Hengge

Hi, I'm Kazuhiro Ogura, CEO of Henge.

Thank you very much for watching our video today. Today, our CFO Haruo Amano will explain the full-year financial results for the fiscal year ending September 2021, and then I will explain the full-year forecast for the fiscal year ending September 2022 and about our growth strategy.

I'm Haruo, the CFO of Henge. Let me first explain about our full-year financial results for FY 2021. Our consolidated net sales expanded steadily as shown on this slide. This slide shows a summary of our consolidated financial results. Sales for Henge 1 were slightly lower, and sales for Professional Service and others were slightly higher than the forecast. And as a result, our overall consolidated net sales for FY 2021 were in line with the forecast which we've announced at the beginning of the fiscal year. Each profit line exceeded our forecast. Gross profit margin remained high and consistent to the previous year Our year-on-year net profit fluctuation is as shown on the slide Our year-on-year fluctuation of operating expenses by nature is as shown on the slide The chart on the slide shows quarter-on-quarter fluctuation of operating expenses. During the fourth quarter, we've focused to invest on the activities which are expected to contribute for the further growth of the company going forward. As for the other SG&A, we actively carried out recruitment activities during the quarter. As for the advertisement expenses, in order to accommodate the demands from our customers about the new features that we've announced in August, we've aggressively held relevant events and advertisements and, at the same time, increased outsourcing costs in order to support our increased sales and customer success activities. Personal expenses increased compared to the third quarter mainly due to the additional support given to the employees in relation with remote working. The sum of cost of sales and R&D expenses increased by ¥24 million quarter on quarter due to the timing on the completion of the project which corresponds to the sales of professional services and other businesses. This chart shows quarterly trends in net sales and operating expenses. As to the employees, currently we have 230 employees. Breakdown by function is as shown in the pie chart. The transition in the number of employees is as shown in the bar chart. As initially planned, recruiting activities for Hengge 1 sales and customer success positions are on track. As we explained in the previous earnings call, currently over 70% of the team members for Henge1 R&D employees is composed of non-Japanese employees, and we have mainly hired them from overseas. The number of Henge1 R&D employees decreased slightly compared to that of previous year, and this is mainly due to some of prospective employees living outside of Japan were unable to cross the border because of COVID-19 restrictions. For now, we believe that there will be no significant impact on R&D activities. However, we will keep our close attention to the situation. In terms of our organizational structure, we have made a change in the third quarter in order to further enhance our product. And as a result, part of customer success employees are integrated into business development section. Furthermore, we will continue to actively recruit in each function. Cash flow status is as shown on the slide. Operating cash flows decreased compared to the previous year, mainly due to holding large-scale event Henge Now and accompanying the advertisements during second quarter FY 2021. Despite the large spend, we've made cash and cash equivalents balance grew steadily year on year. Now I will explain our business activities during the year. This is an overview of our business highlights. We continuously held a number of online events to follow up on Henge Now, a large-scale digital event held in the second quarter, and to raise recognition of the new license lineups announced in August. We held an online meeting for listeners of Henge One in order to explain about our new license lineups and also introduce our marketing support measures for our listeners. We will further enhance the relationship with our listeners and improve our ways of approaching to the customers in both quantitatively and qualitatively. As we explained in detail at the Learning School for the third quarter of FY 2021, we announced the new features of Henge-1 in August 2021 and launched them from October 2021. I won't go into the details of new features today, but it got equipped with three wonderful new features to meet the demands newly recognized under the pandemic. We are proud that we can now provide more value to our customers. We have announced that the license lineups of Henge-1 were updated from October 2021, in line with this big version up. While we are mainly targeting to sell high-value-added suite plans, as a news attempt, we will also set up single-function plans that would be attractive to light users, and this is for us to approach a wider range of customers. Next, I would like to explain our results of KPIs. This slide shows a year-on-year fluctuation of KPIs for Henge-1. The progress of KPIs for Henkei-1 from the end of the previous fiscal year is as shown in the slide. The average monthly churn rate is 0.25%, which is continuously very low. This slide shows the quarterly trends in the number of contracted companies and users. As you can see from the charts, both the number of contracted companies and users increased steadily. ARPU is continuously on an upward trend, together with steady growth in ARR. These were the business results for FY 2021. Thank you very much.