Q3 2023 Financial Results

Optorun Co., Ltd.
November 14, 2023

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AgendaI

Results for Q3 FY12/23

IITopics

I

Results for Q3 FY12/23

3

Key points for the 3rd Quarter of 2023
 Both sales and operating profit performed well.
The gross profit margin exceeded the original forecast due to the on-track sales progressof the new-type equipment and the positive impact of the exchange rate.
 Net income declined due to losses from foreign exchange forward contracts used forhedging purposes.
 The company is vigorously pursuing R&D activities in new growth sectors where weenvision to base our mid/long-term future growth. We won another new order in theNew Energy segment in the third quarter following the first one in the second quarter.
 Slow orders for smartphones in Q3 reflected sluggish global market conditions.
Demand for high-end applications for smartphones remains strong. There are signs of arecovery in demand for smartphones, including those from Chinese smartphone makers.

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Highlights of the Q3 cumulative results[Sales] ¥28.9 billion (up 16.7% y-o-y) of which new-type equipment constituted 47.8%.
 Smartphones: Increased Sales of ALD equipment for high-end camera functions.
 IoT: Wide-ranging sales in the automotive, AR/VR and other sectors.

[Operating Income] ¥8.5 billion, up 37.2% year on year High-margin ALD equipment contributed to higher profitability.

[Current Net Income] ¥4.0 billion (down 30.0% from the previous year) ¥2.8 billion unrealized loss from foreign exchange contracts used for hedging purposes[Orders received] ¥9.9 billion (down 56.5% from the previous year) Smartphones: acquired multiple orders for touch panels and camera modules.
Orders being pushed back, despite strong demand for higher functionality.
 IoT: Orders covered varieties of applications, including automotive dashboards, vehicle-mounted
cameras, and heads-up displays.
 Acquired orders for etching equipment and thin-film deposition equipment in the new energy sector.

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Financial Highlights(Unit: JPY100 million)

Year ended December
Q3 2022

Year ended December
Q2 2023

Changes (%)

Forecast Year
2023

247

289

116.7%

355

109

148

135.7%-(44.1%)(51.3%)--6285137.2%

86(25.2%)(29.6%)-(24.2%)

77

53

68.9%

86(31.2%)(18.4%)-(24.2%)

5840

70.0%

62(23.6%)(14.2%)-(17.5%)2131

144.8%

34(8.8%)(10.9%)-(9.6%)

CAPEX

51

27

53.0%

56

Orders received

458

199

43.5%

-

Order Backlog

492

279

56.8%

-Net sales
Gross profit

Operating income

Ordinary income

Net Profit

R&D expenses(NOTE) % in parentheses represents the percentage of sales

3Quarterly Sales by Segment•••

Smartphone sector sales performance has been strong with ALD being the main driver.
New-type equipment ratio remained high at 51.8% subsequently to Q2.
Sales for automobile and LED applications remained strong.

Smart phone

Camera lens

IoT

LEDOtherALD(Unit: JPY100 million)

New equipment(excluding ALD）

140
120

112

100

20088

80
7468

40

13

1880
60

118

9470

30

1932
33

2021 1Q

21924 391031 15278992021 2Q

2021 3Q

2021 4Q

182919435

178720

3 24

191835411295154150.5 1725 1152022 1Q

952013293552

302022 2Q

14058 225172022 3Q

250 207112022 4Q

2023 1Q

801212 4178355

35 12488631430

2561932902023 2Q

39 33
2023 3Q
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Quarterly profitability transition•Achieved gross margin of above 50% due to increase in the ratio of high-margin new-type equipment.
(Unit: JPY100 million)

Operating Profit

Gross Profit margin

Operating Profit margin

70

60.0%

53.9%
60
46.3%

50.5%

48.1%
44.3%

50

42.5%

40.9%

42.4%

41.5%

50.2%

50.0%

42.1%
40.0%

4030

30.4%
24.3%

26.1%

24.8%

21.8%

0162021 1Q

172021 2Q

40

22132021 3Q

30.0%

20.0%

14.5%
1023.8%19.7%

2034.1%28.8%

252022 1Q

26

19127
2021 4Q

12.7%

292022 2Q

2022 3Q

2022 4Q

2023 1Q

2023 2Q

2023 3Q

10.0%

0.0%

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Quarterly orders received by sector•••

Despite continued strong demand for sophisticated smartphones, orders have been delayed.
Demand for vehicle-mounted cameras and displays were strong for IoT sector.
Won orders for New Energy applications.

(Unit: JPY100 million)

Smart phone

Camera lensIoTLED

OtherForeign exchange impact

200ALD

New equipment(excluding ALD）

188
30

150

10091
69500733 37
22730
1073138121
10920
39818 27
329 161063

39922 22
17 14
71615

164 5163132
231479 64

34
138

24

69 17

26

21676

58

1610243 92

95916315

19102

72

8 25
15 10
12 15-860
2242

124 7
9 6
42
849 9
45161 81125 802023 1Q

2023 2Q-53-50-27-1002021 1Q

2021 2Q

2021 3Q

2021 4Q

2022 1Q

2022 2Q

2022 3Q

2022 4Q

2023 3Q
6Consolidated Balance Sheets
Assets900

829

Liabilities and net assets(Unit: 100 million yen)

836

900
800

700

349

339

Cash and deposits

600

7968

100020420175

End of December
2022

Notes andaccounts payable
Inventories

400

200

700
600

500

300

836

829

800

199
14215
End of June
2023

Other current
assetsNon-current
assets500

47

10 44163

190

4223

5230

Notes and accounts
payableShort-term loans
payableAdvances received
Other Current
liabilities

400300521

575

Non-current
liabirities
Net assets

200
1000

End of December2022

End of June20237IITopics11

Development of business domains
Semiconductor
optical fusion

Optical■Optical components

Electronic devices■Image sensor■New energy

・Decorative membrane, lens and mirror
・Optical filter

・Solar cell・Lithium batteries
・Power device■AR/VR Device■Communication Device

・Smart glass
・Head mount display■Smart Phone

・BAW/SAW
・RF Device

・Camera modules and chassis
・Display and optical sensor■Automobile
・Instrument panel
・ADAS display sensor■Optical communication device■Photoelectron
・Mini LED・Micro LED
・LD/VCSEL■MEMS Device

・Micro mirror・Gyrocompass scope
・Acceleration sensor

Aiming for ¥50 billion revenue by 2025. Optical, Semiconductor-Optical Fusion,
and Electronic Devices will constitute the three major pillars for mid-term growth.
8Market and order trends
Major areas

Applications

Market (technology) trends•

Smartphone
OpticalAutomobile
CameraAR/VR

Semicondu
ctorOpticalFusion

Photoelectron(Sensor)

Opticalcommunication
DeviceElectronicDevice

New energy
Communication
device•Demand for functional improvement in high-end models
is strong.
Camera modules: Larger lens size and higher percentageof new camera functions per smartphone.

••

More safety devices and installed cameras per vehicle.
Display with touch panels also on the rise.

•Surveillance cameras: demand for wide-angle lens areemerging.

•Display: Increasing use of Micro OLED•

Near-infrared sensor, LiDAR, millimeter-wave radar:
Increased demand due to automation, diversification of3D sensor technology•

Shift of transmission means from electrical signals tooptical signals (photoelectric fusion technology)/ 3D package chip•

Large demand for solar battery and lithium battery
applications.

•RF devices: Entered the film-deposition and etchingprocess in BAW/SAW.

Trends in orders received••

Demand for New Technologies
Signs Recovery.
Hard-coat needs remains
unchanged (shifting to 4Q or later).

•

Recovery in display demand.

•

Increase in demand for ALD
equipment for wide-angle lens.

•

Demand for ALD and Etcher
expected to increase for Wave
Guide and Micro Displays.

•Customer enquiries on the rise.

•Market expected to expand for 3D
packages over the medium to longterm.
Started acquiring orders.

••Market expansion expected overthe medium to long term.
Already started receiving orders.

9Semiconductor optical fusion
Industry-wide trend toward chip-to-chip optical transmission devices
using photoelectric fusion technology
Carrier wafer/glass

Chip to chip optical transmission

Optical fiber
2nd generation

3rd generation(Optical conversion devices and optical wiring)

3.5th generation

Since its founding, Optorun has developed advanced photoelectric fusion
technologies cultivated through optical communication technologies.

10Medium-Term Business Portfolio
Bubble represents sales size

Large

Semicondu
ctor opticalFusion
20%

ElectronicDevice
20%

Growthpotential
Small
Small

Market size

Large

In addition to continuously allocating management resources to the Optical field,
Optorun will concentrate its resources on two new high-growth areas, Electronic
Device and Semiconductor optical fusion, to accelerate its growth.
11Disclaimer, Precautions, and Contact Information
The information contained in this document has been prepared on the basis of generally accepted economic and social
conditions as of November 13, 2023, and certain assumptions that we judged to be reasonable. However, the information
contained in this document may be changed without prior notice due to changes in the business environment.
The materials and information provided in this publication include so-called forward-looking statements. These forwardlooking statements are based on current expectations, projections and risky assumptions, and contain uncertainties that
may cause results that differ materially from these statements.
These risks and uncertainties include general industry and market conditions, general domestic and international
economic conditions such as interest rates and currency fluctuations.
We are not obligated to update or revise the forward-looking information contained in this report even if new
information or future events occur.

[Contact]
E-mail:ir-info@optorun.co.jp TEL:049-299-8199

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