TSE Prime
Securities code: 4687

Second Quarter of Fiscal 2022 Ending March 31, 2023
Financial Results Briefing

November 21, 2022

TDC SOFT Inc.

© 2022 TDC SOFT Inc.

1

１

Overview of Consolidated Financial Results for
the Second Quarter of Fiscal 2022 Ending March 31, 2023

２

Status of Key Measures for the Second Quarter ofFiscal 2022 Ending March 31, 2023

３

Outlook for the Fiscal Year Ending March 31, 2023
Hiroyoshi Kobayashi, President and Representative Director

４

Details of Financial Results for Second Quarter of Fiscal 2022 Ending March 31, 2023
Tsuyoshi Ogaki, Director and Executive Officer in charge of Administration© 2022 TDC SOFT Inc.

2

Important Points in the Second Quarter ofFiscal 2022 Ending March 2023

Performance during the Quarter● All business fields made solid progress reaching net sales of ¥16,793 million, a 14.5% increase year on year.

● Secured ¥1,851 million in operating profit, a 16.6% increase year on year, thanks to revenue growth that has outweighed an
expected increase in personnel expenses for the quarter from aggressive efforts to secure talent.

Topics● Status of Next-Generation SI Business
Steadily expanding primarily in key strategic fields.
Net sales grew 65% year on year to ¥3,930 million and accounted for 23.4% of total net sales, up 7.2 percentage points.
● Medium-Term Management Plan “Shift to the Smart SI Plus” (FY2022-FY2024)
Promoting aggressive investment measures to “expand our business domain,” one of our core strategies.

© 2022 TDC SOFT Inc.

3

１
Overview of Consolidated
Financial Results for theSecond Quarter of Fiscal 2022
Ending March 31, 2023
© 2022 TDC SOFT Inc.

4

１

Overview of Consolidated Financial Results for theSecond Quarter of Fiscal 2022 Ending March 2023

(Millions of Yen)

Net sales
Gross profit
Operating profit
Ordinary profit

Net income

Q2 FY
Ending March2023

16,793
3,674
1,851
1,922
1,301Profit Margin

21.9%
11.0%
11.4%
7.8%

YOY

+14.5%+18.9%+16.6%+16.7%+16.5%Q2 FY Ended
March 2022

14,661
3,090
1,588
1,647
1,117

[Highlights]● Despite expecting an increase in personnel expenses for the quarter due to aggressive efforts to secure talent, wesaw revenue growth from strengthening our framework for offering services through alliances, which secured a 16.6%
year-on-year increase to ¥1,851 million in operating profit.
© 2022 TDC SOFT Inc.

5

１

Overview ofFinancialResults

Highlights of Each Field

IT Consulting & Services+33.9% YOY

Provides solution services to promote customers’ DX, including IT strategy
and systemization concept planning, technical consulting, educational

3,150

2,531
2,500

1,891

Growth driven by cloud-based enterprisesolution services projects.

1,850
1,200
2022.3 2Q

services, in-house cloud applications, BI/DWH, ERP, CRM, etc.

2023.3 2QIT Solutions for Financial Services+13.4% YOY
7,766

8,000

6,849

7,000

Provides integrated IT solutions for the financial industry,including systemization planning, design, development,maintenance, etc.

Growth driven by credit-related next-generation
modernization projects.

6,000
5,000
2022.3 2Q© 2022 TDC SOFT Inc.

2023.3 2Q

１Overview ofFinancialResults

Highlights of Each Field

IT Solutions for Public Corporations+13.4% YOY
4,591

4,800
4,400

and public sectors, including systemization planning, design, development,maintenance, etc.

4,047

4,000
3,600
2022.3 2Q

Provides integrated IT solutions for the distribution, manufacturing, service,2023.3 2Q

Growth driven by development projects for thetransportation industry and the automobile, steel,and other manufacturing industries.

Platform Solutions+1.6% YOY
2,000
1,900
1,800
1,700
1,600
1,500

1,873

1,903

Provides environmental design, construction, operational support, network productdevelopment, network integration, etc. for IT infrastructure

Solid progress on projects to build cloud-relatedinfrastructure.
2022.3 2Q© 2022 TDC SOFT Inc.

2023.3 2Q
7

１Overview ofFinancialResults

Overview of Net Sales by Field
Second Quarter of Fiscal 2021
Ending March 2022
¥14,661 million
1,891
1,873
(12.8%) (12.9%)

4,047(27.6%)

1,903
2,531
(11.4%) (15.1%)

4,591(27.3%)
6,849(46.7%)IT Consulting & Services
IT Solutions for Public Corporations© 2022 TDC SOFT Inc.

Second Quarter of Fiscal 2022
Ending March 2023
¥16,793 million

7,766(46.2%)IT Solutions for Financial Services
Platform Solutions

8

２
Status of Key Measures for theSecond Quarter ofFiscal 2022 Ending March 31, 2023

© 2022 TDC SOFT Inc.

9２

Status of Key
MeasuresMedium-Term Management Plan “Shift to the Smart SI Plus”

We will expand our business into new domains basedaround our existing SI business and acquire the capabilities
needed for new business models in an aim to become a new
type of next-generation system integrator.

Expand ourbusiness domain
We will tap into the latest elemental
technologies to expand our high-value-added
integration services based on the potential
needs of society and our customers.

Create high-valueadded SI services© 2022 TDC SOFT Inc.

KeyStrategies

We will use innovative approaches
to develop an SI process designedto ensure high productivity and highquality.

Support SI model
reforms
10

２

Status of KeyMeasures

Core Strategy 1: Create High-Value Added SI Services

Overview of the Next-Generation SI Business
The next-generation SI business is steadily growing.
The business has grown to make up 23.4% ofnet sales, driven by agile development andcloud-related fields.
This business growth coupled with cost
cutting initiatives have increased profitability
on a consolidated basis.

Changes in Next-Generation SI Business Sales
Ratio and Net Sales
Net sales

Share of sales(%)(millions of yen)
5,000

23.44,000252016.2

Gross profit margin
Operating profit margin
Ordinary profit margin

21.9%（+0.8% YOY)
11.0%（+0.2% YOY）
11.4%（+0.2% YOY）

Next-Generation SI Business
Integration services that capture customers’ potential
needs, tap into the latest elemental technologies in agile
development and security, and provide high-value added
services while also reducing the costs to the user,
including time as well as effort.
© 2022 TDC SOFT Inc.

3,933

3,000

15

11.2
2,000

6.5

1,000

10

2,382

5

1,474846

00Q2 03/2020

Q2 03/2021

Q2 03/2022

Net sales

Share of sales

Q2 03/2023

11２

Status of KeyMeasures

Core Strategy 1: Create High-Value Added SI Services

TOPICS: Key Strategic Field – Agile Development BusinessNet sales have grown steadily in the agile development businessaccompanying increased DX demand from customers.
Agile Development Business Sales
1500

1250
1000

Average growth rate of over 30%
984
over the past three years
776

750

568

500

2500
Q2 03/2021© 2022 TDC SOFT Inc.

Q2 03/2022

Q2 03/2023
12

２

Status of Key
MeasuresCore Strategy 1: Create High-Value Added SI Services

TOPICS: Key Strategic Field – Information System Security BusinessWe offer total security solution
services that are conscious of system
life cycles.

Information system security businesssales are already expected to surpass
the previous fiscal year.
Information System Security Business Sales

Security Diagnostics & Analysis⚫ Web/network security
diagnostics⚫ Penetration testing⚫ System security analysis
Monitoring & Audit Support

Support for Strengthening Governance⚫ Support for establishing aCSIRT⚫ Support for security
education

300+16.5％

353

303

Remedial Solutions⚫ Support for building SIEM
⚫ Web application firewalls
solutions⚫ Cloud security platforms*SIEM: Integrated security log⚫ Container securitymonitoring© 2022 TDC SOFT Inc.

40020003/2022
Full-Year Results

03/2023
Full-Year Forecast13

２Status of KeyMeasures

Core Strategy 2: Support SI Model Reforms

We use innovative approaches to develop an SI process designed toensure high productivity and high quality.
⚫ Improvement of quality standards for our services
We have worked to improve the quality standards of our services by encouraging
the shared use of highly-skilled talent among other measures.

⚫ Elimination of troublemaking projects
We have introduced a system to evaluate project performance and worked to eliminate
troublemaking projects.
Down overQ2 03/2022© 2022 TDC SOFT Inc.

20% YOY

Q2 03/2023

Share of projects with lower profit margins than planned

14

２

Status of KeyMeasures

Core Strategy 3: Expand Our Business Domain

We will acquire the capabilities needed for new business models andexpand our business into new domains based around our existing SI
business domain.
Sales and Marketing Headquarters
Product Sales DivisionMarketing Promotion Division
Business Innovation Headquarters
Service Planning Division
R&D Promotion Division
Consulting Division
Existing SI Business Promotion Headquarters© 2022 TDC SOFT Inc.

*Newly establisheddivisions this fiscal year

Area of Expansion 1:
Sales business selling products
and services that meet a diverse
array of customers’ IT needs

Area of Expansion 2:
Consulting business supporting
customers starting from formulating
strategies for their digitaltransformation
Area of Expansion 3:
Providing managed services that
consolidate and offer a solution for themaintenance and upkeep aspects ofprojects from our SI business

15

２

Status of Key
Measures

Promote Proactive Forward-Looking Investment⚫ Increased investment in technologyWe have increased our investments in elemental technologies to further expand our newbusinesses and high-value added fields.
Areas of Investment in FY2022
・ Agile development, security, UXD, cloud native computing, data analytics platforms
・ Front-end frameworks (newly added FY2022), automation managed services(newly added FY2022)⚫ Investments in human resources
We have been promoting aggressive recruitment measures to secure staff, including doubling
the number of new graduate hires over the previous year. We are also implementing
multifaceted investment policies, promoting investments in education as well as branding aimed
at securing talent.

+¥215 million

Q2 03/2022© 2022 TDC SOFT Inc.

Q2 03/2023

Investments in human resources16

３Outlook for the Fiscal YearEnding March 31, 2023

© 2022 TDC SOFT Inc.

17

03/2023

３ Outlook

Outlook for the Fiscal Year Ending March 31, 2023 (By Field)

IT Consulting & Services+22.5% YOY
5,000

5,200

3,877

4,200
3,200

We expect demand for cloud-based enterprisesolution services projects to continue and sales toremain on a growth trajectory.

2,458

2,200
1,200
03/2021

03/2022

03/2023

IT Solutions for Financial Services+7.7% YOY
18,75016,00013,25010,5007,750
5,000

13,27603/2021© 2022 TDC SOFT Inc.

14,393

15,50003/2022

03/2023

We expect to see solid progress in ourexisting domains and revenue growth fromstrong demand for modernization and legacy
migration projects.

03/2023

３ Outlook

Outlook for the Fiscal Year Ending March 31, 2023 (By Field)

IT Solutions for Public Corporations+8.0% YOY
10,000
9,000
8,000
7,000
6,000
5,000

7,945

03/2021

8,795

03/2022

9,500

Continued growth is expected centered aroundprojects supporting customers’ IT planning
driven by demand for DX from thetransportation and manufacturing industries.

03/2023

Platform Solutions+3.6% YOY
4,250
3,800
3,350
2,900
2,450
2,000

3,612

03/2021© 2022 TDC SOFT Inc.

3,858

4,000

03/2022

03/2023

Steady growth is expected due to increasing
demand for cloud-related services.

19

３Outlook for the Fiscal Year Ending March 31, 2023

Financial Results and Dividend Forecast(Millions ofYen)

Full Fiscal
Year

Net Sales

Operating
ProfitOrdinary
ProfitNet Income

34,000

3,260

3,355

2,270

(+9.9%)(+9.9%)(+8.9%)(+9.7%)EPS(Yen)Dividend
Forecast(Yen)Interim 15.00

94.75 Year-end30.00
Total: 45.00● We will promote aggressive investment measures based on the medium-term plan. We expect
revenue growth to absorb the investment costs over the full fiscal year and forecast an
increase in sales and profit.

© 2022 TDC SOFT Inc.

20

４
Details of Financial Resultsfor Second Quarter of Fiscal 2022
Ending March 31, 2023

© 2022 TDC SOFT Inc.

21

●Financial Statements●Net Sales Analysis●Orders Received/Backlog●Operating Profit Analysis© 2022 TDC SOFT Inc.

22

４Financial Statements

Statement of Income(Millions of Yen)

Net sales
Labor expenses
Outsourcing expenses

Other expenses
In-process increase/decrease

Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating profit
Non-operating
income/expenses
Ordinary profit
Profit before incometaxes
Net income© EPS
2022 TDC SOFT Inc.

Balance Sheet

Q2 FY
Q2 FY
Ending March Ended March
2023
2022

Change16,793
5,935
6,883
442
142
13,1193,674
1,823

14,661
5,737
5,551
362
80
11,5703,090
1,502+14.5%+3.5%+24.0%+22.2%+75.6%+13.4%+18.9%+21.3%

1,851
70

1,588
58

+16.6%+19.7%

1,922
1,922

1,647
1,647

+16.7%+16.7%

1,301
51.84

1,117
44.0

+16.5%+16.5%(Millions of Yen)
Total assets
Current assets
Non-current
assetsTotal liabilities
Current
liabilities
Non-current
liabilities
Total net assets
Total liabilities andnet assets
Owners’ equity ratio
Net assets per share

Q2 FY
End of FY
Ending March
Ended2023
March 2022

Change20,724
17,1783,545

21,072
17,368
3,704

-1.7%
-1.1%
-4.3%

5,225
4,897

5,817
5,540

-10.2%-11.6%

327

276+18.5%

15,49920,724

15,25521,072

+1.6%
-1.7%

74.8%
617.1672.4%
607.44

+1.6%

23

４

Financial Statements
Balance of cash etc. at thebeginning of the period
Profit before income taxes
Inventories
Notes and accounts
receivable - trade
Accounts payable - otherAccrued expenses

Statement of Cash Flows
50441

(969)

CF from
investing activities

11,702

Other
Income taxes

151 11,376

CF from
operating activities

CF from operating activities
Proceeds from sales ofinvestment securitiesInterest and dividend income
Other

CF fromfinancing activities

CF from investing activities
Purchase of treasury stock

Increase from inclusionof subsidiaries inconsolidation

Dividend payment
Other

CF from financing activities
Balance of cash etc.
at the beginning of the period© 2022 TDC SOFT Inc.

Balance of cash etc.
at the end of the period

Increase in cash and cash
equivalents resulting frominclusion of subsidiaries in
consolidation
Balance of cash etc. at theend of the period

11,702
1,922
(141)
386

(430)
(298)
(381)
(617)
441
1725
850(304)(734)69(969)151
11,37624

４Overview of Sales by Customer Industry(millions of yen)

Q2 FY Ended March

Q2 FY Ended March

2021

2022

Q2 FY Ending March 2023

4,648
3,898

3,504
2,850
2,062 2,548 2,513
2,034

3,260
2,525
2,404
2,237

2,285

1,640

Banking

CreditInsurance

1,398

1,924

Manufacturing

1,501

Non-Manufacturing

1,404

Public agencies andorganizations

Finance© 2022 TDC SOFT Inc.

25

４

Status of Orders Received/Backlog(Millions of Yen)

17,713

15,421
Orders received

13,415

7,200

7,793

8,4008,831

Backlog of orders

6,650

Net sales

13,186

14,661

16,795Q2 FY
Ended March
2021

Q2 FY
Ended March
2022

Q2 FY
Ending March2023© 2022 TDC SOFT Inc.

26

４

Operating Profit Analysis(Millions of Yen)

Grossprofit

SG&A
expenses+584+321

1,851
1,588

<Gross Profit>+ Profit grew due to an increase in sales+ Profitability improved due to a greater
proportion of sales from the next-generation SIbusiness<SG&A Expenses>+ Proactively invested in business expansion
Q2 FY
Ended March2022© 2022 TDC SOFT Inc.

Q2 FYEnding March202327

https://www.tdc.co.jp/*Note on this document:
The matters related to the forecasts of the TDC SOFT Group in thisdocument have been determined based on currently available informationand may change due to uncertain factors inherent in forecasts and/orchanges in the situation surrounding business operation going forward.

© 2022 TDC SOFT Inc.

28