Geechs Inc. · TSE:7060
Geechs — Q2 FY3/2023 Earnings Presentation
47 slides from Geechs's earnings presentation, Nov 10, 2022
Slide 1: Financial Results Briefing, 2nd Quarter FY Ending March 2023
Fiscal Year Ending March 31, 2023 2nd Quarter Financial Results Briefing November 10, 2022 GEECHS Inc. TSE Prime Market: 7060 0 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2023 ©2022 GEECHS Inc.
Slide 2: Contents
Financial Results Briefing 1．Corporate Profile 02 2．Financial Results 07 3．M&A 22 4．Appendix 32 Contents Contents 1 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2023 ©2022 GEECHS Inc.
Slide 3: Corporate Profile
Financial Results Briefing Corporate Profile 1 2 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2023 ©2022 GEECHS Inc.
Slide 4: GEECHS Group [geek × tech]
GEECHS Group [ geek × tech ] Partnering with technological groups with a wealth of eminent expertise in the IT and Internet fields, GEECHS supports the work styles of all those involved to provide all sorts of value through our technologies. 3 Financial Results Briefing for the 2nd Quarter of the Fi
Slide 5: Grand Vision
Grand Vision Make the biggest impression in the 21st century With our grand vision to make the biggest impression in the 21st century, the Group will create numerous impressions within society by repeating the cycle of always taking on the challenge to face difficult issues, enjoying the process, an
Slide 6: Group Corporate Profile
Group Corporate Profile Group companies Company name GEECHS Inc. (TSE Prime Market: 7060) IT Freelance Matching Business CEO Naruhito Sonehara x-Tech Business Established August, 2007 Game Business Seed Tech Business Head office Shibuya-ku, Tokyo, Japan Capital Stock 1,101 (in JPY MM) Segment compos
Slide 7: GEECHS Group Strengths
GEECHS Group Strengths Portfolio management that enhances growth, stability and profitability Improving management stability to bring business synergies IT Freelance Matching Business Delivering further growth as a pillar of earnings while driving the market forward as our main business Game Busines
Slide 8: Financial Results
Financial Results Briefing Financial Results 2 7 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2023 ©2022 GEECHS Inc.
Slide 9: Executive Summary Q2 FY3/23
Executive Summary Q2 FY3/23 Although both sales and profits were lower than the previous year, they remained as projected against the initial plan Sales Operating Income Ordinary Income Net Income Q2 ¥1,542m ¥379m ¥381m ¥242m (-3.3%) (-36.4%) (-36.1%) (-37.9%) (YoY) Q2 Cumulative ¥2,568m ¥260m ¥263m
Slide 10: Sales and Operating Income
Sales and Operating Income ◼ In addition to maintaining strong sales and profit in our mainstay IT Freelance Business, both sales and profit for the Game Business significantly increased in Q2 due to the recording of sales from rescheduled titles and steady progress in a new development project, hel
Slide 11: Segment Information Q2 FY3/23
Segment Information Q2 FY3/23 ◼ IT Freelance Matching Business : Sales reached a record high of 1 billion yen in half a year. In terms of profit, the operating margin remained over 50% despite some increased investment in advertising. ◼ Game Business : Steady progress in a new development project an
Slide 12: IT Freelance Matching Business (1/3)
IT Freelance Matching Business (1/3) Q2 (YoY) Gross sales ¥3,111m ◼ Half-year gross sales exceeded 6 billion yen and net sales exceeded 1 billion yen, marking a record high! (+19.1%) ◼ As a result of implementing projected advertising investment, the advertising expense ratio increased to 2.3% in Q2
Slide 13: IT Freelance Matching Business (2/3)
IT Freelance Matching Business (2/3) ◼ The number of freelancers under contract exceeded 4,000 person-months in 2Q ! ◼ The ratio of projects, which indicates the supply-demand balance in the IT freelancers market, remained at a high level of 10.46. Unit price of orders continued to rise reaching a r
Slide 14: IT Freelance Matching Business (3/3)
IT Freelance Matching Business (3/3) ◼ Steady growth in the number of new business partners, partly due to the effects of strengthening sales structure, etc. ◼ The number of new IT freelance registrants grew significantly, reaching a record high due to the effects of advertising and the success of t
Slide 15: Profitability of IT Freelance Matching Business
Profitability of IT Freelance Matching Business ◼ Although CAC increased due to increased strategic advertising expenses, including the use of Koji Kato as an image character, LTV also increased due to growth in average duration of service, mainly as a result of strengthening the CS system, etc. ◼ C
Slide 16: Game Business
Game Business Q2 (YoY) ◼ Significant growth in both sales and profit in Q2 due to the recording of sales from resheduled titles and steady progress in a new development project ◼ Drop in stock sales was due to the closing of one operating title and decrease in proceeds from revenue share in some ope
Slide 17: Other Business
Other Business Seed Tech Business Topics Q2 (YoY) Seed Tech Business x-Tech Business ◼ Offshore development sales grew steadily due to orders for new projects Sales ¥48m Q2 (YoY) (+28.3%) in addition to upselling of existing projects. ◼ Sales increased in Q2 due to the resumption of IT study abroad,
Slide 18: Consolidated Balance Sheet & Cash Flow Statement
Consolidated Balance Sheet & Cash Flow Statement ◼ Operating cash flow decreased slightly due to a decrease in income before income taxes and other deductions. It is expected to increase significantly in the second half of the year due to the receipt of payments for development projects in the Game
Slide 19: Changes in the Number of Employees
Changes in the Number of Employees ◼ In the IT Freelance Matching Business, there was an increase of 11 employees from the end of the previous fiscal year due to an increase in mid-career hires resulting from the strengthening of systems in each division, in addition to new graduates ◼ In the Game B
Slide 20: Revision of Full-year Performance Forecast (Consolidated)
Revision of Full-year Performance Forecast (Consolidated) ◼ Due to a delay in the timing of orders for new titles and a drop in stock sales in the Game Business, and in anticipation of unplanned expenses related to the closing of an M&A project, we have given a downward revision of sales and profit.
Slide 21: Revision of Full-year Performance Forecast (by Segment)
Revision of Full-year Performance Forecast (by Segment) ◼ IT Freelance Matching Business: Sales remained unchanged as initially projected with profit revised upward through appropriate cost controls ◼ Game Business : Has been revised downward due to the delay in receiving orders for multiple titles
Slide 22: Shareholder Composition
Shareholder Composition ◼ In line with the overall slump in the stock market due to global financial tightening and the situation in Ukraine, the overseas institutional investor ratio fell 3.7%, the domestic institutional investors ratio dropped 0.8%, and the individual investors ratio increased 4.7
Slide 23: M&A: Share Acquisition of Launch Group Holdings
Financial Results Briefing M&A Share Acquisition of Launch Group Holdings Pty Ltd 3 22 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2023 ©2022 GEECHS Inc.
Slide 24: Key Points of M&A
Key Points of M&A Highlights ◼ Acquired Launch Group Holdings Pty Ltd, a fast-growing IT staffing business in Australia ◼ Launch has sales of around ¥10bn and a database of more than 350,000 IT freelancers. ◼ GEECHS and Launch have a combined gross sales of over ¥20bn. ◼ Expansion expected for cross
Slide 25: The Australian Macro Environment
The Australian Macro Environment ◼ Australia is a country with a stable economy with strong growth in diverse industries, a healthy demographic with population growth due to immigration and natural increase, and a significant surge in net employment in the current period. Comparison of forecasted po
Slide 26: The Australian Recruitment Services Market
The Australian Recruitment Services Market ◼ Australia is one of the top 5 markets, accounting for 64% of the global recruitment services market, and the largest market in the APAC region ◼ Staffing market size: Australia = ¥2.5trn, Japan = ¥7.6trn Global staffing market size Japan Other North Ameri
Slide 27: Launch Group Holdings Pty Ltd
Launch Group Holdings Pty Ltd Company name: Launch Group Holdings Pty Ltd Representative: Rebecca Jane Wallace Financials* (million yen) FY20 FY21 FY22 Established: 2006 Sales 6,717 9,959 10,436 Business IT staffing business, MSP business, and recruitment services Gross profit on description busines
Slide 28: Launch's Strengths (1/2)
Launch’s Strengths (1/2) ◼ Managed Services Providers (MSP) is expanding worldwide, and Launch’s MSP is also expected to grow steadily, built on a solid customer base by comprehensively implementing a series of processes related to customer procurement from marketing to contracts ◼ Provides the Vend
Slide 29: Launch's Strengths (2/2)
Launch’s Strengths (2/2) ◼ Since its establishment in 2006, Launch has earned trust and a track record as a pioneer start-up company in the IT staffing service industry. Launch has been doing business continuously with more than 50% of its customers for more than 5 years. ◼ Launch has its own IT sta
Slide 30: GEECHS Global Strategy and Synergies
GEECHS Global Strategy and Synergies Evolving into a global platform for sharing IT freelancers ◼ One of the biggest companies in Japan in terms of its IT freelance matching business for reliability and track record Ability to leverage the strengths of Group companies to expand cross-border matching
Slide 31: Results Impact Image (GEECHS + Launch Simple Aggregation)
Results Impact Image (GEECHS + Launch Simple Aggregation) ◼ Greater sales to a scale that will achieve the G100 medium-term management plan ahead of schedule ◼ By making Launch the overseas division of the IT Freelance segment, sales in the segment will increase significantly, becoming the largest s
Slide 32: Share Acquisition
Share Acquisition Acquisition amount ¥1.79bn (AUD 18,887k, 70% stake) *1 Converted at 95 yen per AUD *2 Funds for acquisition to be borrowed from bank Date of share acquisition January 2023 (planned) Little impact on consolidated results for this fiscal year ・ Balance sheet consolidated from the fis
Slide 33: Appendix
Financial Results Briefing Appendix 4 32 Financial Results Briefing for the 2nd Quarter of the Fiscal Year Ending March 31, 2023 ©2022 GEECHS Inc.
Slide 34: IT Freelance Matching Business
IT Freelance Matching Business Technology Resource Sharing Platform Growth companies in IT field Internet companies ◼ Ad Tech ◼ Med Tech Project information website ◼ Fin Tech ◼ Real Estate Tech with over 1,500 projects Matching Approx. 3,400 ◼ HR Tech ◼ EC ◼ Ed Tech ◼ Game client companies ◼ Health
Slide 35: Source of growth
Source of growth Financial Figures Business KPIs Key Success Factor Platform Value Monthly orders Outsourcing Monthly unit price of orders Matching Capabilities Trust from IT freelancers and customers gross sales Order period Net sales (source of growth) Retention rate Support capabilities / Engagem
Slide 36: GEECHS Strengths
GEECHS Strengths Support team structure of 3 people per IT freelancer Speedy and relevant matching Support ◼ Generous support as a project mentor Capabilities ◼ Speedy matching with the whole process done online ◼ Generous support from career advisors ◼ Utilizing big data to take factors other than
Slide 37: Connect with IT Freelancers
Connect with IT Freelancers Improve engagement by having effective contact with IT freelancers over the long term Registration Boost exposure Lead acquisition Matching Negotiations Contract Start interview Marketing Automation Lead Generation Lead Nurturing Customer Success ◼ Online marketing ◼ One-
Slide 38: Differences from Similar Businesses
Differences from Similar Businesses Developing a platform specifically for mid- to high-spec, professional IT freelancers GEECHS Crowdsourcing IT Technician Dispatch Registrant IT freelancers (main job) Freelancers (side/main job), and others Dispatched workers Major system integration Main clients
Slide 39: 49 services provided (Engagement)
Engagement Strengthening ongoing partnerships to maximize business by increasing engagement with IT freelancers 49 services provided for IT freelancers so they can work for extended periods without Benefits program the extra stress for IT freelancers ◼ Seminars on how to file a tax return ◼ Discount
Slide 40: Game Business
Game Business 1. Specialists in Partner Strategy With solid technical capabilities centered on Unity / PHP, we have stabilized our revenue base through contract development and operations, winning revenue share from successful titles. We have also increased orders for globally distributed titles. ©
Slide 41: Differences between Developer and Publisher
Differences between Developer and Publisher The future strategy of the Game Business is to become a developer of globally distributed titles Developer (GEECHS) Publisher Main role Planning, development, and operation of titles Planning, distribution and promotion of titles ⚫ Planning and development
Slide 42: Game Business: Business and Revenue Image
Game Business: Business and Revenue Image Business Model Revenue Image ◼ GEECHS is a developer specifically contracted by major game companies ◼ Since there has been a greater shift from the cost recovery to the percentage of completion (publishers) for the planning, development and operation of gam
Slide 43: Seed Tech Business
Seed Tech Business 1. Providing Sodatech, a DX/IT freelancer development service for companies Seed Tech Inc. Providing a SaaS-type DX/IT freelancer development platform for Development business - Offshore development business businesses. An expansive curriculum containing more than 300 tutorial Edu
Slide 44: x-Tech Business
x-Tech Business 1. Digital marketing support for the golf industry Brining IT to golf, providing digital marketing support from the development of owned media and building direct-to-consumer platforms to managing social media channels. 2. Expansive production track record and management expertise In
Slide 45: ESG Statement & Map
ESG Statement & Map Actively promoting initiatives based on the ESG Statement and ESG Map ESG Map Creating a society where people can work with peace Pride in reducing our impact on the of mind environment ◼ Finding solutions to the shortage of corporate IT freelancers, and making IT freelancers bet
Slide 46: Financial Highlights
Financial Highlights Fiscal Year-End FY3/20 FY3/21 FY3/22 FY3/23 Q2 Sales (Thousand yen) 3,544,309 3,427,816 5,388,647 2,568,288 Ordinary Income (Thousand yen) 675,446 713,942 1,135,706 263,476 Profit attributable to owners of parent (Thousand yen) 390,651 457,755 705,194 145,955 Comprehensive incom
Slide 47: Notes regarding Forward-Looking Statements
Notes regarding Forward-Looking Statements www.GEECHS.com The information contained in this presentation is based on a number of assumptions. These statements are not intended to assure or guarantee the achievement of future numerical targets or measures. Please note that actual results may differ d