Progress and Outlook ofMedium‐term Business Plan
(April 2022 ‐ March 2025)

July 21, 2023

ZUKEN Inc.
Tokyo Stock Exchange, Prime Market
Securities code: 6947

Summary of Progress and Outlook

1

First Year Progress Report and Outlook(1) Sales and operating profit reached record highs for the second
consecutive year(2) No change in basic policies and numerical targets of the plan(3) Global IT investment in automation and energy conservation areexpected to remain strong because of firm driven by DX and smart
engineering(4) Steady progress with the MBSE business in Japan, continuing
investment in development activities at Zuken Vitech and Zuken(5) Seek opportunities in the three‐dimensional integrated circuit (3DIC)
market2

Topics
Corporate event in North America by Zuken Vitech and Zuken USA(June 5‐8, 2023, Scottsdale, Arizona) Presentations by the customers of both companies, including AppliedMaterials, Lockheed Martin, Northrup Grumman, Sandia National
Laboratories and others
 Interaction among the customers of both companies through presentations,hands‐on demonstrations, design competitions and other activities
 The Zuken and Vitech development teams exchanged views about a
GENESYS roadmap based on their knowledge about the market and theneeds of customers
3Report on the First Year of the Plan

4

Medium‐term Sales and Operating Profit Targets(Millions of yen)

Sales

(Millions of yen)

50,0007,000

45,00040,00035,000Operating Profit

35,07331,50230,00025,00037,00040,000

6,000

6,000
5,000

↑
33,500(Plan)

4,000

20,0003,000

15,0002,000
Three‐year plan
CAGR: 8.3%

10,000
5,000

4,428
3,904

4,600

↑
4,100(Plan)Three‐year plan
Operating profit:+2.1 billion yen

1,000
00FY3/22(Result)

FY3/23(Result)

FY3/24(Plan)

FY3/25(Plan)

FY3/22(Result)

FY3/23(Result)

FY3/24(Plan)

Notes: Average exchange rates in FY3/23 were 135 yen/USD and 141 yen/EUR.
Foreign exchange rate assumptions for the FY3/24 plan are 130 yen/USD and 138 yen/EUR.

5Record‐high sales and operating profit
No revision of FY3/24 forecast due to FY3/23 results consistent
with the plan, excluding the influence of FX

FY3/25(Plan)

Change in Operating Profit(Billions of yen)

Change in grossmargin ratio Higher personnel andother expenses
‐0.32
‐0.79
Higher sales
+2.47

3.90

‐0.83
Higher expenses dueto the impact offoreign exchange

4.42
Breakdown of personnel andother expenses

Change in grossmargin ratio+0.04 Higher personnel
expenses‐0.78
Higher sales
Increase in other expenses
‐0.40
+1.32

4.60

+0.52

+0.18

FY3/23

FY3/24(Plan)

Resumption of sales activities: +0.39
R&D expenses:+0.27
Personnel expenses:+0.18

FY3/22

6

Change in Rankings of Primary Client Industries(for sales in Japan except client services)FY3/23

FY3/22

FY3/21

FY3/20

1. Automobiles

Vehicle electronics

Electrical machinery

Communications
equipment

2. Electronic components

Electrical machinery

Communications
equipment

Vehicle electronics

3. Office equipment

Automobiles

Electronic components

Electrical machinery

4. Vehicle electronics

Office equipment

Office equipment

5. Inspection equipment

Construction machinery

Consumer products

Construction
machinery
Automobiles

6. Vehicle electronics

Industrial machinery

Vehicle electronics

Electronic components

7. Automobiles

Office equipment

Consumer products

Office equipment

8. Electronic components

Consumer products

Consumer products

Automobiles

9. Automobiles

Construction
machineryConsumer products

Automobiles

Automobiles

Automobiles

Vehicle electronics

10. Construction machinery

7Sales to manufacturers of automobiles and automotive
components increased in the second half of FY3/23

Order Backlog
Order backlog by solutions and services(Billions of yen)

14.0
140
120
12.0

12.93
Client services (Maintenance)

YoY+16.2%

11.13

Solutions

9.35

10.0
100

8.33
80
8.0

7.23

60
6.0

4.25
40
4.0

2.94

2.88

FY3/19FY3/20

3.46

4.28 +0.6%

20
2.00

FY3/21

FY3/22

Order backlog at a record‐high level
8FY3/23

Major Products of Each Category
Major Products

Product Categories Used in Financial Reports
Design Automation

Printed Circuit Board
design solutions
Printed Circuit Board

CR‐8000 Design Force
CR‐8000 DFM Center
CR‐8000 Design Gateway

Circuit design solutions

Wire harness

Data Management

IT solutions
Client services*

E3.series/E3.infinite
Cabling Designer series
DS‐2 series
GENESYS
FortiGate
PreSight/visual BOM

Divided among the above categories*Client services are recurring revenue from the maintenance and updates of licenses.

9Sales by Product Category vs. FY3/22

Product categoryFY3/22

FY3/23

19,263

20,887+1,624+8.4%(5,893)(7,032)+1,138

19.3%

Data Management

12,23914,186+1,946

15.9%

Total Sales

31,50235,073+3,571

11.3%(Millions of yen)

Design Automation(of which WH Design)

10

YoYchange(%)

YoYchangeReference: Sales by Solution Category in Financial Reports

Sales (Millions of yen)

FY3/22

FY3/23

YoY change

Printed Circuit Board
design solutions

4,262

4,123

‐138
Design Automation

Circuit design solutions

6,884

7,817+932

IT solutions

7,198

8,290+1,092

Data Management

Client services

13,156

14,841+1,685

Total

31,50235,073+3,571

Client services aredivided into theabove twocategories

11Changes in Sales by Product Category(Billions of yen)

Data Management
Electronic DesignAutomation

+0.48

31.5

Wire Harness

+1.94
+3.57

+1.13

35.0

Design Automation

FY3/23

FY3/22

Low sales vs. prior year due todemand in FY3/22 created by theresumption of projects and to higher
sales of options for remote work
environments in FY3/22
Major customers are continuing toshift to the CR‐8000

12

Data Management

Wire Harness Design

Electronic Design Automation

Companies are making big
investments in supply chain
reforms and smart manufacturing,
chiefly in the automobile andsemiconductor/electroniccomponents industries
In Japan, now accepting orders
for the E3.inifite, a new product,in the automotive OEM sectorStrong sales involving security
solutions (handled by an affiliatedcompany) and data management
for wire harnesses
Large volume of IT investmentsfor overhauling engineering
processes (including MBSE) as
part of DX demand in themanufacturing sectorGrowth Sector (1)Sales Associated with Model‐based development

Overview
 Steady growth of the MBSE businessin Japan (industries, businessdomains) Promoting system for managing
electronic design requirements tocurrent customers using CR products(GENESYS‐CR)(Millions of yen)
1,400

Sales associated with model‐
based development
YoY¥1,080 million +28.7%

1,200

1,000

¥840 million
800

600400 Increasing variations of proposals in
different industries and businessdomains→Considering the provision of
products and services in a mannerthat matches the requirements,
objectives and expertise ofindividual customers
132000FY3/22
22年3月期

FY3/2323年3月期MBSE関連
MBSE

MBD関連
MBD(SystemsEngineering)(Model‐basedDesign)Growth Sector (2)Consulting‐driven Customer Engagement Business Sales

Overview
 In Japan, DX investments are strong in allindustries. The installation and upgradesof core systems (enterprise resourceplanning) are creating a large volume ofIT expenditures for design andmanufacturing operations. Midsize aswell as large companies are increasingly
using product data management (PDM)
for raising the efficiency of businessprocesses.

PDM business sales(Millions of yen)
6,000

YoY
¥4,900 million +23.9%

5,000¥3,950 million
4,000

3,0002,000 Strong sales to companies in themanufacturing equipment sector due tofirm demand concerning supply chain
reforms and smart manufacturing.
Investments for wire harness design data
management increased. (Europe, Japan)

141,0000

FY3/22
22年3月期

FY3/2323年3月期Changes in Sales by Region(Billions of yen)

Average exchange rates in FY3/22 were 112 yen/USD and 131 yen/EUR.
Average exchange rates in FY3/23 were 135 yen/USD and 141 yen/EUR.

Foreign exchangeimpactOverseas businessJapan+1.97+0.49+5.3%+1.10+3.57+8.9%31.5
Japan 22.1
Europe 5.4
USA2.2Asia
1.7

FY3/221535.0

FY3/23

Changes in Overseas Sales

Average exchange rates in FY3/22 were 112 yen/USD and 131 yen/EUR.
Average exchange rates in FY3/23 were 135 yen/USD and 141 yen/EUR.

exchange
Asia Foreign
impact(Billions of yen)

Europe+0.47

9.3
EuropeUSA
Asia

+8.7%
5.4
2.2
1.7

USA

(including direct salesin China)

+0.08

‐0.05

+3.7%

‐3.4%

+1.10

10.9

Sales in local currencies

FY3/23

FY3/22Europe2416

Consistently firm demand forautomation and optimization ofengineering processes due topositive business situations
among industrial machinery
manufacturers, the primary usersof the E3.series
Data management sales tocurrent customers increased too+1.60USA



Stable base for earnings due toTBL (Time Based License)
revenue; sales activities withaircraft manufacturers started torecover
Increasing sales to manufacturing
equipment producers as undersound capital expenditures in theU.S. manufacturing sectorAsiaA slow recovery among customers
in Asia, where most are inconsumer product industries, butthere are signs of an economic
upturn mainly in China and South
Korea
Higher levels of investment
expected in the automotive (EV)sectorOutlook for Business CategoriesThe size of potential projects is increasing as companies aim to
implement design and manufacturing process innovations from a
medium to long‐term perspective→As a result, the number of projects that include data management
solutions is increasingSales have started for the E3.infinite, the new wire harness design system
for the automotive OEM sector→Increasing activities to capture orders by accurately targeting
technology trends such as electrifications, the horizontal specialization,and the platform designIn North America, started receiving orders of E3.series through nVent
HOFFMAN for industrial machinery manufacturers



MBSE: Companies are becoming increasingly aware of the benefits ofMBSE
Continuing investments to make GENESYS even more competitive andappealing17Capital Policies and Profit Distributions

Maintain financial
soundness to enable
flexibility and speed forinvestments for growth Progressive dividend policy Business operations withemphasis on efficient useof capital

Execute the best possible measures for returning
earnings to shareholders based on results ofoperations, market conditions and all otherapplicable factors

18Corporate Profile

Zuken has started selling the 3D EMC Adviser, the industry’s firstelectromagnetic compatibility (EMC) analysis tool that combines electricaland mechanical factors. (May 2023)

19

Corporate Profile
ZUKEN Inc.
Established:
Capital:Employees:

December 17, 1976
10,117,065,000 yen
437 (non‐consolidated)
1,538 (consolidated) (As of March 31, 2023)
Tokyo Stock Exchange, Prime MarketSecurities code: 6947
 A Japanese engineering software vendor with global presence More than 40 years of experience in the electronic design automationindustry (Backed by a consistently sound financial position) In‐house development of technologies along with the use of alliances,
M&A and other measures to acquire new technologies quickly as
needed20

History
December 1976

Established as Zukei Shori Gijutsu Kenkyusho Inc.

June 2009

Announced the release of “PreSight,” a new product of PLM Solutions.

June 1978

Developed Japan's first CAD/CAM system "Create 2000" for the design ofprinted circuit boards.

May 2010

Concluded an equity alliance with Lattice Technology Co., Ltd., making Zuken
the second‐largest shareholder after Toyota.

November 1983

Established ZUKEN AMERICA Inc. (now ZUKEN USA Inc.) in the United States.

June 2011

Announced the release of "visual BOM" that integrated bill of materials
technology with the ultra lightweight 3D format XVL.

January 1988

Developed a new CAD system "CR‐3000."

October 2011

Announced worldwide the release of the "CR‐8000," a new generationelectronic device design platform.

October 1991

Registered in the Second Section of the Tokyo Stock Exchange as a first EDA corporation.

December 2014

Concluded a capital and business alliance with Toyo Business Engineering
Corporation (now Business Engineering Corporation).

January 1992

Established ZUKEN EUROPE GmbH (now ZUKEN GmbH) in Germany.

March 2015

Established ZUKEN INDIA Pte. Ltd. in India.

January 1992

Established ZUKEN KOREA Inc. in Seoul.

July 2015

Took over YDC Corporation's CADVANCE business (CAD and PDM operations).

August 1992

Established ZUKEN SINGAPORE Pte. Ltd. in Singapore.

April 2016

April 1994

Developed EDA vertical integration solution "CR‐5000."

December 2017

Acquired all the shares of Alfatech Inc. (now Zuken Alfatech Inc.).

June 1994

Acquired all the shares of Racal‐Redac Group (11 companies) of the United Kingdom.

August 2019

Acquired all the shares of Vitech Corporation (now Zuken Vitech Inc.) of USA.

September 1994

Moved up to the First Section of the Tokyo Stock Exchange.

October 2019

Established ZUKEN Modelinx Inc.

March 2000

Acquired all the shares of INCASES Engineering GmbH.

November 2021

Business Engineering Corporation became an equity‐method affiliate
following an additional investment by ZUKENMarch 2002

Started provision of a wire harness design environment for the automotiveindustry.

April 2022

Stock listing was moved to the Prime Market because of the restructuring ofthe Tokyo Stock Exchange into new market segments

June 2002

Established Shanghai Technical Center in Shanghai.

February 2004

Announced the release of "ePLM Platform DS‐2," a PLM solution speciallydesigned for the electrical and electronics industries.

August 2005

Established ZUKEN TAIWAN Inc. in Taiwan.

May 2006

Acquired all the shares of CIM‐TEAM (now ZUKEN E3 GmbH) of Germany.

June 2007

Released "V54EE" based on "Catia V5."

21

The PreSight Division was spun off as Zuken PreSight Inc.

Global Locations and Affiliates in Japan
Head Office/Central Research Facility: Tsuzuki‐ku, Yokohama
Locations in Japan:

Yokohama, Osaka and Nagoya

Overseas Locations:

21 locations, including 6 R&D sites

Domestic Affiliates:

7 (Zuken Tec Inc., Zuken Netwave Inc., Zuken Elmic Inc., Zuken PreSight Inc.,
Zuken Alfatech Inc., Zuken Modelinx Inc., Business Engineering Corporation)

EUROPEUK, Germany, Switzerland,France, Italy, Netherland, Poland

AMERICAS

Korea

Japan
China:Sales OfficeTaiwanAsia

India
Singapore

22Zuken Group
Zuken Tec
Overseas subsidiaries
EuropeNorth America
Asia

Technology services(including support for model‐based development activities)

Design/manufacturing link
Knowledge/AI23

3D mechanicaldesigns
BIM

Security

Telecommunications

Storage

Embedded softwarePrecautions
Information in this presentation includes forward‐looking statements about results ofoperations and other items. These statements are judgments of the Zuken Group basedon information available when this presentation was prepared and include potential risks
and uncertainties. Therefore, actual results of operations and other aspects of future
performance may differ greatly from these forward‐looking statements. Risk factors thatmay affect the Zuken Group’s performance include, but are not limited to, changes in theeconomies of various countries, capital expenditures of the group’s customers, changes
in the demand for the group’s products, progress with the development of new products,competition with other companies, and foreign exchange rate movements.
The performance targets in this presentation are not forecasts or current outlooks for
future results of operations. These figures are goals that the Zuken Group will attempt toreach by implementing its business strategies.

24

Contact

ZUKEN Inc.
Corporate Marketing Division
2‐25‐1, Edahigashi Tsuzuki‐ku, Yokohama
Tel: +81‐45‐942‐1511