Financial Results
for the 6 Months Ended
June 30,2022
July 28,2022
SIOS ,Corp.
（Stock Code: 3744 on Standard Market of Tokyo Stock Exchange）© SIOS Corp. All rights Reserved.

Table of Contents
1. Summary of Business Results for the Six Months
Ended June 30, 2022
2. Updated Business Forecasts for FY2022
3. Review of the Six Months and Growth Strategies Going
Forward© SIOS Corp. All rights Reserved.

1. Summary of Business Results for the
Six Months Ended June 30, 2022

© SIOS Corp. All rights Reserved.

Consolidated Financial Results
for the 6 Months Ended June 30,2022（In millions of yen）

Results for the
6 months
ended June
30,2021

Net Sales

8,079

Gross profit

2,486

Operating income

295

Ordinary income

316

Profit attributable toowners of parent

234

EBITDA
ROIC(annualized)

334
16.9%

Results for the
6 months ended
June 30,2022

Change

7,256
2,298
-225
-207
-339
-157
-16.1%*EBITDA: Operating profit + Depreciation + Amortization of goodwill*ROIC: Operating profit after tax / (Shareholders’ equity + Interest-bearing debts)© SIOS Corp. All rights Reserved.

%Change-823-10.2%

-188

-7.6％

-520

－

-524

－

-574

－

-492

－

－

－
4

Consolidated Net Sales（In millions of yen）

8,079

1H FY2021

7,256

Down
10.2% YoY

1H FY2022© SIOS Corp. All rights Reserved.

5

Consolidated Operating Profit, EBITDA,
and R&D Spending（In millions of yen）

353

293
295

334

・ Operating profit was
down by ¥520M YoY.

-225
1H FY2021

Operating Profit-157

・ EBITDA was
down by ¥492M YoY.

1H FY2022

EBITDAR&D Spending© SIOS Corp. All rights Reserved.

6

Consolidated Balance Sheets（In millions of yen）

Current
assets5,774(including
cash anddeposits of
3,148)

Investment andother assets 653

⚫
⚫

Total
liabilities
4,752(includinginterestbearing
debts of314)
Total net
assets
1,897

Current
assets5,287(including
cash anddeposits of
2,738)

Total
liabilities
4,552(includinginterestbearing
debts of250)

Investment andother assets 605

Total net
assets1,551

Total assets Total liabilities
and net assets
6,649
6,649

Total assets Total liabilities
and net assets
6,104
6,104

◼ Property, plant and equipment 121◼ Intangible assets 100◼ Property, plant and equipment 113◼ Intangible assets 97

As of December 31, 2021

As of June 30, 2022

Current assets：A decrease of 410 million yen in cash and deposits.
Current liabilities：A decrease of 321 million yen in accounts payable trade.
© SIOS Corp. All rights Reserved.

7

Analysis of Consolidated Cash Flows（In millions of yen）

3,148

-218

88
-86

2,738

-193

Cash and cash
equivalents asof December
31,2021

Cash flows fromoperatingactivities

Cash flows frominvestingactivities

Cash flows fromfinancing
activities© SIOS Corp. All rights Reserved.

Effect ofexchange ratechange on cash
and cashequivalents

Cash and cash
equivalents asof June 30,2022

8Year-on-Year Changes in Cash Flows
Cash flows fromoperating activities
Net amount of cash
generated or used
BreakdownAmount of cash
generated¥218M net cash used••

Cash flows frominvesting activities¥86M net cash used

Cash flows fromfinancing activities¥193M net cash used

Cash generated as aresult of a decrease intrade receivables:¥110M
Cash generated as aresult of an increase incontract liabilities:¥220M
Loss before income
taxes: ¥237M•

Cash used to purchaseproperty, plant, andequipment: ¥22M•

Cash used to reduce
trade payables: ¥321M•

Cash used to purchase Cash used to pay dividends:
intangible assets: ¥18M ¥129M•

Cash used to pay
accrued consumption
taxes: ¥143M•

Cash to used topurchase investment
securities: ¥45M

Amount of cash •used© SIOS Corp. All rights Reserved.

Cash used to repay longterm borrowings: ¥61M

9

Open System Infrastructure BusinessNet sales

4,303 million yen, Down 14.9％ YoY（In millions of yen）

⚫ Revenue from OSS*-related products andtheir support services increased YoY.

5,054

⚫ Sales of software products sourced from Red
Hat, Inc.* were down YoY, as high-volume

4,303

sales to corporate clients were sluggish due
to delays in their system development
projects at the height of chip shortages.
⚫ Sales of LifeKeeper* decreased, as strong

sales in the Americas, Asia, and Oceania

1H FY2021

1H FY2022

were more than offset by weak perpetual
license sales in Japan.
Note: See the Glossary on page 35 for descriptions of terms with an asterisk.

© SIOS Corp. All rights Reserved.

10

Open System Infrastructure Business
Segment income

15 million yen, Down 92.9％ YoY（In millions of yen）

Segment profit was down YoY,215

due to decreased sales andincreased personnel expenses.

15
1H FY2021

1H FY2022© SIOS Corp. All rights Reserved.

11

Application BusinessNet sales

2,947 million yen, Down 2.6％ YoY（In millions of yen）

3,024

2,947

⚫ Revenue from the Gluegent series* andsoftware applications for MFP* was up
YoY.
⚫ Sales of the management support

system to financial institutions were
slow.
⚫ The application of the AccountingStandard for Revenue Recognition
1H FY2021

1H FY2022

resulted in a decrease in net sales inthis segment.

© SIOS Corp. All rights Reserved.

12

Application Business
Segment income

Loss of 246 million yen, compared with onincome of 79 million yen the year before（In millions of yen）

Posted a segment loss, due to
79

-246

decreased sales, increased

personnel expenses, and increased
investments in new products andservices.

1H FY2021

1H FY2022© SIOS Corp. All rights Reserved.

13

2. Updated Business Forecasts for FY2022© SIOS Corp. All rights Reserved.

Updated Business Forecasts for FY2022（In millions of yen）

Earlier Forecasts(announced in
February 2022)

Updated
Forecasts

ChangeOperating profit(loss)

100

Ordinary profit(loss)
Profit (loss)
attributable toowners of parent

120

15,000
-550
-500

60

-650

-710

EBITDA

220-640

ROIC (annualized)

3.0%

-420
-24.9%Net sales

16,000© SIOS Corp. All rights Reserved.

-1,000
-650
-620

15

Updated Business Forecasts for FY2022
Reason for change No. 1
Weaker sales of software products sourced from Red Hat, Inc., and the
management support system for financial institutions
Background
Sales of these products have been negatively affected by delays in systemdevelopment projects by corporate clients, which have been caused by longer
delivery lead times for hardware products at the height of chip shortages.
Reason for change No. 2
Increased upfront investments in new Med Tech*and HR Tech* solutions and the
Gluegent series in anticipation of robust growth of the SaaS* market
Background•We have been spending more in advertising and product development for new
HR Tech solutions and been stepping up product development for Med Techsolutions.

•

We have been stepping up product development and marketing for the Gluegent
series.
© SIOS Corp. All rights Reserved.

16

Dividend Rate for FY2022

Annual dividend rate

Projected dividend rate
for fiscal year ending
December 31, 2022

Fiscal Year

Fiscal Year

ended
December 31, 2021

endingDecember 31, 2022

¥15

¥10

(Ordinary dividend: ¥10)
(Commemorative dividend: ¥5)¥10 (unchanged)© SIOS Corp. All rights Reserved.

17

3. Review of the Six Months and Growth
Strategies Going Forward© SIOS Corp. All rights Reserved.

Primary Objective and Management Metrics Established

Primary Management Objective
Under the mission of making the impossible possible for the people of

the world, the SIOS Group works toward achieving its primarymanagement objective of pursuing innovative solutions to resolve issues
affecting people and to contribute to a better society.

Management Metrics
The Group uses EBITDA and ROIC as its key management metrics tocontinue to generate positive cash flow. Positive cash flow enables theGroup to invest in the three driving forces for our growth—people, researchand development, and a corporate culture that fosters innovation—and toreturn profit to our shareholders and stakeholders. Through these efforts,
the Group works toward achieving its primary management objective.
© SIOS Corp. All rights Reserved.

19

Basis for Achieving the SIOS Group Mission
Make the businessfoundation more solid
Raise the level ofCarry out
customer
M&A
satisfaction

Release new
products andservices

Maintain good
relationships
withEnhance existing
stakeholders
products andservices
Make the businessfoundation more solid

Improve performanceon key management
metrics

Generate
positive cash
flows

Increase sales andgross profit
Optimizing SG&A expenses
Reduce interest-bearing
debts

Invest to achieve the mission
Return profit to shareholders andother stakeholders

Invest in people, R&D, and acorporate culture that fosters
innovation
Return profit to shareholders
and other stakeholders

Achieve greater
EBITDA andROIC© SIOS Corporation All rights Reserved.

20

Updates on Key Strategies for FY2022: Part 1
Enhanceexisting
products andservices

Release new
products andservices

Key strategy for FY2022
To continue to invest heavily in expanding the Group’s SaaS
business in order to better serve corporate clients andaccelerate the Group’s growth
To continue to upgrade cloud application for LifeKeepr andother existing products• To step up sales efforts for the Gluegent series• To venture into the Med Tech business•

Updates• We have released a single sign-on (SSO)* solution basedon facial recognition as part of the Gluegent series. (Seepage 25)• We have launched a new Med Tech service. (See page 28)• We have released a new HR Tech solution. (See page 30)© SIOS Corp. All rights Reserved.

21

Updates on Key Strategies for FY2022: Part 2
Enhance existingproducts andservices
Release new
products andservices

Key strategy for FY2022
To continue to pursue cross-selling opportunities for theGroup’s products and services in order to achieve greater sales
productivity
UpdateA dedicated project team has been established to pursue
cross-selling opportunities.

Optimizing SG&A
expenses

Update on Key Strategy for FY2022
The Tennozu Isle Office in Shinagawa-ku, Tokyo, will be closed
in September 2022.

Return profit toshareholders and otherstakeholders

Update on Key Strategy for FY2022
We plan to pay an ordinary dividend of ¥10 per share at year
end.
© SIOS Corp. All rights Reserved.

22Market Updates• Largely triggered by the COVID-19 pandemic, momentum remains strong

for business use of the public cloud as a basis for implementing DX*
solutions.

• The Japanese SaaS market is projected to grow 14% YoY to 1.3 trillion yen

in 2022. (Source: “Cloud Computing Market 2022—Today and Future,”
published by Fuji Chimera Research Institute, Inc.)

The Group’s Growth Strategies Going Forward• We will continue to invest heavily in the SaaS business in H2 FY2022. (Seethe following page)• Focused SaaS products are the Gluegent series, Med Tech solutions, andHR Tech solutions.

© SIOS Corp. All rights Reserved.

23

Continue to strengthen investment in SaaS business【Our B2B Business Domains】

Highpriority
area(continued)

SaaS

Softwarelicensing andsubscription*
services

Systemintegration
services

Sales ofsoftwareapplications
sourced fromoutside theGroup

The SaaS market is projected to maintainstrong growth momentum, buoyed by anaccelerating DX trend in corporate
environments.

Continue to invest heavily in the SaaS business,using our existing B2B products and services asa basis

Focused SaaS products(1) Existing Gluegent series(2) Med Tech solutions (new)(3) HR Tech solutions (new)© SIOS Corp. All rights Reserved.

24

Focused Business ① Gluegent Series
Bolster product offerings in the Gluegent series, including
the Gluegent Flow cloud-based workflow system andthe Gluegent Gate SaaS authentication system,to assist corporate clients in shifting to teleworking and implementing DX solutions

Single sign-on (SSO) based on facial recognition
We have provided AEON Fantasy Co., Ltd. with a single sign-on system that combines our Gluegent
Gate and Japan Computer Vision Corporation's facial recognition solution.
SSO based on facial recognition

Authentication
Employee

Enter anemployeenumberCameraactivated

Facialrecognition
completed© SIOS Corp. All rights Reserved.

SAML
authentication(SSO)

Log-in allowed toGoogle and otherapplications

25

Focused Business ① Gluegent Series
Actions planned for H2 FY2022 (continued)
Step up marketing efforts
Recruit marketing professionals and continue to step up digital marketing
efforts in order to raise awareness of the Gluegent series in the market andincrease orders
Step up product development efforts

Add more engineers to the development team to create and deliver productsthat meet business users’ needs and expectations© SIOS Corp. All rights Reserved.

26

Focused Business ① Gluegent Series【ARR*of the Gluegent Series (In millions of yen) 】
574

624

471
271

2017/06333

2018/06381

2019/06

2020/06

2021/06

2022/06

1. ARR: Annual Recurring Revenue, obtained by multiplying MRR (monthly recurring revenue, which is a predictable revenue that a business counts onreceiving every month from subscriptions) by 12© SIOS Corp. All rights Reserved.

27

Focused Business ② Med Tech
We have started offering the INDIGO NOTE electronic medical records service tomental hospitals to assist with their DX efforts.

INDIGO NOTE
INDIGO NOTE is the first electronic medical
records service in Japan compliant with the
HL7®FHIR® (Fast Healthcare
Interoperability Resource), which is theinternational standard for exchanging
healthcare information between different
systems.

© SIOS Corp. All rights Reserved.

28

Focused Business ② Med Tech
Actions planned for H2 FY2022
Step up product development efforts

Assign more engineers to product development projects to expand service
offerings© SIOS Corp. All rights Reserved.

29

Focused Business ③ HR Tech
We have significantly upgraded our management system for free-address
seating arrangements to YourDesk to offer greater usability.
YourDesk
It offers upgraded centralized managementof free-address seating and teleworking
arrangements for employees on an
intuitive screen.

© SIOS Corp. All rights Reserved.

30

Focused Business ③ HR Tech
We have released the new OurEngage employee engagement survey solution.

OurEngage
OurEngage is an employee engagement survey* solution
designed to assist corporate clients with talentmanagement to increase their enterprise value in the longterm. We began taking pre-orders on June 1, 2022, andreleased it on June 20.

© SIOS Corp. All rights Reserved.

31

Focused Business ③ HR Tech
Actions planned for H2 FY2022
YourDesk• Step up digital marketing efforts and upgrade the product website• Solicit business partners to expand sales channels• Add functions to enhance UI and UX, and achieve wider compatibility with othersystems

OurEngage• Step up digital marketing efforts and upgrade the product website• Solicit distributors to expand sales channels• Add functions to enhance its usability© SIOS Corp. All rights Reserved.

32

Appendix© SIOS Corp. All rights Reserved.

About SIOS Corporation
SIOS is Innovative Open Solutions
SIOS Corporation started as a system integrator that provided solutions based on Linux and other varieties ofopen source software. Today, the company is listed in the Standard Market of the Tokyo Stock Exchange, andserves as a holding company of the SIOS Group, which includes technology firms specializing in software
products and SaaS solutions.
Under the mission of making the impossible possible for the people of the world, the SIOS Group is committed
to pursuing innovative solutions that resolve issues affecting people and contributing to a better society.

Visit https://www.sios.com/en to learn more about us.
Headquarters
CapitalEstablished
No. of employees
Main consolidated subsidiaries

SIOS Building, 2-12-3 Minami Azabu Minato-ku, Tokyo, Japan
1,481 million yen
May 23, 1997
489 on a consolidated basis (as of December 31, 2021)
Japan:
SIOS Technology, Inc.
© SIOS Corp. All rights Reserved.

U.S.A.:
SIOS Technology Corp.

34

Glossary
Page

Term

10

OSS

10
10

Description
Abbreviation for open source software, Software whose source code, which is thefundamental component of the program, ismade available for free and can be used, modified, and redistributed.

Software products sourced from Open-source software products developed by Red Hat, Inc., a provider of open-source
solutions.
Red Hat, Inc.
LifeKeeper

A failover software product that automatically switches a failed primary server to a backup
server.

12

Gluegent seriesService products designed to assist corporate clients in achieving greater operational
efficiency using cloud solutions. The series includes the Gluegent Gate cloud-based
management of user IDs, the Gluegent Flow cloud-based workflow system, and the
Gluegent Apps Group Scheduler, which incorporated a function to manage schedules ofteam members into Google Calendar.

12

Software applications for
multifunction printers (MFPs)

A multifunction printer (MFP) is a piece of office equipment that incorporates print, scan,copy, and fax capabilities into one unit. The Group develops, markets, and updates
document management software applications, such as Quick Scan and Speedoc, that run
on an MFP.

16

SaaS

16

Med Tech

Short for medical technology.
It refers to technology that delivers medical services through software applications.

16

HR TechShort for human resources technology.
It refers to technology that delivers human resources management through software
applications.

Software as a Service. A software licensing and distribution model that allows users toconnect to and use cloud-based software applications over the internet.

© SIOS Corp. All rights Reserved.

35

Glossary
Page

Term

Description

21

Single sign-on (SSO)

An authentication method that enables a user to authenticate with multiple web and cloudservices by using just one set of user IDs and passwords

23

DX(Digital transformation)

A process in which a company uses data and digital technology to transform its products,
services, and business models to more effectively respond to constantly changing businessenvironments and deliver greater value to customers and society as well as to transform its
business processes and organizational structure and culture to gain greater competitive
advantage.

24

Subscription business model

31

Employee engagement
surveyA business model that charges customers a recurring monthly or annual fee to access asoftware product or service.

A survey to measure the connection employees have toward their work, teams, departments,
and company© SIOS Corp. All rights Reserved.

36

Cautionary Statement
Forward-looking statements about the Company’s business outlook contained in this document reflect
management’s assumptions and judgments made on the basis of available information, and may include
risks and uncertainties. We caution that significant risks and uncertainties could cause actual performance
to differ materially from what is discussed in the forward-looking statements. Significant risks anduncertainties that might affect our performance include, but are not limited to, the economic environment
and market conditions in which we operate.

For inquiries about this document
Call the IR Section of SIOS Corporation on 03-6401-5111(+81-3-6401-5111 from outside Japan)
or fill in and send an online inquiry form available at:https://mk.sios.com/SIOS_Inquiry_english.html© SIOS Corp. All rights Reserved.

37