Non-consolidated Financial Results for the Three Months Ended September 30, 2021 [Japanese GAAP]

Non-consolidated Financial Results

for the Three Months Ended September 30, 2021

[Japanese GAAP]

November 9, 2021

Company name: i3 Systems, Inc.

Stock exchange listing: Tokyo Stock Exchange

Code number: 4495

URL: https://www.i3-systems.com/

Representative: Tsutomu Sasaki, President and CEO

Contact: Takashi Ono, Manager, Accounting and Finance Department

Phone: [phone]

Scheduled date of filing quarterly securities report: November 9, 2021

Scheduled date of commencing dividend payments: -

Availability of supplementary explanatory materials on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Not scheduled

(Amounts of less than one million yen are rounded down.)

1. Financial Results for the Three Months Ended September 30, 2021 (July 1, 2021 - September 30, 2021)

(1) Operating Results					(% indicates changes from the previous corresponding period.)
			Net sales	Operating profit	Ordinary profit	Profit
	Three months ended		Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
	September 30, 2021	599	30.8	232	65.9	232	79.7	161	79.5
	September 30, 2020	457	－	139	－	129	－	89	－
			Basic earnings		Diluted
				earnings
			per share
				per share
	Three months ended			Yen		Yen
	September 30, 2021			30.74		30.13
	September 30, 2020			17.39		16.96

(Notes) 1. No financial statements have been prepared for the three months ended September 30, 2019. Accordingly, figures indicating changes from the previous corresponding period for the three months ended September 30, 2020 are not provided.

1. 2. The Company's shares were listed on the Mothers market of the Tokyo Stock Exchange on July 15, 2020. For this reason, the average share price for the period between the date of the initial listing and September 30, 2020 is used to calculate the diluted earnings per share for the three months ended September 30, 2020.

2. Financial Position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
As of September 30, 2021	2,649	1,791	67.6
As of June 30, 2021	2,830	1,681	59.4

(Reference) Equity: As of September 30, 2021: ¥1,790 million As of June 30, 2021: ¥1,681 million

2. Dividends

			Annual dividends per share
		1st quarter-end	2nd quarter-end		3rd quarter-end		Year-end	Total
		Yen	Yen		Yen		Yen	Yen
Fiscal year ended		-	0.00		－		10.00	10.00
June 30, 2021
Fiscal year ending		-
June 30, 2022
Fiscal year ending
June 30, 2022			0.00		－		10.00	10.00
(Forecast)

(Note) Revision to the forecast for dividends announced most recently: None

3. Financial Results Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 - June 30, 2022)

(% indicates changes from the previous corresponding period.)

Net sales Operating profit Ordinary profitProfitEarnings per share

Full year	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
2,569	26.6	732	28.6	734	31.1	469	11.7	89.60

(Note) Revision to the financial results forecast announced most recently: None

* Notes:

1. Accounting methods adopted particularly for the preparation of quarterly financial statements: Yes
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Total number of issued and outstanding shares (common shares)
5. 1. Total number of issued and outstanding shares at the end of the period (including treasury shares):

September 30, 2021:	5,241,350 shares
June 30, 2021:	5,238,350 shares
2) Total number of treasury shares at the end of the period:
September 30, 2021:	121 shares
June 30, 2021:	121 shares
3) Average number of shares outstanding during the period:
Three months ended September 30, 2021:	5,238,937 shares
Three months ended September 30, 2020:	5,159,537 shares

• These quarterly financial results are outside the scope of quarterly review by certified public accountants or an audit firm.
• Explanation of the proper use of financial results forecast and other notes
  The financial results forecasts and other forward-looking statements herein are based on information currently available and certain assumptions considered to be reasonable, and the Company does not in any way guarantee the achievement of the projections. Actual results may differ significantly from these forecasts due to a wide range of factors. For assumptions underlying the financial results forecasts and notes on their use, please refer to "(3) Explanation of Financial Results Forecast and Other Forward-looking Information in 1. Qualitative Information on Quarterly Financial Results" on page 3 of the attached material.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results .........................................................................	2
(1)	Explanation of Operating Results .......................................................................................................	2
(2)	Explanation of Financial Position .......................................................................................................	3
(3)	Explanation of Financial Results Forecast and Other Forward-looking Information ...........................	3
2. Quarterly Financial Statements and Principal Notes ...............................................................................	4
(1)	Quarterly Balance Sheets ....................................................................................................................	4
(2)	Quarterly Statements of Income ..........................................................................................................	5
(3)	Notes to Quarterly Financial Statements .............................................................................................	6
	(Notes on going concern assumption) ............................................................................................	6
	(Notes in case of significant changes in shareholders' equity) .......................................................	6
	(Accounting methods adopted particularly for the preparation of quarterly financial statements) ..	6
	(Changes in accounting policies) ....................................................................................................	6
	(Significant subsequent events) ......................................................................................................	6

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

During the three months ended September 30, 2021, vaccination against the COVID-19 progressed, although the government decided to extend the state of emergency for some prefectures. There were also concerns about a sixth wave of infections. With no prospects for completely containing the pandemic, the economic environment remained uncertain.

Under such a market environment, the Company provides cloud-based B2B SaaS services in the form of subscription, with CLOMO MDM, a mobile device management service, launched in 2010, and CLOMO SECURED APPs, an apps service for mobile device as its core businesses, under the mission of Making IT More Accessible. The Company has achieved the number one position in the MDM market (own brand) share for ten consecutive years since fiscal 2011, as published in December 2020 (Note 1).

During the three months ended September 30, 2021, the Company promoted sales activities to expand the number of corporations introducing our services by utilizing remote sales via the web conference system, as in the previous fiscal year. We have worked to promote better understanding of how to use our CLOMO services and their quality by aggressively disclosing articles on the cases of introducing our services to meet new demand for MDM caused by social changes such as mobile device management at elementary and secondary schools for the GIGA School Concept (Note 2), IT asset management for remote working, and managing terminals for business to promote digital transformation (DX) in manufacturing and transportation industries. In addition, for measures to raise awareness of our CLOMO services, we are preparing to increase their exposure in the second quarter and beyond.

In terms of development, the Company has continued to focus its efforts on improving the functions to meet customer needs in addition to enhancing the functions needed for its CLOMO services to gain a share of the PC management market. Furthermore, we continue to utilize recent technologies such as Azure Kubernetes Service (AKS) (Note 3) and Xamarin (Note 4) as our initiatives to increase product value and reduce costs by product development and enhanced efficiency of service operations.

The Company is aggressively recruiting human resources, particularly in Product Development Division, Sales Division, and Customer Success Division in order to strengthen its workforce for continuous business growth in the future. The Company has been recognized as a great place to work in the 2022 edition of the Great Place to Work ranking, which is based on an employee survey conducted by the Great Place to Work® Institute Japan in accordance with a global standard, for two consecutive years. The Company is aggressively working to develop the working environment to acquire and retain excellent human resources. In addition, 20% of new graduates who are set to join the Company in April 2022 are foreign nationals, which represents the Company's ongoing commitment to building a diverse organization.

As a result of these efforts, the number of corporations introducing our services reached 3,555, an increase of 164 (up 4.8%) compared to the end of the previous fiscal year.

Regarding the impact of the spread of COVID-19 on our business and operating results, the impact on the operating results for the three months ended September 30, 2021 and the management indicators targeted by the Company (i.e., increasing the number of corporations introducing CLOMO and license retention rate) was extremely minimal.

Consequently, for the three months ended September 30, 2021, the Company reported ¥599,144 thousand in net sales (up 30.8% year-on-year), ¥232,049 thousand in operating profit (up 65.9% year-on-year), ¥232,497 thousand in ordinary profit (up 79.7% year-on-year), and ¥161,030 thousand in profit (up 79.5% year-on-year).

As the Company operates in a single business segment, the license sales business, overview of net sales by segment is omitted. The breakdown of net sales by service is as follows:

CLOMO MDM:	¥545,659 thousand
SECURED APPs:	¥47,544 thousand
Others:	¥5,940 thousand

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