インテリジェント　ウェイブ（4847） – Presentation material, Financial Results for 1H FY0622 (presented on February 4, 2022)

Financial Results for 1H FY06/22(July 1 to December 31, 2021)[Non-Consolidated]Announced on Feb 4, 2022Intelligent Wave Inc.Financial Results 1H FY06/22Key initiatives in 1H FY06/22Reference1H FY06/22:Overview of results YoY comparison1H FY06/211H FY06/22ChangeMillion yenNet salesOperating incomeOrdinary incomeNet income5,247 4,887-360-6.9%405421285478499337＋73 ＋18.0%＋78 ＋18.5%＋52 ＋18.2%Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.31H FY06/22:Overview of results vs. Forecast1H FY06/22forecast1H FY06/22actualChangeMillion yenNet salesOperating incomeOrdinary incomeNet income5,0004,887-113-2.3%410430300478499337＋68 ＋16.6%＋69 ＋16.0%＋37 ＋12.3%Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.41H FY06/22 Sales by categoriesYoY comparison(＋) Steadily increase in sales of System Development and In- house products for new customers.(△) Hardware sales decrease due to the short of major system development project.1H FY06/211H FY06/22ChangeNet SalesSystem DevelopmentMaintenanceIn-house productsCloud serviceHardwareThird-party productsSecurity products5,2472,437647209470872240369Million yen-360＋82＋81＋59＋23-600-72＋694,8872,519728268493272168438Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.51H FY06/22 Sales by categories vs. Forecast(△) Orders for additional projects from existing customers decreased(＋) Progress in other categories as the initial plan 1H FY06/22forecast1H FY06/22actualNet SalesSystem DevelopmentMaintenanceIn-house productsCloud serviceHardwareThird-party productsSecurity products5,0002,713725265489188120500Million yenChange-113-194＋3＋3＋4＋84＋48-624,8872,519728268493272168438Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.61H FY06/22 Top three clients by sales1H FY06/21 1H FY06/22 ChangeMain projects1 . DNP867 691 -176Million yenTokenization Service system (for Smartphone payment transaction ) , System operations (24/7), Payment Platform*Disaster recovery System for FEP* and Fraud detection system550 497 -53 2 .System Integrator3 .System Integrator110 261 ＋151 Initial development for the introduction of IOASIS and license fee＊Payment Platform: System services operated by DNP, which enables customers to launch cashless payment business.＊FEP（Front-End Processor）：Sub-system, which communicates between network and main-frame and manages flood of transaction data. Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.71H FY06/22 Operating income(+) Cloud service turned profitable and In-house product sales increased. Improved margin of System Development and Maintenance.(△) Decreased in sales of hardware. Increased in SG & A expenses■…Net Sales●…Operating margin5,2474,887Million yen+73 YoY7.7%Reasons for changes9.8%(Increase)⚫ Turned profitable in Cloud service⚫ Increased in sales of In-house products⚫ Improved profitability of System Development and Maintenance(Decrease）⚫ Decreased in sales of hardware⚫ Increased in SG & A expenses1H FY06/211H FY06/22Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.8Financial Results 1H FY06/22Key initiatives in 1H FY06/22Reference1H FY06/22 sales of Cloud services Stable progress of sales as the initial plan. Gross profit exceeded the plan by the sales growth and the streamlined operating job.FY06/21FY06/22Q1Q2Q3Q4Full yearQ1Q2Q3Q4Full yearMillion yen2963431,130463380PlanPlanNet salesGross profitActual224246232239942Actual-37-12-28-3-81No. of customers by service lines (Actual)■IOASIS■IFINDS■IGATES■IPRETS53215341534153415341240243-18-19534124825018316341Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.101H FY06/22 Orders of Cloud servicesNew contracts are going satisfactory in IOASIS. Received an order for a large project in IGATES. These contracts start to be booked sales from April and contribute next fiscal year’s earnings.Million yenFY06/21FY06/22Q1Q2Q3Q4Q3Q4Orders on hand1337379483Amount of orders1,9341,7621,6091,853■IOASIS■IFINDSNo. of ordersNewAdd, update3–3 ・New orders from a major credit card company and a retailer.1 ・Steadily increasing inquiries from credit card companies・Developing a shared score model generated by the aggregation of customers’ fraud transaction data.■IGATES1 ・Ordered large scale project from an international credit company・Strong inquiries from Fintech Start-Ups.Q11,0002,611Q21,8764,236OverviewCopyright © 2022, INTELLIGENT WAVE INC. All rights reserved.11Reference) our cloud services ■IOASIS■IGATES- SaaS product for providing operation system and supporting customers to launch acquiring business- Offer 24/7 system operation- System launched in 2016- Provides 24/7 non-stop operation for payment network transaction internationally. – SaaS product derived from NET+1, in-house product enjoying the overwhelming share in the domestic market.■IFINDS- Credit card fraud detection solution- SaaS product derived from ACEPlus, in-house product with the highest market share.Rule-based methodIFINDS automatically detects frauds by referencing the record of frauds cases.＋AI scoring method- Next generation fraud detection servicealgorithm- Utilizing AI with advanced Generates score of the fraudulent rating of the transaction automatically. Detecting the unknown frauds methods.Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.12Security Solution BusinessPursuing DNP group synergy and strengthen the group’s commitment on our security solution business.Proposing one-stop service to customers by taking advantage of our technological strengths.Marketing/ PlanningEducation Assessment / ConsultationSecurity products for applicationConstruction of security infrastructureCybersecurity products(inhouse / overseas products)Started Collaboration “Demand Generation (DG)”as an initial phaseWeb siteEvent(Seminar)Collabo-ration“DG”Adver-tisingMar-keting/SNS / E-mailCopyright © 2022, INTELLIGENT WAVE INC. All rights reserved.13Approach to Health and productivity managementApplied to the certified Health and productivity management organization 2022 and promote good working environment in terms of employees’ health.Declaration of Health and productivity management“We will promote initiatives for our employees to remain healthy both physically and mentally.”① Measures to promote employees’ health -covering full payment of health screening (for over 35-year-old employees and dependents) and gynecological exam (for the all female employees )- Group Long Term Disability (GLTD)–self-care and line-care training for mental healthvaccination leave② Work Style Reformcurtailing overtime work– breakfast service promoting early bird shift- All employees taking 8 days a year for paid leaveCopyright © 2022, INTELLIGENT WAVE INC. All rights reserved.14Financial Results 1H FY06/22Key initiatives in 1H FY06/22ReferenceOrders on handMillion yen7,963 5,786 5,319 5,202 5,317 2,016 2,401 2,202 2,026 6,075 1,934 5,688 5,530 5,912 4,236 1,762 1,609 2,611 5,022 1,853 1,769 1,873 1,321 1,732 2,061 2,075 1,882 1,540 1,485 1,615 1,534 1,512 1,679 1,559 2,080 1,851 2,039 1,629 1,816 2,112 1Q2Q3Q4Q1Q2Q3Q4Q1Q2QFY06/20FY06/21FY06/22■…Cloud services ■…System development ■…Security products, Hardware, In-house products, etcCopyright © 2022, INTELLIGENT WAVE INC. All rights reserved.16Amount of ordersMillion yen4,686 3,016 3,230 3,056 2,402 2,254 2,562 2,660 2,612 2,829 1Q2Q3Q4Q1Q2Q3Q4Q1Q2QFY06/20FY06/21FY06/22Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.17Historical net sales （Stock/Flow）■Stock ■Flowthe rate of stock businessMillion yen10,603 9,176 10,443 8,682 10,920 8,846 11,187 8,888 8,469 7,371 13.5%16.9%19.0%20.6%13.0%1,098 1,427 1,761 2,074 2,299 4,887 25.0%3,666 1,221 1H FY06/22FY06/17FY06/18FY06/19FY06/20FY06/21Stock（YoY）Flow（YoY）1,0987,3711,427＋30.0%9,176＋24.5%1,761＋23.4%8,682-5.4%2,074＋17.8%8,846＋1.9%2,299＋10.8%8,888＋0.5%1,221＋9.3％3,666-11.2％* Stock: categories with contracts that allow us to record sales of a fixed amount on a regular basisFlow : categories with contracts that are not stationary in terms of the amount and timing Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.181H FY06/22 production costsFY06/21FY06/22Q1Q2Q3Q4Q1Q2Q3Q4Thousand yenMaterials cost4,8906,3378,2558,9407,1948,162Labor costExpensesSubcontracting costTotal manufacturing costWork in progress (beginning of period)Work in progress (end of period)Transfer to other accounts708,202739,778712,358732,866718,848734,397363,448353,011368,936399,624431,898413,397581,894546,583565,629555,601603,162668,3631,658,4351,645,7111,655,1801,697,0321,761,1051,824,322381,557515,004503,982534,449209,668283,587515,004503,982534,449355,789283,587279,908100,02087,206124,252182,951247,200344,251Cost of sales1,424,9671,569,5261,500,4591,692,7411,439,9851,483,749Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.191H FY06/22 SG&A expensesSalariesTraining and recruitingRentAdvertisingR&DDepreciation and amortizationSG&AFY06/21FY06/22Q1Q2Q3Q4Q1Q2Q3Q4Thousand yen287,425323,927312,972339,842290,810310,5275,32117,46313,35216,78910,33213,98917,62117,61517,91818,16418,79318,3281,5864,2393,2287,14512,69111,4328,72322,25419,25030,2329,3015,5139,4579,95210,29110,6749,5709,7051H FY06/211H FY06/22ChangeMillion yen984（breakdown）1,018salariesTraining and recruitingAdvertisingResearch and developmentOthers＋34-10＋2＋18-16+40Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.201H FY06/22 Cash flowsMillion yen3,6104,307＋297△649△345Purchase of PP&EPurchase of intangible assets-102-561Dividends-340Income before taxesD&AA/R increaseA/P increaseInventory increaseIncome taxes paid499402‐14247-124-190JPY 696mn decrease30-Jun-2121年6月期末Operating activities営業活動Investing activities投資活動Financing activities財務活動31-Dec-2122年6月期2Q末Cash and cash equivaentsCash and cash equivalentsCopyright © 2022, INTELLIGENT WAVE INC. All rights reserved.21Revised the category of salesWe have revised categories to show the classification of sales based on the so-called “stock” and “flow” type in more precise than before. Judged from the type of contract and the actual status of the services, we have classified projects and contracts that can generate a certain amount of sales on a regular basis as “stock” and the rest of those as “flow”.Old CategoryCategorySystemDevelopmentMaintenanceIn-house productsCloud serviceHardwareThird-party productsSecurity productsFlowStockFlowStockFlowFlowFlowNew CategoryCategorySoftware Development FlowIn-house productsSystem ServiceThird-party productsSum of “flow” type salesMaintenanceMaintenance of Third-party productsOwn ServicesOher ServicesFlowFlowFlowStockStockStockStockSum of “stock” type salesMillion yenFY12/20211,97840.5％285161572,4371,2773076242382,4495.8％0.3％3.2％49.9％26.1％6.3％12.8％4.9％50.1％22Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.FY06/22 Full-year ForecastsMillion yenFY06/21actualFY06/22forecast2H（Full year -1H actual）1H2HFull year1H(actual)Full yearYoY(full year)Net sales5,247 5,94011,1874,887 7,113 12,000+7.3%Operating income[OM]Ordinary income[OM]Net income[NM]405（7.7%）725（12.2%）1,130（10.1%)478 （9.8%)842 （11.8%)1,320（11.0%)+16.8%421（8.0%)750（12.6%)1,171（10.5%)499 （10.2%)861 （12.1%)1,360（11.3%)+16.1%285（5.4%)555（9.3%)840（7.5%)337 （6.9%)603 （8.5%)940（7.8%)+11.9%Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.23FY06/22 Forecasts FY06/211H2HFull year1H(actual)Full yearYoY(1H)FY06/22２H（Full year-1H actual）Million yenNet Sales5,247 5,94011,1874,8877,113 12,000+7.3%2,4372,8355,2722,5193,3315,850+11.0%SystemDevelopmentMaintenanceIn-house productsCloud serviceHardwareThird-party productsSecurity products6472094708722403697101264727662691,3573359421,6385097282684932721684387121326371,440+6.1%400+19.4%1,130+20.0%1,4581,730+5.6%82250-50.9%7621,1317621,200+6.1%Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.24Historical performance■…Net sales■ …Operating incomeMillion yen11,18710,92010,60310,4437,1376,6956,3675,8915,5054,8445,2575,1745,5275,2414,9564,7628,4697,2056,5586,1605,8701,8541,5281,1771,482678371389 417228 358 321131145484731 702 547921 1,036 1,130010203040506070809101112131415161718192021Note: Consolidated results are shown through FY06/15.(677)Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.25Company overviewAs of Dec 31,2021EstablishedDecember 27, 1984LocationEmployees434Kayabacho Tower, 1-21-2 Shinkawa, Chuo-ku, TokyoParent companyDai Nippon Printing Co., Ltd. (50.71%)Capital stockJPY843.75kShares outstanding 26,340,000Shareholders9,536Individuals, othersJapanese financial institutionsOther Japanese corporationsForeign corporationsJapanese securities firmsTreasury stockOwnership (%)% of shareholders37.45%7.70%51.06%2.10%1.48%Individuals, othersJapanese financial institutionsOther Japanese corporationsForeign corporationsJapanese securities firms0.20%Treasury stock98.29%0.10%0.41%0.87%0.31%0.01%Copyright © 2022, INTELLIGENT WAVE INC. All rights reserved.26These materials were produced to provide information concerning the company and its businesses. They are not intended as a solicitation for investment in securities issued by Intelligent Wave Inc.The opinions, forecasts, and other forward-looking statements in these materials are based on the company’s judgment at the time they were produced, and Intelligent Wave Inc. makes no guarantees concerning the accuracy and completeness of the information contained herein. Please be aware that this information may also be revised without prior notice in the future.Intelligent Wave Inc.Management Planning Office E-mail: ir_info@iwi.co.jp