Presentation Material for
FY04/2024 Full Year Financial Results
June 14,2024
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. Introduction to Our Group Businesses
3. Updates on Our Group Strategy

4. FY04/2024 Full-Year Performance (Consolidated)
5. Forecast of FY04/2025 Performance
6. Initiatives in each Business Segment
7. Frequently Asked Questions and Answers© 2024 HEROZ, Inc.

2

01
Financial Highlights© 2024 HEROZ, Inc.

3

※Please note that the consolidated financial statements are disclosed from the third quarter of the fiscal year
ending April 30, 2023. Therefore, please note that comparisons with the previous period (cumulative total) arebased on figures that incorporate only six months of income statements of subsidiaries.

Financial Highlights◼

FY04/2024 Full Year
Performance Summary◼
◼

Two new companies
were consolidated in
FY04/2024

Group Strategy
HEROZ 3.0
“Sell Work, not AI.”

Cumulative results for the fiscal year ending April 2024 are as follows: net sales of 4,841 million yen(up 62.4% YoY), EBITDA of 901 million yen (up 47.8% YoY), and operating income of 451 million yen(up 75.0% YoY).
In the AI/DX business, HEROZ's BtoB business grew by slightly less than 20% and BtoC business by
about 9% throughout the fiscal year, and the contact center product business of A.I. Squared, whichbecame a group company in November, also contributed.
“HEROZ ASK" and "JOINT" products have been launched, and recurring revenue will be expanded in
the future.

◼

A.I. Squared(hereinafter referred to as “AI2”) and Tifana.com (hereinafter referred to as “Tifana”)
became group companies through M&A in November and March, respectively . AI2 will contribute 5months to the business results for the fiscal year ending April 2024, and Tifana’s business results will
be reflected from the next fiscal year.

◼

The “Quick” series of AI products for call centers and the "AI Sakura-san” series is added to theGroup's AI SaaS products, accelerating synergies among products in the Group as a whole.

◼

With the development of Generative AI, AI can handle a significant portion of tasks that were previously
handled by humans. However, we will go beyond mere provision of tools, and will create fundamental
business reforms utilizing Generative AI, and provide Work in areas previously handled by people (wewill develop this business as one established business).

◼

In accordance with this strategy, AI2 and Tifana will become group companies in November 2023 andMarch 2024, respectively.
For the time being, the company plans to promote the strategy with a view to providing Work forcontact center operations.

◼

© 2024 HEROZ, Inc.

4

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

increase corporate and share value through EBITDA growth.

Performance Indicators for
Business Profitability

EBITDAEBITDA◼ Formula: Operating profit + amortization and other non-cash expenses (amortization of goodwill, security deposits,etc.)◼ Years of depreciation
・Investment in servers for machine learning is mainly depreciated using the declining-balance method with a usefullife of 5 years.
・Goodwill accrual (at acquisition) and amortization period
VarioSecure 14 years (2,180 million yen), StrategIT 9 years (219 million yen)AI2 12 years (273 million yen) *Amortization begins in October 2023
Tifana.com 15 years (627 million yen) *Additional goodwill is expected to accrue in the future.

◼ We intend to address more generic problem solving with AI SaaS as our group strategy.

Performance Indicators for
AI SaaS Business

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

We will focus our management efforts on the following indicators that are important to our AI 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.

© 2024 HEROZ, Inc.

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02
Introduction to Our Group Businesses© 2024 HEROZ, Inc.

6

History of HEROZ（Million of Yens）⚫ Sales Trends and Main History
HEROZ was founded with the concept of “Surprise to the Heart",
aiming to create services that will surprise the world.

Newly added companies toour group

6,000

We believe that everyone has unique abilities, and through the creation of our services,
we would like to help "give birth to as many heroes as possible".

4,841

We want to do things that maximize the power of technology while at the same timemaking things interesting and surprising people, and this desire is at the root of
HEROZ's "Surprise to the Heart" concept.
2,980

BtoB
1,315

1,193

1,377
1,155

1,544

1,556

1,482

FY04
2020

FY04
2021

FY04
2022

1,155
877

507

0

41

85

64

FY04
2009

FY04
2010

FY04
2011

FY04
2012

FY04
2013

FY04
2014

FY04
2015

FY04
2016

FY04
2017

FY04
2018

2016 JVA2016 Small and Medium Enterprise Agency

FY04
2019

2022

FY04
2023

Established2012”Shogi Wars" released.

2013

Shogi AI developed by our engineers

2017 Capital and business alliances with various partners

2023

A.I.Squared becomes a group company(at the time) won against an active

2018 Listed on the Tokyo Stock Exchange.

2024

Tifana.com becomes a group company

professional Shogi player.

FY04
2025
(Forecast)

Vario Secure becomes a group company

2009

Director-General‘s Award

FY04
2024

StrategIT becomes a group company© 2024 HEROZ, Inc.

7

Group Management StructureGroup management structure after Tifana.com becomes a group company in March 2024
Combined sales of the five companies will be approximately 6 billion yen (forecast for the fiscal year ending April 2025)

Listed on the TSE (securities code 4382)
Fiscal year ending April 2024 (consolidated)
・Net Sales
4,841 million yen
・Operating Profit 451 million yen◼ Approximately 43% owned◼ Appoint a majority of the board

members◼ 100% owned◼ Approximately 92% owned◼ Approximately 51% owned◼ Dispatch 2 directors◼ Dispatch 4 directors◼ Dispatch 3 directors

Listed on the TSE(securities code 4494)
Provides security services primarily
to small and medium-sizedbusinesses
Fiscal year end: February◼ Dispatch President andRepresentative Director◼ Dispatch 3 directors

Established in 2019
Provides "JOINT“, a SaaS-to-SaaS
collaboration platform
Fiscal year end: February

Established in 2015
Provides AI products for contact
centers
Deemed acquisition date: October 1,
2023
Fiscal year end: February

Established in 2000
Providing “AI Sakura-san” Series
Deemed acquisition date: February
29, 2024
Fiscal year end: February© 2024 HEROZ, Inc.

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Group Business Structure◼ We have two businesses: AI/DX Services and AI Security Services.
◼ A.I. Squared and Tifana.com, which became group companies in FY4/2024, are classified as AI/DX Services※1 MAU：Monthly Active User
※2 MPU：Monthly Paid User
※3 ARPPU：Average Revenue Per Paid User

AI/DX Services

AI Security
Services

Segment

BtoC

Business
Contents

Main
KPI

BtoB

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

Promote AI Transformation
through customer data
analysis and AI solution
development

Focusing on SaaS
implementation support and
SaaS-to-SaaS integration
services

HEROZ ASK, an AI assistantfor LLM in the business world.

Launched "Joint iPaas for
SaaS," a SaaS integration
product for SaaS vendors.

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

Recurring Revenue andSolution revenue

Recurring Revenue andSolution revenue⚫

⚫

Recurring Revenue Ratio⚫ number of customers⚫ number of employees⚫ utilization rate/unit cost
⚫ revenue per employee⚫ Number of operating projects

Recurring Revenue Ratio⚫ number of customers⚫ number of employees⚫ utilization rate/unit cost
⚫ revenue per employee⚫ ARPPU※3

Providing AI products such as
natural language processing in
the contact center domain

Providing "AI Sakura-san"series of DX solutions that are
in use in various areas

Provides security services
primarily to small and mediumsized businesses

Deployment of businessautomation solutions including
automatic response andautomatic summarization“AI Sakura-san" actively works
in various fields, including
stations, airports, and internal
help desks of companies.

In addition to integrated
Internet security services,vulnerability assessment
services and off-the-shelfproducts are also available.

Recurring Revenue

Recurring Revenue

Recurring Revenue

⚫

⚫

⚫

Recurring Revenue Ratio⚫ number of customers⚫ churned⚫ revenue per customer

Recurring Revenue Ratio⚫ number of customers⚫ number of units installed⚫ unit price⚫ churned

number of customers
churned⚫ revenue per customer⚫

© 2024 HEROZ, Inc.

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HEROZ Group Business Overview
Promote maximization of
Shogi population

Supporting corporate AIX from the perspectives ofboth individual AI solution development and AI SaaS
Promoting social implementation of LLM
through the introduction of SaaS

“Shogi Wars",“Kishin Learning"and other platforms
to enjoy Shogi in a
familiar way.

Shogi playing
platform officiallyrecognized by theJapan Shogi
Federation

Providing AI
solutions mainly inthe finance,
entertainment, andconstruction
domains.

HEROZ
BtoB
Services
AIX/DX support
for enterprise

Accelerate AI SaaS across the Group with HEROZ ASK as the foundation for LLM

ASKAI assistantservice using
Generative AI(LLM)

Platforms that
support SaaS-toSaaS
collaboration

AI products to
help call centers
improve
operational
efficiency

DX Solutions inaction at stations
and commercial
facilities

In addition to the focus businesses listed above, each company isengaged in several other businesses.

Firewall-typesecurity system© 2024 HEROZ, Inc.

10

03
Updates on Our Group Strategy© 2024 HEROZ, Inc.

11

Our Vision

Creating the future through
AI Revolutions© 2024 HEROZ, Inc.

12

HEROZ’s thoughts of "AI Revolution" in the age of Generative AI

CreatingValuethrough AI

HEROZ's vision is “Creating the future through AI Revolutions”.
With the evolution of Generative AI, we have entered an era in which AI has deeply penetrated our lives,automating and assisting us in various daily activities. This allows us to focus on what is truly important: selfrealization and the realization of an ideal society. AI does not take away human jobs, but opens up newopportunities and possibilities, and creates new value together with humans. Our goal is not to provide AI as amere tool, but to contribute to society by allowing AI to play a creative and valuable role as well.

Looming
Decline inLabor ForceJapan faces the challenge of a labor shortage due to a declining birthrate and an aging population;
coexistence with AI is the key to solving this problem. We believe that when humans and AI work together,
new ideas and solutions will emerge to build a prosperous and vibrant society.

AI Revolution
realized in
Shogi

The Shogi AI developed by our members is a historical prime example. When the Shogi AI won the first victory
over a professional Shogi player, many people were pessimistic about the future of the Shogi world. However,
now AI is helping players learn more and evaluating the board to provide new enjoyment that is easy forspectators to understand. More than 10 years have passed since AI vs professional players, but people's
desire to enjoy Shogi has not changed. Rather, the Shogi world has evolved and become more attractive
through coexistence with AI. Such co-creation by humans and AI is possible in all industries and will expand
future possibilities.

AIX
Co-creation
by humansand AIWe HEROZ believe that humans and AI work together to create new value, transform industries with thepower of AIX (AI Transformation), and surprise the world. We believe that this is “AI Revolution” that HEROZ isaiming for. As a company at the forefront of the use of Generative AI, we will build this future together with you.
We believe in the unlimited possibilities of AI and will continue to take on challenges for a better future.
© 2024 HEROZ, Inc.

13

AI Revolution we achieved in the Shogi world
Shogi Wars, our core business, is not just a Shogi application, but a Gaming Platform that has contributed greatly
to the revolution of the Shogi world itself through cutting-edge AI technology.

➢Total 8 mil users➢500 thousands MAU➢Played a total of over 900 mil games

From “Competition" to “Co-Creation”
The Age of Humans vs.AI

The Age of Human with AI

Evolution of the Shogi world

Growing pessimism that shogi is over

Human intelligence evolves with AI

A new era has arrived in which
practicing with AI is the norm.

In 2017, PONANZA won against thenMeijin Amahiko Sato

Professionals are now studying Shogi
through AI(we also launched Kishin Analytics)

Sota Fujii, the 8th crown, is the poster
child of AI.
.In the age of overturning the conventional
wisdom through research using AI© 2024 HEROZ, Inc.

14

HEROZ Group Strategic Policy (HEROZ 3.0): Sell Work, not AI◼ Launch of HEROZ ASK and business integration with group companies led to growth in AI SaaS and recurring revenues.
◼ Through the remarkable progress of Generative AI, promoting value provision that goes beyond mere AI tools

HEROZ 1.0

HEROZ 2.0

HEROZ 3.0

Individual problem
solving based onconventional AI

Improved productivity byproviding AI-based
tools(AI SaaS)

Provision of Work automatedby Generative AI(AI BPaaS)HEROZ GroupHEROZ Group×
Customers

Data

HEROZ AI

Advances in Generative AI will greatly expand the areas of that can be automated, thus
promoting value provision that goes beyond mere AI tools and accelerating the AI
Transformation of society© 2024 HEROZ, Inc.

15

Strategies to achieve through “Sell Work, not AI” (AI BPaaS)
By providing reasonable and higher quality labor sustainably with our AI, we will fundamentally solve the vicious cycle causedby labor shortages and create changes in the target markets that our group companies enter.

Challenges facing the BPO industry

Potential markets that can be approached by the HEROZ Group (TAM)
Although we have traditionally focused on the provision of AI (IT) tools, we will go beyond mere tool
provision, and will create fundamental business reforms using Generated AI, and provide work forareas previously handled by people (we will develop this business as one established business).

Wage
Rigidification
High Turnover

Low Profit
Insufficient
manpower
Improving
efficiency
through AI

Generative AI for
Providing Work

Call Center Market
Break the vicious
cycle by radicallyautomating with
Generative AI

about 1,200 mil yen
Radically automate the process with
Generative AI and offer it as a business.
STEP1

Examples we are currently working on
・Managed Security

Decreased
employeeturnover

Profitability
improvement

BPO market 4,700 mil yen

Increasecustomer value
offer value to customers at a reasonable price

Increased satisfaction of
employees(stress reduction)

・RPO

IT tools market
200 to 300 bil※

STEP2

(Recruitment Process Outsourcing)

Source: MIC Research Institute of Economics, "Total BPO Market Status
and Outlook 2024 (Contact Center & Fulfillment Service Edition)”.

※Our Research© 2024 HEROZ, Inc.

16

Official release of HEROZ ASK
Officially releasing HEROZ ASK, an enterprise AI assistant SaaS using generative AI, in May 2024.
Further enhancements will be made to promote AIX as the core SaaS for "Sell Work, not AI" by providing value that goes beyond the mere IT tools.

About HEROZ ASK• AI Assistant to Lead Your Operations• HEROZ ASK assists you in all yourbusiness operations by searching,summarizing, and translating various datathat exist in your company, as well as bytranslating your voice into languages.
• Q&A system is realized based on yourcompany's document information.
• HEROZ ASK will lead your daily work sothat you can create new time and work
creatively
HEROZ ASK will lead your business in avariety of applications, including• document summarization• composition and writing correction• group management• dialogue• searching• internal document and data utilization© 2024 HEROZ, Inc.

17

Tifana.com Social Implementation of AI by "AI Sakura-san”◼ As an AI business, developed "AI Sakura-san" series as DX solutions that can be utilized in various issues faced by customers.
◼ “AI Sakura-san" is actively working in outdoor facilities, corporate chatbots, mental health care, etc.

【 Development of diverse AI Sakura-san series 】⚫ In addition to its activity as an avatar in outdoor facilities, many
AI Sakura-san series have been developed to improve internal
operations of companies, etc.
⚫ She is working in line with diverse needs, such as handlinginternal inquiries and phone calls, monitoring employee mental
health, etc., mainly for major companies and government
agencies.

【 Social Implementation of AI 】
⚫ AI Sakura-san is actively working in various facilities such as
train stations and airports, as well as municipalities andcommercial facilities.
⚫ The importance of AI Sakura-san is growing due to its ability to
be customized to meet specific needs, such as multilingualand courteous guidance and lost and found, and she will beworking in many more facilities and regions in the future.
Introduction results(partial)

Offering a total of 12 Sakura-san series

AI Sakura-san Cumulative number ofunits installed (based on contracts
signed)（unit：number）

Some of our services are listed below

JR East Japan

Yokohama Sotetsu
JOINUS

350
303
180
120
48
2021/02

Avatar Customer Service

AI Phone Support

Lost and Found Help

Sakura-san

Sakura-san

Sakura-sanSupreme Court

Haneda Airport Garden

2022/022023/022024/022024/06(見込み)
forecast© 2024 HEROZ, Inc.

18

Selected as No. 1 in the "BOXIL SaaS AWARD Summer 2024"
AI Sakura-san won "Good Service" and three other No.1 awards in the chatbot category in the “BOXIL SaaS
AWARD Summer 2024”■ She won "Good Service," "No. 1 in Service Stability,""No. 1 in Functional Satisfaction," and "No. 1 in Ease ofUse" in the chatbot category of the "BOXIL SaaS
AWARD Summer 2024" organized by Smart Camp,
Inc.(hereinafter referred to as “Smart Camp”)■The "BOXIL SaaS AWARD" is an event in which Smart
Camp, which operates the SaaS comparison site
"BOXIL SaaS," judges, selects, and awards outstanding
SaaS.
■For more information about the "BOXIL SaaS AWARD
Summer 2024" and the selection criteria, please visit
the official website below:
https://boxil.jp/awards/2024-summer/(Japanese Only)© 2024 HEROZ, Inc.

19

StrategIT officially launched “JOINT iPaaS for SaaS”◼

StrategIT launches iPaaS platform "JOINT" for SaaS vendors as a new business axis.

◼

Shift to a stock-type revenue model while continuing conventional businesses such as SaaS integration development, API development support,
and SaaS implementation support.

【JOINT iPaaS for SaaS】⚫ A platform that enables efficient and easy handling of development, management,
and operation of integration between the customer's products and other SaaS
products⚫ Developed iPaaS based on their track record of implementing integration withmore than 50 major SaaS in Japan and abroad【 What can be achieved with JOINT 】⚫ By integrating JOINT into the customer's product,
・ Build collaborative apps
・ Build app stores・ Standardization of post-application management
can be achieved easily⚫ Reduce implementation time for external LLM integration such as ChatGPT
Development of linked applications, which normally takes 3.5~4 months, canbe implemented in as little as one week.

Standard features of JOINT iPaaS for SaaS
① Building and incorporating App Stores② No-code collaborative apps development③ Semi-automated data mapping with AI© 2024 HEROZ, Inc.

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Service Introduction Video
Click below to watch the introductory video(Japanese Only)： https://youtu.be/ug8iX5_mhKg?si=ZN5CMIjwtmf2uDxs： https://youtu.be/Qnk6KDavah4?si=o6c9YF1D9S1RUgoD© 2024 HEROZ, Inc.

21

04
FY04/2024 Full-Year Performance(Consolidated)© 2024 HEROZ, Inc.

22

Performance Summary (May 2023-April 2024)

Consolidated financial statements are disclosed from the third quarter of the fiscal year
ending April 30, 2023.
Therefore, please note that comparisons with the previous period are based on figuresthat incorporate only 6 months of income statements of group companies.

HEROZ Group Consolidated(FY04/2024 )Net Sales

4,841

mil yenYoY ＋62.4%

EBITDA901

mil yenYoY ＋47.8%

Operating Profit

451

mil yenYoY ＋75.0%

AI SaaS KPI

ARR

3,357

mil yenYoY ＋18.7%

Recurring Revenue Ratio

AI Security
Recurring churn rate

63.9%

0.8%

YoY ＋5.7pts

YoY +0.3pts* 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, and AI2’s products“Quick” series sales** Recurring churn rate is the churn rate for managed security services in the AI Security service.
© 2024 HEROZ, Inc.

23

Performance Overview (May 2023-April 2024)◼ Net sales continued to grow significantly in the organic BtoB and BtoC businesses as the sales structure was strengthened and "Kishin

Learning" performed Strong.
◼ AI2, which was acquired through M&A in November 2023, is included only for 5 months in the current term.

FY04/2023
Results

FY04/2024
Actual(Consolidated)（Consolidated ）Net sales

2,980

EBITDA

Initial Forecast

Progress against
Initial Forecast

YoY(Announced on
March 8, 2024)

4,841+62.4%

4,850

99.8%

609

901

+47.8%

920

98.0%

Operating Profit

257

451

+75.0%

450

100.3%

Ordinary Profit

216

368

+70.6%

410

90.0%

Net Income (loss)-574-1,134ー-930

ー(Units: JPY millions)

attributable toowners of the parent© 2024 HEROZ, Inc.

24

Key Performance KPIs (by Quarter)
Net Sales

EBITDA（Units: JPY Millions）（Units: JPY Millions）
300

1,400

1,100
1,118
1,114

1,200

279 281

1,296 ※
1,217
1,209

258 256※Investments made tolaunch SaaS
products

250

1,000
200

170

170
800
150
600

400

100

389
354 374 371 381 375

78
50

200

53

47

41

40
22

0

0
1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q

3Q

FY04/2023

4Q

1Q

2Q

3Q

4Q

FY04/2024※Effects of changes in accounting standards and the fact that AI2's intake was for twomonths (approx. 50 million yen), etc., and the timing of sales booking delays, despite
an increase in BtoB orders.

1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q

3Q

FY04/2023

4Q

1Q

2Q

3Q

4Q

FY04/2024© 2024 HEROZ, Inc.

25

Group-wide ARR of approximately 3.35 billion yen and continued growth

ARR continues to grow

ARR (By Quarter)（Units: JPY Millions）

YoY+18.7％ Grouth

3,400

3,328

3,357

3,300

3,200

◼ Recurring revenue includes subscription

sales in the BtoC and BtoB segments of the
AI/DX business, ongoing sales in the BtoB
segment, ongoing sales from AI Square, andsales from management security services in
the AI Security business.
(AI Sakura-san's revenue will be added fromthe fiscal year ending April 2025)

3,100

3,000

2,900

18.7%
ARR amounts 3,357 mil JPY
YoY Growth Rate +

2,958
2,898

2,872
2,827

2,800

2,700

◼ 4Q growth compared to 3Q due to increasein ongoing fees from HEROZ BtoB businessand VarioSecure's management security
services

2,600

2,500
3Q

4Q
FY04/2023

1Q

2Q

3Q

4Q

FY04/2024© 2024 HEROZ, Inc.

26

Recurring revenue shows a continuous increasing trend.
◼ In May 2024, "HEROZ ASK" and "JOINT" were officially released.
◼ Expect full-scale increase in recurring-type sales from this fiscal year onward..

(Units: JPY millions)

Net Sales

1,400

Recurring revenue

Raito of Recurring revenue

100.0%
90.0%

1,200

1,000

64.1%

63.9%

64.8%

66.8%

70.0%

60.2%

800

600

37.5%

38.5%

40.1%

39.3%

40.5%

39.9%

400

200

80.0%

64.9%

1,114

1,100

714
354
133

374
144

371

149

381
150

375
152

713

1,118
725

1,217

1,296

60.0%

1,209
50.0%

732

828

808

HEROZ 2.0 AI SaaS Starategy(Change to a Recurring Revenue Model)

389
155

40.0%
30.0%

0

20.0%

1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q

3Q

FY04/2023

4Q

1Q

2Q

3Q

4Q

FY04/2024※ Recurring sales ratio in this slide is calculated and disclosed on a quarterly basis.

© 2024 HEROZ, Inc.

27

Recurring revenues are expected to continue to increase
with product launches
Recurring revenue breakdown (by quarter)

900

YoY
+13.3%(Units: JPY millions)

800

700

56
99

600

50
101

50
105

52
110

74

48 ※4Q reflects

50

51

119

120

Details of revenues

Future Outlook

AI Squared package revenue.

Expanding sales for call centers.

AI Squared recorded package sales forcontact centers

only 2 months
results

BtoB Recurring Contracts

Launch several new SaaS products

HEROZ's BtoB and StrategIT, Inc. recorded
ongoing maintenance and operation sales.

Expect growth through SaaS
monetization, such as the release of the"HEROZ ASK" "JOINT", etc.

500

400

Subscription of Shogi Wars, etc

300

558

562

569

569

581

587

Shogi Wars paid subscriber growth wasmaintained at 9.3% YoY.

200

100

57

55

94

99

1Q

2Q

0
3Q

4Q

1Q

FY04/2023

2Q

3Q

4Q

FY04/2024

AI Security

Subscription of

B to B

A.I. SquaredManaged Security Service

Shogi Wars, etc

Recurring Contracts

Package revenue

By coordinating the sales structure
within the group, we are accelerating
our approach to new customers.

Establishing the
Shogi Wars Economic Zone
Released new Shogi-related content
such as "Kishin Analytics" and "Kishin
Learning," and expect further growth.

AI Security
Managed Security Service

Entering thegrowing security industry

No. 1 share of the domestic market for
firewall-type security services for small andmedium-sized enterprises
Churn rate remains low at less than 1%.

Expanding areas of support for existing
services.
Developing services that expand thescope of MSS to enter the zero-trust
security domain.

© 2024 HEROZ, Inc.

28

Breakdown of SG&A expenses (Consolidated)■ Policy to control SG&A expenses through cost control.
■ The increase is due to investments in sales personnel and marketing related investments for the next fiscal year, including the launch of SaaS.

Overall, the company will continue to strive for appropriate cost control

YoY+11.2%(Units: JPY millions)

Does not include theimpact of new M&As

Aggressive investment in
human resources, etc.

Consolidated results
including new M&As

600

⚫ Total personnel expenses increased
from last year due to the introductionof a stock compensation plan.

500

140

400
109

100

22
16

116

126

31
45

300

200

129

135
45

32

45

43
4

203

144

137

31

27
3

32

20
11

3

45
16
30

27
34
3

50

37

18
30

237

249

4

36
3

39

4

252

⚫ Recruitment costs are reduced
throughh the use of direct recruiting
to achieve both recruitment and cost
reduction.

4Q⚫ Aiming to expand SaaS products,
investments related to advertisingand marketing are also being made.

4
227

196

222

222

0
3Q

4Q

1Q

FY04/2023

2Q

3Q

FY04/2024

人件費

採用教育費

減価償却費

4Q

3Q

FY04/2024

FY04/2024（新規M&A影響と関連費用を除く）（新規M&A影響と関連費用を含む）

広告宣伝費

のれん償却費⚫ Aggressive hiring of sales andmarketing personnel for the launchof HEROZ ASK's business. On theother hand, the number of personnel
involved in corporate functions itself
increased slightly.

その他© 2024 HEROZ, Inc.

29

Cost of Sales Breakdown (Consolidated)■ Aggressive hiring continues, mainly in engineering and business positions, for sales growth, and personnel expenses are steadily increasingat +24.0% YoY.
■ Achieve substantial growth for the group as a whole, while appropriately controlling outsourcing costs.
Cost of sales excluding
inventory write-downs(Units: JPY millions)

Does not include new
M&As

YoY＋1.7%700

Consolidated
accounting results
27
52

27

600
101

35

40

49
500
123

131

67

50

37

21

150

153

300

200

100

37

145
137

143
136
65

400
70

74

63

58

48

50

35

34

71

58

70

67
38

38

36

37

60

65

60

71

71

38

39

51

39

51

51

45

37

35

216

213

165

154

170

173

186

191

3Q

4Q

1Q

2Q

3Q

4Q

FY04/2024

FY04/2024(without AI2)

⚫ aggressive investment in humanresources to achieve earnings
growth and a policy of increasing
labor costs in the cost of sales forthe entire group38⚫ On the other hand, outsourcing
costs (subcontracting costs) arestable and appropriately
controlled.

⚫ VarioSecure recorded a one-timecharge for the write-down of
inventories.

0
FY04/2023

Continued planned
investments

67

3Q

4Q

labor costServer costs, etc.

FY04/2024(エーアイスクエアを含む)
Including AI2
Depriviation and amortization

Billing and settlement fees

VarioSecure equipment and materials costs

Outsorcing expenses© 2024 HEROZ, Inc.

30

Performance by Segments (May 2023-April 2024)■ AI/DX business continued to increase revenue through M&A and organic growth. EBITDA margin was also high at 37.4%.
■ AI Security business similarly maintained high profitability with an EBITDA margin of 41.3%

FY04/2023
Full-YearResults

FY04/2024
Full-Year Actual(Consolidated)（Consolidated ）Net Sales

1,683

Segment Profit
EBITDA

YoY

YoY（Consolidated ）（Performance of HEROZ
on a standalone basis）

2,212+31.4%+11.1%

494

677+36.8%+42.4%

655

826+26.0%+15.9%EBITDA Margin

39.0%

37.4%

-1.6pt-Net Sales

1,297

2,640

+103.6%-

Segment Profit

380

789

+107.4%-

EBITDA571

1,089+90.7%-EBITDA Margin

44.0%

41.3%

-2.8pt-Segment Profit adjustment Segment Profit-617-1,014--（Units: JPY millions）

AI/DX
services

AI Security
Services ※※ Disclose segment information from 3Q FY4/2023.
AI/DX business FY4/2023 cumulative total reflects the sum of HEROZ's full-year cumulative total and StrategIT's 3-4Q figures; AI Security business FY4/2023 cumulative total reflects
VarioSecure's 3-4Q figures onlyThe segment income adjustment of -1,014 million yen represents corporate expenses that are not allocated to each segment.

© 2024 HEROZ, Inc.

31

AI/DX Services Segment◼ This segment includes BtoC centered on Shogi Wars, BtoB for providing AI solutions to customers, SaaS implementation and SaaS-linked

development business developed by StrategIT, and services in the contact center area developed by AI2.
◼ From the fiscal year ending April 2025, incorporate sales and profits of Tifana.com, which provides "AI Sakura-san".

Both BtoC and BtoB sales
increased significantly YoY

FY04/2024
Actual（Units: JPY millions）◼ Shogi Wars-related sales increased steadily due to the

Recurring Revenue Ratio
Net Sales

2,212

35.5 ％
Operating Margin

Operating
Profit677

30.6％

stable increase in the number of Shogi Wars users andthe effect of acquiring users through the launch of theKishin Learning service, etc. With the recent Shogi boom
as a tailwind, we will continue to approach a wide range
of users with the aim of maximizing the number of Shogi
players.
◼ HEROZ's BtoB business has seen an increase in thenumber of projects in operation since the second quarter,and this quarter also saw a significant increase in sales
YOY. HEROZ ASK" is now available as a paid version,and the company will continue to capture recurring sales.

EBITDA Margin
EBITDA

826

37.4％© 2024 HEROZ, Inc.

32

AI/DX Segment
HEROZ's BtoB business achieved sales growth of slightly about 20% YOY
HEROZ BtoB Business Sales
Trends

BtoB Business Number of Active
Projects

・Although project orders were favorable, 4Q
results fell short of expectations due to adelay in the start of projects.
・Backlog of orders is higher than last year, so
continued growth is possible in FY4/2025.
・Full-year growth of 15.4% YOY is expected.

・Net sales grew not due to specific high-unitprice projects, but rather to an overall
increase in the number of projects due to
growing client base.

BtoB Quarterly headcount・BtoB business model is based on engineer manmonths x utilization ratio.
・Despite the impact of personnel transfers to
LLM development, headcounts increased
steadily.
・The utilization ratio rose by an average of 22%
from the previous fiscal year.
50

Number of Projects+32% increased YoY

YoY+15.4%Growth45

Number of Employees+9.5% increased YoY

40
35
30
25
20
15
10
5
0
FY04/2022

FY04/2023
1Q

2Q

3Q

FY04/2024
4Q

FY04/2022

FY04/2023
1Q

2Q

3Q

FY04/2024
4Q

FY4/2022

FY04/2023

FY04/2024

B2Bエンジニア・ビジネス従業員数
Number pf BtoB Business’s employees© 2024 HEROZ, Inc.

33

AI/DX Segment
BtoC Business continued to increased Net sales
BtoC business grew steadily due to the effects of increased attention to Shogi following Sota Fujii's first ever 8-kan championship, collaboration
with the popular Shogi manga "Ban'ou", and the release of "Kishin Learning", an e-learning service to help players achieve Shodan (first dan) in
Shogi.
HEROZ B to C Business
Sales Trends
・ With a certain market share as a platform for
Shogi games, further growth is expected with
Sota Fujii's Eighth Crown achievement

四半期新規対局数
Number of games played in the quarter
対局数（過去分積み上げ）
Total number of games played

YoY
+8.5%

YoY
+7.4%

Various measuresin and outside the game

Shogi Wars has playedover 900 million games.

2024/4
playd over 910 mil games

2023/4played 800 mil games

2022/4played 700 mil games

・In the current fiscal year, various in-game events,
such as the collaboration event with the Shogi
comic "Ban'ou" and the swinging piece event
held during the year-end and New Year holidays,
were well received and contributed to sales.
・The number of paying subscribers far exceeded
initial expectations due to the popularity among
Shogi Wars users of the high quality content of
the "Kishin Learning" e-learning tool forachieving Shodan in one year.
・The number of paying subscribers exceeded our
initial expectations.

2022/04期
FY04/2022

2023/04期
FY04/2023
1Q

2Q

3Q

2024/04期
FY04/2024
4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY04/2024

4Q© 2024 HEROZ, Inc.

34

AI Security service Segment◼ This segment is developing the business of implementing the HEROZ Group's AI into the security business developed by Vario Secure.
◼ Recurring sales account for 87.4% of total sales, making it possible to generate stable sales.

Recurring sales ratio is high at 87.4%.

FY04/2024
Actual（Units: JPY millions）◼ Vario Secure's sales grew about 3% YoY, but the

Recurring Revenue Ratio
Net Sales

2,640

87.4％
Operating Margin

Operating
Profit789

29.9％

breakdown shows that managed security services, thecompany's focus area, maintained its growth rate, andthe ratio of recurring sales rose.
◼ Operating income is expected to decrease due to growthinvestments based on the medium-term management
policy, mainly in hiring personnel for service planning,
engineering, and operation support, as well as inadvertising expenses to strengthen marketing.

EBITDA Margin
EBITDA

1,089

41.3 ％© 2024 HEROZ, Inc.

35

AI Security segment
Managed security services steadily increased end-user base with low churn rate
Number of Managed Security Service End
Users (at the end of each quarter)

Managed Security Services Churn
Rate Trends

3,091

Churn rate remains stable at below 1%.

•

3,038
2,981

2,992

3,005

2,961
1.50%

1.10%
1.02%
0.89%

0.90%

0.85%

0.75%

0.82%

0.82%

0.79%
0.76% 0.75% 0.76%

1Q

2Q

3Q

FY02/2023

•

4Q
15%

1Q

2Q

3Q

4Q

FY02/2024

0.81%

Performances (by each services )0.76%

0.76% 0.74%
0.79%

0.78%

2,926

16%

0.94%

1.00%

2,919

0.82%

0.64%
0.58%

0.49%

2,634

2,640

16%

15%

13%

84%

85%

87%

FY02/2022

FY02/2023

FY02/2024（Unit：Million of JPY） 2,566

0.50%
0.56%

84%

Managed Security Service
Integration Service

•

0.00%

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY02/2019

FY02/2020

FY02/2021

FY02/2022

Steady quarterly
increase in thenumber of users
Contribution to stablerevenue base

FY02/2023

FY02/2024
IFRS

Managed security
services (recurring
revenue model) as apercentage of sales
is increasing© 2024 HEROZ, Inc.

36

Balance Sheet (as of April 30, 2024)◼ The cash and deposits currently held by the Company will be gradually appropriated for investments to realize the Company's mid- to long-term
growth strategy.
◼ In intangible assets, there is a goodwill balance of about 1.9 billion yen.

Units: JPY millions

As of 4/30/2023(Consolidated)(A)

As of 4/30/2024(Consolidated)(B)

Increase and decrease(B-A)

Current Assets

4,963

3,997

Cash anddeposits

3,798

2,738

-966
Decrease mainly due to-1,060

3,709

3,693

Property, plantand equipment

237

262

Intangible assets

2,640

2,547

Investments andother assets

831

884

8,673

7,691

-981

Current Liabilities

994

1,168

173

Fixed Liabilities

1,598

1,380

-218

Net Assets

6,080

5,143

-937

Fixed Assets

Total Assets

M&A investments

-15
24
-93

Decrease mainly due to the onetime amortization of a portion of
goodwill of VarioSecure andincrease due to goodwill arisingfrom the consolidation of four
companies.

53© 2024 HEROZ, Inc.

37

05
Forecast of FY04/2025 Performance© 2024 HEROZ, Inc.

38

Forecast of FY04/2025 Performance■ Based on continued growth of existing businesses and the contribution of Tifana.com, a new group company, sales for the full year are

expected to be 6 billion yen.
■ Operating profit is targeted at 500 million yen, given that the SaaS businesses of HEROZ ASK and JOINT are in the start-up phase and weplan to invest in development and marketing costs.
FY04/2024
Actual(Consolitdated)

FY04/2025
Forecast(Consolidated)

Increase anddecrease(B-A)

Increase Raito(B)/(A)Net sales

4,841

6,000

1,158

+23.9%EBITDA

901

1,000

98

+11.0%

Operating Profit

451

500

48

+10.8%

Ordinary Profit

368

450

81

+22.0%Net Income (loss)-1,134

30

1,164

-

（Units: JPY millions）

attributable toowners of the parent© 2024 HEROZ, Inc.

39

Full-year forecast: Actual performance basis(excluding investment in SaaS-related products)■ In FY4/2025, the company plans to increase investment in sales personnel, recruiting, and marketing related to new SaaS products, etc.
■ On the other hand, we will continue to strive for appropriate cost control, and each existing business is aiming to increase sales and profits,

and we expect operating income of approximately 720 million yen on an actual value basis excluding these new product investments.

（Units: JPY Millions）⚫

Expected to spend approximately 220 million yen
for marketing and personnel costs associated withthe launch of "HEROZ ASK" and "JOINT".

⚫

Existing business operating income is expected tobe approximately 720 million yen, and is expected
to grow by 60% YoY on an actual basis.

⚫ Breakdown of Product
Investment Expenses
・Aggregate the following related costs for "ASK"and "JOINT∟ Personnel expenses for sales, customer
success, etc.
∟ Marketing expenses∟ New recruitment costs for sales expansion∟Other costs
Forecast

ability score(as in RPGs)© 2024 HEROZ, Inc.

40

06
Initiatives in each Business Segment© 2024 HEROZ, Inc.

41

HEROZ's Mortgage Fraud Detection AI System Begins Operation
at Shizugin Credit Guarantee◼ HEROZ and Shizugin Credit Guarantee Co., Ltd. to Implement Fraud Detection AI System for Use in Mortgage Loan Screening
Operations.
◼ Practical application of fraud detection AI to begin in April 2024.
Background of Introduction of Mortgage Fraud
Detection AI System

System Features andFuture Development⚫ Improve the accuracy of mortgage loan screening operations
and reduce the workload.

• This fraud detection AI system visualizes thepossibility of fraudulent use of mortgages thatare not for home purchase purposes with a scoreby an AI model that has already learned frompast screening data.

The fraud detection AI system, now in operation at Shizugin
Credit Guarantee, immediately detects loan applications that may
not be for the purpose of home purchase and prevents fraudulent
use. This will improve the accuracy of screening and reduce theworkload on screening staff• By referring to the score at the time of screening,
the screening staff can improve the accuracy of
screening by preventing the overlooking offraudulent use while streamlining the screening
process.
• We will continue to contribute to the accelerated
development of industry by pursuing AI-based
approaches to solving problems in industry.

© 2024 HEROZ, Inc.

42

PJCS 2024 also introduces the “Pokémon Battle Scope”◼ Pokémon Battle Scope" was also used for the live streaming of the "Pokémon Japan Championships 2024" held on June 1 and 2.
◼ The system used in the Pokemon Ryuo Tournament has been improved and enhanced to double battle specifications.

Image of the "Pokémon Battle Scope" distribution screen⚫ Real-time Pokémon battle match evaluation.

⚫ The system displays the battle's status and potential next moves, making
it easy for novice Pokémon battle spectators to watch the battle.

Development

開発の背景
Background• Pokémon Battle Scope" is a game direction AI
specialized for Pokémon battles, and its development
started with the aim of making Pokémon battles
enjoyable for a wide range of people.
• HEROZ is in charge of AI development, data
input/output, and adjustment for "Pokémon Battle
Scope," leveraging its technological strengths cultivatedthrough the development of AI-powered games such as"Shogi Wars" and AI for game analysis.

※ The production and production aspects of the distribution screen areprovided by The Pokémon Company. and other companies outside of HEROZ.

© 2024 HEROZ, Inc.

43

Kishin Analytics" is introduced as the evaluation value of Shogi live
broadcasts from the Meijin Tournament.
◼ Kishin Analytics," a Shogi AI analysis system, is now provided to the YouTube channel "Igo/Shogi ch Mainichi Shimbun" operated by theMainichi Newspapers.
◼ Live streaming of the 82nd Meijin-Sen matches to be held on April 10

Making watching Shogi easier to understand andmore authentic.

About Kishin Analytics⚫ Shogi AI analysis is applied to the evaluation value of the live-streamed
game.
Kishin Analytics" is installed in "Shogi & Go Channel: Mainichi Shimbun",which displays customized analysis results to improve the convenience ofusers watching. Live broadcasts of the Mainichi Shimbun-sponsored Meijin,
Ousho, and Class-A rank tournaments, the most prestigious title tournamentsin the chess world, are also available for "watching Shogi" by installing AI for
professionals.

Analysis screen of the board by
Kishin Analytics *The production
is different from the distribution
screen of "Shogi & Go CH
Mainichi Shimbun".

• HEROZ's "Kishin Analytics" is a Shogi analysis AI
system that was launched in May 2010 to provide
professional Shogi players with easy access to thelatest Shogi AI research.
• Now, a light version is also available at a reduced
price so that not only professional players but also
general Shogi players can enjoy full-scale analysis.

© 2024 HEROZ, Inc.

44

Launched vulnerability assessment service◼ Comprehensive support for small and medium-sized businesses' security with the launch of vulnerability
assessments and managed LAN/Wi-Fi

脆弱性診断サービス
専用ツールによる
自動診断

Webアプリケーション診断

ペネトレーションテスト

プラットフォーム(ネットワーク)診断

スマートフォンアプリケーション診断

Internet

セキュリティエンジニア
による手動診断

お客様の環境診断レポート

リモート診断脆弱性診断後のセキュリティ強化を柔軟に対応
UTM運用のマネージドサービス

次世代エンドポイント対策

セキュリティ強化型バックアップ

LAN内スイッチ、Wi-Fi APを一括管理

インターネットゲートウェイの運用管理体制強化

ウィルス・マルウェアの検知強化／最新サイバー攻撃対策

ランサムウェア感染被害を受けにくいバックアップ

社内のネットワーク／Wi-Fi
トラブル回避と脆弱性対応強化

VSRマネージドセキュリティ
サービス

Vario Endpoint Security

VDaP-Vario Data Protect

VarioマネージドLAN / Wi-Fi© 2024 HEROZ, Inc.

45

AI SoC Project◼ HEROZ's AI technology is used to promote a project to streamline network security operation and management tasks.

▍「AI SoC」 Project
Project Summary• Automation of technical support contact work previously

performed by experienced operators through the use ofAI.
• Full-scale use of LLM to improve support quality andExpected Benefits• Achieve cost reduction and quality improvement.
• Improvement of service level by reducing work time.
• Expansion of service scope through the utilization oflarge amounts of teacher data.

efficiency, security training, etc.

Project ProgressFuture Outlook• Introduced AI to the support desk of VSR Managed• Introducing AI to front desk support operations as well,

Security Services to automatically determine thecomplexity of customer requirements and semiautomate subsequent processing.

to reduce training costs and improve response quality.
• Directly linking the operation platform system and AI toprovide necessary and sufficient operation services
according to customer characteristics.

© 2024 HEROZ, Inc.

46

Strengthen marketing initiatives◼ Solution website opened to the public and marketing measures strengthened. Aiming to increase demand throughdirect sales.
▍Solution site open to the public
Consolidate cybersecurity-related content,Strengthencross-selling▍Content Examples
Archived Webinar Videos• Distribution begins in January 2024
• Number of videos: 9• Highest viewed more than 700 times

Case Studies• Solutions• Seminar Information• Archived Webinar Videos• Useful Documents• Case Studies• Security Column• Overview of Introducing Companies• How to Use the Service• Effects of Service Introduction• Interview with the person in charge© 2024 HEROZ, Inc.

47

Value provided to future customers• The sales style in this industry to date has been a system in which customers combine various functions to ensure security,
but it has been difficult for our main customer base to select functions.
• Going forward, we will provide optimal security packages to our customers and shift our focus to business value,
providing security rather than selling conventional functionality.
これまでのセキュリティ業界の販売スタイル
各種機能
SASE※

運用

今後の当社の顧客提供価値
Vario Ultimate Zero

まとめて”WORK”を提供

UTM※

端末（PC等）を守る

SOC

SWG※

DLP※

（運用管理）

EPS※

社内LANを守る
アカウントを管理する

セキュリティのプロによる運用管理

ファイルを守る• 各社が特定の機能に特化した製品を販売（各社は機能（サービス）を提供）• 顧客側に相応の知識が必要であり、自社のセキュリティ
を顧客側が担保する必要があった• 今後は顧客層に合わせて適切な機能に運用業務を組み合わせ、統合セキュリティベンダーとして、セキュリ
ティを当社が統合的に担保する顧客価値を提供※ UTM（Unified Threat Management） ： コンピュータウイルスやハッキングなどの脅威から、コンピューターネットワークを効率的かつ包括的に保護する管理手法※ SASE（Secure Access Service Edge） ： ネットワークの機能とセキュリティの機能を一体として提供するサービス、またはその考え方・概念※ SWG（Secure Web Gateway） ： エンドユーザーが社外ネットワークへのアクセスを安全に行うためのプロキシ※ DLP（Data Loss Prevention） ： 機密情報や重要データを自動的に特定し、データを常に監視・保護する機能※ EPS（End Point Security） ： ネットワークに接続される末端機器を悪質なサイバー攻撃から守ることを目的としたセキュリティ対策やソリューション

© 2024 HEROZ, Inc.

48

Vario Ultimate Zero service launched◼ Launched "Vario Ultimate ZERO," a zero-trust security service suited to the scale of small and midsize companies.
◼ From cloud computing to office environments, both security assurance and labor-saving operation and maintenance▍Managed services for zero-trust security with minimal configuration= Vario Ultimate ZERO
クラウド型ネットワーク・セキュリティ

新サービス

監視・管理

Vario SASE
Vario FWaaS

Vario SWG

パブリッククラウド／
通信キャリアデータセンター

Vario IPS

⚫ クラウドからオンプレまで対応可能⚫ 接続の経路上でセキュリティ確保

SaaS
業務アプリケーションPortal

新サービス
Vario FWaaS

Vario IDaaS

Vario SWG

Vario IPS

CASB

Sandbox

Vario IDaaS
Vario IDaaS⚫ 認証・シングルサインオン⚫ アクセス（端末）管理⚫ アカウント管理・サービス登録⚫ ディレクトリ統合

最新のサイバー攻撃の検知・防御

オフィス

自宅

外出先

Vario EDR

Vario EDR

Vario EDR

既存サービス

Vario EDR
Vario EDR
⚫ ランサムウェア対策⚫ 未知の攻撃への対策⚫ マルウェア感染された端末の自動隔離※「CASB」「Sandbox」は顧客ニーズに応じて外部と連携し提供予定© 2024 HEROZ, Inc.

49

07
Frequently Asked Questions and Answers© 2024 HEROZ, Inc.

50

Frequently Asked Questions and Answers◼ Some of the frequently asked questions and answers we receive in relation to our most recent financial results announcement.

Q： Are there any factors that are likely to increase costs over the current fiscal year (ending April 2025), such as a significant
increase in personnel?
A：Yes, in the fiscal year ending April 2025, we will continue to strengthen our investment in human resources and aggressively
invest in the release of new products.
In February 2024, the Group released paid beta versions of two products, "HEROZ ASK" and "JOINT," and after receiving
feedback from enterprise companies, released the official versions in May.
In the current fiscal year, we will actively hire personnel for the operation of these products, customer success, and the
expansion of functions. In addition, we expect to hire personnel for marketing and incur expenses for advertising in
conjunction with the official release of the products.
In launching SaaS-type products, while costs will be incurred upfront, the earnings model will be an accumulative one, sowhile sales will steadily increase, investments will be made upfront. Therefore, the product business will be in the red for thetime being, but we will make it profitable beyond the break-even point by accumulating stable sales on an ongoing basis.
The Group's profit policy for the current fiscal year is to continue in the investment phase. We appreciate yourunderstanding.

© 2024 HEROZ, Inc.

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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.

© 2024 HEROZ, Inc.

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