Intelligent Wave Inc.TSE: 4847

Financial Results for Q1 FY06/25, presentation

Nov 12, 2024 at 3:43 AM UTC · Issued by Intelligent Wave Inc.

Financial Results for Q1 FY06/25

（July 1 to September 30, 2024）

[Non-Consolidated]

Intelligent Wave Inc.

Announced on November 8, 2024

Financial Results for Q1 FY06/25

Forecast for FY06/25

Progress of the Medium-Term Management Plan

Reference

Overview

■Sales increased due to steady performance in the core payment domain and product introductions to major customers in the security domain.

Profit rose on higher revenues and lower SG&A expenses, despite higher infrastructure costs for cloud services in the

payment domain.

Orders on hand increased significantly due to projects in multi-year contracts in the payment and security domains.

Million yen

	Q1 FY06/24	Q1 FY06/25		Change

		Sales		Sales
				[YoY]
	Results	composition	Results	composition

		ratio		ratio
Net sales	3,158	-	3,542	-	+383	+12.2%

Gross profit	955	30.2%	979	27.6％	+24	+2.5％

SG&A expenses	691	21.9％	675	19.1％	(16)	(2.4％)

Operating income	263	8.3％	304	8.6％	＋40	＋15.3%

Ordinary income	259	8.2％	304	8.6％	＋44	＋17.1%

Net income	175	5.6％	208	5.9％	＋32	＋18.8%


Amount of orders	4,257	-	5,594	-	＋1,336	＋31.4%

Orders on hand	12,073	-	18,636	-	＋6,563	＋54.4%
						3
		Copyright © INTELLIGENT WAVE INC. All rights reserved.

Sales by Business Domain

In the payment domain, sales in the FEP area increased due to the ongoing renewal of the FEP systems of existing customers from the previous year. Sales in the fraud detection area rose, mainly due to an increase in the number of companies using cloud services. Sales in others areas decreased temporarily on a decline in the number of projects for existing customer.
In the security domain, sales increased due to product introductions to major customer.
In the data communication and analysis infrastructure domain, sales increased mainly due to hardware sales.

				Change(YoY)		Million yen
		Q1 FY06/24	Q1 FY06/25

	Net sales	3,158	3,542	+383	＋12.2%

	Payment *	2,678	2,930	＋251	＋9.4％

	FEP	1,150	1,319	＋169	＋14.7%

	Fraud detection	385	502	+117	＋30.4%

	Acquiring	672	748	＋75	＋11.3％

	Others	470	359	(110)	(23.5%)

	Security	319	407	+87	＋27.4%

	Data communication and	160	204	+44	＋27.8%
	Analysis infrastructure



	*Reference) Cloud services	592	718	+125	+21.2％

＊Front-end processor (FEP) system: Hardware and software with network connectivity, card usage authentication, and other functions required for credit card payment processing
		Copyright © INTELLIGENT WAVE INC. All rights reserved.		4

Top Five Clients by Sales

For DNP, security-related sales increased, driven by cryptographic key management systems and security product

introductions. Orders rose significantly due to multi-year contracts for security product introductions.

Sales for both the second and third "System Integrator" increased slightly due to large projects for credit card

company.

Sales for both the fourth and fifth "Credit card company" remained steady, mainly in the FEP and fraud detection areas.

Million yen

		Q1 FY06/24	Q1 FY06/25	Change	Main projects
		(YoY)


					TSP development (smartphone payment)
1.	DNP	426	418	(7)	System operation (24/365)
Cryptographic key management system

					Security product introduction

2.	System Integrator	349	320	(29)	System development for credit card company

3.	System Integrator	155	221	＋65	System development for credit card company

4.	Credit card company	226	216	(9)	System development in the FEP area, Fraud
detection, Payment DX


5.	Credit card company	11	211	＋199	FEP system renewal
					5
			Copyright © INTELLIGENT WAVE INC. All rights reserved.

Sales by Category

Third-partyproducts and services increased, mainly due to ongoing FEP system renewal for existing customers

from the previous year.

Cloud services grew, mainly due to a rise in the number of companies using the fraud detection service IFINDS.
Security rose, mainly due to product introductions to major customers.

				Million yen

	Q1 FY06/24	Q1 FY06/25	Change(YoY)

Net sales	3,158	3,542	+383	+12.2%

System development	1,596	1,510	(86)	(5.4%)

Maintenance	397	398	+1	+0.3%

In-house products and services	60	74	+13	+21.6%

Third-party products and services	191	434	+243	+127.1%
(hardware, etc.)


Cloud services	592	718	+125	+21.2%

Security	319	407	+87	+27.4%

Operating income

Gross margins in system development and maintenance in the payment domain remained steady, but infrastructure costs have increased in cloud services due to delays in the infrastructure transition. We will continue to improve gross margins by enhancing productivity in system development and maintenance and adjusting prices to better reflect the value provided.
Selling, general and administrative (SG&A) expenses were at the same level YoY due to cost optimization efforts.

						Gross profit			SG＆A expense		Operating income	Million yen
						Gross profit margin		SG&A expense ratio		Operating margin
■ … Operating income			1,600				33.0%		32.9%	33.6%
●… Operating margin			31.1%	31.4%	32.2%	30.2%	32.6%	27.6%
					21.5%
600				25.0%	1,400		21.2%	20.9%	21.9%	17.3%	16.7%	18.4%	19.1%
			17.9%

500	483				1,200	13.3%	10.2%	10.7%	12.1%	8.3%	15.5%	16.9%	14.2%	8.6%
		20.0%


400					1,000	1,134

300		263	304	15.0%	800
13.3%									1,244	1,278	1,229
			10.0%	600				1,149
					1,000
200							985	728	955				979
				400		667
		8.3%	8.6%		651	665		691	656		694	675
		5.0%				634644
100					483					588		534
				200

						319		420	263				304
							332

0				0.0%	0

	Q1	Q1	Q1			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
	FY06/23	FY06/24	FY06/25				FY06/23			FY06/24			FY06/25
							Copyright © INTELLIGENT WAVE INC. All rights reserved.							7

Cloud Service Business

Sales increased due to a rise in the number of users of the fraud detection service IFINDS .
There was a gross loss of ¥20 million due to higher infrastructure costs resulting from delays in the cloud service

infrastructure transition. Profitability is expected from Q2 onward, with ongoing efforts to improve gross margins by enhancing operational efficiency and adjusting service prices to better reflect the value provided.

Orders increased due to a major IFINDS project.

		FY06/24					FY06/25		Million yen

	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q

Amount of orders	614	969	890	2,761	1,618
Net sales	592	587	618	705	718
Orders on hand	6,717	7,098	7,371	9,426	10,326

Gross profit	96	84	94	75	(20)

	■Number of customers								■Overview
40		IOASIS		IFINDS								Service	Overview



	IGATES		IPRETS
					1	1		■ IOASIS	Demand grew from existing customers for additional functionality and



										1	9	9		expansion in response to increased transaction volumes.
	1	1
	9					9
				1					A growing number of companies are adopting "FARIS Shared Scoring
	9
20
							1	6	6	11	11		■ IFINDS	Service Powered by PKSHA Security," which enables issuers to share AI-
	9	11			3				based fraud analysis data to prevent fraud. New services are being
							2	4							progressively rolled out as part of our next-generation fraud prevention
							3
	10	10		3	10	10	10	10			project "FARIS."
		5	5
0
					■ IGATES	We secured a large-scale project to develop a cross-industry multi-user

						FY06/20	FY06/21	FY06/22	FY06/23	FY06/24	Q1FY06/25
		Q1 FY06/23 Q1 FY06/24

										platform. (The platform is scheduled to begin operating at end-2024.)

												Copyright © INTELLIGENT WAVE INC. All rights reserved.	8

Amount of orders (by Category)

Cloud services and security increased significantly due to multi-year contract projects.
System development decreased YoY due to a decline in large projects for credit card companies.
In-houseproducts and services declined due to the multi-year contract projects awarded in the same period of the

previous year.

■ …System Development	■ …Maintenance, In-house products and services, Third-party products and services
■ …Cloud Services		■ …Security												Million yen

6,000												6,355
			5,594								305
											5,594
							5,421			5,515

5,000							286			631
				1,915
		4,257									2,761	1,915
								4,257
									969
4,000									4,000

	807
								807
	3,130					3,329	2,794			821

	610			3,130
3,000				132		2,904	610
322		1,618	322		1,781
			822		273		890	1,147	1,618
	507	839			507

2,000						297	839
903			315		945	864	807					315
			903			857
1,000	1,398	2,001		1,745		1,430	1,477	1,527	2,001	2,134	1,430	2,142	1,745
			1,398

0
	Q1 FY06/23	Q1 FY06/24	Q1 FY06/25	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
						FY06/23				FY06/24				FY06/25

Orders on Hand (by Category)

Orders on hand increased across all areas, including system development, cloud services, and security.
System development grew in a wide range of areas, including FEP, fraud detection, and security.
Cloud services and security increased significantly due to multi-year contract projects.

■ …System Development	■ …Maintenance, In-house products and services, Third-party products and services
■ …Cloud Services	■ …Security	18,636

Million yen

20,000

18,000

16,000

14,000

12,000

10,000

8,000

18,636

3,102

12,073

1,071

9,04710,326

749

6,717

					16,584	3,102

					1,594
				13,800	13,995
			12,073	1,264	1,639
	11,548
	10,974
	605	1,071
	582
	9,233			9,426	10,326
9,047
		7,098
749	606			7,371
	6,913	6,695	6,717

4,214	4,589

6,000

4,000

2,000

4,214

2,212 2,309

2,704

			3,188	2,964	3,295	2,704
2,212	2,297	2,286	2,309
2,126

1,872 1,976 2,503

23年6月期１Q 24年6月期１Q 25年6月期１Q

1,872

1,741

1,744

1,571

1,976

2,249

2,020

2,268

2,503

FY06/23

FY06/24

FY06/25

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