Transcosmos : FY2024/3 Earnings Conference Presentation Material

Supplemental Material for FY2024/3

Financial Results

(April 1, 2023 - March 31, 2024)

April 30, 2024

transcosmos inc.

Table of Contents

1. FY2024/3 Financial Results

2. Medium-term Business Plan: Progress & Priorities

1-1. Financial Results Overview

• Financial Results Summary
• Consolidated Income Statement Summary
• Consolidated Sales Analysis
• Consolidated Sales Analysis (Quarterly Trend by Segment)
• Consolidated Sales Analysis (Quarterly Trend: CX Services)
• Consolidated Sales Analysis (Quarterly Trend: BPO Services)
• Consolidated Sales Analysis (Quarterly Trend: Geographic Market)
• Parent Company Quarterly Sales Trend
• Consolidated Operating Income Analysis
• Consolidated Operating Income Analysis (Quarterly Trend by Segment)
• Parent Company Operating Income Analysis
• Parent Company Gross Profit Trend excluding COVID jobs
• Parent Company Six-year Sales/Operating Income Trend
• transcosmos inc. Net Income Analysis
• Consolidated Balance Sheet Summary
• Consolidated Cash Flow Statement
• CAPEX, Amortization/Depreciation, Employees, Service Bases

2-1. Market Landscape

• Market trends impacting transcosmos business
• Demand trends: Adapt to changing consumer behavior
• Demand trends: Enhance labor productivity

2-2. FY2025/3 Priorities

• Secure competitive edge with differentiated services
• Drive growth focusing on burgeoning Asian market
• Accelerate growth strategy by making the most of AI
• Win new & expand existing clients with robust sales capability
• Further integrate Sustainability Management into business and strengthen the Group's management base

2-3.Medium-toLong-term Numeric Targets

• Medium-toLong-term Numeric Targets
• Reference: Medium-term Business Plan 2024/3-2026/3 Outline

1-2. Dividend Policy

2

1

FY2024/3 Financial Results

1-1 Financial Results Overview

1-2 Dividend Policy

2

Medium-term Business Plan: Progress & Priorities

2-1	Market Landscape
2-2	FY2025/3 Priorities
2-3	Medium-toLong-term Numeric Targets

3

Financial Results Summary

• Sales declined YoY due to a drop in COVID jobs and lower demands for China's e-commerce business. Yet, both CX and BPO Services, excluding COVID jobs, continued to grow. Order bookings expanded, riding the wave of social change, such as changing consumer behavior in a digital society, an aging and shrinking population, work style reform, global economic growth, etc.
• • CX services grew 3% YoY. Actively delivered unique platform services built on our patented TCI-DX model.
  • BPO services grew 2% YoY. Actively pushed platform services that combine our expertise and digital technology.
  • Overseas retained double digit growth, ASEAN continued to expand business with global companies.
• Operating income decreased due to temporary upfront investments made towards medium-term growth and SG&A headwind on top of a drop in COVID jobs. Despite this, operating margin in existing business excluding COVID 19 jobs stabilized due to a higher operating ratio.
• Although transcosmos inc. net income decreased, non-operating income and extraordinary profit increased.

Consolidated Sales

¥362.2B

(YoY: -3.1%)

Consolidated Operating

Income

¥11.5B

(YoY: -¥11.8B)

transcosmos inc. Net Income

¥10.1B

(YoY: -¥5.7B)

4

	Consolidated Income Statement Summary	*For each segment income row, figures in the Mix columns are profit margins.
	In ¥100M (rounded to the nearest 100M)	FY2023/3		FY2024/3		Change
				Amount	Mix	Amount	Mix	Amount	%Change
	Sales	3,738	100.0%	3,622		100.0%	-116	-3.1%
			Parent Company	2,445	65.4%	2,367		65.4%	-78	-3.2%
			Domestic Affiliates	432	11.6%	423		11.7%	-9	-2.1%
			Overseas Affiliates	983	26.3%	957		26.4%	-26	-2.7%
			Elimination of intra segment transaction	-122	-3.3%	-125		-3.5%	-3	-2.4%
	Gross Profit	765	20.5%	683		18.8%	-83	-10.8%
	SG&A Expenses	532	14.2%	568		15.7%	+35	+6.7%
	Operating Income	233	6.2%	115		3.2%	-118	-50.7%
			Parent Company	159	6.5%	70		3.0%	-89	-56.0%
			Domestic Affiliates	37	8.7%	19		4.5%	-18	-48.7%
			Overseas Affiliates	36	3.7%	25		2.7%	-11	-29.8%
			Elimination of intra segment transaction	-0	-	0		-	+0	-
	Non-Operating Income (Loss)	-2	-0.1%	23		0.6%	+25	-
	Ordinary Income	231	6.2%	138		3.8%	-93	-40.3%
	Extraordinary Income (Loss)	4	0.1%	26		0.7%	+22	+609.2%
	Net Income Attributable to	158	4.2%	101		2.8%	-57	-36.0%
	Shareholders of transcosmos inc.		5

Consolidated Sales Analysis

• Sales decreased by ¥11,600M (-3.1%)

Parent

Company

Domestic Affiliates

Overseas Affiliates

3,738

Sales down due to a YoY drop in COVID jobs. Excluding COVID jobs, existing business grew bookings by actively pushing CX services built on patented TCI-DX model and BPO services that combine our expertise and digital technology.

Sales down mainly due to lower sales in a listed subsidiary and its group companies caused by lower demands for business areas that grew under the pandemic.

South Korean subsidiary continued to grow while ASEAN subsidiaries kept double-digit growth. Yet, sales declined in Chinese subsidiaries' e-commerce business unit.

-78
	-9	-26	-3
Parent Company	Domestic Affiliates	Overseas Affiliates	Elimination of

intra-segment

transaction3,622

-116

In ¥100M (rounded to the nearest 100M)

FY2023/3	FY2024/3
Consolidated Sales	Consolidated Sales	6

Consolidated Sales Analysis (Quarterly Trend by Segment)

• QoQ: Down ¥500M due to weaker sales in the Parent Company.
• YoY: Down ¥7,000M mainly due to a drop in COVID jobs in the Parent Company and lower sales in a domestic listed company and declined e-commerce business sales in Chinese subsidiaries.

Quarterly Trend by Segment

In ¥100M (rounded to the nearest 100M)	%Sales growth			-70		-5
+13.7%
	+4.7%	+2.8%	+2.0%		+1.1%	-1.4%
		-4.6%
					-7.1%
221	234	243	285	231	243	239	244
106	103	112	112	108	103	107	106
636	595	603	612	581	595	600	591
-30	-30	-31	-31	-30	-30	-33	-32
23/3 1Q	23/3 2Q	23/3 3Q	23/3 4Q	24/3 1Q	24/3 2Q	24/3 3Q	24/3 4Q
933	901	926	978	889	911	913	908

■ Parent Company ■ Domestic Affiliates	■ Overseas Affiliates	■ Elimination of intra-segment transaction	7

Consolidated Sales Analysis (Quarterly Trend: CX Services)

• QoQ: Down ¥900M. Excluding COVID jobs, down ¥500M.
• YoY: Down ¥5,700M. Excluding COVID jobs, down ¥2,800M mainly due to lower sales in China's e-commerce business.
• Full-year:Down ¥6,100M. Excluding COVID jobs, up ¥6,400M, +2.7%.

Quarterly Trend: CX Services

In ¥100M (rounded to the nearest 100M)		COVID job
-57		Existing business exc. COVID job
	-9

		36	35		10
60	40	18	12	6

553	574	591	636	587	610	613	608

23/3 1Q	23/3 2Q	23/3 3Q	23/3 4Q	24/3 1Q	24/3 2Q	24/3 3Q	24/3 4Q
613	614	627	671	604	622	623	614

• Demand expanded for services that match the needs of changing consumer behavior in a digital society.
• Grew orders with integrated services that combine the industry's leading contact center network and web development services.
• Actively pushed TCI-DX, our unique patented platform. Clients increased to 85 companies, up 66% YoY.
• Generative AI strategy made progress. Now offering GenAI-powered agent support systems, AI-powered chatbot services, and more.

*Sales for each service are calculated based on the sales mix used for management accounting, and are not adjusted for intra-segment transactions.

8

Consolidated Sales Analysis (Quarterly Trend: BPO Services)

• QoQ: Up ¥800M. Excluding COVID jobs, up ¥800M.
• YoY: Down ¥900M. Excluding COVID jobs, up ¥200M
• Full-year:Down ¥4,300M. Excluding COVID jobs, up ¥1,900M, +1.7% growth.

Quarterly Trend: BPO Services

In ¥100M (rounded to the nearest 100M)				COVID job
			-9			Existing business exc. COVID job
							+8
42	11	9	11		0	0
5	5

265	274	287	294	276	280	288	296

23/3 1Q	23/3 2Q	23/3 3Q	23/3 4Q	24/3 1Q	24/3 2Q	24/3 3Q	24/3 4Q
307	285	296	305	281	285	288	296

• Population aging and shrinking as well as workstyle reform accelerated, expanding service demand for business process and productivity enhancement.
• Grew orders by actively delivering platform services that combine our expertise and digital technology.
• Order momentum continued in DX services that meet the growing demands in the construction and manufacturing industries.
• Released HCM Analytics Platform that helps businesses make human capital information disclosure and GHG Emissions Calculation Solution that auto- collects/calculates GHG emissions data, responding to client needs to implement sustainability management.

*Sales for each service are calculated based on the sales mix used for management accounting, and are not adjusted for intra-segment transactions.	9

Consolidated Sales Analysis (Quarterly Trend by Geographic Market)

• South Korea: Up ¥400M QoQ, and ¥700M YoY. CX service orders expanded. Achieved full-year growth of +3.8%.
• China: Up ¥100M QoQ. Down ¥5,400M YoY. Bookings declined for the e-commerce business. On a full-year basis, down -22.0%.
• ASEAN: Up ¥200M QoQ, and ¥500M YoY. Business with global companies expanded. Continued double digit growth on a full-year basis at 18.4%.

Overseas Quarterly Trend

In ¥100M (rounded to the nearest 100M)		%Overseas sales	*Overseas sales are categorized by country or region based on clients' location,
	therefore, figures are different from the Overseas Affiliates segment.

			27.6%
	24.4%	24.3%	17	24.3%	25.2%	24.3%	24.8%
22.2%
		43
	16	17		18	18	15
		15
16
36	36		40	43	46	48
35
		77	112
65	72		63	75	57	58
91	96	96	97	97	93	100	104
23/3 1Q	23/3 2Q	23/3 3Q	23/3 4Q	24/3 1Q	24/3 2Q	24/3 3Q	24/3 4Q
207	220	225	270	216	230	222	225

■ South Korea ■ China ■ ASEAN ■ Other	10