Cybozu, Inc.
Business Overview and Financial Results Briefing for the Fiscal Year Ended December 2022
February 24, 2023

Event Summary
Company Name

Cybozu, Inc.

Company ID

4776-QCODE

Event TypeEarnings Announcement

Event NameBusiness Overview and Financial Results Briefing for the Fiscal Year Ended
December 2022

Fiscal Period

FY2021 Annual

Date

February 22, 2023

Time

13:00 – 14:11(Total: 71 minutes, Presentation: 41 minutes, Q&A: 30 minutes)

Venue

WebcastNumber of Speakers

6
Yoshihisa Aono
Yumika Nakane

Tadamasa Hayashi
Tamotsu Hayashida
Keita Kuriyama

Teppei Sato

Representative Director & President
Director, Executive Officer, General Manager
of Human Resources Division, General
Manager of Legal & Compliance Division
Director, Executive Officer, General Manager
of Corporate Affairs Division
Executive Officer, General Manager ofBusiness Marketing Division
Executive Officer,
General Manager of Sales Division,
General Manager of Business Strategy Office
Executive Officer, General Manager ofDevelopment Division/Representative
Director and President of Cybozu Labs, Inc.

Presentation
MC: It’s time to start, so let’s begin. Thank you very much for taking the time out of your busy schedule today
to attend the business overview and financial results briefing of Cybozu, Inc. for the fiscal year ending
December 31, 2022. My name is Yamami, from Public Relations at Cybozu, and I am the MC for this session.
Thank you for joining us.
Today's financial results and business briefing is being broadcast simultaneously via Zoom webinar andYouTube Live.
Now, Mr. Yoshihisa Aono, Representative Director & President of Cybozu, will on report on our financial
results and business performance for the fiscal year ending December 31, 2022. Mr. Aono, please go ahead.

Aono: Hello, everyone. This is Aono from Cybozu. Today I will be presenting an overview of Cybozu’s businessactivities and the financial results for the 2022 year just ended.
This is the latest company overview. One thing that has changed in the past year is that we now have a basefor our South-East Asian operations in Kuala Lumpur, Malaysia.
Also, within Cybozu permanent employees are referred to as open-ended contract employees rather thanpermanent employees. And, on a consolidated basis we now have over 1,000 such employees in total.

This is our corporate vision. Cybozu's corporate vision is different from that of other companies in that it was
passed by a resolution at the Annual Shareholders Meeting. This most vital aspect of our company, ourcorporate vision, was passed by a resolution at the Annual Shareholders Meeting, in March 2021.
Our purpose and raison d'etre is to build a society brimming with teamwork. We exist for that reason, which
we define as our highest and greatest purpose.
The four cultural elements express what kind of society a society brimming with teamwork looks like.
The first element of our culture is to share a common vision. We don’t want to have the kind of team culture
where people exert their authority ordering other team members to do things that aren’t part of the common
vision. We should all work together, sharing the same ideals. This is the first cultural element.
The second is to embrace individuality. It’s fine for teams to include many different people. Those people aregoing to work as a team. In other words, some major IT companies treat people as if they are interchangeable
and replaceable, laying off thousands of people without a glance, but we do not do that. We look at each
person individually and value their diverse personalities.
The third is to be transparent. This means be open and do not lie. In other words, we do not have anything tohide, and we all try to share information openly, and this is the third part of our culture.
Finally, the fourth cultural element is to be yourself and take responsibility. That means when you work in ateam, that you don’t just listen to what others say and do not express your own opinion. We believe that it isimportant to have a culture where each worker takes the initiative and discusses what he or she wants to do
and how to do things better. That is why we include this cultural element to be yourself and take responsibility.
Our highest and greatest purpose is to expand the number of teams successfully using these four culturalelements around the globe. All in all, we would like to move toward this goal, and we hope you will understandthis key part of how we operate.

Information sharing is essential to creating a society brimming with teamwork. Using various tools to talksecretly, such as communicating by email, inevitably leads to information not being openly shared and only
some people knowing about things.
Instead of such tools, we want to provide an information sharing platform where more-and-more people canshare a whole wealth of information, and this is what links in to our business.

We sell four main groupware products.
The first is Cybozu Office, a groupware suite of applications that can be easily used by small- and medium-size
companies.
Then, there is Garoon, which can be used by much larger organizations than Cybozu Office. It can be used byorganizations with hundreds or thousands of users and this groupware is also highly customizable.
In addition, Kintone, which has become Cybozu's flagship product, is an application platform that allows
anyone to create information sharing apps.
The final product is Mailwise. Email still tends to be a closed-use tool, so this is a tool that allows everyone toshare the emails they receive and reply to them together.
These are the four groupware products that we are currently offering and further developing. These products
constitute our main business.

I would like to tell you about the business model for Kintone in more detail.
As often shown in our TV commercials, Kintone is no-code software. It allows you to create apps for businessprocesses you previously did using spreadsheets or analog operational processes without having to do any
coding. No code means no coding or programming. By learning how to use Kintone, even non-IT specialists,
the people doing the day-to-day operational work in your business can create apps without needing to know
how to code or program. This is the whole point of Kintone.
The TV commercials only mention this part, but in reality, once you start creating apps without having to code,
you will find yourself thinking up all kinds of additional new apps you want to build for all those uses you wantto put Kintone to. You will find yourself thinking up new features you want to add, or wanting to connect
Kintone apps up to various different systems, and so on.
What’s great about Kintone is that it is simple yet extendible, so you can expand its functionality with various
plug-ins. Just like plugging in a home video games cassette, you can use plug-ins to enhance Kintone giving it
more powerful functionality. There are a whole bunch of third-party plug-ins and other Kintone integrations.
And there are an ever increasing number of external services that can be connected up to Kintone. This allhelps make Kintone a system in which you can easily do so many of the things you want to do.
However, there is one thing that you need to remember. The word reskilling is often used today, and it isexactly what is needed with Kintone. Your non-IT people, the people involved in the day-to-day aspects ofyour operations, need to reskill in order to create a Kintone system for your company. And we are here to
support this. Only when this is done can a Digital Transformation (DX) be achieved on a company-wide scale.
We call it in-house platform creation, it is only by being able to do that that you will be able to drive your DX
by yourselves, and this is the model we envision.
To support this, of course, we need partners. We need many partners who can teach us and give us advice,
so we have created the Official Partner Program to nurture partners. Our model also includes providing backup support to our users by putting qualification systems and educational institutions in place to help themlearn.

In addition, we are trying to invigorate the user community so that during the learning process users canconnect with each other and exchange information on what others are doing and how they are doing it.
For example, KinKomi. It stands for Kintone Community and is an online community where members can shareand solve each other's problems. There is also a community for large companies called Kintone Enterprise
Circle, and GovKin, which is a community for local government employees to exchange information about
using Kintone for government and public administration purposes.
We have also created various forums, such as Kintone Hive, where users can share good practices with eachother, and Kintone Café, to connect our customers with each other and help them learn while keeping themmotivated.
So, Kintone encompasses all of this. People often ask me what the difference is between Kintone and otherproducts, and I say that Kintone is all encompassing. It is because we go this far, that our customers will beable to drive their own DX. This is the model we are creating.

For the past two years, we have been working under the company-wide slogan BET! The COVID pandemic andthe boom in DX, created a very favorable business environment. So our policy has been to invest unflinchingly,
even if it meant incurring losses.
As a result, sales continued to grow, but profits declined under the BET! policy. In other words, we haveinvested.
Actually, we have done something similar in the past. In around 2014 and 2015, when we were getting ourcloud business up and running and we had a policy of going for market development, even if it meant taking
a loss in the short term. Similarly, in 2021 and 2022, we have also been investing to create a market for thecompany, even if it reduces our profits in the short term.

These are the performance figures. The numbers are as shown here.
To elaborate, sales grew by 19.4%.

That growth figure is pretty much what we achieve every year. For the past 10 years or so, we have mostly
achieved 15% to 20% growth annually, and this year too we been able to continue to grow as in previous years.

Please look at advertising expenses.
Under the BET! slogan, we put out more-and-more TV commercials, spending money and investing hard inadvertising, resulting in a total of just over JPY 6.4 billion spent on advertising. Labor costs were JPY 7.8 billion,
so comparatively you can see that we spent a great deal of money on advertising. We really put a lot of money
into it.
As a result, operating profit declined significantly.

A survey of the resulting product awareness shows that the effectiveness of advertising investment whenspending this much has increased Kintone brand name recognition from about 19% before to 28%.
I believe that the TV commercials have made us known to a very large number of people. It is a good
conversation starter and easier to market to people who have seen Kintone on TV. These are the kinds ofresults we are seeing.

This is the balance sheet.
Please take a look at the borrowings. At the end of the fiscal year ended December 31, 2022, the Company's
borrowings had increased from JPY 2.2 billion to JPY 4.68 billion. This figure is also shows that the Company
borrowed to invest in the short term.
Just to add, at the beginning of the following term, in January 2023, we sold some of our treasury stock holding
to Ricoh Company, Ltd. As a result, we generated about JPY 4.5 billion in cash, repaid JPY 4.18 billion of thisdebt, thereby reducing our borrowings considerably.

Looking at the business in detail, cloud sales now account for 84.5% of Cybozu's total sales. Light blue
represents cloud sales, and cloud sales roughly account for the majority of total sales. Cloud sales have grown
to JPY 18.6 billion.

As is written here, we are disclosing these sales figures on a product basis for the first time ever. Until now,
we have not released sales figures by product, partly for strategic reasons, but now that Kintone sales haveexceeded the JPY 10 billion mark, we have decided to make them public.

Last year, Kintone sales were JPY 10.4 billion, a 32.4% growth rate over the previous year, which means
Kintone has grown to be a large-scale product.
There are many SaaS companies in Japan, but I have not heard of many companies that are generating JPY 10
billion in sales from a single product, so I think Kintone has grown to be a strong product in Japan in its own
right.

We are also releasing the sales figures for our other products as well as Kintone.
Cybozu Garoon, our groupware product for mid-size and large enterprises, recorded sales of JPY 4.5 billion.
While Cybozu Office, our groupware for small- and medium-size companies, recorded sales of JPY 5 billion.
And Mailwise, our email sharing groupware, hit sales of JPY 670 million.
I am pleased to be able to report that we are doing business on this scale. Sales of all of our products are
growing, and all products are switching to being primarily cloud-centric.
Garoon for mid-size and large enterprises still has a large number of package software sales since many ofthese customers are running the on-premise version of Garoon on site. However, the scale of cloud productsales is becoming larger than sales of the on-premise version.
To add further detail, more-and-more users are using Garoon in combination with Kintone. For example, wehave data showing that about half of our customers who use Garoon in the cloud are using Garoon in
conjunction with Kintone.

One of the things we most frequently get asked about in relation to our cloud services is security. We are also
investing heavily in this area.
One key aspect is our infrastructure. Many SaaS companies run their applications on other companies' cloudinfrastructure, such as AWS or Microsoft Azure, for example. However, in Cybozu’s case, we have leased ourown data centers and purchased our own servers for the cloud services we provide in Japan, and we also
operate this cloud infrastructure ourselves, which we put a lot of time and effort into. I believe that we areable to provide a very robust and high level of service because of this.
We are also working with third-party organizations to raise the level of our infrastructure even further, as wellas with other companies to further raise the level of security by integrating their services with ours.
Additionally, we have continued to improve the level of security through granular access control features inour products.

These are the assessments of our security by external organizations. The main one is ISMAP, which is a security
evaluation system created for Japanese government procurement, and we are certified and registered under
this system.
We have also acquired certification under ISMS, which is a more global standard.

Conversely, these are evaluations of our performance from a customer perspective.
For customer support, Cybozu has achieved a three-star rating, under the HDI rating benchmark, which is very
strict; it is difficult to achieve a three-star rating unless you score an average of 3.5 or higher out of 4. Our
company has raised its level of support, which has resulted in this three-star rating.
Furthermore, in an annual customer satisfaction survey conducted by Nikkei Computer, Kintone ranked firstin the PaaS category for customer satisfaction.
In the Magic Quadrant for Enterprise Low-Code Application Platforms, published by global research firm
Gartner, Kintone has been included in the low-code/no-code application development platforms for large
enterprises for the sixth time in a row.

This is also the first time we have released the figures on the amount of revenue partner sales generated.
One of the salient features of Cybozu is that while we deliver cloud services, our model is very unique in that
it is a partner-centered business.
Looking at specific figures, sales through partners accounted for 61.6% of total cloud sales in Japan. Thatmeans that more than half of our cloud services are being sold through partners.
Moreover, as you can see from the graph, partner sales are growing really well. Cybozu's direct sales are
growing, but sales through partners are growing even faster. Sales through partners have exceeded the JPY
11 billion mark.
As I mentioned earlier, the number of services that integrate with Kintone is now over 370, and the numberof partners has reached 400. We have also held the inaugural Cybozu Cloud Garden, an event focused on theecosystem consisting of partners and Cybozu.

When you think of partner companies, system integrators (Sis) probably come to mind, but Cybozu's partners
do not stop there.
For example, regional banks. We have already partnered with 17 regional banks in Japan, which has resulted
in bank employees using Kintone to provide ICT consulting services.
Kintone has already been deployed in 400 companies as a result of ICT consulting by regional bank employees.
I would like to tell you about this as it is really interesting. There aren’t many IT companies in rural areas. This
has led to a tendency, until now, for the rate of IT adoption to be increasingly slower the further you get out
into rural areas.
We thought that partnering with banks would be a good way to accelerate the digitalization of small- andmedium-sized local businesses (SMEs). There are many regional banks in Japan, and although bank employees
are not necessarily proficient in programming, we were confident that they could become proficient in using
a no-code business application tool like Kintone if they studied up on it.
We have been working on this initiative for a number of years, as we felt that partnering with regional bank
employees might work well, since they are highly trusted by their customers and very familiar with theircustomers’ businesses.
This has worked increasingly well, and the number of banks who have partnered with us has increased to 17.
Last year, we entered into new partnerships with a number of banks, including Hyakugo Bank, which is locatedin Mie Prefecture, Shikoku Bank in Kochi Prefecture, and Oita Bank in Kyushu, among others. For some reason,
many of these regional banks are located in the west of Japan, and we are working with these regional banks
to promote the digitalization of regional SMEs.
To make this possible, we also need to reskill bank employees, so we set up a community called Kintone
Training Camp for this purpose, and we are administering and driving it.

In order to reskill more-and-more people, we partnered with Pasona last year and launched an initiative underwhich staff registered with Pasona’s talent dispatch service learn how to use Kintone and become DX-capable
personnel who are then dispatched out to client workplaces.
To make this happen, we have created a Kintone certification course and have started reskilling talentregistered with the dispatch service and then sending them out to client companies. We hope that this will
also serve to accelerate digital transformations within Japanese companies.

These are the latest Kintone deployment stats.
The number of signed-up companies using Kintone right now is 27,500, and roughly 550 new companies are
signing up for Kintone every month.
It is not only SMEs who are adopting Kintone in their organizations. One-in-three companies listed in the Prime
Section of the Tokyo Stock Exchange (TSE) have deployed this system. Last year, I believe we said one-in-fourcompanies, but this year the figure is one-in-three.
Although one-in-three companies are using Kintone, the number of large enterprises who are using Kintone
throughout their entire organization is still small, with many having only deployed Kintone in a few of theirdepartments. In future, with these large enterprises listed on the Prime section of the TSE, who have partially
implemented Kintone, we are looking to grow the scale of their Kintone deployment within their organization.
The graph in the middle shows customers by industry sector. As you can see, Kintone is not really an industryspecific product, in fact it can be used in any industry.
It is interesting to note that the people in charge of implementing Kintone within an organization are not only
from the IT department, in fact, non-IT departments are by far the largest group, with Kintone systems being
supported by the frontline staff.
As I explained earlier, you can create an app with no coding needed, so you don't necessarily have to be an IT
professional. The reality is that people in many different departments have seen what Kintone can do andsuccessfully deployed the system for use in their own department.

We have particularly seen an increase in the number of large enterprises rolling out Kintone on a companywide basis.
Last year, we launched the Kintone Enterprise Circle, an initiative designed to create a community amongcustomers who are using Kintone at scale within major corporations. We currently have about 20 companies
participating in the Kintone Enterprise Circle, with en Japan Inc., serving as chair of this user group and Japan
Airlines Co., Ltd. as vice chair, and members are working to improve their know-how by exchanging
information with each other.
As the IT departments of major corporations are exchanging information in this way, we thought it would also
be a good idea to promote how to best use Kintone within large companies, and we have compiled this knowhow in the form of the Kintone Governance Guidelines. This is very important.
With a product like Kintone, which is so easy to use and is being increasingly used by an ever expanding
number of people out in the field, there is a risk of the system becoming an unregulated, anything goes zone
if you get the controls wrong. However, if you impose too many restrictions, the invaluable know-how of thecontent experts in the frontline will not be reflected in the apps, so finding the right balance can be tricky.
We have compiled this know-how into the Kintone Governance Guidelines so that both the non-IT department
people are happy and the IT department can maintain proper governance. These guidelines are available freeof charge and made public, so please take a look if you are interested.

I would like to showcase a large company user case story from last year, Alpen.
Alpen operates 400 stores nationwide, and with 400 stores, coordination between them can be very
challenging. Alpen uses Kintone as the infrastructure to provide a platform for the business systems used inits stores.
One example is customer records. For example, at Alpen they created a number of systems on Kintone all ina short period of two months or even two weeks. These include: a system that compiles information, such as
what kind of problems golf lovers have, the customer purchase history, etc., as a customer record, amanufacturing management system for rackets, a secondhand outdoor equipment buyback system, an ordermanagement system, etc.
What is interesting is that the people creating these applications are not super-expert IT professionals fromoutside the company, but actual store staff who went to the IT department and talked to them in order tothen create those applications that incorporate the opinions of the store staff. The IT department thencontinued the interaction with the stores, and then re-iterated those discussions into the system
improvement cycle.
This is exactly the kind of case study that we are seeing, where a DX is being successfully implemented becauseof the field-driven approach to app creation. This is great. This is what we call bringing systems development
in-house and doing-it-for-yourself.
We hope to continue to increase the number of these large companies who are developing Kintone systems
in-house capabilities.

The next topic is our work with local government municipalities. This graph shows that 190 municipalities
have now deployed Kintone.
Three years ago, back in 2019, there were really only a few dozen. To put it another way, in the past it was
really challenging for us to make municipalities our customers. For example, they may have not been keen to
move to the cloud or they already had various vendors working with them. Consequently, for a number ofreasons it was difficult for us to make headway into the government sector market.
However, the COVID pandemic has awakened many municipalities to the fact that they need to create moreand-more systems by themselves to speed up the process. That is why Kintone is being installed at local
municipalities.
We decided to offer them great deals as an investment, and we are running a campaign offering one year’s
use of Kintone free of charge. With this campaign, we will not charge license fees for one year if the customer
is willing to deploy Kintone across their entire organization. We have about 50 municipalities participating inthis campaign to encourage adoption of Kintone.
If there are any municipalities that have not yet used this service, we would like to encourage them to apply.
Even after installation, you may be eligible to receive up to 60% off the license fees.
I don't know if it will equate to very profitable business for Cybozu, but as a company that originated in Japan,
we cannot allow Japan to sink. Anyway, I hereby commit to this, to enabling Japanese local governments tomake a digital transformation.

Central government ministries and agencies are also beginning to adopt Kintone, with a number of ministries
having already deployed Kintone.
In addition, since April 2022, we have been welcoming ministry employees into Cybozu to have them learn
how to utilize Kintone and other DX products. It is not only about DX. We are also working to have them learn
what kind of organizations are capable of utilizing these tools, and then have them go back to theirorganizations and start with organizational reform before proceeding on to DX.
Cybozu, of course, provides the Kintone tool and groupware tools, but we would also like to share ourorganizational management know-how on what kind of organization is an organization where information isshared and how to manage such an organization so that it can run smoothly.
I am keen to share with them how to create an organization that is not a top-down organization like in thepast, but one in which everyone shares information and initiates and engages in discussions proactively.

We started a brand called the Cybozu Teamwork Research Institute (TRI) for this purpose; and set up anorganization called TRI, which delivers lectures, training, and consulting services in response to client requests.
We launched TRI in around 2018, but subsequently delivery of face-to-face lectures and training weresuspended due to the COVID pandemic. However, in 2021, we were finally able to get TRI back on a growthtrajectory once again. In 2022, TRI delivered 125 lectures and 159 training and consulting sessions, thereby
growing into a much more prominent business within Cybozu.
We are also working with Panasonic welcoming Panasonic HR employees into our company to have themlearn organizational management know-how at Cybozu before returning to Panasonic.

This is information on our human resources status.
The red line graph shows the staff turnover rate. Although the turnover rate was very high in the Company’s
early years, we have worked to diversify our work styles, and the turnover rate has improved and remained
steady at around 5% for about 10 years. I believe that we are managing to maintain a very low turnover rate
for an IT company.
The blue graph shows the number of employees. The number of open-ended contract employees (permanent
employees) is steadily increasing.
Some HR topics are listed here.
We have renovated our office in Nihombashi, Tokyo greatly changing its appearance. Prior to the renovation,
the office was a tidy-looking configuration of non-reservation-based desks, but since the number of
employees coming into the office to work has dropped, and even when we do come into the office to work,
we are now more likely to have more on-line video meetings in conference rooms than to work solely out in
open-plan desk areas, we renovated the office, greatly changing it up. The open-plan area where everyone
works was made to look like a café, and instead, the office area was redesigned with many private rooms
where people can have video conferences inside.
Also, Cybozu's employee share ownership plan is unique, and we are working to expand it globally.
This is the inflation allowance, which has attracted a lot of attention. Inflation has been rapidly rising globallyfor about a year now, so we decided to pay an inflation allowance, including to employees in our overseas
offices, in order to swiftly respond to the situation.
We also set up the New Business Division, the division for creating the next Kintone products.
These are the organizational initiatives we have undertaken.

This is an initiative regarding our Board of Directors.
About two years ago, we conducted an open recruitment process in which any employee could nominate to
be a Director on the Board, which resulted in a 17-person Board of Directors. However, I would like to sharethe makeup of the Board of Directors we plan to put to a decision of the Annual Shareholders Meeting next
month.
Briefly, in the middle, are Mr. Tadamasa Hayashi and myself, who will be on the Board of Directors in the socalled administrative sense. As for Outside Directors, Mr. Yasutomi Kitahara, who was appointed one year ago
and teaches at the Business School in the Graduate School of Management at Nagoya University of Commerce& Business, will assume the position as a specialist in business and innovation. In addition, Ms. Yuko Watanabe
works in New York, and we have asked her to join us as an Outside Director so that she can bring a foreign
perspective to the Board.
We are also proposing that two Internal Directors, who are employees who were elected by an internal vote,
be appointed to the Board. Mr. Takakazu Morioka, who was formerly Deputy General Manager of the Sales
Division, and Ms. Yuko Kanzaki, who is in the Development Division, ran as candidates for a position on the
Board, and as the result of an internal vote, they were elected as Internal Directors. Including these two
employees, we are planning to move forward with a six-member board for the next financial year.
I think this will be a good balance. Inevitably, Directors tend to be people who have risen to the top and thatis final. In order to hold the powers of Directors in check, we would like to have people from outside theCompany on the Board of Directors. And, we also would like to make sure that the opinions of the people on
the front line are properly reflected.
I am hopeful that these six candidates will be selected to form the well-balanced Board of Directors structure
we are putting forward.

This is our global expansion.
In Greater China, growth has weakened slightly, especially in China, where the zero-COVID policy has madeface-to-face sales activities impossible, but despite that, new contracts have doubled in Taiwan. In particular,
our services have earned favor amongst local Taiwanese companies.
Southeast Asia is also growing steadily. As I mentioned earlier, we are establishing a corporation in Malaysia
to act as our Asian headquarters.
The US has tried its best to accelerate under the policy of BET!, but it is still struggling. However, as weannounced, we have been able to form a global sales partnership with Ricoh, and this year we will be using
Ricoh USA's network to expand sales of Kintone in the US. Of course, it may be difficult to see results within ayear or two, but I expect that when we have the full sales teams and structures in place, the number of Kintone
customers in the US will grow dramatically.
What I have explained so far are our achievements.

Next, I would like to introduce our new company-wide slogan.
Last year and the year before, we said we were going to increase short-term investments under BET!.
For the three years 2023, 2024, and 2025, our company-wide slogan will be "2025 and go Beyond with Trust,"
or 25BT.
“25” means, in short, that we are not looking in one-year increments, but always firstly taking a three-year
view. Since the slogan is "go Beyond" it also means let's look beyond that. Let's look three years into the future,and then 5 years, or 10 years from there, and rather than investing for the short term, let's work towardbusiness expansion beyond that. And "with Trust" means we have decided to proceed with a policy of building
up trust.

Under this policy, the focus will be on increasing medium- to long-term investments rather than short-term
investments. So, I’d like to share how we expect to perform in the current fiscal year.
Sales will increase by about 15% as usual, and we expect profits to return again, as we will be investing in themedium to long term rather than in the short term.
Of course, we intend to be flexible and make changes depending on the situation, but at this point, we areproceeding with our business with this expectation.

Finally, please take a look at this diagram.
Kintone is more than just a product. It’s an ecosystem and the peripheral plug-ins, external services, and thepartners and user communities that support reskilling are all included in the Kintone ecosystem.

I believe this is our strength, and that expanding the deployment of Kintone will drive digital transformations(DXs) that are brimming with this kind of teamwork, where non-IT experts, the people in the field can drive
the DX themselves.

Once your organization has made this kind of progress, you will be able to successfully achieve your own DX,
and you will truly be an organization that is adept at change. You will become an organization capable ofchange, driven by the ideas of the people in charge of the daily operations, at their own initiative, and with
their own hands.
We are not simply talking about transferring analog tasks to computers. It is about moving agilely, reclaiming
these lost three decades, and evolving into an organization that is adept at change. That is the customer value
we envision.

Once again, this is our corporate philosophy.
What we want to do is to build a society brimming with teamwork, and we will continue to deliver products,
ecosystems, and methods to achieve this goal.
That concludes my business overview.

Questions & Answers
MC [Q]: Let's move on to the question-and-answer session. Let me go ahead and take up the questions we
received in the Q&A box.
There are two questions on the partner business part. I will read from the first one.
You mentioned that indirect sales exceed 60% of sales. Do you have target percentages for direct and indirect
sales? This is the first question.
Second, today, you mainly talked about non-IT partners. Do you intend to focus on expanding such non-IT
partners in the future? And what do you expect from IT partners?
Please respond to the first one regarding the target percentages for direct and indirect sales.
Kuriyama [A]: Thank you for your questions. I am Kuriyama, General Manager of the Sales Division.
Although we have not set clear target percentages, we have set a guide that the percentage of partner sales
should not fall below 50% of sales. Although we have not set a clear target or a ceiling, as a general guideline,
the common understanding we operate on within the Sales Division is working to keep the percentage fromfalling below 50%.
On the other question. We are not looking to add more-and-more non-IT partners. This time we havepartnered with financial institutions, not because they are non-IT partners, but because they are a good matchfor our cloud products. We have been working on this partnership for about the past three years and it finallyachieved results last year. That is how we see it. It's not that we want to add increasing numbers of non-IT
partners.
The other thing, regarding what we expect from our IT partners, we are really finding that customer needs
are changing in relation to the final system delivery to the customer, often referred to as implementation, or
SI. It has been said for quite a long time that the so-called traditional waterfall approach of letting thecustomer define the requirements and then writing the specifications will be replaced by the agile approach,and this is finally starting to happen.
Therefore, we would like to work with many partners who can provide an agile, hands-on type of SI, or
something like that, to match the customer's service requirements. In addition, we are seeing partners whoare starting to provide this kind of hands-on support and turning delivery of that knowhow into a business.
MC [Q]: I will move on to the next question. It consists of two questions as well, and I will read from the firstpoint.
Competition for talent is intensifying in the IT industry. Do you plan to increase personnel and hiring
expenditure?
Secondly, would you say that the adoption of distinctive HR systems and work styles has been effective not
only in retaining human resources, but also in acquiring talent?
Nakane [A]: My name is Nakane and I am in charge of Human Resources.

Regarding the first point, we plan to increase recruitment expenses. Over the past three years, we haveincreased the number of people we employ globally by approximately 13%, and we have increased ourinvestment in personnel costs accordingly.
Not only that, but as is the case globally, per capita salary levels are also gradually rising in Japan. Cybozu isalso raising its salary levels while keeping a close eye on the market, so we are investing in personnel expenses.
Accordingly, the amount of investment in recruitment expenses will also increase. This is the first point.
Secondly, regarding our HR systems, I think you asked about the staff turnover rate because it is being held at
between 3% and 5%, and it is definitely having a positive effect on attracting talent. In particular, we feel thatafter the COVID pandemic, we are now able to acquire personnel with the basic premise that we explain in
job interviews that employees can work remotely.
I believe that it is not just about individuals being able to work remotely, but what is important is to be able
to achieve strong results with good teamwork while working remotely. Through trial-and-error during COVID,
we, too, have come to be able to work more productively in this hybrid way of working, either remotely or by
coming to the office in real life. I feel that this has been successful, both in terms of acquiring personnel andretaining them.
MC [Q]: I will move on to the next question. The next person also has two questions, and I will read the firstone.
What are the factors behind the significant increase in earnings forecast for this fiscal year? In addition to theeffect of increased revenue, does this mean that investments in TV commercials, recruitment, etc., will becurtailed?
Second, some have pointed out that the deteriorating macro environment is making it difficult to invest, sowhat is the reason you are budgeting for increased profits at this time?
Hayashi [A]: My name is Hayashi and I am in charge of finance and accounting. I will answer your first andsecond questions together, since both of them refer to the forecast profit increase for the current fiscal year.
As for the reasons, as mentioned in the question, we invested heavily in advertising in 2021 and 2022 aimed
at lifting brand recognition in a short period of time based on the BET! policy. As per the new slogan Mr. Aono
just announced at the end of his presentation, we are making a major shift in strategy from 2023 onward,
shifting from BET! to 25BT, thereby pivoting to medium- to long-term investment.
Regarding personnel expenses, which you pointed out, our direction is not to reduce them, but rather toincrease them over the medium to long term.
For the current fiscal year, we have forecast an increase in profit due to both the curtailment of advertising,in which we invested heavily in 2021 and 2022, and the effect of increased revenue.
MC [Q]: I will move on to the next question. It is a question for Mr. Aono.
What do you see as the biggest risk going forward for the further adoption and expansion of Kintone?
Aono [A]: I would like to talk about the risks to Kintone’s expansion, domestically and internationallyseparately.
As for Japan, the Japanese market itself is still lagging behind in DX, and if the momentum for DX stalls, it will
have an impact on our business. However, at this point, there is a strong appetite for DX, and we feel that
there is still a lot of room for us to continue to expand our business.

As for global business, we have great confidence in our ability to expand it. We have been making investments
in Greater China, Asia, and the US as we go along. We have gradually gained customers, at a crawl, and now
have about 850 customers in the US and 1,000 customers each in Greater China and Asia.
To grow the business offshore, I believe we need a strong ecosystem similar to the one in Japan. In that sense,
the global partnership with Ricoh this time gives us great expectations for expansion. However, it is just the
beginning, so we will continue to strive forward. It is unprecedented for a Japanese cloud vendor to be activeon the global stage, so we would like to manage to make our mark.
MC [Q]: I will now move on to questions from the general viewing audience. I'll read out the first question.
The financial results included disclosure of sales by product, and for the first time you announced that
Kintone's sales for the previous fiscal year exceeded JPY 10 billion. I know that until now you have been
conscious of your competitors and have had a policy of not releasing this kind of information, so what kind ofchange in strategy did you have?
Company Representative [A]: Thank you for your question regarding financial indicators.
Cybozu's basic policy is to minimize the information gap between internal and external information as muchas possible, but over the past few years we have been struggling between this policy and our competitive
strategy.
We decided to disclose the figures because we believe that revealing the detailed business structure of Cybozu
to the public once Kintone broke through the JPY 10 billion mark would help win trust all round thereby
contributing even more to the expansion of our ecosystem and business.
MC [Q]: I will move on to the next question.
In ASCII's joint interview with Ricoh, you mentioned that you want to triple Kintone sales by 2025. Kintone
sales in 2021 were about JPY 8 billion, so are you intending to increase them to JPY 24 billion by 2024? How
feasible is this, and what percent of sales would you anticipate Kintone's overseas sales would account for atthat point in time?
Kuriyama [A]: I will answer this question.
I just read the article myself, and it is the sales figure for 2025, not 2024. The comment is in reference to sales
in the three years 2023, 2024, and 2025. We are still working on the exact figures, but we imagine the figure
will be in a range close to the JPY 24 billion you have mentioned.
In regard to how feasible this is, looking at the current market environment and the status of Kintone, I feelthat reaching this figure won’t be easy, but it is not impossible.
The percentage of total sales that overseas sales are projected to account for is between 10% and 15%, but
the actual figure we are aiming for is closer to 20%.
That is my answer to this question.
MC [Q]: I will move on to the next question.
I felt that the capital and business alliance with Ricoh was one of the most significant moves in your mostrecent strategy. While our expectations are high, we are uneasy about the concern that this may cause
conflicts with other partners.

For example, if, among the three major partners, only Ricoh has its own brand of Kintone, and perhaps under
different economic conditions, this could create a sense of unfairness. Do you have any measures to ensure asense of unfairness does not develop among the partners? Also, to avoid differences, would you consider
allocating treasury stock to FUJIFILM Business Innovation, Otsuka Corporation, etc.?
Kuriyama [A]: I will answer this question too.
With regard to this alliance, we will be focusing our efforts on the US this year, as mentioned earlier in Mr.
Aono's announcement, with an eye toward the global arena. Naturally, there are also activities within Japan
too, but we recognize that our partnership is in anticipation of the global market.
You are well informed about our three major partners in the domestic market as stated in your question, andin terms of whether there is any impact or not, we have been careful to ensure that there is no impact. We
also believe that we are promoting this alliance in a manner that eliminates all factors that impede freecompetition. The client base is naturally different, and their daily activities are different, so there is no
immediate direct impact.
Regarding stock allocation, that is a conversation that involves another party, and there is a possibility thatthe other party will say they do not want stock even if we offer to allocate it to them. We are not sure that
there is zero possibility of such an allocation, but at this point, we have not had any such discussions.
MC [Q]: I will move on to the next question.
I understand that there are two broad types of capital policies that could be envisaged for the overseas
expansion of Kintone. The first is to accept outside capital injected directly into Kintone Corporation, which isa wholly owned subsidiary, to raise money for sales and marketing expenses. The second is to allocate theremaining treasury shares to partners and others, as in the case of Ricoh, and for additional investment tothen be made by the well-capitalized Cybozu itself, making 100% [inaudible].
Which of these two scenarios is closer to your current thinking?
Company Representative [A]: I will answer the question.
The question is it about overseas business development and the capital policy for that purpose, correct?
At present, we do not have any particular plans for either number one or number two, as we will continue todevelop our business with the funds we have raised through capital increases to date and projected businessincome.
However, as you asked, which is more likely, number one or number two, I think number two is closer basedon the current situation surrounding Cybozu.
MC [Q]: I will move on to the next question.
I believe there are 5.14 million treasury shares held even after the allocation to Ricoh. If you plan to disposeof treasury stock in the future, the higher the market capitalization, the more capital you will get at the timeof disposal, so are you considering any measures to communicate appropriate corporate value to the stock
market?
Compared to competing cloud-related companies, such as RAKUS, Money Forward, freee, and Sansan, Cybozu
is unfairly undervalued, and we feel that Cybozu's appeal has not been communicated to the stock market.
Please let us know if there are any improvement measures that would make it easier, especially for domestic
and foreign institutional investors, to invest in Cybozu stock.

Lastly, IR is the responsibility of a listed company, and as a Cybozu fan, I would be happy to have more
opportunities to learn about the Company if you would at least disclose semi-annual financial results and holdsemi-annual financial results meetings, as is generally done by listed companies. What do you think?
Aono [A]: Thank you for your questions and comments.
As for the stock price, we believe that it will converge at an appropriate level as we go about our businessappropriately and also as we engage in IR appropriately. So, we do not have any specific measures to improve
the stock price at this time.
On the other hand, based on your requests, we would like to be more proactive about IR from now on.
Specifically, we would like to hold a group meeting for institutional investors in September to answer
questions about our business and other matters. As soon as the details are decided, we will announce themon our website, etc. Please wait for a while.
MC [Q]: I will move on to the next question.
In 2022, a person who had been involved in Cybozu's corporate branding for more than 10 years left theCompany. Were there any background organizational or governance issues?
Nakane [A]: I will explain about this.
First of all, since this is a personal matter, I would like to refrain from going into details. However, I would liketo respond that this was not due to any organizational and governance issues as asked in the question.
MC [Q]: I will move on to the next question.
I have a question regarding the forecast for the next fiscal year. I believe that the main reason for the strong
performance forecast for the next fiscal year is not just because you will be pursuing sales and profits, butthat you have already made investments for the next stage and advertised to increase awareness, etc. Whatdo you think has worked for your company?
Hayashida [A]: My name is Hayashida from the Business Marketing Division of Cybozu.
As you asked, we have worked hard to develop our advertising. However, I think that the market environment
was characterized by the establishment of a no-code/low-code market and the trend toward in-house DX. We
believe that the synergy in this area has been successful.
MC [Q]: I will move on to the next question.
It is about Mr. Aono. President Aono's Twitter account is not influential enough to effectively publicize oradvertise, but it is a risk to Cybozu, as when you make any controversial statement, it results in flaming, which
I think is a risk to Cybozu. It would be great if, like Elon Musk, Mr. Aono was charismatic and influential enough,that the company would get a whole lot of free advertising when his tweets escalated into flames.
Hayashida [A]: I would be happy to answer this question as well.
In fact, we have heard such comments within the Company as well, and at the end of last year, dozens ofvolunteer employees, including Mr. Aono, engaged in much discussion on this topic. As a result, we asked Mr.
Aono to choose his words more carefully, and I think that probably the tone of what he says on Twitter now
is completely different to what it used to be.

However, we do not prohibit our employees from expressing their individual ideals or engaging in suchactivities at their own responsibility, and I believe that such activities will continue to be engaged in, not only
by Mr. Aono, but also by various other employees. So, when a problem arises, we would like to resolve it bydiscussing it internally, without hiding it.
MC [Q]: I will move on to the next question.
One thing about Mr. Aono. In President Aono's political activities, he made many enemies by making
discriminatory remarks on Twitter against those with whom he disagreed, saying it will be very difficult if yourboss finds out what you said you online right-winger.
This kind of thing is really a nuisance to Cybozu and should be stopped immediately. It is badly regarded not
only by shareholders, but also among Cybozu employees on OpenWork. What does the Company think ofthese remarks of his?
Hayashida [A]: I, Hayashida, will answer this one as well.
As I mentioned earlier, we are hearing a variety of opinions within the Company, and we will continue to listen
to them, discuss them on a case-by-case basis, and correct what needs to be corrected.
Aono [A]: Excuse me. I recognize that my Twitter comments have caused quite a few problems, and I would
like to improve them and correct what needs to be corrected. However, I am not aiming to be Elon Musk, butrather, in order to create a society brimming with teamwork, I must say what I need to say regardless of who
I am talking to. I would like to raise the level of sophistication in the way I say things. I would appreciate yourcontinued input and advice. Thank you.
MC [Q]: I will move on to the next question.
Should we be concerned about the risk of reduced sales through other copier manufacturer-affiliateddistributors as a result of Ricoh becoming a shareholder?
The answer might overlap with that given earlier, but let me ask again.
Kuriyama [A]: I think this is probably the same question as the one we received earlier, but we are working
with due consideration for the domestic market, so at this point, we do not think there will be a major impact.
MC [Q]: I will move on to the next question.
You have made statements, such as that you are forgoing sales, which runs directly counter to the concept of
the TSE Prime. Why did you choose to be listed in the Prime section of the TSE?
In addition, have there been any examples in the past year of things that were raised during dialogue withinvestors that have been reflected in the business?
Hayashi [A]: I, Hayashi, will answer this.
Rather than forgoing sales, we intend to convey that our company vision comes before sales. We would liketo convey that it is not that we do not consider sales to be of any importance at all, nor do we intentionallyforgo sales.
In addition, we have not had a lot of meetings with individual institutional investors. We provide opportunities
to deepen understanding of our business policies and answer questions through open discussions, but fromnow on, we would like to hold group meetings like the one I just mentioned in order to take our dialogue withinstitutional investors to the next level.
The disclosure of sales by product, as mentioned in the previous question, has been requested not only byinstitutional investors, but also by individual investors, so we have decided to disclose this information in lightof our strategy and other factors.
MC [Q]: I will move on to the next question.
This may be a similar question, but what is the reason for disclosing figures for sales by product, sales throughpartners, etc., for the first time? For example, is it that since you are now at a size that ranks with competitors'
services, the situation is such that giving specific numbers is not a disadvantage, but conversely, an advantage?
Hayashi [A]: This is Hayashi.
This may overlap with the previous point, but while we have always wanted to eliminate the information gap
between internal and external information as much as possible, we have not been able to disclose thisinformation due to strategic considerations with our competitors.
However, as I mentioned earlier, Kintone has just exceeded the JPY 10 billion mark, so we are releasing thefigures to the public in the hope that it will help people understand Cybozu's business structure at a higher
level of resolution, thereby helping to win trust in Cybozu and promote our business.
MC [Q]: I will move on to the next question.
You mentioned that you will be developing guidelines for the use of social networking services by Cybozu
executives and employees, but when will they be published?
Hayashida [A]: This is Hayashida.
We are still working on the development of the guidelines, and we have not yet decided when we will makeit public, as some aspects have not yet been finalized at this point in time. There is the issue of how far toallow various types of statements to go. If anything, employees often speak out about what they want to do
to achieve the vision. We are considering whether to prohibit that or to what extent we should be stricter.
We apologize that we do not have a set date for publication at this time.
MC [M]: Since there are no additional questions at this time, we will conclude the question-and-answer
session. Thank you very much for your questions.
Finally, I would like to inform you of the following: The slides and video of today's presentation will be available
on the IR page of our official website at a later date.
There are no questions that we were unable to answer within the time today, however, we do post thequestions we receive at other times along with the answers on the IR Inquiries page. If you have any additionalquestions about this financial results briefing, please contact us at IR Inquiries, and we will make yourquestions, along with the answers, available to the public. Please feel free to post your questions.
This concludes the Cybozu financial results briefing for the fiscal year ended December 2022. Thank you verymuch for reading to the end.
[END]

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Document Notes
1.

Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides ananswer from the Company, or [M] neither asks nor answers a question.