HEROZ : Presentation Material for FY04-2022 Full Year

Notice

This 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.

Presentation Material for FY04/2022

Full Year Financial Results

June 10, 2022

HEROZ, Inc.（4382）

1. Executive Summary
2. Business Overview
3. FY04/2022 Full Year

Performance

1. FY04/2023 Forecast
2. Growth Strategy
3. Reference Materials

Executive Summary of FY04/2022

• Net sales were 1,482 million yen (-4.7% YoY), consisting of
• • AI (B-to-B) services: net sales of 564 million yen(-17.4% YoY)
  • AI (B-to-C) services: net sales of 918 million yen (+5.2％ YoY)
• In the AI (B-to-B) service, sales decreased 17.4% YoY due to the termination of services for game operations with our AI and delays in acquiring initial setup fees, etc. In the AI (B-to-C) service, sales increased 5.2% YoY due to the effects of "Shogi Wars", including increased attention to Shogi following the achievement of Sota Fujii's fifth championship and events held in the application.
• EBITDA was 188 million yen (-48.4% YoY), operating profit was 34 million yen

(-88.2% YoY), ordinary profit was 87 million yen(-69.3% YoY).This was due to increases in labor costs, depreciation and amortization, and recruiting and training expenses, but the investments were generally within the scope of the plan, as they contribute to our medium-term growth. Net income was 49 million yen (-76.2% YoY),due to the impact of the expansion of income tax credits associated with these increased expenses, etc.

◼ Difference from forecast mainly due to lower sales in AI (B-to-B) services.

3

Strategy of FY04/2023

• In FY4/2023, in addition to stable growth of AI (B-to-C) services, we will strengthen sales and marketing functions for growth of AI (B-to-B) services, and as a growth investment, we will strengthen promotion of collaboration with VarioSecure Inc.

AI（B-to-C）

services

AI（B-to-B）

services

Investment For Growth

• Stable business growth mainly by Shogi Wars
• In May 2022, dlshogi with HEROZ won the World Computer Shogi Championship. We launched "Kishin Analytics," which supports professional Shogi AI research using our Shogi AI, for professional Shogi players through AI SaaS model.
• Although the company has not focused on customer acquisition activities due to its focus on its highly skilled engineering team, the company will launch a sales and marketing organization by May 2022 and strengthen our customer acquisition activities for our future growth.
• Several AI products under development will be available by the end of FY04/2023.
• Collaboration with VarioSecure Inc., to establish an "AI Security Company" between the two companies.
• As a first step, we will incorporate our AI into the managed security services provided by VarioSecure to strengthen product attraction.

4

1. Executive Summary
2. Business Overview
3. FY04/2022 Full Year Performance
4. FY04/2023 Forecast
5. Growth Strategy
6. Reference Materials