Heroz, Inc. · TSE:4382
Heroz — Q1 FY04/2022 Earnings Presentation
25 slides from Heroz's earnings presentation, Sep 10, 2021
Slide 1: Presentation Material for FY04/2022 Q1 Financial Results
Notice This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail. Presentation Material for FY04/2022 Q1 Financial Results
Slide 2: 1. Business Overview
1. Business Overview 2. FY04/2022 Q1 Performance 3. Growth Strategy 4. Reference Materials
Slide 3: Company Overview
Company Overview 2019 Listed on the First Section of Tokyo Stock Exchange (TSE) Name HEROZ, Inc. 2018 Listed on Tokyo Stock Exchange (TSE) Mothers Location PMO Tamachi 2F, 5-31-17 Shiba, Minato-ku, Capital and business alliance with Netmarble Games Corporation Tokyo 2017 Established April 2009 Capit
Slide 4: Our Vision: Creating the future through AI revolutions
Our Vision Creating the future through artificial intelligence (AI) revolutions 4
Slide 5: Global Leader in Mind Game AI
Global Leader in Mind Game AI Chess AI Shogi AI Go AI Deep Blue (’97) AI developed by our Google acquired Deep Mind defeated a engineers defeated a (’14) professional Chess professional Shogi AlphaGo, developed by player (Japanese Chess) Deep Mind, defeated a player (’13) professional Go player (’16
Slide 6: B-to-B Services: Machine Learning by Replacing Shogi Game Records with Other Data
B-to-B Services: Machine Learning by Replacing Shogi Game Records with Other Data Structural design data, Shogi game records financial data, etc. HEROZ Kishin Deep learning and other machine learning: MLaaS (Machine Learning as a Service) Shogi AI Construction AI, Finance AI, etc. MLaaS： What is Mac
Slide 7: B-to-B Services: Profit Model and High Switching Costs
B-to-B Services: Profit Model and High Switching Costs Research/develop Shogi AI Standardize AI technology accumulated through shogi AI Establish “HEROZ Kishin”=MLaaS （Machine Learning as a Service） Establish an infrastructure which allows HEROZ to provide AI services efficiently Client’s data sent
Slide 8: B-to-B Services: Engines included in HEROZ Kishin and Examples of Applications
B-to-B Services: Engines included in HEROZ Kishin and Examples of Applications ◼ Create AI products by combining engines and achieve an efficient operating structure Know-how on AI-related technology development and and R&D capabilities service operations (deep learning, etc.) (massive servers, etc.
Slide 9: B-to-B Services: Areas of Focus and Examples of Services Provided
B-to-B Services: Areas of Focus and Examples of Services Provided ◼ Focusing on construction, finance, and entertainment for the foreseeable future ◼ Earning structure is initial setup fee and ongoing fees *Examples of clients served Construc Fi- Enter- -tion nance tainment Creation of high-quality
Slide 10: B-to-B Services: horizontal x vertical expansion across industries
B-to-B Services: horizontal x vertical expansion across industries ◼ We aim to create industry-standard AI through horizontal and vertical expansion, applying into various industries ◼ After creating the industry-standard AI, we plan to form an ecosystem based on it Other industries Entertainment AI
Slide 11: B-to-C Services: Fees from Application Users
B-to-C Services: Fees from Application Users Charging fees for B-to-C content which user AI ◼ Leveraging AI-related technology to provide mind game mobile apps such as shogi ◼ Shogi Wars has remained cash cow backed by increase of paid users on a YoY basis ◼ Staying longer at home due to Covid-19 ha
Slide 12: 2. FY04/2022 Q1 Performance
1. Business Overview 2. FY04/2022 Q1 Performance 3. Growth Strategy 4. Reference Materials
Slide 13: Our Key Performance Indicator: EBITDA
Our Key Performance Indicator ◼ We believe that EBITDA, as calculated below, is our key performance indicator EBITDA = Operating Profit + Depreciation/Amortization Expenses ◼ In AI-related businesses, server investments, etc. are required to engage in advanced machine learning, leading to various de
Slide 14: Performance Overview (May-July 2021)
Performance Overview (May-July 2021) ◼ Revenues of AI (B-to-B) decreased due to the termination of gaming services in our entertainment AI etc. Revenues of AI (B-to-C) increased by stay-at-home demand ◼ EBITDA and other profits made progress as forecasted while they decreased on a year- on-year basi
Slide 15: Net sales and EBITDA Trends
Net sales and EBITDA Trends ◼ We forecast over 20% year-on-year revenue growth for AI (B-to-B) services, the core pillar of our growth strategy, in FY04/2022 as our business risks associated with Covid- 19 are being resolved ◼ Net sales of AI (B-to-C) services increased compared with our forecast an
Slide 16: COGS and SG&A Trends
COGS and SG&A Trends ◼ Labor cost has increased on a year-on-year basis and is expected to keep growing to increase our engineering capacity, which will lead to our medium-to-long term growth ◼ In addition, there were expenses to improve the workplace environment to counter COVID-19, an increase in
Slide 17: Balance Sheet (as of July 31, 2021)
Balance Sheet (as of July 31, 2021) ◼ B/S remains strong backed by cash and deposits increased via public offering in 2019 ◼ We plan to invest them in efforts to achieve the medium-to-long term growth strategy (e.g. hiring for AI engineers, in-house computing servers and external cloud computing ser
Slide 18: 3. Growth Strategy
1. Business Overview 2. FY04/2022 Q1 Performance 3. Growth Strategy 4. Reference Materials
Slide 19: Medium-to-long term Growth Strategy
Medium-to-long term Growth Strategy ・EBITDA ◼ We plan to expand AI (B-to-B) services by what we have cultivated in our AI (B-to-C) services. We aim to create industry-standard AI, to form an ecosystem based on it, and to expand across industries B-to-B AI B-to-B ongoing fee Provide AI services （prof
Slide 20: Capital and business alliance with Vario Secure (4494)
成長戦略実現に向けた取り組み ◼ HEROZ entered into a capital and business alliance agreement with Vario Secure (4494) on September 10, 2021 ◼ Business Alliance HEROZ and Vario Secure aim to generate new products and services, maximizing synergies to increase the corporate value of both companies by mutually provid
Slide 21: 4. Reference Materials
1. Business Overview 2. FY04/2022 Q1 Performance 3. Growth Strategy 4. Reference Materials
Slide 22: Potential AI Demand in Our Areas of Focus
Potential AI Demand in Our Areas of Focus ◼ We believe there is also significant potential demand for enhancing operational efficiency through AI in the construction industry, which is one of our areas of focus ◼ There will be a shortage of 110,000 construction technicians by 2025 (source: Human Tou
Slide 23: Japan: Potential AI Demand is Among the Largest Worldwide
Japan: Potential AI Demand is Among the Largest Worldwide ◼ Potential AI demand in Japan can be expected to be among the largest worldwide, as the working population is expected to decrease significantly going forward Projection of Population Age 15-64 (Median Prediction Interval, 2020=100) ◼ When d
Slide 24: Use of Our AI in DX
Use of Our AI in DX ◼ Domestic DX (digital transformation) is expected to accelerate due to the future decrease in the working population as well as the impact of the COVID-19 pandemic ◼ AI allows for DX of a wide variety of operations including those involving decision- making, which were previousl
Slide 25: Disclaimer
Disclaimer The contents set out in this material are prepared based on generally acknowledged economic, social and other conditions, and on certain assumptions deemed rational by HEROZ, Inc. and may therefore be subject to change without prior notice due to changes in the managerial environment or f