V cube : FY2023.Q1 Investor Meeting transcription

V-cube, Inc.

Q1 Financial Results Briefing for the Fiscal Year Ending December 2023

May 12, 2023

Event Summary

[Company Name]	V-cube, Inc.
[Company ID]	3681-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Q1 Financial Results Briefing for the Fiscal Year Ending December 2023
[Fiscal Period]	FY2023 Q1
[Date]	May 12, 2023
[Number of Pages]	18
[Time]	17:00 - 17:30
	(Total: 30 minutes, Presentation: 20 minutes, Q&A: 10 minutes)
[Venue]	Webcast
[Venue Size]
[Participants]
[Number of Speakers]	1
	Masaya Takada	Representative Director, President & CEO

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Japan	050.5212.7790	North America	1.800.674.8375
Tollfree	0120.966.744	Email Support	[e-mail]

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Presentation

Takada: Hello, everyone. I am Takada, Representative Director, President, and CEO of V-cube, Inc. Thank you very much for taking time out of your busy schedule today to participate in the financial results briefing for Q1 of the fiscal year ending December 31, 2023. Previously, Mashita explained the financial results, but I would like to inform the shareholders of the Company's situation on a regular basis, so I would like to thank you for your cooperation today.

I would like to begin by explaining the contents of the financial results for Q1 of FY2023, followed by a question-and-answer session, so I would like to thank you in advance for your cooperation. The chat section of the seminar is open, so if you have any questions, please enter them there at any time.

I will now begin to explain the financial results. Today, I will explain based on this content. First, here are Q1 performance highlights for FY2023.

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In terms of the sales trend in Q1 so far, sales tended to be concentrated in Q1 due to the Japanese-affiliated pharmaceutical industry and Installation of Telecube to railroad station. However, Q1 sales weighting decreased due to a change in quarterly budgeting policy as a result of budget reductions in the Japanese pharmaceutical industry and the elimination of year-end budget use and also due to the staggered timing of the installation of Telecube to railroad station.

The overall trend has been more even, but Q3 remains the weakest. Q1, Q2, and Q4, each with its own seasonality, are disappearing.

The progress of our performance figures is generally in line with the plan we announced in February of this year. The consolidated results for Q1 of FY2023 were as follows: net sales of JPY3.01 billion, marginal profit of JPY1.89 billion, adjusted EBITDA of JPY0.45 billion, and adjusted operating profit of JPY0.21 billion.

Another key indicator by business segment is SDK usage fees in Enterprise DX, , with recurring billings for the last 12 months up 38% to JPY1.15 billion. In Event DX, the number of events held decreased by 22%, but the unit event cost increased 6% to JPY880,000. In the Third-place DX , 2,525 new units were installed in Q1, resulting in a cumulative total of 19,295 units installed.

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Following are the highlights of each segment.

First, in the Event DX Business, the pharmaceutical industry will see a decline in the number of events held due to the impact of shrinking budgets as anticipated at the beginning of the period, but we will build a track record by raising unit prices through the expansion of high value-added events, such as Metaverse.

As for the US market, we are investing heavily in sales activities for growth, and with new major clients, such as Citigroup and Light & Wonder, beginning to use our services, we are on the path to turnaround and regrowth. On the other hand, SONY and Lincoln Financial, which were having difficulty getting started, have finally begun using the service. Although Q1 had a loss of about JPY80 million, the decline in the number of events held by existing clients due to the reopening and the seasonal weakness of the US market are in line with the plan at the beginning of the fiscal year.

Next is the Third place DX Business. The office and corporate market, which has shown high growth to date, continues to spread at a high level somewhat lower than in the same period last year due to changes, such as an increase in the ratio of shipments of two- or four-person units as a result of an increase in the number of people coming to work.

Direct sales by the Company have been below expectations, and sales have not been achieved. Meanwhile, the subscription model continues to perform well, with 591 units in operation, and the percentage of stock sales is increasing. Although the installations for the public, mainly at railroad stations, has not been achieved due to a delay at the start of the fiscal year, we expect to reach the same level as last year for the full year. Some large projects, which will be Telecube Connect's projects, were affected by a delay in the progress.

In the Enterprise DX Business, the Business Growth set a record in subscription fees, which are stock sales. In the Hybrid Work centered on general-purpose web conferencing, we have seen solid growth in Zoom sales and have begun handling Zoom Phone. In the Reskilling, the LMS has entered a growth phase again, thanks to its strong performance in the corporate sector.

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Japan	050.5212.7790	North America	1.800.674.8375
Tollfree	0120.966.744	Email Support	[e-mail]

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