Slide 1: Financial Results for the Third Quarter of Fiscal Year 2022
Tokyo Stock Exchange Prime Market: Securities Code 3992 Needs Well Inc. Financial Results for the Third Quarter of Fiscal Year 2022 (October 1, 2021 – June 30, 2022) August 5, 2022
Slide 2: Agenda
1. 2022/9 3Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 3: 1.1) Financial highlights
1.1) Financial highlights 1 Significant increase in both net sales and profit year on year, showing a strong trend of expansion • Expanded sales channels and reinforced the customer base through active capital and business alliances and business alliances • Expansion in telecommunications and new or
Slide 4: Quarterly net sales and ordinary profit hit record highs
1.1) Financial highlights 2 Quarterly net sales and ordinary profit in FY2022/9 hit record highs in 1Q, 2Q, and 3Q Both net sales and ordinary profit are progressing faster than forecasts [Net sales by quarter] [Ordinary profit by quarter] 7,000 700 Unit: million JPY Unit: million JPY Total Total To
Slide 5: Medium-Term Management Plan Targets for FY2023/9
1.1) Financial highlights 3 Medium-Term Management Plan Targets for FY2023/9 Net sales: 10.0 billion JPY Ordinary profit: 1.0 billion JPY Present While existing businesses are steadily expanding, we are facing issues in the situation pace of concluding M&A contracts Breakdown of performance targets
Slide 6: 1.2) Performance progression rate
1.2) Performance progression rate Progress of 74% in net sales and 80% in ordinary profit vs. upward revision, showing favorable progress Business Systems SI: Strong performance in projects for telecommunication carriers, public infrastructure, and life insurance companies Infrastructure Services: S
Slide 7: 1.3) Ordinary profit analysis
1.3) Ordinary profit analysis Gross profit increased 10.3% Ordinary profit increased 28.2% year on year due to Increased orders and acquisition of high- value-added projects ■ Increase ■ Decrease Unit: million JPY YoY +28.2% Dividend income increased, and HR Personnel-related development support exp
Slide 8: 1.4) Profit & loss statement
1.4） Profit & loss statement Ordinary profit ratio was 11.3% (Up 1.0 pts YoY) FY2021/9 3Q Financial Results FY2022/9 3Q Financial Results Unit: million JPY Result Net Sales Result Net Sales Year-on-year Net sales 4,262 - 4,972 - 116.7% Business Systems SI 3,260 76.5% 3,705 74.5% 113.6% Infrastructur
Slide 9: 1.5) Balance sheet
1.5） Balance sheet Equity ratio at 75.9% *Selection of significant entries only FY2021/9 FY2022/9 3Q Unit: million JPY Result Result Year-on-year Remained at a high level despite being down Cash and deposits 2,868 2,624 -244 4.3 pts year on year due to the acquisition of Accounts receivable 938 0 -9
Slide 10: Agenda
1. 2022/9 3Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 11: 2.1) 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 12: 2.2) 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 40.7 % 32.
Slide 13: Agenda
1. 2022/9 3Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 14: 3.1) 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 Third Quarter of Fis
Slide 15: 3.2) Growth track
3.2) Growth track July 2022 Holds 33.3% of Souken-sys Inc.’s total outstanding shares Apr 2022 Tokyo Stock Exchange Prime Market Oct 2021 Acquired 70% of Zeroichi Production’s total outstanding shares Net sales Number of personnel Oct 2020 Started Logistics, Connected Businesses Aug 2019 Started AI
Slide 16: 3.3) 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 Third Quarter of Fiscal Year 2022 16
Slide 17: 3.4) 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 18: 3.5) Performance targets FY2023/9
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 *
Slide 19: 3.5) 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 20: 3.6) 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 Third Quarter of Fis
Slide 21: 3.6) 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 22: 3.6) Promote improvement of corporate value ii
3.6) 1 Promote improvement of corporate value ⅱ Proactively pursue M&A, capital and business alliances, and the development of collaborative relationships Expanding sales channels, orders, products, and engineers for further growth Feb. Capital and ITFOR Inc. Utilize engineers from both companies to
Slide 23: 3.6) 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: 3.6) 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: 3.6) 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: 3.6) 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: 3.6) 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: 3.6) 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 3Q Financial report summary 2. 2022/9 Results forecast 3. Growth strategy 4. Reference
Slide 30: 4.1) 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: 4.2) 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 Third Quarter of Fiscal Year 2022 31
Slide 32: 4.3) 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: 4.4) Personnel development: 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: 4.4) 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: 4.5) 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: 4.5) 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: 4.6) 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: 4.6) 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 38.61 ３Q total 36.74 40.81 38.78 41.15 40.99 46.64 通期 36.7 24.8 20.
Slide 39: 4.6) 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 75.9 ３Q total 49.3 61.4 64.0 73.4 74.5 80.2 total 117.
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