1Q FY12/2023 Business Results Briefing Material

Broadleaf Co., Ltd (3673)
May 10, 2023

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.|

Table of Contents

1

Business Results for 1Q FY12/2023

2

Earnings Forecast for FY12/2023

3

Progress of the Medium-Term Management Plan (2022-28)

4Topics5

Supplemental Information

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

2

1

Business Results for 1Q FY12/2023

2

Earnings Forecast for FY12/2023

3

Progress of the Medium-Term Management Plan (2022-28)

4Topics5

Supplemental Information

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

3

Business Results for 1Q FY12/2023

Overview of 1Q FY12/2023

Business Environment

Favorable

・Mobility sector: Demand for cloud services designed for DX has been increasing.
・Non-mobility sector: IT Investment has recovered compared to the early stage of COVID-19 crisis.

Business results

Better than expected・Cloud-based software for mobility sector
Since sales are recorded on a monthly basis, they grew as planned under favorable business environment.
⇒ Revenue of “Cloud service” in 1Q: 935 million yen (YoY +80.9%)・Adoption rate of 5-year lump-sum contracts* for cloud-based software for mobility sector
FY2022: 29% ⇒ FY2023 1Q: 48%⇒ Cash flow from operating activities in 1Q shifted to an upward trend (YoY +109 million yen)・Packaged software for non-mobility sector
Since sales for 6-year usage rights are recorded in a lump sum, they exceeded the expectation
under favorable business environment.
⇒ Revision of packaged system sales forecast for 1H: 5 billion yen (+400 million yen compared to initial forecast)

Progress of Mid-term Management Plan

On track

・Performance plan: Performance largely exceeded initial forecast in FY2022.
The Company made a good start in FY2023 and plans to return to profitability in FY2024.
・Initiatives: The Company is promoting penetration of released cloud-based software as planned,
while promoting development of the remaining cloud-based software.
* For cloud–based software, even in the case of a 5-year lump-sum contract, sales are recorded on a monthly basis.
Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

4・The current business environment continued to be favorable against a backdrop of growinginterest in DX in the mobility sector and a recovery in demand from the COVID-19 crisis in
the non-mobility sector.
・Regarding packaged software for non-mobility sector, the 6-year license fee is recorded as
sales in a lump sum, so it largely influences the Company’s financial result. As a result, theperformance for 1Q exceeded the Company’s expectation, and the earnings forecast for 1H
FY2023 was revised upward.
・In the 2H FY2023, the Company will continue promoting sales of packaged software to
exceed full-year earnings forecast.
・Regarding its medium-term management plan, the Company changed to a monthly
subscription-type business model in 2022 (the first year of the plan), and constructed the basefor future growth. On top of this, financial result was above the initial forecast.
・In 2023 (the second year of the plan), the Company continues to promote the penetration ofcloud-based software, and succeeded in making a good start toward achieving profitability in
2024.
・Along with the penetration of cloud-based software, the number of clients adopting 5-year
lump-sum contracts for cloud-based software increased, so operating cash flow shifted to an
upward trend.

Business Results for 1Q FY12/2023

Overview of Consolidated Financial Results
・Revenue increased and loss decreased by capturing demand for cloud services designed for DX, while conducting upfront investment.

FY2023
1Q(Millions of yen)
Revenue

FY2022
1Q

YoY change

YoY ratio

3,629

3,254

+375

+11.5%

Cloud service

935

517

+418

+80.9%

Packaged system

2,694

2,737

-43

-1.6%

Cost of sales

1,483

1,195

+288

+24.1%

Gross profit

2,146

2,060

+87

+4.2%

SG&A expenses, etc.

2,682

2,797

-115

-4.1%

Operating profit *

-536

-737

+201

-

Profit before tax *

-541

-646

+105

-

Profit attributable to owners of the parent*

-405

-570

+165

-

-4.58 yen

-6.48 yen--

Basic earnings per share**minus (-) represents loss

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

5・Revenue increased by 11.5% year on year to 3,629 million yen.
・Operating loss was 536 million yen, while loss attributable to owners of the parent was 405
million yen, which both improved year on year.

Business Results for 1Q FY12/2023

Quarterly Trends in the Sales of “Cloud service”
・Sales increased by 80.9% year-on-year due to transition of existing clients to cloud-based software and acquisition of new clients.

Quarterly sales of “Cloud service”(Millions of yen)

Software service
Main breakdownMarketplace

Software service

・Cloud-based software for mobility sector
・Monthly subscription-type software services, such as DX solutions+418 (+80.9%)
Explanation
935
861

・Switching of mainstay business support software to monthly subscription contracts
progressed as planned.
・Acquisition of new clients was steady.

721

517

529
697

775

548
347

Marketplace

366
Main breakdown

・Electronic ordering platform for auto parts
170

163

173

164

160

1Q

2Q

3Q

4Q

1Q

FY2022

FY2023・Settlement agency service

Explanation
・The sales remained flat as the transaction volume of recycled auto parts market
has peaked out.
・Next-generation version of ordering platform will be provided in the future.

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6

・Sales of “Cloud service” increased by 418 million yen (80.9%) year on year to 935 million
yen.

・”Software service” drove the sales growth.
・In addition to transition of existing clients to monthly subscription contracts including cloudbased software, acquisition of new clients was steady.
・As the transition of existing clients is planned to continue until 2028, the upward trend in“Software service” is expected to continue over the next 5 years.
・The increase in sales was also attributable to the progress in the adoption of various DX
solutions, including software for the Electronic Book Storage Act.
・Sales of ”Marketplace” were flat in accordance with the plan.
・By switching to the next-generation version of the ordering platform, which is IT base for thepurchase and sale of parts, sales are expected to increase in the future.

Business Results for 1Q FY12/2023

KPI of Cloud-based Software for Mobility Sector
・The pace of user growth was in line with plan for both the number of companies and the number of licenses.
Cloud transition rate

Number of licenses(license)
8.6%

4.6%

6.5%
3,490

2.9%

2,523
1,790

1.2%
995
307
End of 1Q

End of 2Q

End of 3Q
FY2022End of 4Q

End of 1Q
FY2023

Average monthly license sales

End of 1Q

End of 2Q

End of 3Q
FY2022End of 4Q

End of 1Q
FY2023User retention rate(yen/month)
99.6%

Disclosed from FY2023
17,308March

19,148June

21,047

September
FY2022

21,27921,165

DecemberMarch
FY2023

1Q*
FY2023* Converted to average monthly rate for the current quarter

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7

・The cloud transition rate shows how many percent of target clients for cloud-based software
actually switched to cloud-based software. It is expected to reach 100% in 2028.

・As the cloud transition rate increases, the number of users of cloud-based software will
increase, and the number of licenses will increase proportionately.
・Average monthly license sales are expected to increase over the next fiscal year due to theprovision of cloud-based software for auto parts dealers and auto recycle shops, which tend
to have higher unit prices, and the increasing number of major auto maintenance shops
switching to cloud-based software.
・The user retention rate is an indicator of how many percent of clients at the beginning of the
fiscal year are continuing to use the software until the end of the fiscal year. For 1Q, existingclients account for almost 100%, but since there are new clients that install the software on a
trial basis, including these users, the rate becomes 99.6% on a monthly basis.
・As the user retention rate is also expected to stabilize when the cloud transition rate increases,
the Company will closely monitor it so that it does not fall below the current level.

Business Results for 1Q FY12/2023

Quarterly Trends in Sales of “Packaged system”
・Mobility sector is switching to provision of cloud-based software.
・Sales of software for non-mobility sector were strong.

Quarterly sales of “Packaged system”(Millions of yen)

Software sales

Software sales

Operation and support service

Main breakdown・Leasing sales of packaged software

Explanation-43(-1.6%)

2,737

2,737

887

867

1,850

1,870

・Subsidiaries and sales agents also ceased leasing sales of packaged software
for mobility sector.

2,826

2,905

831

953

1,994

1,952

2,694

・Acquiring of orders of packaged software for non-mobility sector progressed
ahead of plan.

754

Operation and support service

1,941

Main breakdown
・Ancillary services of packaged software
1Q

2Q

3Q

4Q

FY2022

1Q
FY2023

Explanation
・Sales moved to “Cloud service” side in line with the transition to
cloud-based software.

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8

・Sales of “Packaged system” declined by 43 million yen (1.6%) to 2,694 million yen.
・In the previous fiscal year, Tajima and the Company’s sales agents sold packaged software
for auto maintenance shops and auto body shops under lease contracts. From this fiscal year,
they are providing monthly subscription contracts in those cases as well. Therefore, shift
from sales of “Packaged system” to sales of “Cloud service” progressed further.
・Meanwhile, the Company continued to sell packaged software for non-mobility sector, anddemand recovered more than expected.
・Since “Operation and support service” consists of ancillary services for packaged software,
the sales is transferred to “Software service” sales along with transition to cloud-based
software.

Business Results for 1Q FY12/2023

Quarterly Trends in the Number of User Companies and Licenses of DX Solutions
・User companies in mobility sector increased due to the launch of cloud-based software, which is highly competitive.
・The number of licenses of DX solutions, which can be used regardless of the sector, also increased by offering them along with cloud-based software.

Number of software user companies

Mobility sector

Non-mobility sector

Licenses of DX solutions

Total

Dencho.DX

BL.Homepage

Google Workspace™
2,358

39,54739,34538,54938,35438,098

2,189
1,924
1,724
1,459

1,449

1,078
36,37336,65036,85837,64337,855

920
912

890

864

958

978

4Q

1Q
FY2023

225
1,725

1,704

1Q

2Q

1,691

1,702

3Q

4Q

FY2022

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1,692

1Q
FY2023

1Q

2Q

3Q
FY2022

9・In the mobility sector, the number of user companies continued to grow steadily as a result offavorable business conditions and the launch cloud-based software, which is highly
competitive and can be installed flexibly.
・Licenses for various DX solutions that can be introduced regardless of the client’s industry
also increased due to strengthening of proposals that meet clients’ needs.

Business Results for 1Q FY12/2023

Factors behind Changes in Operating Loss
・Loss decreased due to increase in revenue, which absorbed upfront expenses such as investment in development andstrengthening of management infrastructure for future growth.

Operating loss

Cost of sales(Millions of yen)・Increased due to upfront expenses to strengthen IT infrastructure
in preparation for future service expansion
FY2023
1Q

FY2022
1Q

Increase inrevenue+375

SG&A expenses, etc.

Abolishment ofshareholders
benefits+255

・Operating activities expenses
Travel expenses and social expense increased due toactive sales activities and sales promotions.
Others-4

Increase incost of sales-288
Increase in-737
operating activities
related expenses-73
Increase inoutsourcing
Increasing amortization
expenses
expenses of cloud services
-64
-59

-536

・Outsourcing expenses
Increased due to outsourcing of back-office business operations, etc.

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10・Amortization expenses of cloud services increased, as the scope of provision of cloudservices including cloud-based software expanded year-on-year.

・In addition, in order to prepare for the increase in software usage in the future,
upfront costs including enhancement of performance and expansion of functions for cloudservices increased.
・As a result, cost of sales increased by 288 million yen.
・SG&A expenses decreased by 115 million yen due to the abolishment of the shareholder
benefit program, despite an increase in operating activities-related expenses as a result of
increased sales activities.
・The increased costs are positioned as upfront investments for future growth, such as
strengthening of cloud services, sales promotions, and management infrastructure inpreparation for service expansion.
・As a result, operating loss in 1Q FY2023 decreased by 201 million yen.

Business Results for 1Q FY12/2023

Balance Sheet Status
・As the adoption rate of 5-year lump-sum payment for cloud-based software for mobility sector rose (FY2022: 29%, 1Q FY2023:48%),
the balance in contract liabilities increased.

FY2023End of 1Q(Millions of yen)

FY2022Year-end

YoY change

Major breakdown of increase/decrease

Current assets

6,518

6,555

Non-current assets

28,373

26,980+1,393

Total assets

34,89133,535+1,356

Current liabilities

7,594

6,583

Short-term interest-bearing debts +975
+1,012 Contract liabilities +437
Operating and other payables -120

Non-current liabilities

3,923

3,291

+632 Long-term interest-bearing debts +631

Total liabilities

11,517

9,873+1,644

Total equity

23,374

23,662-288

Total liabilities and equity

34,89133,535+1,356

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-37 Cash and cash equivalents -156
Property, plant and equipment +729
Intangible assets +419

Loss -414
Dividend payout -88

11・Property, plant and equipment increased due to an increase in lease assets,
and increase in intangible assets due to investment in software development.
As a result, assets rose 1,356 million yen from the end of FY2022, to 34,891 million yen.
・Property, plant and equipment increased by 729 million yen since headquarters rent wasbooked as a lease asset due to the change in IFRS16.
・Debt increased by 1,644 million yen to 11,517 million yen due to an increase in interestbearing debt resulting from borrowings from banks and an increase in contract liabilities.
・Contract liabilities are a positive indicator of cash flow since they mainly consist of advances
received from the 5-year lump-sum payment of cloud-based software.
・The percentage of clients who adopted a 5-year lump-sum payment for cloud-based software
was 29% in FY2022, but rose to 48% in 1Q FY2023.
・Total shareholders' equity fell by 288 million yen to 23,374 million yen due to the reflectionof the loss in 1Q and the payment of the year-end dividend for FY2022.

Business Results for 1Q FY12/2023

Cash Flows Status
・As the adoption rate of the 5-year lump-sum payment of cloud-based software for mobility sector rose (FY2022: 29%, 1Q FY2023:48%),
the cash-flow balance improved.

FY2023
1Q(Millions of yen)

FY2022
1Q

YoY change

Major breakdown of increase/decrease

Increase in trade and other receivables -1,867
Increase in trade and other payables +880
Increase in contract liabilities +470

Cash flow from operating activities

136

28

+109

Cash flow from investment activities

-854

-768

-86

Increase in payments for acquisition of intangible assets -22

Cash flow from financing activities

561

574

-12

Decrease in cash dividends paid +325
Net increase in short-term loans payable -281

Free cash flow

-718

-740

+22

Cash and cash equivalents at end of the period

3,301

3,358

-57

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12・Operating cash flow increased by 109 million yen year-on-year to 136 million yen.
・Operating cash flow shifted to an upward trend due to an increase in contract liabilities,
which correspond to advances received for cloud-based software, despite the decline in salesof packaged software.
・Cash used in investing activities was 854 million yen, an increase of 86 million yen year-onyear.
・Investment amount remains unchanged from the previous fiscal year since the Company
continues to invest in the development of cloud-based software, etc.
・Cash from financing activities was 561 million yen due to short-term borrowings.
・The balance of cash and deposits at the end of 1Q was 3,301 million yen, which is sufficientfor business operations.

1

Business Results for 1Q FY12/2023

2

Earnings Forecast for FY12/2023

3

Progress of the Medium-Term Management Plan (2022-28)

4Topics5

Supplemental Information

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13

Earnings Forecast for FY12/2023

Consolidated Earnings Forecast (First Half of FY2023)
・Upward revision of 1H forecast was conducted considering progress up to 1Q and the reevaluation in the timing of booking of expenses.

1H FY2023

FY2023(Millions of yen)

YoY change
Revised forecast

1H FY2022

Initial forecast

1Q

2Q forecast

Revenue

7,100

6,700

+400

3,629

3,471

6,520

Cost of sales

2,950

2,850

+100

1,483

1,467

2,459

Gross profit

4,150

3,850

+300

2,146

2,004

4,061

SG&A expenses, etc.

5,700

6,000

-300

2,682

3,018

5,460

Operating profit *-1,550-2,150+600-536-1,014-1,398

Profit before tax *-1,600-2,200+600-541-1,059-1,458

Profit attributable to owners of the parent *-1,400-1,900

+500

-405

-995

-1,109-15.80 yen-21.45 yen--4.58 yen

-11.22 yen-12.57 yen

Basic earnings per share**minus (-) represents loss

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14

・The Company revised 1H earnings forecast upward.
・The Company’s recurring sales already accounts for more than 70% of the total sales.
In addition, transition of clients to monthly subscription contracts continues in FY2023.
Therefore, the initial forecast for FY2023 was weighted toward the 2H.
・However, leasing sales of packaged software for non-mobility sector progressed ahead ofschedule. In addition, the timing of recording expenses was reviewed.
・In light of these factors, the Company adjusted the balance between 1H forecast and 2H
forecast, and changed the ratio from 45:55 to 47:53, which is about the same as the result ofprevious fiscal year.
・In 2H, the company will strive to acquire new clients to cover the sales acquired ahead ofschedule.

Earnings Forecast for FY12/2023

Sales Forecast by Service Category (First Half of FY2023)
・Forecast for “Packaged system” was revised upward as leasing sales of packaged software progressed ahead of schedule.

1H FY2023

FY2023(Millions of yen)

YoY change
Revised forecast

Cloud service

1H FY2022

Initial forecast

1Q

2Q forecast

2,100

2,100

-

935

1,165

1,046

1,800

1,800

-

775

1,025

713

Marketplace

300

300

-

160

140

333

Packaged system

5,000

4,600

+400

2,694

2,306

5,474

Software sales

1,300

1,100

+200

754

546

1,754

Operation and support service

3,700

3,500

+200

1,941

1,759

3,720

7,100

6,700

+400

3,629

3,471

6,520

Software service

Total

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15

・The forecast for “Software service” remains unchanged since it consists of monthly
subscription sales. Progress is good, so probability of achievement increased.

・The forecast for “Software sales” was revised upward by 200 million yen, reflecting the
progress in sales of packaged software.
・The forecast for “Operation and support service,” which consists of ancillary services for
packaged software, was also revised upward by 200 million yen, since the sales for databaseand support service was accumulated more than expected.

Earnings Forecast for FY12/2023

Consolidated Earnings Forecasts (Full-year)
・Forecasts for revenue and operating profit remain unchanged, and the probability of achievement became higher than at the beginning of the term.

FY2023Full-year
forecast(Millions of yen)

FY2022Full-year

FY2023

FY2022

YoY change
1H forecast

2H forecast

First half

Second half

Revenue

15,00013,833+1,167

7,100

7,900

6,520

7,312

Cost of sales

6,100

5,346

+754

2,950

3,150

2,459

2,887

Gross profit

8,900

8,487

+413

4,150

4,750

4,061

4,425

SG&A expenses, etc.

11,60011,384

+216

5,700

5,900

5,460

5,924

Operating profit *-2,700-2,897+197-1,550-1,150-1,398-1,499Profit before tax *-2,800-3,005+205-1,600-1,200-1,458-1,548

Profit attributable to owners of the parent*-2,400-2,431+31-1,400-1,000-1,109-1,323-27.07 yen-27.54 yen--15.80 yen-11.27 yen-12.57 yen-14.97 yen

Basic earnings per share**minus (-) represents loss

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16

・The Company adjusted cost of sales and SG&A expenses since the timing of booking costs
was reviewed. However, revenue, operating loss and below are unchanged at this point.

・Progress is going ahead of schedule, so the probability of achieving full-year earning result
increased.
・Since the Company’s sales consist mainly of recurring sales, the fact that sales is progressing
ahead of schedule means that recurring sales are accumulating at a faster pace than expected.

Earnings Forecast for FY12/2023

Sales Forecast by Service Category (Full-year)
・There is no change in the forecast for any of the categories, and “Cloud service” sales are expected to steadily increase.

FY2023Full-year
forecast(Millions of yen)

Cloud service

FY2023

FY2022Full-year

FY2022

YoY change
1H forecast

2H forecast

First half

Second half

5,900

2,628

+3,272

2,100

3,800

1,046

1,582

5,250

1,958

+3,292

1,800

3,450

713

1,244

Marketplace

650

670

-20

300

350

332

337

Packaged system

9,100

11,205-2,105

5,000

4,100

5,474

5,730

Software sales

2,200

3,539

-1,339

1,300

900

1,754

1,784

Operation and support service

6,900

7,666

-766

3,700

3,200

3,720

3,312

15,00013,833+1,167

7,100

7,900

6,520

7,312

Software service

Total

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17

・For all categories, forecast remains unchanged at this point.
Progress is currently favorable, so the probability of achievement increased.

・Sales of “Software service” is expected to rise more than twice year-on-year.
・Full-fledged turnaround in sales of “Marketplace” is expected to start from the next fiscal
year or later, as planned.
・Sales of “Packaged system” will decline as planned, as sales of packaged software underlease contracts is limited to non-mobility sector from FY2023.
・Sales of “Operation and support service” will decline as clients of packaged software switch
to cloud-based software, but those sales will move to sales of “Cloud service.”
・Therefore, the Company expects overall sales to start increasing after bottoming out in 2022,
and increasing revenue is expected to continue until 2028, the final year of the medium-term
management plan.
・Also, the Company is beginning to implement measures to ensure that revenue and profit
continue to grow from 2029 onward after the medium-term management plan.

Earnings Forecast for FY12/2023

Breakdown of Changes in Operating Loss
・The Company plans to conduct active sales activities and promotion activities along with investment in development andstrengthening of management infrastructure, which will lead to better profitability in the future.

Operating loss

Cost of sales(Millions of yen)・Amortization expenses of cloud services will increase in line withthe launch of cloud services.

FY2022

FY2023
Forecast

Increase inrevenue+1,167

Abolition ofshareholders
benefits+256
Increasing thecost of sales-754-2,897

Increase inpersonnel
expenses-167

Increase in amortization expense of cloudservices -118
Increase in development costs -378

・Development costs will increase due to the development of
new cloud services.

SG&A expenses, etc.

Others-305-2,700・Personnel expenses
Recruitment activities and work style reforms will be promoted.
・Others
Sales and promotional activities, as well as service infrastructure
will be strengthened.
・Abolition of shareholders benefits
The Company abolished shareholder benefits from FY2022.

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

18・Increase in revenue due to the accumulation of recurring sales will contribute to decrease inloss.

・On the other hand, amortization expenses of cloud services is expected to increase in linewith the expansion of the scope of services provided, including cloud-based software, and thecost of sales is expected to increase by 754 million yen year-on-year, due to the rise indevelopment costs recorded as cost of sales.
・Further, while the abolishment of the shareholder benefit program is a factor behind thedecrease in loss, expenses related to operating activities are expected to increase.
・Since the current fiscal year, which is the year revenue starts to increase, is a good timing tostrengthen sales and promotional activities, the Company plans to implement upfront
investment in order to accelerate the increase in revenue in the future.
・Therefore, SG&A expenses are expected to increase by 216 million yen.
・As a result, operating loss is expected to decrease by 197 million yen.

Earnings Forecast for FY12/2023

Dividends Forecast
・The dividends forecast for FY2023 is undetermined.

Dividend per share(Yen)

Explanation

FY2023(Forecast)

・The Company plans to announce forecast once a reasonable calculation
becomes possible in light of the progress of the medium-term management
plan and the status of retained earnings.

FY2022

Interim dividend

Undetermined-

Year-end dividend

Undetermined

1.00

Undetermined

1.00

-

-

Annual dividend
Consolidated dividend
payout ratio

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19

・Dividends for FY2023 have not been determined for both the interim and the year-end
dividends.

・Forecasts are scheduled to be announced when it becomes possible to make reasonablecalculations in light of the progress of the medium-term management plan and the situationof internal reserves.

1

Business Results for 1Q FY12/2023

2

Earnings Forecast for FY12/2023

3

Progress of the Medium-Term Management Plan (2022-28)

4Topics5

Supplemental Information

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

20

Progress of the Medium-Term Management Plan (2022-28)

Medium-term Management Plan (2022-28): Performance Plan
・The Company will achieve record-high performance in FY2026, with a target of operating margin of 40% and profit of 8 billion yen in FY2028.
・Performance in FY2022 exceeded the initial forecast, and performance in FY2023 is also expected to exceed the initial forecast for 1H FY2023.

FY2022
Plan(Billions of yen)

Revenue

Cloud service

FY2022
ResultFY2023
Forecast

FY2024Plan

FY2025Plan

FY2026Plan

FY2027Plan

FY2028
Plan

12.3

13.8

15.0

18.5

22.0

25.5

29.0

32.5

2.6

2.6

5.9

10.4

15.2

19.9

25.0

29.1

Packaged system

9.7

11.2

9.1

8.1

6.8

5.5

4.0

3.4

Operating profit *

-4.8

-2.9

-2.7

1.0

3.3

6.7

10.0

13.0

Operating margin

-

-

-

5%

15%

25%

34%

40%

-5.0

-2.4

-2.4

0.6

2.0

4.2

6.3

8.0

Profit attributable to owners of theparent**minus (-) represents loss

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

21

・The Group possesses excellent client assets and competitive cloud-based products.
・For cloud-based products, the Group will further enhance competitiveness by continuing to
expand the menu.
・There are already resources to sell products as well as management infrastructure forbusiness operations.
・From this perspective, medium-term management plan has a high certainty of achievement.
・In 2026, the Company plans to reach record highs, and using this as a milestone, it plans toreach a level of operating profit of 13 billion yen and profit of 8 billion yen in 2028.
・The final year of the Company‘s management plan is 2028, but it will continue to expand its
cloud services that utilize "Broadleaf Cloud Platform" as the starting point, in order tocontinue expanding its earnings thereafter.
・This will be an additional element to the performance plan, so the Company plans to disclose
the information at an appropriate timings through press releases and other media.

Progress of the Medium-Term Management Plan (2022-28)

KPI of Cloud-based Software: Measures
・4 indicators show the progress of penetration of cloud-based software, which is the key to achieving the performance plan,
are generally on track to meet their targets. Measures for further acceleraration are as follows.

Cloud transition rate
1Q FY2023 : 8.6%

Number of licenses
Target for 2024:

40%

1 ・Release of remaining cloud-based software under development⇒ Promote the migration of clients who use multiple types of software.

1Q FY2023:

Targets for 2024:

3,490 licenses

24,000 licenses

1 ・Release of remaining cloud-based software under development⇒ Promote the transition of middle-to-large sized clients who tend to adopt
more licenses per company.

2 ・Enhancement and addition of functions of released cloud-based software⇒ Promote the transition of clients of packaged software under monthly contracts.

Average license monthly sales
1Q FY2023:
21,165 yen/monthTargets for 2024:

23,000 yen/monthUser retention rate
1Q FY2023: 99.6%

Target for 2024: 99% or more

1 ・Promotion of cloud transition
1 ・Release of remaining cloud-based software under development⇒ Software for auto parts dealers and auto recycle shops tends to have higher
average unit prices than software for auto maintenance shops and auto body shops.

2 ・Enhancement and addition of functions of released cloud software⇒ After the launch of cloud-based software, the number of new clients who try
the software increased.
Since the number of cloud-based software users is small at the moment,cancellations by these users influence the user retention rate.
However, it is expected to stabilize as the number of cloud-based software users
increases as cloud transition advances.

⇒ Promote the transition of clients who need to use many functions.

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

22

・The target for the cloud transition rate at the end of 2024 is 40%. Current figures are 8.6%,
but since many clients will switch from 2024 to 2025, it is expected to accelerate in 2024.

・On the assumption of switching to cloud-based software that will be launched in the future,some users are temporarily using packaged software under monthly subscription contracts.
At the timing of the launch of products, these users will promptly switch to cloud-based
software.
・Auto parts dealers and auto recycle shops tend to install multiple licenses per company, so
the number of license is expected to grow largely in 2024.
Therefore, the number of licenses is expected to increase from 3,490 licenses to 24,000
licenses by the end of 2024.
・Major auto maintenance shops who are scheduled to switch to cloud-based software in the
future, and auto parts dealers and auto recycle shops basically have higher unit prices.
・Furthermore, as the ratio of existing clients out of cloud-based software users increases, theaverage unit price will rise, so the average monthly license sales will also rise from 21,165
yen per month to 23,000 yen per month level in 2024.
・Similarly, as the ratio of existing clients out of cloud-based software users by increases, user
retention rate is expected to trend upward from the current level of 99.6%.

1

Business Results for 1Q FY12/2023

2

Earnings Forecast for FY12/2023

3

Progress of the Medium-Term Management Plan (2022-2028)

4

Topics5

Supplemental Information

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

23

Topics

An Interactive AI Function is added to Broadleaf’s Cloud Services
・Combining OPEN AI's ChatGPT with Broadleaf's large language models and knowledge databases,
the Company developed an interactive AI function which was incorporated into cloud services and began trial operations in May 2023.

Challenges that the mobility sector is facing

Broadleaf’s services(Above image is not real )Mechanics in the mobility sector needDue to chronic shortage of human

to cope with the evolution of

resources, it is difficult to secure

automobiles (electric vehicles,

time to improve skills

1

the interactive AI function to streamline client' operations.

autonomous driving)2

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

Contribute to the improvement of productivity in the sector by using

Example: When you hear abnormal noise from tires during driving,mechanics can use it to identify possible causes.

24

・As announced on April 28, Broadleaf’s cloud services was equipped with an interactive AI
function.

・The Company combined OPEN AI‘s Chat GPT with large language model which are trainedusing the mobility sector data and know-hows accumulated in the Company, and knowledge
database. This enables provision of high-value-added services that can be used to improvethe businesses of its clients.
・The Company incorporated the function into its cloud-based software and DX solutions, andbegan trial operations in May 2023.
・Using the function, even inexperienced mechanics and front desks become able to create
highly specialized responses just like experienced mechanics, by utilizing the accumulated
mobility sector data and know-hows.
・In addition, many proposals can be made to improve the skills of employees.
・One of the challenges auto maintenance shops face is that, despite the fact that cars are
evolving year by year, the labor shortage prevents employees from taking time to improvetheir skills.

・By utilizing interactive AI functions, it becomes possible to improve the operational
efficiency and productivity of auto maintenance shops, and effectively utilize the emerging
free time.
・The Company is also actively recruiting AI engineers, and is working on R&D with a view tointroducing AI techniques and expanding services to areas including those other than themobility sector in the future.

1

Business Results for 1Q FY12/2023

2

Earnings Forecast for FY12/2023

3

Progress of the Medium-Term Management Plan (2022-2028)

4

Topics5

Supplemental Information

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

25

Supplemental Information

Indicators List ①
FY2022(Millions of yen)
1Q

FY2023Cumulative
3Q

1H

Full-year

Recurring sales

2,367

4,766

7,481

10,294

Recurring sales ratio (%）

73%

73%

74%

74%

FY2022

1Q

2,876
79%
FY2023End of 2024
Target(companies)
End of 1Q

End of 2Q

End of 3Q

End of 4Q

End of 1Q

38,09838,35438,54939,34539,547-

Mobility sector*

36,37336,65036,85837,64337,855-Non-mobility sector*

1,725

1,704

1,691

1,702

1,692

-

Cloud transition rate

1.2%

2.9%

4.6%

6.5%

8.6%

40%

Target user of cloud-based software**33,57833,85334,06634,357

34,618-User of cloud-based software

395

991

1,557

2,231

2,973

-

Standard version

274

867

1,433

2,099

2,831

-

Existing client

118

405

721

1,094

1,492

-

New client

156

462

712

1,005

1,339

-

Specific version

121

124

124

132

142

-

User of packaged software

33,18332,86232,50932,126

31,645-

Non-target user of cloud-based software

4,520

4,501

4,483

4,988

4,929

-

Total users of business support software*Mobility sector: auto maintenance shops, auto body shops, auto parts dealers, auto recycle shops, car dealers, auto electrical equipment shops, radiator shops, auto glass shops, and service stations
Non-mobility sector: mobile phone shops, machine tools dealers, travel agencies, and bus operators (13 industries in total)
Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

26

Supplemental Information

Indicators List ②

FY2022

FY2023End of 2024

End of 4Q

End of 1Q

Target(license)
End of 1Q
Cloud-based software license

End of 2Q

End of 3Q

1,306

2,056

2,857

3,620

4,633

-

Standard version

307

995

1,790

2,523

3,490

24,000Existing client

136

483

950

1,381

1,970

-

New client

171

512

840

1,142

1,520

-

Specific version

999

1,061

1,067

1,097

1,143

-

September

December

FY2022

FY2023End of 2024

(yen/month)
March
Average license monthly salesof cloud-based software

June

March

Target

-

-

-

-

-

Standard version

17,30819,14821,047

21,27921,16523,000Existing client

18,80821,15023,326

24,074

23,837-

New client

16,115

17,261

18,47017,90017,701

-

-

-

-

-

-

-

Specific version

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

-

27

Supplemental Information

Indicators List ③

FY2022
1Q

FY2023Cumulative
3Q

1H

Full-year

1Q

When lease contract of packaged software expires*Transition ratio to cloud-based software

-

35%

45%

44%

Transition ratio to packaged software(monthly
contract)

-

65%

55%

56%

76%
24%

*Uses industries that have released cloud-based software (auto maintenance shops, auto body shops, service stations) as a population.

FY2022End of 4Q

FY2023
1Q

Target for
the end of 2024

User retention rate of cloud-based software*

-

99.6%

99% or more

The number of users of cloud-based software

2,099

-

-

*User retention rate for cloud-based software：Weighted average of monthly user retention rate for the quarter
Monthly user retention rate：1－｛The number of cancelled companies in the month/（the number of clients of cloud-based software at the beginning of the term ＋New clients）｝

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

28

Supplemental Information

Medium-Term Management Plan (2022-28): Growth Strategy
Software service
DigitalTransformation

Growth Strategy ①

Auto
Auto
Auto
body maintenance parts
shops
dealers
shops

Cloud penetration
Marketplace
Data
Exchanger
Growth Strategy ②

Logistics Ordering
MaaS

Expansion of services

Finance

API/SDK

Database

2DX
Master data

Software users

Finance companies,
system companies, etc.
(Service provider)

Auto maintenanceshops and auto parts
dealers, etc.

Consumer

ConsumerTransaction data

Broadleaf
Cloud Platform

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

3rd parties29

Supplemental Information

Medium-Term Management Plan (2022-28): Measures
・In order to penetrate the cloud-based products, the Company implements the following measures and manages the progressusing the following KPIs.

1. Cloud transition

2. Market expansion

In 2022, the Company started transition“.c Series,” which has evolved into a total

In addition to the various optional services

to cloud-based software when existing

management system, is deployed not onlyof “.c Series,” the Company provides

clients’ 6-year contracts for packaged

in existing markets but also in new

various software services, including

software expires. The transition ismarkets such as car shop chains, cargroupware, solutions that comply withscheduled to be completed in 2028.

dealers that provide auto maintenance

law and regulation, and website creation

services, and service stations.

tools.

Related KPI

Related KPI・Cloud transition rate

・Cloud-based software licenses
・User retention rate of cloud-based software
Related indicators
・Total number of users
・Retention rate of packaged software users
・The number of cloud-based software users
Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

3. Menu expansion

Related KPI・Average license monthly sales ofcloud-based software
Related indicators
・Number of licenses for major software services30Supplemental Information

Medium-Term Management Plan (2022-28): Sales Plan by Service Category
・Within “Cloud services,” “Software service” is expected to drive the revenue growth.
・”Packaged system” is expected to shrink as conventional software are changed to cloud services.

FY2022
Plan(Billions of yen)

FY2022
ResultFY2023
Forecast

FY2024Plan

FY2025Plan

FY2026Plan

FY2027Plan

FY2028
Plan

2.6

2.6

5.9

10.4

15.2

19.9

25.0

29.1

Software service

1.9

2.0

5.3

9.0

13.6

18.0

22.1

25.0

Marketplace

0.7

0.7

0.7

1.4

1.6

1.9

2.9

4.1

9.7

11.2

9.1

8.1

6.8

5.5

4.0

3.4

Software sales

3.2

3.5

2.2

2.5

2.6

2.5

2.2

2.0

Operation and support service

6.5

7.7

6.9

5.6

4.2

3.0

1.8

1.4

Cloud service

Packaged system

Revenue

12.3

13.8

15.0

18.5

22.0

25.5

29.0

32.5

(Reference) Recurring sales ratio*

80%

74%

85%

86%

88%

90%

92%

94%

*Recurring sales ratio: (Software service, Marketplace, and Operation and support service) / Revenue

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

31

Supplemental Information

Expansion of Broadleaf’s service area
“Seller” and “buyer” groups thatcan be matched by digitization ofordering businessAccounting system
Electronic book storage act

Website creation tool
Mobile phone shops

Ordering of parts
Electronic book storage act

Groupware(GWS)

Auto body shops

Travel agencies

Non-mobility sector

Mobility sector

Broadleaf’sServices

Bus operators
Work analysis
software (OTRS)Human resources system

Website creation tool
Auto maintenance shops
Service stations

Machine tool dealers

Ordering of vehicles

Radiator shops
Groupware(GWS)

Auto electricalequipment shops

Auto recycle shops
Car dealers

Auto glass shops

Financial system

Auto parts dealersetc

Ordering of services
Work analysis
software (OTRS)

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

etc
etc

32

Supplemental Information

Release Plan of Cloud-based Software
Mobility sector (9 industries)

2021 and earlier

Auto maintenance shops
Switch upon expirationof the 6-year lease contract
Auto body shops

2022

2023-2024(Details undetermined)

During the period of
the medium-term
management plan

Cloud-based
software*Service stations**

Medium-term management plan
Cloud Target Industries (5 Industries)
Switch upon expirationof the 6-year lease contract
Auto parts dealers

Auto recycle shops

Auto electricalequipment shops

Car dealers
Auto glass shops

Packaged
softwareSwitch upon expirationof the 6-year lease contract

Radiator shops

Non-mobility sector (4 industries)

Mobile phone shops

Travel agencies

Machine tool dealers

Bus operators

Service Category (Accounting Method):
Package system
Software sales (Lump-sum sales of six years license)& Operation and support service (mainly monthly sales)

Cloud services
Software services (monthly sales)*Sales of packaged software is ended in principle, but it is provided to some users based on monthly fees for a limited time (see page 37)**Service stations became a new market from cloud-based software
Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

33

Supplemental Information

Service Structure (Cloud-based Software Service)
Job license

Company license

Additional Employee
Account

Select the required licenses and options
according to the business size and contents
Select a plan according
to the business size
(mandatory)＋

Select a license
according to the job
type of an employee
経営者

Clients will select a plan from the company license
menu and select necessary job licenses in addition.
When multiple people use the functions of company
license and job license, purchase of additional
employee account is necessary according to thenumber of users. There are also other service menus
such as database and client support.

＋

Added when
multiple people use
the functions ofcompany license andjob license
アカウント①

Start plan

Corporate manager

Account-1

Standard plan

Front desk

Account-2

Total plan

Mechanic

Account-3＋

OptionOnline reservation
Vehicle examinationline linkage

Select required
functions

Database

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

Insurance linkage

ClientsupportSlip
issuance
34

Supplemental Information

Understanding of Cloud Transition Rate
・Switching to cloud-based software will not proceed at a constant pace.
・Clients switch when 6-years contracts expire, so the number of switching users depends on the number of deals 6 years ago.

Understanding of cloud transition rate

Reference: Revenue from FY2016(Millions of yen)

Early stage
Smaller numberof users
will switch to
cloud-based
softwareMiddlestage
中期
Largernumber『.cシリーズ』
of users
切り替え対象
will switch to
ユーザー数が多い
cloud-based
softwareLate stage
Smaller numberof users
will switch to
cloud-based
software

22,586
21,285100%

21,162

20,652

FY2020

FY2021

18,195
16,76040%

FY2022

FY2023

FY2024FY2025

FY2026FY2027

FY2028FY2016FY2017*FY2018FY2019* Tajima Inc. became consolidated subsidiary of Broadleaf Group from 3Q FY2017.
Note) cloud-based software for auto parts dealers and auto recycle shops have not yet been provided.

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

35

Supplemental Information

Understanding of changes in software sales due to cloud transition(The case of auto maintenance shops and auto body shops)

If the Company continues to sell packaged software in 2022 and beyond

If the Company starts selling cloud-based software (Green) from 2022

About 1/6 of user companies renew their contracts each year,
but there is a wave in the number of contract renewals depending on the year.

About 1/6 of companies using packaged software will switch to cloud-based
software each year. Average sales are expected to rise after the transition
completes due to different licensing systems

Sales of licenses (6-year usage rights)
Target of each year: Companies who renew the contract for packaged software (About 1/6 )Accounting method: License fee for 6 years is booked in lump-sum as sales
in the year when the contract is renewed.

Sales of operation and support services
Target of each year: All users of packaged software
Accounting method: Monthly sales

FY2021

FY2022

FY2023

FY2024FY2025

FY2026FY2027

FY2028

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

・For the year in which the contract is switched, the period after the contract isconcluded will be is booked as sales ().
Therefore, sales from the following year onward () will be roughly doubled
because sales for 12 months are fully booked
・Sales of operation and support services are received from users of packaged
software, so it will gradually decline as the transition proceeds.

FY2021

FY2022

FY2023

FY2024FY2025

FY2026FY2027

FY202836

Supplemental Information

Cases for Providing a Monthly Contract of Packaged Software
・Some clients will keep using packaged software under monthly contracts for a limited period.

Case (1): Clients with multiple lease contracts
Example: Client with 6-year contract of packaged software for auto
maintenance shop concluded in 2016 and 6-year contract for auto body
shop concluded in 2017

Case (2): Clients who wish to use a specific function
Example: Client whose contract of packaged software will expire in 2022,
but the desired function is not implemented at the time.

Packaged software
monthly contract

Packaged software (Maintenance)monthly contract

Packaged software(Maintenance) 6-year contract

Packaged software
6-year contract

Cloud-based software(Maintenance/Auto body)monthly contract

Packaged software (Autobody) 6-year contract

Cloud-based software
monthly contract
Switch after desired function is
implemented

Switch after expiration of both contracts

January January
2016
2017

January January
2022
2023

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

January
2016

January2022

37Supplemental Information

Reason for Switching to Cloud-based Software when the Previous Contract Expires
・If existing clients who have lease contracts of packaged software for 6 years switch to cloud-based software before the expiration of the contract,
negative sales will be recorded.

In the case of cloud-based software*

Usage fees - trade-inrecorded as sales

Usage
fee for
6 years

In the case of packaged software with multi-year lease contract

If the contract was changed at
this timing, usage fee will bemonthly while trade-in will be
one year, so trade-in becomeslarger than usage fee, resulting
in recording of a negative sales+Additional license+Volume charge

Usage
fee for
6 years

Usage
fee for
6 years

Monthly
usage fee

Trade-inTrade-inMonthly
usage fee

Trade-in

下取り
Trade-inContract
concluded six
years ago

Fifth year of
the contract

Expiration ofcontract

Contract
concluded six
years ago

Fifth year of
the contract

Switch tocloud-based
software upon
expiration ofcontract

Sales recorded(monthly)

Expiration ofcontract

Renewal ofcontract before
expiration*The same applies when selling packaged software under a monthly subscription contract
Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

38

Supplemental Information

Sales Trend of Cloud Service Expected in the Future

Sales plan of “Cloud service”（Billions of yen）

New platform services※Not included inAuto financing, logistics MaaS, etc. the performance plan
Marketplace
Ordering platform

4.1

Software service
Cloud-based software and DX solutions

2.9

1.9

1.6

25.0
22.1

1.4

18.0
13.6

0.7
9.0
0.7

5.3

2.0

FY2022

FY2023

FY2024

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

FY2025

FY2026FY2027

FY202839

Supplemental Information

Growth Strategy for the Ordering Platform in the Future
・By launching cloud-based software for auto parts dealers and auto recycle shops (seller side), preparation for renewing the ordering platform is done.

Make ordering platform
an industry standard

CAGR

30

% or more

Advance penetration of ordering platform by equipping themas standard function (100% adopted) of cloud-based software

Auto repair partstransaction market
New parts

Recycled parts

850 billion yen 200 billion yen
Usage level of electronic trades

remains low

Equip ordering
platform as
standard function(100% adopted)

Introduce them tovehicle examination
chains with hightransaction volumes, etc.

Introduce them toauto parts dealers andauto recycle shops

Promote usage insmall-to-medium-sizedauto maintenance shops
and auto body shops

Industry standards
EDI adoption rate

28.4%
*Adoption rate of ordering platforms by the Company’s software users
Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

(auto maintenance shops) (as of the end of 2021)

40

Supplemental Information

Explanation of Service Category

Packaged system

Cloud service
Software service

Software sales

・Provision of cloud-based software
・Sales of packaged software under monthly contract
・Provision of DX solutions
・“Dencho.DX,” a solution for Electronic Book Storage Act
・“BL.Homepage,” a website creation tool
・“Google Workspace™,” a groupware

Marketplace・Sales of packaged software under lease contract
・Sales of "OTRS," a work analysis software

Operation and support service

・Provision of electronic ordering platform for auto parts
・ “BL Parts Order System,” a transaction system for auto parts
・ “Parts Station NET,” a transaction network for recycled auto parts
・Settlement agency service

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

・Ancillary services of packaged software such as support service
・Sales of supplies such as forms and toners

41

Supplemental Information

Company Profile
Company nameBroadleaf Co., Ltd

Representative

Kenji Oyama, Representative Director, President and CEO

Listed on

Prime Market of Tokyo Stock Exchange (3673)

SectorInformation and telecommunication

Founded/Established

December 2005/September 2009

Capital stock

7.148 billion yen (consolidated)

Fiscal year

From January 1 to December 31

Business outline

Using proprietary "Broadleaf Cloud Platform" as its infrastructure, the Company provides SaaS cloud services,marketplace-type services, and partner programs that enable functional and service collaboration with various
players.
These services are utilized as IT solutions that lead environmental changes, which are occurring in various
industries including mobility sector, to business opportunities.

Head office location

Floor 8, Glasscube Shinagawa, 4-13-14 Higashi-Shinagawa, Shinagawa-ku, Tokyo

Domestic offices

27 business offices and 3 development centers in Japan

Major subsidiaries

Tajima Inc., SALES GO Inc., etc.

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

42

Disclaimer

The earnings forecast and forward-looking statements contained in this document are forecasts made by theCompany based on information available at the time of preparation of the document and include potential risks
and uncertainties.
Therefore, please be aware that actual results may differ from these results forecasts due to various factors.

Contact Information
Broadleaf Co., Ltd
Investor Relations OfficeE-mail: bl-ir@broadleaf.co.jp

Copyright©2023 Broadleaf Co.,Ltd. All rights reserved.

43