Cube : FY2019 Financial Results presentation slide

FY2019

Financial Results Briefing Document

V-cube, Inc.

February 12, 2020

Copyright © V-cube, Inc. All Rights Reserved.

Index

1. Current Initiatives

1. FY2019 Results
2. Segments and KPIs
3. FY2020 Forecast
4. Appendix

Copyright © V-cube, Inc. All Rights Reserved.

Highlights

Opportunities for the unprecedented spread of telework

FY2019

• Net sales increased 10.6% YoY (excluding divested business)
• Operating profit was in the Red due to conducting Mass Marketing (No plan in 2020)
• Fully impaired China-related business, no negative impact expected in the future

・Cannot be recorded due to delayed sales receipt of sold services

（approx. 200 million yen)

• FY2020 and beyond are not included in the sales and profit plan.
• Only royalty income from distributors' sales in the future

⇒FY2020 will make a positive contribution

FY2020

• Progress in realigning and investing in growth areas, with clear contributions to 2020 (P.11)
• Operating profit target is 900 million yen, and the forecast is 500 million yen.
• FY2019 Dividend forecast 1 JPY unchanged. Aim for a dividend payment ratio of 20%

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1. Current Initiatives

2. FY2019 Results

1. Segments and KPIs
2. FY2020 Forecast
3. Appendix

Copyright © V-cube, Inc. All Rights Reserved.

Necessary for wider use of telework

Culture	System	Tools	Location
・ Leadership	・ Employment	・ Web conferencing	・ Share office
Regulations
・ Pressure from	・ Chat tools	・ Satellite office
・ Evaluation System
the employment
・ Security Tools	・ Telecommuting
environment	・ Telework rules
	environment
・ Social pressures	・ 4G, 5G line
	・ Telecube
・ Awareness of the need		・ Electronic approval
- Olympics		system
- Frequent occurrence		・ Groupware
of disasters such as
typhoon
- Epidemics of infection

Previously the tools were relatively complete, but the other 3 were in short supply

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Social Environment (Telework Wave)

Decided on the implementation policy of "Telework Days 2020" on January 29, 2020

Calling for the Implementation of Telework, Government-led National Campaign for Work Style Reform

• Implementation period: from July 20th 2020 to September 6th 2020
• Period of Olympic games is the "Period for Concentrating Enterprises in Tokyo"
• Approximately 680 thousand participants from 2,887 organizations in 2019
• Aiming for participation by more than 3,000 organizations in 2020
• Encourage telework, satellite offices, holidays, staggered commuting, etc.

Culture System

"Smooth Biz"	(Since 2017, V-cube has been participating as a special cooperative group
by the Tokyo Metropolitan Government	(with more than 100 participants at the same time).

As 1 of the 3 initiatives

Promoting the Establishment of Telework

⇒Increasing momentum

for telework toward summer

Copyright © V-cube, Inc. All Rights Reserved.	6

Launch of telework introduction support service (release on February 12.2020)

As a countermeasure against the spread of new coronavirus infections

Support for introduction of telework to companies and organizations that embark on new

introduction of telework and environmental improvement

System Tools

【Target】

All companies and organizations considering the introduction of telework

【Services provided】

Telephone and online consultation desks for the introduction of new

telework systems

Provision of various tools for realizing telework

Introduction to Telework Usage Guidelines

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Telecube, Killer Products for Telework

Launched the subscription model.	Location
Large-scale commercials were conducted on television and taxis at

the end of 2019.

For 1 person

69,800 yen~/month

For 2 persons

100,800 yen~/month

TelecubeCo.Ltd	JR East
Image of installation at office lobby	STATION BOOTH image
https://telecube.jp/	https://www.stationwork.jp/

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Feedback of Mass Advertising, Including TVCM

Satoshi Ikematsu, an actor of Japan, passionately performs a moderately-sized salaried worker!? On-air service started on December 1st, on the "Telecube" TVCM, which solves "Shortage of meeting room issues" in offices.

• A lot of empathy for the "shortage of meeting rooms" defined in TVCM.

Effects of mass advertising

• Number of visits to websites : 219% YoY
• Number of prospective online customers : 141% YoY
• Number of Telecube business negotiations :

337% compared to before TVCM and the end of January 2020

• Acceleration of business negotiations due to widespread recognition of partner candidates among large corporations and government agencies

Copyright © V-cube, Inc. All Rights Reserved.	9

Telecube's Business Deployment

The number of units installed increased significantly from FY2019.3Q level.

In Telecube for public spaces, only 65 units were installed due to location adjustments, but preparations for full-

scale installation in 2020 progressed as planned.

Progress in installing Telecube for public spaces

October. 2019

Telecube 2019 Total number of installed units

• Seibu Railway "Takadanobaba Station" "Tokorozawa Station"

November• Odakyu Railway. 2019"Machida Station" "Kyodo Station"

• Sanno Park Tower (directly connected to Tameike Sanno Station)

December. 2019

• Tobu Railway " Kita-Senju Station"

January. 2020

• Toyosu Foresia, Toyosu Front (Toyosu area)
• Shiodome Building (Shinbashi/Hamamatsu-cho area)
• Kitanomaru Square (Kudan Area)

February. 2020

• Shinjuku Front
• Shinjuku East Side Square

(Units)

400

350

300

250

200

150

100

50

0

65

50

For the public sector

For companies

13319

3228

148

105

FY19.1Q

FY19.2Q

FY19.3Q

FY19.4Q

Copyright © V-cube, Inc. All Rights Reserved.	10

Growth by Focus Area in 2020

General web conferencing (general purpose web	Video communication services specializing in specific applications
conferencing) and video conferencing	"V-cube for Video Utilizing the Video Business"

V-CUBEmeeting

Image embedding (SDK)

Provide API/SDK to meet the

demand for videos in various

industries, and develop business

jointly.

(Education/Social/Medical, etc.)

Pharmaceutical

website seminars, etc.

Distribution of web seminars in the pharmaceutical industry. Developed a system for remote detailing, on-line medical care, and medication guidance.

Emergency measures

and disaster

countermeasures

Emergency measures, disaster

countermeasures, and field

support solutions.

Copyright © V-cube, Inc. All Rights Reserved.

LMS/TMS

11

Growth by Focus Area in 2020
General web conferencing	Video communication service specializing in specific applications
(general purpose web conferencing) and video conferencing
"V-cube for Video Utilizing the Video Business,"

Sales :2,726→2,978

MP(marginal profit): 2,103 → 2,021

V-CUBEmeeting

Sales :297→164

MP: 69 → 57

Sales :90→236	Sales :807→1,217	Sales :307→545
MP: 90 → 228	MP: 653 → 975	MP: 204 → 335

Image embedding

(SDK)

Provide API/SDK to meet the

demand for videos in various

industries, and develop business

jointly.

(Education/Social/Medical, etc.)

Pharmaceutical	Emergency measures
website seminars, etc.	and disaster
Distribution of web seminars in the	countermeasures
pharmaceutical industry. Developed

a system for remote detailing, on-	Emergency measures, disaster
rcountermeasures, and field support
line medical care, and medication
solutions.
guidance.

Sales :526→632	Sales 496→1,664
MP: 439 → 553	MP 176 → 488

Copyright © V-cube, Inc. All Rights Reserved.

Sales :153→214	Sales 324 → 380
MP: 87 → 144	MP 292→ 344
	LMS/TMS

12

1. Current Initiatives

1. FY2019 Results
2. Segments and KPIs
3. FY2020 Forecast
4. Appendix

Copyright © V-cube, Inc. All Rights Reserved.

2. FY2019 Results: Consolidated P/L (Pro forma basis)	※	※ Pro forma: Reference values for explanation

Net sales excluding divested businesses increased YoY.

Cost of sales increased significantly due to expansion of Appliance business.

Operating profit is in the black excluding mass advertising expenses.

	FY2018		FY2019		YoY
(million yen)
Full year		Full year	Change	Rate of change

Net sales	5,580	6,172	+592	+10.6%
Cost of sales	2,904	3,669	+765	+26.3%
Gross profit	2,676	2,504	△173	△6.5%
SG & A Exp.	2,522	2,755	+233	+9.2%
Operating profit	154	△252	△406	-
Ordinary profit	120	△310	△430	-
Profit attributable to owners of parent	466	45	△421	△57.1%

• For Y-o-Y comparison, the following adjusted pro forma P/L is presented.
• • Excluding net sales and operating profit from divested businesses (smart board service business, iStudy, Indonesian subsidiary)
  • Excluding impairment loss on China and Hong Kong business
  • Adjustments to transfer personnel and other costs to cost of sales and SG & A expenses due to reorganization
• Impact of adoption of new revenue recognition rules: △158 mil JPY for net sales and △123 mil JPY for operating profit

Copyright © V-cube, Inc. All Rights Reserved.	14

※

2. FY2019 Results: Breakdown of Changes in Net Sales (Pro forma basis) ※ Pro forma: Reference values

for explanation

Net sales excluding divested businesses grew in Visual Communication business and Appliance business such as "Telecube","V-CUBE Box",etc, despite impact of adoption of new revenue recognition rules and sluggishness in overseas businesses.

	Increase in sales of
		※ 2
	VC business,etc.
		(Unit:Million Yen)
	Increase in sales of	△167
	Appliance business	216
		Decrease of
	337	sales in
	Wizlearn
	Increase of
Impact of	sales related
adoption of	Telecube
new
revenue

recognition
rules	365
△158	6,172

5,580

FY2018	FY2019
Net sales	Net sales

• The Figures are comparisons excluding divested businesses (smart board service business, iStudy, Indonesian subsidiary).

Copyright © V-cube, Inc. All Rights Reserved.	15

2. FY2019 Results: Breakdown of Changes in Operating Profit (Pro forma basis)※

Growth in Visual communication business and Appliance business contributed to increase marginal profit. Operating profit declined due to impact of adoption of new revenue recognition rules, temporary royalty

expenses, and mass advertising expenses.

△123

290

Impact of

adoption of

new

revenue

recognition

※ Pro forma: Reference values for explanation

(Unit:Million Yen)

Lump-sum

recording of

royalties

Mass

△238

advertising

expenses

Increase of

marginal

154 profit of

Parent

company

FY2018

Operating

profit

rules

		Decrease of	FY2019
		Operating
	△257	profit in
	profit
		overseas
		business
		△78	△252

• The figures are comparisons excluding divested businesses (smart board service business, iStudy, Indonesian subsidiary).

Copyright © V-cube, Inc. All Rights Reserved.	16

2. FY2019 Results: Consolidated B/S

B/S shrank overall due to deconsolidation following divestment of iStudy and repayment of debts.

Equity ratio rose from 35.0% to 43.2%.

(million yen)	December 31, 2018	December 31, 2019	Change
Current assets	5,059	2,269	△2,790
Cash and deposits	(2,732)	(790)	(△1,942)
Fixed assets	5,525	4,733	△792
(Software)	(2,507)	(2,025)	(△482)
(△232)
(Goodwill)	(1,111)	(879)
Total assets	10,585	7,002	△3,583
Current liabilities	4,021	2,248	△1,773
(Short-term debt, current portion of long-	(1,815)	(546)	(△1,269)
term debt)
Long-term liabilities	2,033	1,705	△328
(Long-term debt)	(2,003)	(1,663)	(△340)
Net assets	4,530	3,049	△1,481

Short-term loan and current portion of long-term loan: 1,570 mil JPY as at June 30, 2019, 1,233 mil JPY as at September 30, 2019, and 546 mil JPY as at

December 31, 2019

Copyright © V-cube, Inc. All Rights Reserved.	17

2. FY2019 Results: Consolidated C/F

Investing C/F: Purchase of property, plant and equipment by relocation of head office, establishment of

Telecube services for affiliated companies, etc.

Financing C/F: Reduction of interest-bearing debt

	(million yen)	December 31, 2018	December 31, 2019
	Operating C/F	963	373
	Investing C/F	△558	△746
	Financing C/F	△1,035	△1,581
	Free cash flow	405	△373
	Effect of exchange rate change on	△28	△1
	cash and cash equivalents
	Net increase/decrease in cash and	△658	△1,930
	cash equivalents
	Cash and cash equivalents	2,719	790
	at the end of period
Copyright © V-cube, Inc. All Rights Reserved.		18

2. FY2019 Results: Progress of "Selection and Concentration" and Impact on Business

Continuously review the business portfolio and improve profitability

	Item		Smart board		iStudy Co.Ltd.		Indonesia	China business
		service business			Subsidiariy
	Time of		FY2018.4Q		FY2019.1Q		FY2019.3Q	FY2019.2Q	FY2019.4Q
	implementation
		•	Sale the business	•	Sale of share	•	Sale of share		• Impairment loss on
		•	Exclusion from	• Impairment loss on
	Contents	•	For FY2019, only		consolidation at	•	Exclusion from	software for a	investment in a Hong
		order backlog in			consolidation since	Kong company operating
				the end of FY2019		Chinese automaker
			the previous year.			FY2019 3Q	in China
				1Q
	Impact			Learning management		Visual	Visual	Visual
		Appliance business		Communications	Communications
	Segment			system business		Communications Business
					Business	Business
	Impact on		1,558 mil JPY		Decrease of 519 mil		Immaterial	N/A	N/A
	Net sales		(FY2018 results)	JPY in FY2019 2Q~4Q
	Impact on		77 mil JPY
	operating			Elimination of deficit		Elimination of deficit	N/A	N/Al
		(FY2018 Results)
	profit
Copyright © V-cube, Inc. All Rights Reserved.						19

2. FY2019 Results: Returns to Shareholders

Measures to increase shareholder returns

(Starting dividends, introducing special gifts for shareholders which can use Telecube in the city, and

conducting stock buy-back)

		•	FY2019 year-end dividend: 1 yen per share
Dividend		•	Aiming for a dividend payout ratio of 20% against profit attributable to owners of
			parent excluding 1-time profit, in the future aiming for a dividend payout ratio of 30%

Shareholder

• Gift of 10,000 yen for Telecube use coupons

(For shareholders with 100 shares or more as of the end of December)

benefits	• Scheduled to be delivered in late March

Stock buy-

buck

• Period of acquisition: June 3 to July 18, 2019 (completed)
• Total number of shares acquired: 177,700 shares
• Total acquisition cost: 99,954,300 yen

Copyright © V-cube, Inc. All Rights Reserved.	20

(Reference) 2. FY2019 Results: Consolidated P/L (Financial Accounting Figures)

Net sales decreased mainly due to adoption of new revenue recognition rules and separation of businesses such as the sale of

subsidiary iStudy.

SG&A expenses include mass advertising expenses of 257 million yen.

Profit attributable to owners of parent was in the black due to the contribution from gains on sales of subsidiaries and other factors.

					FY2019
	FY2018	FY2019	YoYProfit	Forecast
	(Announced on
(million yen)					October. 25)
	Full-year	Full-year	Change	Rate of	Full year
	change
Net sales	7,960	6,369	△1,591	△19.9%	6,550
Cost of sales	4,550	4056	△494	△10.8%	3,917
Gross profit	3,410	2,313	△1,097	△32.1%	2,633
SG & A Exp.	3,065	2,598	△467	△15.2%	2,578
Operating profit	345	△284	△630	ー %	0
Ordinary profit	259	△341	△601	ー %	△62
Profit attributable to	456	34	△421	△92.5%	372
owners of parent

• P14 2. FY2019 Results: Consolidated P/L (Pro forma) Reference Materials
• Impact of adoption of new revenue recognition rules: △ 158 mil JPY for net sales, △ 123 mil JPY for operation profit

Copyright © V-cube, Inc. All Rights Reserved.	21

1. Current Initiatives

1. FY2019 Results
2. Segments and KPIs
3. FY2020 Forecast
4. Appendix

Copyright © V-cube, Inc. All Rights Reserved.

3. Segments and KPIs: Adoption of new revenue recognition rules (from FY2019）

Sales are postponed from previous revenue recognition. Over the long term, sales are the same.

• Previously, the amount equivalent to the license was recorded at the time of the contract for a term-based cloud service, and the amount equivalent to the maintenance and infrastructure costs was recorded proportionately according to the contract period. Accounted for in full from FY2019 on a straight-line basis over the term of the contract

Impact of Adoption of new Revenue Recognition rules (Image)

＜ Previous revenue ＞

＜ Revenue after the change ＞

Start		Start
	Contract period	Contract period

• When we act as an agent to provide our customers with the goods and services of other companies, the amount obtained by offsetting the so-called sales amount against the cost of sales is recorded as sales.

Copyright © V-cube, Inc. All Rights Reserved.

3. Segments and KPIs: Segment changes (from FY2019)

Segments are divided into three categories in order to strengthen the management system and allocate

management resources more optimally.

	Supplemental
	category by type
Visual	of sales
Cloud
Communication
62%
	On-premises
Service	9%
Appliances
Business
23%
	Others
	6%

* Each percentage shows a composition to sales of FY18

Copyright © V-cube, Inc. All Rights Reserved.

Visual Communication Business

[V-cube, Inc.]

V-CUBE Meeting, V-CUBE Seminar, Prime, Agora.io, Qumu

[iStudy Co., Ltd.] Qumu (until 1Q 2019)

[V-cube USA, Inc.] V-CUBE Seminar

[V-cube Global Services Pte. Ltd. (incl. V-cube (Thailand) Co., Ltd. and PT. V-CUBE INDONESIA)] V-CUBE Services

Learning management system Business

[iStudy Co., Ltd.] LMS、iStudy Academy (until 1Q 2019) [Wizlearn Technologies Pte. Ltd.] AsknLearn

Appliances Business

[V-cube, Inc.] [Group Companies]

V-CUBE Box、TELECUBE, Microphones, Speakers, Headsets, etc.

3. Segments and KPIs: Segment Overview

Operating profit margin deteriorated due to impact of adoption of new revenue recognition rules, mass advertising expenses, and recording royalties in one lamp sum in Visual Communication business.

Appliance business profitability improved due to growth in highly profitable products.

					FY2018	FY2019		YoY	FY2019
		(million yen)			Full-year	Full-year	Change		Rate of	Full-year forecast
						(Announced on
						change
									October. 25)
		Visual	Net sales		4,132	4,068	△64		△1.5%	4,270
		Communications	OP		580	274	△306		△52.8%	589
		Business	(margin)		(14.0%)	(6.7%)		(13.8%)
		Learning	Net sales		1,776	1,051	△725		△40.8%	1,040
		Management System	OP		99	△13	△112		-	23
		Business	(margin)		(5.6%)	(-%)		(2.2%)
		Appliance	Net sales		2,051	1,250	△801		△39.1%	1,240
		OP		66	131				118
		Business		+65		+98.5%
		(margin)		(3.3%)	(10.5%)		(9.5%)
		Corporate epenses	Net sales		-	-	-		-	-
		(including mass	OP		△401	△677	△276		-	△730
		advertising expenses)	(margin)		(-%)	(-%)		(-%)
			Net sales		7,960	6,369	△1,591		△19.9%	6,550
		Total	OP		345	△284	△630		-	0
			(margin)		(4.3%)	(-%)		(0.0%)
	Impact of adoption of new revenue recognition rules: Net sales △ 158 mil JPY, Operating profit △123 mil JPY
	(Breakdown) Visual communication business: Net sales △88 mil JPY, Operating profit △88 mil JPY,
	Learning management system business: Net sales △2 mil JPY, Operating profit △ 2 mil JPY
	Appliance business: Net sales △69 mil JPY, Operating profit	△33 mil JPY
Copyright © V-cube, Inc. All Rights Reserved.								25

3. Segments and KPIs: Visual communication business

Although segment sales accounted for 95% of the full-year forecast due to the failure to record approximately 200 million yen in sales in China, in Japan, the distribution of seminars and On-premises are driving sales growth.

Subscription-type sales increased YoY

	FY2018	FY2019	YoY		FY2019
(million yen)					Rate of	Full-year
				forecast
	Full-year	Full-year	Change
		change	(Announced on
						October. 25)
Net sales	4,132	4,068	△64		△1.5%	4,270
Operating profit	580	274	△306		△52.8%	589
(Ratio)	(14.0%)	(6.7%)		(13.8%)

Subscription-type sales (annual)

(million yen)			Monthly subsc.			Annual subsc.
3,500
					3,068	3,212
3,000				2,849
2,559	1,022	1,192
2,500
2,306			835
	593
2,000	406

1,500

1,000	1,900	1,966	2,014	2,046	2,020
500
0
FY15	FY16	FY17	FY18	FY19

[Major factors for change]

Annual subscription

Pharmaceutical Industry seminar distribution projects increased steadily, contributing to overall growth

Monthly subscriptions

Pharmaceutical projects with large sales shifted from

FY19.2Q to annual revenue

• Impact of adoption of new revenue recognition rules: Net sales △88 mil JPY, Operating profit △88 mil JPY, Lump-sum recording of royalties of 238 mil JPY affected the cost of sales

Copyright © V-cube, Inc. All Rights Reserved.	26

3. Segments and KPIs: KPIs in Visual communication business

Monthly subscription is flat. Churn rate remained at the assumed level.

In 4Q large accumulation of annual subscriptions responding flexibly to the seminar distribution needs of the pharmaceutical industry.

Monthly subscription KPI

Average monthly billing unit price (thousand yen)

FY14	FY15	FY16	FY17	FY18		FY19	FY19	FY19	FY19
						1Q	2Q	3Q	4Q
139	137	134	137	141		140	139	137	136

Number of billing companies

FY14	FY15	FY16	FY17	FY18	FY19	FY19	FY19	FY19
					1Q	2Q	3Q	4Q

Subscription-type sales (quarterly)

(million yen)

monthly subsc

annual subsc

1,000

800
		287	322	274	347
600	289	203	243		258

1,065

1,155

1,225

1,228

1,211

1,218

1,210

1,216

1,215

Churn rate (%)

FY14	FY15	FY16	FY17	FY18		18/4~	18/7~	18/10	19/1
	19/3	19/6	~19/9	～12
19.0	16.9	13.7	14.4	12.2		12.4	11.0	10.5	10.7

Toward FY2020

Billing price

Number of billing companies

400

200

0

469 515 525 536 513 494 504 510

Seminars for the pharmaceutical

Strengthen treatment to existing	Low-cost customer acquisition
customers, which are seeing	through online sales
increasing use

Early transition of Meeting Plaza customers

Annual

industry, etc.

subscription

Account plans for the use of events

Monthly

Monthly subscriptions and long-

subscriptions

term contracts for more than half a year

Copyright © V-cube, Inc. All Rights Reserved.	27

3. Segments and KPIs: Learning management system business

Achieved full-year sales forecast, with operating income negative including iStudy, a subsidiary that has

been sold

Wizlearn: Stop the decline in sales to schools and strengthen sales and R&D to grow sales to companies

	FY2018	FY2019	YoY		FY2019
(million yen)					Rate of	Full-year
				forecast
	Full-year	Full-year	Change
		change	(Announced on
						October. 25)
Net sales	1,776	1,051	△725		△40.8%	1,040
(iStudy	1,168	930	△239		△20.4%
Excluding sales)
Operating profit	99	△13	△112		△113.1 %	23
(Ratio)	(5.6%)	(-%)		(2.2%)

(Thousand

SGD)			LMS Transition of sales breakdown in Asia
14,000
12,000
10,000
8,000
6,627		6,491			5,124
6,000
4,000
2,000	3,120		3,655			4,053
0
2017		2018			2019
			Corporate LMS		School LMS		Regional		Support

Copyright © V-cube, Inc. All Rights Reserved.

[Major factors for change]

• Sale of iStudy in April 2019

Consolidated in 1Q, non-consolidation after

• Wizlearn (Singapore subsidiary)

For schools: Although sales fell sharply due to the government's shift to in-house production, have stopped declining and revenue continues from the next year onward.

For companies: Acquire content creation and

customization projects

28

3. Segments and KPIs: Appliance business

Achieved full-year sales and operating profit forecasts due to business expansion of "Telecube" and growth

of "V-CUBE Box"

	FY2018	FY2019	YoY		FY2019
(million yen)					Rate of	Full-year
				Forecast (as
	Full year	Full year	Change
		change	of October.
						25)
Net sales	2,051	1,250	△801		△39.1%	1,240
(Net sales excluding	492	1,196	+703		+143.0%	ー
Smart board )
Operating profit	66	131	+65		98.5%	118
(Ratio)	(3.3%)	(10.5%)		(9.5%)

Number of Telecube installations

(Units)

400

Target 400 units

300

200

345

Actual

100

73

0 11

FY2017 FY2018 FY2019

Actual Actual Actual

[Major factors for change]

• Profitability improved due to the transfer of smart board service business.
• Telecube
  117 units installed in 3Q and 106 units in 4Q
• Increased sales of V-CUBE Box and related equipment
  Capturing demand for video conferencing replacement throughout the year

Copyright © V-cube, Inc. All Rights Reserved.	29

1. Current Initiatives

1. FY2019 Results
2. Segments and KPIs
3. FY2020 Forecast

5. Appendix

Copyright © V-cube, Inc. All Rights Reserved.

4. FY2020 Forecast (Financial Accounting Figures)

FY2020 business forecast is 7.2 billion yen for net sales and 0.5 billion yen for operating profit.

Easy to compare with the previous fiscal year due to adoption of new revenue recognition rules from FY2019

		FY2019	FY2020	YoY
(million yen)
	Full-year	Forecast	Change		Rate of change
		results
Net sales	6,369	7,237	+868		+13.6%
Cost of sales	4,056	4,250	+194		+4.8%
Gross profit	2,313	2,986	+673		+29.1%
SG & A Exp.	2,598	2,486	△112		△4.3%
Operating profit	△284	500	+784		ー %
Ordinary profit	△341	359	+700		ー %
Profit attributable to owners	34	185	+151		△444.1%
of parent

Targets: Net sales of 7.8 billion yen and operating income of 0.9 billion yen

Copyright © V-cube, Inc. All Rights Reserved.	31

4. FY2020 Forecast: Full-year Forecast by segments

Visual communication business: growing demand for telework and growth in services utilizing video business

Learning management system business: expect to return to profitability,

Appliance business : expect to continue growing Telecube.

		FY2019	FY2020		YoY
(million yen)
	Full-year	Full-year	Change		Rate of
		results	forecast		change
Visual	Net sales	4,068	4,692	+624		+15.3%
Communications	OP	274	750	+476		+173.7%
Business	(margin)	(6.7%)	(16.0%)
Learning	Net sales	1,051	830	△221		△21.0%
Management System	OP	△13	70	+83		-
Business	(margin)	(-%)	(8.4%)
Appliance	Net sales	1,250	1,715	+464		△37.1%
OP	131	218
Business	+87		+66.4%
(margin)	(10.5%)	(12.7%)
	Net sales	-	-	-		-
Corporate xpenses	OP	△677	△538	+139		-
	(margin)	(-%)	(-%)
	Net sales	6,369	7,237	+868		+13.6%
Total	OP	△284	500	+784		-
	(margin)	(-%)	(6.9%)

Copyright © V-cube, Inc. All Rights Reserved.	32

Impact of growth in 2020 by focus areas and products (Summary of Target/ Business Forecast)

Operating profit is expected to be 0.5 billion yen due to growth in focus areas. In particular, targeting operating profit of 0.9 billion yen through further growth in general-purpose web conferencing, On-premises and Telecube.

	Segment	Focused Products	Increase in sales	Increase in marginal	Background
			(million yen)	profit (million yen)
					Expectations for increased use due to the spread of telework
		Office-use web conferencing	△50～+252	△248～△82	Increasing use and intensifying competition and falling unit prices are
					expected.
					Aiming for survivor profits by withdrawing from domestic and overseas
		On-premises	+6～+106	25～114	competitors
					Expanded alliances centered on NTT Techno Cross
	VC	SDK embedded in video	+146	+138	Needs for embedding images in businesses in various industries
		Web seminar for the pharmaceutical	+410	+322	Needs for small-scale web seminars are expanding significantly.
		industry	We expect growth in both the number of customers and the number of events.
		Sales plus and QUMU	+61	+57	Proliferation of online sales
		Manual video production within the company
	LMS	LMS/TMS	+56	+52	Provided mainly in Asia. Last year's deficit disappeared in Japan.
	Efficient training and e-learning in highly liquid Asian countries
					Need for video conferencing replacement due to decrease in competition
		V-CUBE Box	△133	△12	Last year, large customers could cause sales to decline in 2020 (cost of sales
					to improve)
					Rapid increase in recognition through mass advertising. Significant growth is
	AP	Telecube	+568～+1,168	+132～312	expected in conjunction with the installation in public areas, which will
					become full-fledged in 2020.
		Emergency measures and disaster			Introduction due to frequent and serious accidents
		countermeasures	+238	+131	Integrate, organize, and share information in one location
	Total		+1,302～+2,304	+602～1,032
	Copyright © V-cube, Inc. All Rights Reserved.			33

Growth impact in 2020 by focus areaｓ and productｓ (Comparison of FY2019 Actual and FY2020 forecast)

Expect operating profit of 0.5 billion in FY2020, excluding 1-time FY2019 factors, with investing in

focus areas

Copyright © V-cube, Inc. All Rights Reserved.	34

4. FY2020 Forecast : Top share in the web conferencing market

Expanding new customer base through alliance with NTT Techno Cross, the fourth largest company in web- conferencing market in Japan

On-premises become blue ocean due to withdrawal of domestic competitors and specialization in Cloud for oversea competitors.

• Alliance with NTT Techno Cross (announced on August 28, 2019)
• Meeting Plaza web-conferencing services terminated
• NTT Techno Cross became a distributor of V-CUBE

Meeting

• Strengths by Japanese made products and On-premises
• Domestic competitors, mainly manufacturers, withdrew

from the Web conferencing market.

• Demand for On-premises is strong, particularly among financial institutions and local governments.
• Global competitors are in principle not compliant with On-premises.
• Added value to Japanese-made services in terms of security due to the international situation (others made in U.S.A. and China)

ASP(SaaSType +

SI(On-premises) type

Others,

29% V-CUBE32%

NTTTechno7%

C, 24%

J, 8%

	From Seed Planning, Inc., "Current Status of the Latest Market and Video Communication in 2019 Video
	Conference/Web Conferencing"
Copyright © V-cube, Inc. All Rights Reserved.	35

4. FY2020 Forecast: Telecube

Contributing to the effects of TV commercials and other factors, V-cube aims to grow significantly by 2020. Establish a position as an infrastructure within the current fiscal year, and expand it to use it in areas other than

telework.

For Corporate customers (Actual: 280 units in 2019)

Direct sales

• Utilization in companies
• Lack of conference rooms and use of private space

Sales agency

Sales agency

• Bulk purchase and subscription sales as well as direct sales
• Record royalty income

For public spaces (Actual: 65 units in 2019)

Telecube Service,Inc.

• Office entrances, complex facilities, and stations

JR East

• Providing Telecube in train stations as
  "STATION BOOTH"
• Introduced to STATION DESK shared offices

2020	500 to 1,000 units	200 to 400 units
Target	Full-scale deployment of subscription models	JR East: Target for "STATION BOOTH" at 30 stations (FY2020)

Copyright © V-cube, Inc. All Rights Reserved.	36

4. FY2020 Forecast : Application-specific video communications: Pharmaceutical seminars

Held low-cost,high-quality web seminars to disseminate information from pharmaceutical companies to doctors

"Attentive and helpful" one-stop service

Provision of one-stop services for web seminars,

which are increasing due to regulations on visits by

MR and strengthening of area marketing

V-cubedistributes about 2,000 times a year in the

pharmaceutical industry. This is precisely because it provides not only technical support in studios and local areas, but also "attentive and helpful" services through various agency services such as lines and meals.

Easily hold web lectures from your area

Small web lectures and minisessions are easy to operate with

an Internet environment, a PC, and a distribution staff. Easy-

to-use software to provide low-cost,high-quality web

seminars

Copyright © V-cube, Inc. All Rights Reserved.	37

4. FY2020 Forecast : Application-specific video communications/disaster countermeasures

"V-CUBE Board", emergency solutions for collecting, organizing, and sharing information in times of disaster Strengthening the Government's Budget for Strengthening National Land (last year of 3-year urgent measures)

• A scene-specific solution for dealing with all kinds of disasters, which have been on the rise in recent years.
• V-CUBEBoard, a large-screentouch-screen operation table, and V-CUBE Collaboration, a visual communication service, enable quick decision-making required in emergencies, such as simultaneous examination of multiple documents, aggregation of information based on maps, simultaneous writing by multiple persons, and real-time information sharing with remote locations.
• (Reference Video) https://japan-demo.qumucloud.com/view/2ngfYK6jQUt?start=140#/ ((Link))

Expansion of introduction municipalities and

companies

• Aviation Bureau of the Ministry of Land, Infrastructure, Transport and Tourism
• Kumamoto Prefectural Government
• Miyazaki Prefectural Government
• Oita Prefectural Government
• Kobe City Hall
• Kumamoto City Hall
• Okinawa Nanjo City Hall
• Fire Department, Ono City, Fukui Prefecture
• Tokyo Gas Co., Ltd. Ohgishima LNG Terminal
• ASKA SOKEN CO., LTD.
• Tokyu Corporation
• Gero City Hall, Gifu Prefecture

And many others

Copyright © V-cube, Inc. All Rights Reserved.

Exhibited at the Crisis-Management Industry Exhibition 2019 (RISCON TOKYO)

(October 2019)

38

4. FY2020 Forecast: Application-specific video communications: VCaaS

Increasing need to incorporate video and audio functions into company services and devices, provide business

support while people view images remotely when needed, and provide unique communication services

Live distribution platform

Live for PCs and smartphones

Large-scale distribution and live commerce

Video distribution service infrastructure

Online lesson platform

Online English conversation schools and online interviews, For remote dialogue systems such as telemedicine Visual communication infrastructure

according to application and purpose>

Labor-saving and unmanned stores

Stores that are increasingly labor-saving and unmanned incorporate them into self-

registers, ATMs, digital signage, etc., and

provide instructions and guidance on how to

use them when remote support is required.

Copyright © V-cube, Inc. All Rights Reserved.

Labor-saving and unmanned on-site operations

Incorporated into IoT Construction Machinery, which is becoming more labor-saving and unmanned, as well as into automobiles for automatic operation. Incorporated into wearable glasses, as well as remotely monitored

and operated by advanced engineers, to provide work

support for construction sites and infrastructure

equipment inspections from remote locations.

39

VCaaS

(Visual Communication as a Service)

Solution Provider

Copyright © V-cube, Inc. All Rights Reserved.

1. Current Initiatives

1. FY2019 Results
2. Segment and KPIs
3. FY2020 Forecast
4. Appendix

Copyright © V-cube, Inc. All Rights Reserved.

Mission Statement

Provide Even Opportunity to Everybody

We want to create a world where everyone can get even opportunity

in any circumstances.

We believe that we can realize more affluent society

by reducing the time and distance of face-to-face communication.

The world is facing social issues such as extreme concentration of population and industry in city area, declining birthrate and aging society, long working hours, educational and healthcare gaps, etc.

We aim to provide even opportunity to everybody

by solving these social issues with our Visual Communication solutions.

Copyright © V-cube, Inc. All Rights Reserved.

Corporate summary (As of December 31, 2019)

VCaaS (Visual Communication as a Service) Solution Provider

Company name

Established

Fiscal year end

Capital (including capital

reserve)

Listed Markets

Group companies

Number of members

V-cube, Inc.

October 16, 1998

December

2,801 million JPY

The 1st Section of the Tokyo Stock Exchange (3681)

Domestic 3 Overseas 5.

(3 in Singapore, 1 in United States, 1 in Thailand.)

Board members 14・ Employees 402

(consolidated) *As of December 31, 2019

Copyright © V-cube, Inc. All Rights Reserved.

Group Companies (As of December 31, 2019)

V-cube, Inc. and 6 subsidiaries operate in Japan, USA and ASEAN area.

Singapore

V-cube,Inc.

	Telecube,Inc.		V-cube Global Services Pte. Ltd.		V-cube USA, Inc.

Telecube Service,Co.Ltd.

※Equity Method Affiliate

Wizlearn Technologies Pte. Ltd.

V-cube (Thailand) Co., Ltd.

Pave Education Pte. Ltd.

Other group company: SENSYN ROBOTICS, Inc.

Copyright © V-cube, Inc. All Rights Reserved.

Corporate History

Established V-cube Internet Ltd. for Web creating, system and app development

Conversion to stock company

Began developing and selling Web conferencing due to high TV conferencing costs

Changed corporate name to V-cube,Inc and decided to focus in visual communication

Investment from Capital investment and started business in Asian market

Listed on TSE Mothers

Listed on theTSE first section

1998 2001 2004 2009 2012 2013 2014 2015 2016 2017 2018 2019

2003 V-cube USA, Inc.

2009 V-cube Malaysia Sdn. Bhd.

Sale

2012 V-cube Global Services Pte. Ltd. Singapore

								2012 PT. V-cube INDONESIA	Sale
Net sales(million yen)					2013 BRAV International Limited	Sale
V-cube		7,239			7,960	2014 Pioneer VC	Merged into V-cube, Sale of Smartboard
affiliate		6,638
		6,083					2015 Wizlearn Technologies Pte. Ltd.
	4,681		26.5%				2015 iStudy Co., Ltd.	Sale
	21.4%	17.1%
			19.8%	2016 V-cube (Thailand) Co., Ltd.
2,525 9.5% 14.7%				15.6%
3,972			5,924	5,020		2019 Telecube Inc.
2,419	3,149	3,540	3,483
2013	2014	2015	2016	2017	2018	2019
Copyright © V-cube, Inc. All Rights Reserved.

Exchange rates for major currencies

• Full Year

		FY19		FY20
	Full	Average	Year end	Full
（JPY）	(forecast)	(results)	(results)	(forecast)
US$	111.00	109.06	109.55	111.00
S$	81.00	79.95	81.06	81.00

Copyright © V-cube, Inc. All Rights Reserved.

Corporate Directors（As of December 31, 2019)

Management team consisting mainly of members from the time of founding

President, CEO & Founder	Managing Director, CRO
Naoaki Mashita	(Chief Revenue Officer)
Jun Mizutani
1977	Born in Tokyo
1998	Established V-cube	2006	Entered V-CUBE as new graduate
2000	Graduated from Keio University	2009	Sales Department Group Manager
2002	Graduated from Keio Graduate School	2012	Vice President of Sales Department
2003	Established V-cube USA, Inc.	2014	Manager of Customer Experience
2009	Established V-cube Malaysia	2015	President of Sales Department
2012	Established V-cube Singapore	2016 Became Director at V-cube, Inc.(sales)
2012	Established P.T. V-cube Indonesia	2019	Became Managing Director at V-cube, Inc.
2015	Established V-cube Robotics Japan, Inc.

Deputy President, COOCTO

Masaya Takada	Yosuke Kamezaki
2001	Became Executive at V-cube Internet,	2002	Joined V-cube Internet, Inc.
2002	Graduated from Keio Graduate School	2003	Developed the 1st Web Conference model
2006	Became Deputy President	2007	Became Officer at V-cube, Inc.
2013	Became Executive Deputy President	2012	Became Director at V-cube, Inc.

at V-cube, Inc.

Copyright © V-cube, Inc. All Rights Reserved.

Outside Officers and Adviser （As of December 31, 2019)

Corporate governance by experienced and powerful outside officers

Outside corporate director

Outside corporate director

Norio Murakami

Kenichi

Nishimura

CEO at Murakami Norio Office, Inc. Outside director, CellSource Co., Ltd.

Former Executive Vice President at Google, Inc. Former CEO of Google Japan

Outside Director, Hakusan

Former NTT-Neomeit President

Former Mirait, Inc. Adviser

Corporate

Directors

External ratio

42.9%

Outside corporate director

Hajime Nakano

Senior Director, Regional Economy Vitalization Corporation of Japan Director, REVIC Partners

Outside Auditor, SENSHUKAI CO.,LTD

Outside Audit

• Supervisory Board Member

Outside Audit

• Supervisory Board Member

Outside Audit

• Supervisory Board Member

Kikuo

Fukushima

Kiyoji

Odashima

Arifumi Sunada

Representative, Success Coaching Studio

President, Odashima Kiyoji Tax Accountant Office

Outside Auditor, Ebara Foods Industry, Inc.

Senior Director, Regional Economy Vitalization Corporation of Japan Senior Director, REVIC Partners

Outside Auditor, I-ne CO.,LTD.

Adviser

Hiroshi

Komiyama

Chairman of the Board of Trustees at Mitsubishi Research Inst., Inc. Former President of Tokyo University

Copyright © V-cube, Inc. All Rights Reserved.

Group Employees (As of December 31, 2019)

								By group								By region									By function
							V-cube				Subsidiaries							Japan		Singapore			Others				Technical			Sales			Admn.
420		402	420			402		420				402
														16			9		50				52
174
	166	158			153		141				129
246		236	246			240		229				221
'19/6		'19/12	'19/6			'19/12		'19/6				'19/12
																				Number of Staff
				V-cube		Subsidiaries
					470						500	450			457
														420
																														402
													296
					284						201			213		174				166
186		204	249			244		246				236
'15/12		'16/12	'17/12			'18/12		'19/6				'19/12

Copyright © V-cube, Inc. All Rights Reserved.

Disclaimer

This documents contains forecast, target, plans and other future-related information of V-cube,

Inc. (including all subsidiaries). This information stated in this documents is based on the information at hand when creating this document. The statements in this document is based on the aforementioned principle. The statements and prerequisite stated in this documents is only a prediction and forecast of the future, we do not guarantee all statements will be realized in the future. Please refer to V-cube's summary of accounts, securities report, disclosure magazines, annual report, etc., for uncertainty and risks of the information in this document. The information in this documents was received at the time of creating this documents, thus for changes occurred after the creating of the documents, V-cube does not resume responsibility

of updating the information. Your understanding is appreciated.

Information disclosed regarding other companies in this document are from public releases, in case of misinterpretation, V-cube do not guarantee the accuracy of this information. V-cube does not resume responsibility for any misinterpretation, mistake, or damages caused by the use of this document and the data used in this documents. Your understanding is appreciated. V-cube claims all rights of this documents, please do not by any means or purposes, electronically or mechanically copy or forward this documents.

Copyright © V-cube, Inc. All Rights Reserved.