Presentation Material for
FY04/2023 Q3 Financial Results
March 10,2023
HEROZ, Inc. ｜4382｜

NoticeThis document is an excerpt translation of the original Japanese document and is only
for reference purposes. In the event of any discrepancy between this translated
document and the original Japanese document, the latter shall prevail.

Contents
1.Financial Highlights
2.HEROZ Group Strategy
3.Group Structure

4.FY04/2023 Q3 Performance (Consolidated)
5.Reference Materials© 2023 HEROZ Co., ltd.

2

01
Financial Highlights© 2023 HEROZ Co., ltd.

3

※Consolidated financial statements are disclosed from this fiscal year. Please note that previously nonconsolidated financial statements were disclosed, and year-on-year comparisons are based on consolidated figures
for the current period and non-consolidated figures for the previous period.

Financial Highlights

FY04/2023 3rd Quarter
Performance Summary(Consolidated)

Disclose Key KPIs
in AI SaaS Business

Evolution to AI SaaS
Business Model◼

Net sales for the first nine months of the current fiscal year totaled 1,879 million yen (+70.7%, YoY)
due to organic growth and the consolidation of two companies, VarioSecure, Inc. and StrategIT, Inc.
from this quarter.

◼

EBITDA, which the Company attaches great importance to, also grew to 352 million yen (+218.7%,
YoY) due to improved profitability of existing businesses and the effect of M&A.

◼

With AI SaaS as the group strategy, we will strive to increase the ratio of recurring sales and achieve
growth while establishing a stable revenue base.

◼

Three major KPIs are disclosed from this quarter:
Annual Recurring Revenue (ARR), Recurring Revenue Ratio, and Churn Rate.

◼

Evolution to AI SaaS-type business model is progressing through M&A

Specifically,◼ ARR realized 2.8 billion yen, up 376% YoY.
◼ Recurring Revenue Ratio was 63.9%, up 23 points YoY.
◼ Churn Rate remained low at 0.6% for our main service AI Security.

© 2023 HEROZ Co., ltd.

4

02
HEROZ Group Strategy© 2023 HEROZ Co., ltd.

5

Company Overview
Name

HEROZ, Inc.

Location

PMO Tamachi 2F, 5 -31-17 Shiba, Minato -k u,
Tok yoRepresentative Director Co-CEO

Established

April 2009

Takahiro Hayashi

Representatives

Tak ahiro Hayashi/Tomohiro Tak ahashi

Business
Description

AI/DX service
AI Security service

MembershipJapan Deep Learning Association
The Japan Society for Artificial Intelligence2022

Acquires shares of VarioSecure, Inc. through third -party allotment andmakes it a consolidated subsidiary
Acquired shares of StrategIT Corporation and made it a consolidated
subsidiary.
Moved to the Tokyo Stock Exchange Prime Market

2021

Capital and business alliances with VarioSecure

2019

Listed on the First Section of Tokyo Stock Exchange (TSE)2018

Listed on Tokyo Stock Exchange (TSE) Mothers
Capital and business alliance with Netmarble Games Corporation▍Director/Officer

Graduated from Waseda University
Joined NEC as a technology engineer
Experience at IT strategy division, business planning division
Founded HEROZ

Representative Director Co-CEO

Tomohiro Takahashi
Graduated from Waseda University
Joined NEC as a technology engineer
Experience at Business Planning Division, BIGLOBEFounded HEROZ

Director CTO

2017
2016

Capital and business alliances with Takenaka Corporation
and Koei Tecmo GamesJVA2016 Small and Medium Enterprise Award
Capital and business alliance with Bandai Namco Entertainment

2013

Shogi AI, developed by engineers who was member of HEROZ at that time formerly
with HEROZ, defeated a shogi professional

2012

Launched mobile app, “Shogi Wars”

Keiichi Iguchi
Operating officer
CFO

Hiroya Mori
Operating officer
CSO

Kyota Seki

Graduated from Tokyo Institute of Technology
Joined NEC Central Research Labs

Graduated from Aoyama Gakuin University
Passed the CPA Examination
After joining an auditing firm and a consulting firm, served as General Managerof the Finance Division of PERSOL HOLDINGS CORPORATION
Graduated with a Master's degree from the University of Tokyo
Joined Panasonic Corporation and Deloitte Tohmatsu Consulting G.K.
Involved in projects such as new business strategy development© 2023 HEROZ Co., ltd.

6

Our Vision

Creating the future throughartificial intelligence (AI) revolutions© 2023 HEROZ Co., ltd.

7

HEROZ Group Strategy◼ Based on the knowledge gained from our experience in solving individual customer issues, we will aim for

SaaS-type business management driven by intelligence such as our data utilization and AI in the future.（HEROZ 2.0）

HEROZ 1.0

HEROZ 2.0
More versatile issue resolution

Individual issue resolution●●prediction AI

×customer

data

HEROZ AIHEROZ GroupWe will expand AI to a wider range of society by realizing intelligent SaaS,
utilizing the core technology of algorithm and AI development cultivated through Shogi AI, and the advanced knowhow accumulated through solving individual problems.

© 2023 HEROZ Co., ltd.

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Overall Group Strategy ：AI SaaS
◼ We will evolve the products of our company and group companies into more intelligent data-driven software by making the most of ouraccumulated expertise in advanced AI implementation and our strength as an engineering group.

Pillars ofBusiness

AI SaaS Products

Customized AI

Mind Sports

VarioSecure Security Services

StrategIT iPaaS

data

Advanced AI implementation
know-howUsing Deep LearningWorld’s Strongest Shogi AI

Engineers committed towinning cultivated by Shogi AI.

Data analysis technology toapply customer Big Data

Preparation for the implementation of vision

HEROZ Group

Embodying the vision throughout the group© 2023 HEROZ Co., ltd.

9

Aspect of the SaaS market and our views of the major trends◼ While the SaaS market in Japan is expected to grow steadily, there is still room for further penetration.
◼ To reach the approximately 10 trillions yen potential market, it is necessary to grasp the trends in the Japanese SaaS market.

Our view of future trends
in the SaaS market
in the SaaS market

Enterprise Software Market
in Japan （SI）

10.8

tn yentn yen potential market

10

SaaS Market in Japan(2026)

1.7 tn yen
CAGR

11%

SaaS Market in Japan(2022)

Diversification of needs

Diversifying market needs will accelerate SaaS adoption,and increase demand for operational expertise

Integration with legacy systems
For the foreseeable future, the integration of on-premiseand cloud systems is inevitable, and the transition to zerotrust security will be done in phases.

Need for integrated management
Multiple SaaS deployments increase the burden ofsystem management and operations

1.1tn yen(Source: IDC Japan Domestic Enterprise IT Market Forecast, Fuji Chimera Research Institute, Software Business New Market 2022 Edition)© 2023 HEROZ Co., ltd.

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Our perception of the challenges of implementing SaaS
By resolving trends that could be barriers to SaaS adoption through technology, we aim to materialize a latent market.

Diversification of needs◼ Rapid changes in the business environment

Issue hypothesis
behind the trend

have led to diversification of issues andcircumstances faced by customers.
◼ Many high-level IT professionals are

unevenly distributed among SIers andcannot promote implementation andoperation customized to the specific needsof each company.

Integration with legacy systems◼ Traditional perimeter defenses are reaching◼ Handling multiple SaaS is becoming thetheir limits as remote work and cloud
adoption accelerate.
◼ Especially, small and medium-sizedenterprises (SMEs), where "one-person
information systems" is an issue, are unable
to respond to recent security trends such as
Zero Trust.

Security

Advanced AI implementation
know-how

Need for integrated management

norm, and management costs are becoming
bloated.
◼

Therefore, there is a need for a migration
service to ensure consistency andcentralized management of information
managed within each SaaS.

iPaaS

Products of our group companies
Machine resources to increase the value of the product© 2023 HEROZ Co., ltd.

11

What we think AI SaaS should be like
We will support the provision of the ideal SaaS usage environment required by our clients by making full use of ouraccumulated know-how and technology.

顧客

CRM

HEROZ GROUP

HR

Automated and optimized
SaaS-to-SaaS collaboration
Automated operations
and maintenance

mail

SaaS Big Data
accumulated through business activities

Chat

Advanced Security

MA
Learning with AI© 2023 HEROZ Co., ltd.

12

03Group Structure© 2023 HEROZ Co., ltd.

13

Group Structure◼ With the consolidation of VarioSecure Inc. and StrategIT Inc. as consolidated subsidiaries, we have shifted to the group management

structure.
◼ Total net sales of the three companies are approximately 4.5 billion yen(sum of the most recent results).

Listed on the TSE Prime Market (4382)
FY04/2022
・Net sales: 1,482 million yen
・Operating profit: 34 million yen
・Net income: 49 million yen◼ Owns approximately 43% of thecompany◼ Owns approximately 89% of the company◼ Appoints majority of directors◼ Dispatches 2 directors◼ Dispatches 3 directors

Listed on the TSE Standard
Market (4494)
Deemed acquisition date ：2022/8/31

FY02/2022（IFRS)・Sales revenue: 2,566 million yen
・Operating profit: 751 million yen
・Net income: 500 million yen

Venture company inits 4th year of operation
Deemed acquisition date ：2022/9/30

FY06/2022
・Net sales: 397 million yen
・Operating profit: 32 million yen
・Net income: 26 million yen© 2023 HEROZ Co., ltd.

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Group Business Structure

AI/DX Service
Segment

BtoC

Business
Contents

Main KPI

BtoB

AI Security
Service

Shogi SaaS business forindividuals, including "Shogi Wars,"
utilizing AI and other technologicalcapabilities that won the World
Computer Shogi Championship.

Provide solutions to customer issues
through data analysis and AI
development.
Developing AI that can be utilized inpractical operations for a wide varietyof customers.

Support for SaaS implementationand development of systems that
integrate APIs between SaaS. Selling
API applications on the app market.

Managed security and integration
services for secure Internet use,
primarily for small and medium-sizedbusinesses.

Recurring Revenue⚫ MAU※1⚫ Billing rate
⚫ MPU※2⚫ ARPPU※3

Recurring Revenue and Solution
revenue⚫ Recurring Revenue Ratio⚫ number of customers⚫ number of employees⚫ utilization rate/unit cost
⚫ revenue per employee

Recurring Revenue and Solution
revenue⚫ number of customers⚫ number of employees⚫ utilization rate/unit cost
⚫ revenue per employee⚫ number of apps
acquired/churned⚫ ARPPU※3

Recurring Revenue⚫ number of customers⚫ churned⚫ revenue per customer※1 MAU：Monthly Active User
※2 MPU：Monthly Paid User
※3 ARPPU：Average Revenue Per Paid User

© 2023 HEROZ Co., ltd.

15

04
FY04/2023 3 rd Quarter Performance(Consolidated)© 2023 HEROZ Co., ltd.

16

Our Key Performance Indicator◼ We have set EBITDA, a measure of cash generation, as a key performance indicator and aim to sustainably

Performance Indicators for
Business Profitability
EBITDAEBITDA

increase corporate and share value through EBITDA growth.
◼ Formula: Operating profit + amortization and other non-cash expenses (amortization of goodwill, security deposits,etc.)◼ Years of depreciation

・Investment in servers for machine learning: Mainly 5-year useful life and declining-balance method
・ Amortization period of goodwill (amount)
VarioSecure, Inc. 14 years（2,179 million yen）,StrategIT, Inc. 9years（219 million yen）

◼ We intend to address more generic problem solving with AI SaaS as our group strategy (realization of HEROZ

Performance Indicators for
AI SaaS Business

ARR*
ARR
リカーリング売上
Recurring Revenue Ratio
解約率
Churn
rate

2.0).
We will focus our management efforts on the following indicators that are important to our SaaS business model.
◼ ARR（Annual Recurring Revenue）

An important indicator essential for understanding the growth and profitability of SaaS businesses.
Estimated as 12 times the last month of the quarter.
◼ Recurring Revenue Ratio

Indicator of ongoing sales that can be booked on a regular monthly basis.
◼ Churn rate

The churn rate of existing customers is an important indicator of the stability of the above recurring sales.

© 2023 HEROZ Co., ltd.

17Performance Summary ： Achieved significant growth through M&A
HEROZ Group Consolidated(cumulative Q3)
Net Sales

1,879

mil yenYoY ＋70.7%

EBITDA352

mil yenYoY ＋218.7%

Operating Profit

195

mil yensame period last year：-3 mil yen

AI SaaS KPI
ARR

2,862

mil yenYoY ＋376.4%

Recurring Revenue Ratio

AI Security
Recurring churn rate

63.9%

0.6%

YoY ＋23.8%pt

YoY -0.2%pt* Recurring Revenue is the sum of HEROZ’s BtoB recurring sales and BtoC subscription sales, VarioSecure's managed security services sales, and StrategIT's subscription sales and maintenance sales.
** Recurring churn rate is the churn rate for managed security services in the AI Security service.
© 2023 HEROZ Co., ltd.

18Performance Overview (May 2022-January 2023)◼ Net sales totaled 1,879 million yen, growing.(+70.7%, YoY).
◼ EBITDA grew sharply to 352 million yen, (+218.7%,YoY) due to improved profitability of existing businesses and the benefits of M&A.

3rd

FY04/2022
Quarter Actual3rdFY04/2023
Quarter Actual

Earnings Forecast

YoY(Announced on
December 9, 2022)

Progress against
Forecast(Non-Consolidated)（Consolidated ）Net sales

1,101

1,879

+70.7%

2,900

64.8%

EBITDA

110

352+218.7%

550

64.2%

Operating Profit

-3

195

-

250

78.4%

Ordinary Profit

-0

161

-

200

80.8%

Net Income (loss)

-2

-518

-

-590

-

(Units: JPY millions)

attributable toowners of the parent© 2023 HEROZ Co., ltd.

19

Key Performance KPIs (by Quarter)

Net Sales

EBITDA(Units: JPY millions)
1,200

1,114

(Units: JPY millions)
300

258
1,000

250

800

200

600

150

400

367 386 374

429

108

381 375 390
354 375 372

100

95

83

80

78

50

200

53

47

41

40
23

0

0
1Q

2Q

3Q

FY04/2021

4Q

1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q
FY04/2023

3Q

1Q

2Q

3Q

FY04/2021

4Q

1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q

3Q

FY04/2023© 2023 HEROZ Co., ltd.

20

Recurring Revenue Ratio increased significantly◼ With the AI SaaS strategy, Recurring Revenue Ratio will be emphasized in the future in pursuit of sales quality.
◼ Recurring Revenue Ratio rose to 63.9% this quarter following the consolidation of VarioSecure and StrategIT as group companies.

(Units: JPY millions)

1,200

Net Sales

Recurring revenue

Raito of Recurring revenue

100.0%

1,114

90.0%
1,000

80.0%
800

63.9% 70.0%

600

60.0%

400

37.5%

38.5%

40.1%

39.3%

40.4%

39.2%

50.0%

713
40.0%

200

374

355

133

382

372

144

149

390

376
150

152

30.0%

153

0

20.0%

1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q

3Q

FY04/2023© 2023 HEROZ Co., ltd.

21

ARR also increased significantly to 2.8 billion yen(Units: JPY millions)

ARR

3,500

ARR grows significantly

2,862

3,000

2,500

376.4%
ARR for the group 2,862 mil yen
YoY growth◼ Recurring Revenue is the sum of BtoC and

2,000

BtoB subscription revenue and BtoB
recurring revenue in AI/DX services,and management security service revenue in
AI Security services.

1,500◼ In management security services, the

1,000

544

601

601

597

611

company continues to enjoy a high share of
the market for SMEs, due to its consistent
support system.

612

500

◼ Going forward, ARR will achieve growth

0

1Q

2Q

3Q
FY04/2022

4Q

1Q

2Q
FY04/2023

3Q

through the introduction of AI into security
services and the development of SaaSlinked applications.

© 2023 HEROZ Co., ltd.

22

Breakdown of Recurring Revenue and Churn Rate
Breakdown of Recurring Revenue
for this Quarter(Units: JPY millions)
700

600

AI Security： Churn Rate Trends for Managed
Security Services
1.6%

56
97

BtoB Recurring Contracts/Subscriptions
Operate a lot of long-term projects
lasting more than one year

500

1.4%

1.2%
1.2%

1.1%
1.0%
1.0%

Shogi Wars Subscription(Reference Values)

400

1.4%

0.9%

0.9%

0.8%

0.8%
0.6%

0.9%

0.8% 0.7%
0.8%

Membership grew steadily, up 5.4% YoY.
300

0.9%
0.9%

0.8%

0.8%

0.8% 0.8%0.8% 0.8% 0.8%

0.8%

0.7%
0.6%

558
0.4%

200

100

AI Security
Managed Security Services

0.2%

Churn rate remains low at less than 1%.
0.0%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY02/2018
FY02/2019
FY02/2020
FY02/2021
FY02/2022
FY02/2023

0※ The above graphs are based on VarioSecure’s discloser materials.

© 2023 HEROZ Co., ltd.

23Performance by Segments (May 2022-January 2023)◼ AI/DX services continue to grow at +11.9% YoY ,also, EBITDA margin at 37.8%, high profitability◼ AI Security service is deployed by VarioSecure and maintains high profitability with an EBITDA margin of 43.7%.

3（Units: JPY millions）

Segment Profit
adjustment

FY04/2023
Quarter Actual

YoY

YoY

（Consolidated ）（Excluding M&A
impact）

1,232+11.9%

+5.5%

-3

370

-

-

110

466

-

-

10.1%

37.8%

-

-

3

rd

（Consolidated ）1,101

Segment Profit
EBITDAEBITDA Margin

AI Security
service

FY04/2022
Quarter Actual(Non-Consolidated)

Net Sales
AI/DX
servicerd

Net Sales

647

Segment Profit

221

EBITDA

282

EBITDA Margin43.7%

Segment Profit-396※ The Company has changed its business segments from the third quarter of the current fiscal year. The segment income adjustment of -396 million yen
represents corporate expenses that are not allocated to each segment.
For the previous year's figures, corporate expenses are included in AI/DX services. Therefore, year-on-year comparisons are not shown for Segment profit,
EBITDA, and EBITDA margin.

© 2023 HEROZ Co., ltd.

24

AI/DX Services Segment◼ This segment includes BtoC, mainly Shogi Wars, BtoB, which handles AI development for customers, and SaaS

implementation and SaaS-linked development business, which is being developed by StrategIT.

3（Units: JPY millions）

rd

FY04/2023
Quarter ActualHigh profitability with EBITDA margin of 37.8%.

(May/2022-Jan/2023)

Recurring Revenue Ratio
Net Sales

1,232

37.2 ％◼ Shogi Wars continued to see solid revenue growth from theprevious quarter. Continue to reach out to a wide range of users
with the aim of maximizing the Shogi population.
◼ BtoB business at HEROZ saw an increase in the number ofOperating Margin
Operating
Profit370

30.0 ％

projects in highly specialized entertainment-related fields.
Continued to focus on improving business efficiency in eachindustrial area through AI.
◼ StrategIT aims to grow recurring sales by strengthening therevenue base of its SaaS-linked apps and other products.
◼ Developing AI-based SaaS product collaboration to create

EBITDA Margin
EBITDA466

synergies among group companies.

37.8 ％© 2023 HEROZ Co., ltd.

25

AI Security service◼ This segment is developing the business of implementing the HEROZ Group's AI into the security business developed by

VarioSecure, which joined the group this fiscal year.

3（Units: JPY millions）

rd

FY04/2023
Quarter Actual

Recurring sales ratio is high at 86.3%.

(May/2022-Jan/2023)

Recurring Revenue Ratio
Net Sales

647

86.3 ％◼ In managed security services, differentiate the company with value-

added features in addition to a stable sales base.
◼ Specifically, we will provide additional functions that are in highdemand and substantially revamp the UI.

Operating
Profit221

Operating Margin◼ In addition, we will expand our business to adjacent businesses,

34.2 ％

leveraging our high market share for small and medium-sizedenterprises.
◼ Specifically, the company will expand sales of EDR products for the

EBITDA Margin
EBITDA282

remote work era by developing distributors and provide antiransomware solutions mainly to the medical industry.

43.7 ％© 2023 HEROZ Co., ltd.

26

Balance Sheet (as of January 31, 2023)◼ The cash and deposits currently held by the Company will be gradually appropriated for investments to realize the Company's mid- to longterm growth strategy.
◼ With the consolidation of VarioSecure and StrategIT into the group, there is a goodwill balance of 2.3 billion yen in intangible assets, which
will be amortized in the future.

Units: JPY millions

As of 4/30/2022（Non-Consolidated)（A）

As of 1/31/2023(Consolidated)（B）

Increase and decrease
（B-A）

3,959

4,867

908

3,660

3,574

-85

2,675

3,744

1,069

Property, plant and equipment

260

271

10

Intangible assets

25

2,673

2,648

2,390

799

-1,590

6,635

8,612

1,976

Current Liabilities

194

825

630

Fixed Liabilities

－

1,679

1,679

6,440

6,106

-333

Current Assets
Cash and deposits
Fixed Assets

Investments and other assets
Total Assets

Net Assets© 2023 HEROZ Co., ltd.

27

05
Reference Materials© 2023 HEROZ Co., ltd.

28

Global Leader in Mind Game AI

Chess AI

Shogi AI

Go AI

Deep Blue (’97) defeated aprofessional Chess player

AI developed by our engineers who
was member of HEROZ at that time
defeated a professional Shogi(Japanese Chess) player (’13)

Google acquired Deep Mind (’14)
AlphaGo, developed by Deep Mind,
defeated a professional Go player (’16)

IBM

Google© 2023 HEROZ Co., ltd.

29

AI SaaS(AI Software as a Service)
Developing our AI construction capabilities cultivated through machine learning using deep learning of vast Shogi game datain the construction, finance, entertainment, and other fields

Shogi game records

Structural design data,
financial data, etc.

AI SaaS for deep learning and other machine learning（AI Software as a Service）

Shogi AI

Construction AI
Finance AI etc.

AI SaaS：AI Software as a Service is“Business model that provides models built by machine learning/deep learning as a service”© 2023 HEROZ Co., ltd.

30

Profitability of AI SaaS

Research/develop Shogi AI

Standardize AI technology accumulated
through shogi AI
AI SaaS（AI Software as a Service）

Client’s data sent to HEROZ
Kishin/model developed bymachine learning

Output after machinelearning through deeplearning, etc.

Output applied inbusiness settings

Establish an infrastructure which allows
HEROZ to provide AI services efficiently tosolve various challenges in various industries
just by changing input data
Provide comprehensive AI services withmassive servers
Achieve stable, sustained earnings and highswitching costs

Accumulated data to be used for further
machine learning

Output precision increases throughrepeated machine learning

Earning structure: initial setup fee andongoing fees
© 2023 HEROZ Co., ltd.

31

Potential demand for AI in the construction domain (one of our focus areas)◼ We believe there is also significant potential demand for enhancing operational efficiency
through AI in the construction industry, which is one of our areas of focus◼ There will be a shortage of 110,000 construction technicians by 2025
(source: Human
Touch Research Institute, “status quo” scenario in the Proprietary Analysis Monthly Report,
December 2017)

Challenges
faced by theConstruction
Industry

Chronic
Shortage of
Man-power◼ Over 1/3 of first-class registered architects are over 60 (average: 56.2 years old)(source: Report on Construction-related Administration Aimed at Securing Safety ofArchitecture, Social Infrastructure Council, August 2006)◼ The number of construction and mining industry workers is expected to decrease from5.05 million in 2014 to 4.16–4.24 million in 2030, with some variability depending on future
economic growth and labor market participation trends(source: JILPT, 2015 Estimated Labor Supply/Demand)
Soaring
Materials
Prices◼ The national construction materials price index has increased by 17% since 2010(source: Economic Research Association)◼ We entered into a capital and business alliance with Takenaka Corporation in 2017and became a member of i-Construction. We aim to create the industry standard AI
for the construction industry, enhancing productivity and creating a new, attractive
construction site
© 2023 HEROZ Co., ltd.

32

Japan: Potential AI Demand is Among the Largest Worldwide◼ Potential AI demand in Japan can be expected to be among the largest worldwide, as theworking population is expected to decrease significantly going forward
Projection of Population Age 15-64(Median Prediction Interval, 2020=100)◼ When defining the working population as those
aged 15-64, the world average is forecasted toincrease by about 12% from 2020 to 2035 and by
about 21% from 2020 to 2055. On the other hand,
the working population is expected to decrease by
about 11% and about 28% during the same periods,
respectively

140

120
100
80
60

About 28%
decrease

40
20
0
2020年
2025年2030
2030年
2021
2025
20352035年
2040 2040年
2045
全世界

中国

2045年
2050年
2050
2055

日本

◼ Based on such forecasts, the Japanese working
population will show the largest decrease amongleading GDP nations

2055年

米国

Source: Prepared by HEROZ based on United Nations, World
Population Prospects, The 2019 revision© 2023 HEROZ Co., ltd.

33

Use of Our AI in DX◼ Domestic DX (digital transformation) is expected to accelerate due to the future decrease in theworking population as well as the impact of the COVID-19 pandemic◼ AI allows for DX of a wide variety of operations including those involving decision-making, whichwere previously considered difficult to automateStandard
Tasks

Decisionmaking

Creative
Tasks, etc.

Structured
data◼ DX will begin with standard tasks based on structured
data and is expect to expand to decision-making andtasks which utilize unstructured data

◼ Our AI can automate a wide variety of operations
including those requiring decision-making. We have alsoachieved DX for unstructured data, which weretraditionally considered difficult for DX

Unstructured
data
TraditionalIT

Our AI◼ We are promoting DX and building a track record in areas
including construction, finance, and entertainment© 2023 HEROZ Co., ltd.

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Overview of VarioSecure Inc.
Name

VarioSecure Inc.

Established

June 2001

capital

749 million yen

Employees

75

Performance(FY02/2022)(IFRS)Sales revenue: 2,566 million yen
Operating profit: 751 million yen
Net income: 500 million yen

Head Office
Location

Sumitomo Corporation Nishiki-cho Building 5F,
1-6 Kanda Nishiki-cho, Chiyoda-ku, Tokyo

Osaka Office Location

Osaka Office
Fukuoka Office

1-2-19 Kitahorie, Nishi-ku, Osaka-shi, Osaka

Fukuoka Office Location

1-12-17, Hakataekihigashi,
Hakata-ku, Fukuoka-shi, Fukuoka

Business

Managed Security Services
Integration Services

President and Representative Director
Director
Director
Director
Director
Director
Director
Outside Director
Director and Audit Committee
Director and Audit Committee
Director and Audit Committee

Yoshihiko Inami
Yasufumi Kajiura
Satoshi Yamamori
Hideko Isoe
Takahiro Hayashi
Keiichi Iguchi
Hiroya Mori
Masataka Shiba
Kenji Sakai
Hideo Fukai
Hidetaka Nishina

Webhttps://www.variosecure.net/

Certification

ITSMS（ISO20000）、ISMS（ISO27001）、privacy markTokyo Head
Office(As of November 30, 2022 ）© 2023 HEROZ Co., ltd.

35

Toward the Realization of an AI Security Company
Provide customers with new safety and security in the age of zero-trust through the power of AI by utilizing a variety of corporate data.
Supporting digital transformation by supporting corporate safety and security from the ground up

Automation of one-stop
service for customers

device data
Various hardware
usage data stored
in the company's
network✓ AI replaces complicated security
settings and operations✓ Anyone can easily implement
advanced security

transmission data
User behavior datacollected via the
network

Aggregation ofa wide variety of data

Insight Extraction

Advanced andsemi-automatedoperations

systemdevelopment

data scienceAIdevelopment

SaaS usage data
Usage data for
multiple SaaS
accounts

personalized data
Data varies by
individual andindividual company

Basic AI Technology

Turning Non-IT
Professionals into IT
Professionals✓ Setting up and maintaining asecurity environment on thesame level as largeorganizations

Reproduction of theprofessional skills of amaster craftsman✓ Identifying and handlingirregularities that only an
experienced veteran would
notice.

© 2023 HEROZ Co., ltd.

36

AI Security Company's Growth Strategy
We will promote the following items jointly with VarioSecure
to realize AI Security Company.

・ Mutual provision of management resources, including our AI

Realization of
AI Security Company

technology and VarioSecure's industrial domain knowledge and data
・ Achieving an AI Security Company through Collaboration in New
FieldsService expansion
into the zero-trust area

・ Promote the use of AI in our managed security services and the
expansion of our services into the zero-trust area

Business system innovation
through the utilization of AI.

・Promote the use of AI in the backyard (core systems)
・ Utilize AI technology for labor saving, efficiency improvement, andsales promotion based on such utilization© 2023 HEROZ Co., ltd.

37

(Reference) Business Overview- Services provided by VarioSecure
Security Framework• AssetManagement• Vulnerability
Management

Services of
VarioSecure

Building
Systems

Network Integration Services

indentificat
ion

Vario Network Security Suite• Access Control• Intrusion Prevention

Protection

VSR-VarioSecure Router(Integrated Internet Security Services)

VCR-Vario Communicate Router• Detect andmonitor security
events

Detection(Sales of integrated security equipment for SMEs)

Vario-EDR Services
SupportVSR-VarioSecure Router(Integrated Internet Security Services)

Recovery

VDaP-Vario Data Protect(Data Backup Service)© 2023 HEROZ Co., ltd.

38

(Reference) Providing services
that make Internet use safe and comfortable
Service Category

Managed Security Services

Integration Services

Service Form

Installation support, operation and maintenance
24 hours/365 days, nationwide in Japan

Equipment sales and construction

Revenue Model

Recurring type (monthly charge)

one-time fee-type① Integrated Internet Security Services(Managed type)Protecting Internet Entrances

For organizations with less than 50
members

Dedicated equipment for managed security services

Integrated security equipment for SMEs

VSR—VarioSecure Router

VCR—VarioCommunicate Router

Data retention in case of emergency② Data Backup Services
Service Content① Sales of intefrated security equipment for SMEs
(Sales type)

Dedicated equipment for data backup services

VDaP—Vario Data Protect② Network Integration Services• Procurement and construction of network
equipment
Construction of company network(wireless LAN network)

Rogue Terminal Detection, Vulnerability
Management③ Vario-NSS(Network Security Suite)

Assists in detecting and responding to cyberattacks④ Vario-EDR Services© 2023 HEROZ Co., ltd.

39

(Reference) VarioSecure's business model◼ Provided mainly as an adjunct to the Internet connection

Collective offer
Proposal and Sales

agency agreement(OEM/Distributor)
Sales Support

Internetconnection＋
Security
Services

Sales
Agent

Security
Services

Cutomers

Usage fees￥￥

Monthly fee

Monthly fee(Japanese
Companies)

supports© 2023 HEROZ Co., ltd.

40

Overview of StrategIT Inc.

Name

StrategIT Inc.

Establish

July,2019

Capital74 million yen

Employees

Our vision is to contribute to management improvement by integrating"Strategy" and "IT“
And our mission is to bring the power of SaaS to all companies
We aim to be a company that promotes the utilization and valueenhancement of SaaS

23(excludes outsourcing)

Location

PMO Tamachi 7F, 5-31-17 Shiba, Minato-ku, Tokyo

Buisiness

SaaS Solution Implementation Support
SaaS API Linkage Development Service
Operation of app store (SaaStainer)

President andRepresentative
Director
Director and CTO
Director
Director
Director

Fumie KatoWeb

https://www.StrategIT.jp/

Net sales (Millions of yen)
500
400
300

Yuhei Kawamoto
Masaki Moriwaki（Part-time officer）
Takahiro Hayashi（Part-time officer)
Hiroya Mori（Part-time officer）

200
100
0
FY06/2020
20/6期

FY06/2021
21/6期

FY06/2022
22/6期© 2023 HEROZ Co., ltd.

41

StrategIT’s Business Overview
Develop various APIs (linked systems) for SaaS vendors to improve the convenience of SaaS, utilizing know-how gained
through SaaS introduction consulting for BtoB.
Business model to sell developed APIs to general companies through our SaaStainer (app store)

１）Existing Services● SaaS Implementation
SaaS Solution Implementation Support

・Main and high-growth/high-profitability business
・Focus on mid-size projects (from 30 million yen)・Incorporation of Microsoft Dynamics(NetSuite, freee, Microsoft Dynamics, etc.)●

Collaborative Development
API integration development
System integration, development of linked
applications

・Developed an API system for SaaS vendors to link SaaS
vendors by utilizing our know-how of SaaS implementation
・ Have contacts with top SaaS listed companies ARR

Official Apps
Apps for major SaaS solution functions●

SaaStainer
App store（SaaStainer）
Providing a platform for SaaS solution information

・Recurring Sales Model
・Number of registered SaaStainer accounts: 1,091
companies
・Number of listed apps: 60, Number of paid apps: 18
・Pillars of future growth２）New Products Development
MasterHub API Platform（MAPIP）
Collaborative Platform Application

・In-house development of API integration platform application

・Provide customers with an environment that allows them todevelop their own API integration© 2023 HEROZ Co., ltd.

42

Strengths and Features with StrategIT
Holds patent for "Master Hub," a development platform that brings together all the know-how required for SaaS collaborative
development

Operate "SaaStainer," an app store that provides SaaS-linked applications (recurring monthly fee model)

・Patented ”Master Hub”
・Master Hub is a development platform that consolidates the knowhow required for collaboration
・Development by Master Hub can achieve high quality system
integration at less than half the cost of general contracted
development and ensure stable operations.

・App store for services that support the continued use of SaaS・Linked apps listed in the app store can be easily linked now, without
the need for API linking know-how
Official Website：https://saastainer.com/apps
Official Twitter：https://twitter.com/SaaStainer© 2023 HEROZ Co., ltd.

43

Notes◼ The forward-looking statements contained in this material are based on information currently
available to the Company, but are not guarantees of future performance and are subject to various
risks and uncertainties. Actual results may differ from the forward-looking statements contained ordeemed to be contained herein due to changes in the business environment and other factors.

◼ This document contains information about our company and other companies, etc., and we makeno representations or warranties as to the accuracy or completeness of the information contained
herein.

© 2023 HEROZ Co., ltd.

44