance sheet Estimation after taking into account the capital increase through the allotment to Sony Corporation announced on Apr 26 (Million JPY) FY2023 Q1 FY2023 Q1 Post capital increase*1 As of Mar 31st As of Mar 31st (pro forma) Total current assets 1,641 2,304
Slide 16: FY2023 forecast
FY2023 forecast – Planning to achieve 40% YoY organic growth, whilst profitability is planned at around breakeven +39% 4,000 2,878 Net Sales 1,010 762 311 60 EBITDA 203 112 196 38 -182 -127 Operating 171 20 10 Profit -183 -133 -251 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Act. Act. Act. Act. Act. F
Slide 17: 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 19: 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 (260 → Scale unit-based revenue
Slide 20: Digi-Solutions unit installation (cumulative)
Digi-Solutions unit installation (cumulative) 1,738units 1,531 1,265 1,024 DigiLook*1 806 980 547 317 644 106 406 485 526 496 454 SignDigi*2 384 121 185 301 DigiPark/ 103 units 95 229 260 DigiFlow 87 16 97 24 154 178 192 etc.3 90 105 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY2021 FY2022 FY2023 ended Dec. ended D
Slide 21: Digi-Solution services introduced across Japan
Digi-Solution services introduced across Japan Key locations recently installed Hyogo Pref. Sendai city Prologis Park Inagawa 1&2 People flow in urban centers, Muroran city License plate detection evacuation center operation Regional revitalization with AI- optimization enabled urban development Kas
Slide 22: DigiFlow recent case studies
DigiFlow recent case studies Okinawa Shurijo Castle Park (Apr. ‘24) Marunouchi Nakadoori, Tokyo (Apr. ‘24) Support for DX Urban development facility through management and visualization of operations human flow In collaboration with Supporting "safe and the Okinawa secure community Memorial Park Off
Slide 23: Variety of projects in action in Thailand
Variety of projects in action across private/ public/ academia in Thailand Partnership with w/ Agreement w/ KOSEN-KMITL, Adopted for JICA*1 project CP Group - Egg Digital Inc. Thailand's National College of Tech. CTO Nakano Neural Group Thailand speaking at KOSEN-KMITL • Partnership with Egg Digital
Slide 26: 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 27: 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 technology Project commission AI tech Sales of AI Revenue from clients experiments licenses share AI serv
Slide 28: 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 29: Adoption of edge AI technology is accelerating
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 30: 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 31: 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 32: Neural Platform 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 33: 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 34: 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. 34
Slide 35: 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 36: 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 37: 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 39: Company overview
Company overview Company name Neural Pocket Inc. (TYO: 4056) Expected to change corporate name to Neural Group Inc. on Jun 1 st, 2023 Established Jan. 22nd, 2018 Representative Roi Shigematsu Listed exchange Tokyo Stock Exchange Growth Market (listed since Aug. 20th, 2020) Headquarters Tokyo Midtown
Slide 40: Management team
Management team (as of Mar. 31st, 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 digitizati
Slide 41: Neural Pocket Group
Neural Pocket Group (as of Mar. 31st, 2023) Ownership 100% 100% 100% Thailand Neural Marketing Inc. Neural Engineering Inc. Neural Group (Thailand) Co., Ltd. Established Aug 20th, 2003*1 Oct 1st, 2021 Nov 4th, 2022 Business Development, fabless Installation, operation, and Sales of AI services and s
Slide 42: Organization
Organization: Since Jan 2022, the company has established a divisional system organized by product/ service Board of Directors CEO Technology Financial Marketing Digi-Solution Lifestyle Development Management Division Division Division Division Division Copyright © Neural Pocket Inc. All Rights Rese
Slide 43: Group operates locations internationally
Neural Pocket Group operates 15 locations internationally, with the infrastructure to support the development of smart cities nationwide Neural Pocket Inc. locations Neural Group (Thailand) Co., Ltd. Neural Marketing Inc. locations Sapporo Branch Niigata Branch Singapore Branch Nagoya Branch Sendai
Slide 44: 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 Company name Neural Group (Thailand) Co., Ltd. Representative Kazuma TAKENAKA, CEO/ M
Slide 45: 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 46: Appearances at seminars/events
Appearances at seminars/ events AI technology ▪ G7 Ministerial Conference on Digital Technology in Takasaki, Gunma: Corporate exhibit ▪ Public-private partnership conference for overseas expansion of startups, co-hosted by the Ministry of Economy, Trade and Industry and Keidanren: Speaker ▪ Advantec
Slide 47: Membership in public/private organizations
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 48: 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 49: DigiLook: Top share in Japan with more than 10,000 installations
DigiLook: Top share in Japan with more than 10,000 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 stores LED s
Slide 50: 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. 50
Slide 51: Media characteristics of Focus Channel
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 52: Five years since founding: rebranding to Neural Group
Five years since founding, we aim to expand our business and contribute to society - Rebranding the company name to "Neural Group" Feb 2023 Announcement Jun 1st Name change effective date Mar 2019 Series B Neural Group Inc. Jan 2018 Founding • Growing into one of the top Neural Pocket Inc. global co
Slide 53: Updating company name to reflect diversity of business
Neural Pockets celebrating 5 Years since founding and is updating it’s company name to reflect the diversity of business Building an exciting and inspiring future with AI Neural Group Inc. The company name "Neural Group" expresses our desire to provide unconventional services that transcend boundari
Slide 55: 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

Neural Pocket — Q1 2023 Earnings Presentation on 6ix

Neural — Neural Pocket — Q1 2023 Earnings Presentation

Slide 1: Financial Results Briefing Material FY2023 Q1

Slide 2: FY2023 Q1 ended Mar. highlights

Slide 3: Agenda

Slide 4: Announced capital and business alliance with Sony Corporation

Slide 5: Aim of capital and biz alliance: Signage industry experiencing tail winds

Slide 6: Aim of capital and biz alliance: Signage biz and our vision

Slide 7: Aim of capital and biz alliance: AI-based human attitude detection biz

Slide 8: Promoting capital and business alliances while ensuring share liquidity

Slide 9: Agenda

Slide 10: Highlights from FY2023 Q1 ended Mar.

Slide 11: Net sales trajectory toward full-year sales of 4.0 billion yen

Slide 12: Trajectory of full-time employees

Slide 13: Net sales by service domain

Slide 14: FY2023 Q1 consolidated statement of income

Slide 15: FY2023 Q1 consolidated balance sheet

Slide 16: FY2023 forecast

Slide 17: FY2023 consolidated forecast

Slide 18: Agenda

Slide 19: FY2023 business growth themes

Slide 20: Digi-Solutions unit installation (cumulative)

Slide 21: Digi-Solution services introduced across Japan

Slide 22: DigiFlow recent case studies

Slide 23: Variety of projects in action in Thailand

Slide 24: Copyright © Neural Pocket Inc. All Rights Reserved.

Slide 25: Appendix

Slide 26: AI industry expected to grow to an overwhelming market size

Slide 27: AI industry shifting from selling AI tech to AI-enabled services

Slide 28: AI technology is evolving along with the industry's growth

Slide 29: Adoption of edge AI technology is accelerating

Slide 30: Edge processing is rapidly expanding

Slide 31: We enable smart cities with edge AI

Slide 32: Neural Platform for AI software development and operations

Slide 33: Proprietary AI libraries and edge implementation technologies

Slide 34: AI libraries operate on a variety of technical standards

Slide 35: Established position as an edge AI platformer

Slide 36: Accelerating growth since inception in the edge AI market

Slide 37: AI platforms expected to emerge from Asia

Slide 38: Appendix

Slide 39: Company overview

Slide 40: Management team

Slide 41: Neural Pocket Group

Slide 42: Organization

Slide 43: Group operates locations internationally

Slide 44: Established Thai subsidiary in Nov. 2022

Slide 45: Vast infrastructure investment expected in Thailand and SE Asia

Slide 46: Appearances at seminars/events

Slide 47: Membership in public/private organizations

Slide 48: LED Vision installation cases

Slide 49: DigiLook: Top share in Japan with more than 10,000 installations

Slide 50: Apartment Signage Focus Channel

Slide 51: Media characteristics of Focus Channel

Slide 52: Five years since founding: rebranding to Neural Group

Slide 53: Updating company name to reflect diversity of business

Slide 54: Update the world for a better tomorrow

Slide 55: Disclaimer

Slide 56: Copyright © Neural Pocket Inc. All Rights Reserved.