セグエグループ（3968） – [Delayed]FY2021 Financial Results Briefing

FY2021Financial ResultsFebruary 24, 2022Segue Group Co., Ltd.Stock Code：3968Opinions and forecasts contained in this material are based on our judgments at the time the materials were prepared, and we do not guarantee the accuracy of the information.Actual results may differ materially from the forward-looking statement due to changes in various factors.Table of Contents1. FY2021 Highlights2. Medium-Term Targets3. FY2022 Business Forecasts4. Reference Material１FY2021 HighlightsHighlights：PerformanceNet sales reached a record high, but gross profit remained flat from the previous year.Promote investment in human resources to accelerate growth as planned, SG&A expenses increased and operating and other income decreased.Net salesGross profitOperating incomeOrdinary income12.038 billion yen3.091 billion yen0.638 billion yen0.686 billion yenUP 9.5%DOWN 0.0%DOWN 24.3%DOWN 21.5%PerformanceSummary Value Added Distributor： Despite strong orders, delivery delays caused by global semiconductor shortages System Integration：Strong performance remains from the first quarter, service accumulation is progressingIn-house Development： Working on adding functions and improving quality. Increasing number of potential projects, but it takes time to receive orders SG&A expenses increased mainly due to investment in human resources, mostly in line with the plan© Segue Group Co.,Ltd. All rights reserved. 4Highlights：Performance TrendsGross profit remained flat from the previous year due to the significant impact of delivery delays caused by the shortage of semiconductorsNet sales（million yen）Gross profit（million yen）Gross margin（％）Operating income（million yen）Operating margin（％）12,00010,992 10,0009,646 12,038 28.1%26.2%25.7%3,092 3,091 2,531 7.7%843 5.3%638 5.7%548 8,0006,0004,0002,00003,0002,5002,0001,5001,00050008007006005004003002001000FY2019FY2020FY2021FY2019FY2020FY2021FY2019FY2020FY2021© Segue Group Co.,Ltd. All rights reserved. 5Highlights：Number of Each BusinessSales in the Value Added Distributor business did not reach the previous year due to delivery delay caused by shortage of semiconductors, although System Integration business remained strong. Profits of In-house Development business declined due to investments in strengthening development and quality systems.In-houseDevelopment5.1%In-houseNet salesGross profit0.6 billion yen＋3.7%0.33 billion yen－18.7%Net salescompositionratioValue Added Distributor43.7%Net salesGross profit5.26 billion yen－0.3%1.31 billion yen－4.2%System Integration51.2%© Segue Group Co.,Ltd. All rights reserved. Net salesGross profit6.16 billion yen＋20.3%1.44 billion yen＋10.1%6DevelopmentBusinessValueAddedDistributionBusinessSystemIntegrationBusinessHighlights：Business TopicsIn-house Development Business Improvement of pace and quality for development RevoWorks Browser : Release of new feature version Expansion of sales partners and acceleration of collaboration Promoted winning of projects to strengthen local government information systemsValue Added Distribution Business Strengthening of relationships with manufactures and sales partners Expansion of new product lineups Delivery delays due to global shortage of semiconductors Orders strong, backlog increasingSystem Integration Business Strengthening of cooperation with sales partners Expansion of the scope of engineering services New challenges in AI, DX, cloud solutions, etc.© Segue Group Co.,Ltd. All rights reserved. 7New Feature Version of RevoWorks BrowserSeptember 2021 : Launched “RevoWorks Browser” with new features. It was compatible with widely used Google Chrome and Microsoft Edge, and responded to the needs of using web conferencing systems in separate environments. Improved security was also achieved at the same time.The number of RevoWorks sales partners also increased steadily, inquiries were more than five times higher than in the past, mainly formunicipal information system resiliency replacement projects.© Segue Group Co.,Ltd. All rights reserved. 8Highlights：Backlog of OrdersOrders received remained steady. Large increase in order backlog due to delivery delays caused by shortage of semiconductors.ServicesProducts507 2,397 836 2,916 3,209 3,218 （Million yen）6,0005,0004,0003,0002,0001,0000FY2019 Q4FY2020 Q4FY2021 Q4© Segue Group Co.,Ltd. All rights reserved. 9Highlights：Growth Investment and ProgressProgress in securing human resources, and the foundation for accelerating medium-to long-term growth is establishedHuman resource investmentEnvironmental improvement Securing human resourcesEnd of Dec. 2020: 446 employees → End of Dec. 2021: 473 employees Strengthening training, from new graduates to executive candidates Strengthening of inside sales Renewal of Osaka Office and Technical CenterStrengthening of promotion Promotion of digital marketingUtilizing of marketing automationUtilized webinars and doubled the number of events heldEnhancement of web pages Significant increase in the number of leads (potential customers) acquired© Segue Group Co.,Ltd. All rights reserved. 10Number of EmployeesIn addition to continuing to secure technical staff, we increased the number of sales and marketing staffs to strengthen sales capabilitiesEngineeringSales, Marketing, and Administrative391409446473329350End of Dec. 2016End of Dec. 2017End of Dec. 2018End of Dec. 2019End of Dec. 2020End of Dec. 2021© Segue Group Co.,Ltd. All rights reserved. 11Highlights：Breakdown of Changes in Operating IncomeGross profit remained flat and operating income declined, although SG&A expenses were largely in line with planIncrease in investmentin human resources▲146 Increase in other costs▲15 Gross profit▲0▲41 Increase in marketing and other expenses843 Gross Profit（Million yen）3,092Operating income843SG&A2,248 3,091Operating income638SG&A2,452 3,0002,4001,8001,2006000FY2020FY2021FY2020Operating income© Segue Group Co.,Ltd. All rights reserved. （Million yen）8007006005004003002001000638 FY2021Operating income12Highlights：Capital and Business AllianceCollaboration with companies that have unique technologies and can accelerateCapital andbusiness alliancebusiness developmentAlso invests in companies that support the growth of human capitalFebruary 2021 : Capital alliance with EAGLYS Inc. for continued investment and domain expansion in advanced technology fields such as AI and data securitySeptember 2021 : Capital alliance with Fixpoint, Inc. a provider of system operation automation tools that contribute to solving the problem of engineer shortagesHumanresourceAIDatasecurityNovember 2021 : Capital alliance with manebi Inc. to promote visualization of human resource development results in addition to online recruitment and educationMobility andteleworkInfrastructurePrevious areas© Segue Group Co.,Ltd. All rights reserved. 13Highlights：Quarterly Performance TrendsNet sales（million yen）Quarterly Net sales and Operating incomeNet sales 2019Net sales 2020Net sales 2021Operating income 2019Operating income 2020Operating income 2021Operating income（million yen）3,5003,0002,5002,0001,5001,0005000-5007006005004003002001000-100Q1Q2Q3Q4© Segue Group Co.,Ltd. All rights reserved. 14Highlights：Consolidated Statements of IncomeAlthough delivery delays due to a shortage of semiconductors had a significant impact, efforts to improve profitability led to an improvement in operating and other income from the revised forecastUnit: million yenFY2020FY202110,99212,038YoYChangeChange ratioFull-year plan（Revised onNov. 11, 2021）Change12,325▲286Net salesGross profit（Profit margin）SG&A expensesOperating income（Profit margin）Ordinary income（Profit margin）Net incomeInterim dividend3,09228.1%2,2488437.7%8748.0%634－3,09125.7%2,4526385.3%6865.7%454－Year-end dividend16 yen （Plan）16 yen© Segue Group Co.,Ltd. All rights reserved. 203＋9.1%1,045▲0▲2.4pt▲204▲2.4pt▲188▲2.3pt▲179＋9.5%▲0.0%▲24.3%▲21.5%▲28.3%5754.7%6255.1%44063611415Highlights：Consolidated Balance SheetsAlthough delivery delays continue, inventories increased significantly due to progress in securing goods in the fourth quarterUnit: million yenFY2020FY2021ChangeFY2020FY2021Change5,8061,7277,2361,351Current liabilities3,733Accounts payable-trade2,1762,078Short-term debt5,1011,6055015203248048737285Advances received2,1832,472OtherNon-current liabilitiesCurrent assetsCash and depositsNotes and accountsreceivable, andElectronically RecordedMonetary ClaimsInventory assetsOtherNon-current assetsProperty, plant and equipmentIntangible assetsInvestments and otherassetsTotal assets8211,0811,3841942419487,1912,3761,4291,3882091661,0138,6251,429▲375▲971,554348314▲75641,433Total liabilities4,0185,4261,407Total net assets3,1723,199Total liabilities andnet assets7,1918,6251,4331,367801493289▲2163926© Segue Group Co.,Ltd. All rights reserved. 16Acquisition of treasury stock（announced on November 11, 2021）Acquisition of treasury stock to return profits to shareholders through improved capital efficiency and for use in M&A and equity compensation plans, etc.AnnouncementResultAcquisitionPeriodFrom November 15, 2021 to February 28, 2022From November 15, 2021 to January 20, 2022 (End of acquisition）Total number ofshares to acquireMaximum 375,000 shares（Ratio to total number of shares issued and outstanding (excluding treasury stock) : 3.22%）375,000 sharesTotal amount of acquisition cost of sharesMaximum 300,000,000 yen285,172,200 yen© Segue Group Co.,Ltd. All rights reserved. 17２Medium-Term TargetsInitiatives to Achieve Medium-Term Targets：Recruitment of EngineersSubstantial increase in the number of engineers as the foundationApproximately 70% of our group’s personnel are engineers, who are indispensable as the foundation of our business, such as examining new commercial materials, ensuring quality, developing our own products, and providing various services.A new recruiting team will be formed to double the number of engineers hired over the next three years.Image of Engineer Transition500400300200End of Dec. 2019End of Dec. 2020End of Dec. 2021End of Dec. 2022(Target)End of Dec. 2023(Target)End of Dec. 2024(Target)© Segue Group Co.,Ltd. All rights reserved. 19Initiatives to Achieve Medium-Term Targets： Value Added Distribution BusinessGrowth in Value Added Distribution Business Continuous handling of new security products Accumulation of steady support services (recurring revenue) Strengthening of efficient sales systemImage of sales targetsAverage annual growth rate : 16.7％（FY2021～FY2024）4.305.275.266.42Unit: billion yen201920202021202220232024© Segue Group Co.,Ltd. All rights reserved. 20Initiatives to Achieve Medium-Term Targets：In-house Development BusinessExpansion of In-house Development Business Acquisition of local government resilience projects Development of new series and cloud versions Private demand development of medical institutions, financial Provision of cloud servicesinstitutions, manufacturing companies, etc. Augment of development unit Expansion of sales partners and acceleration of collaborationImage of sales targetsAverage annual growth rate : 31.6％（FY2021～FY2024）Unit: billion yen0.580.600.350.96201920202021202220232024© Segue Group Co.,Ltd. All rights reserved. 21Initiatives to Achieve Medium-Term Targets：System Integration BusinessStrengthening of System IntegrationVADビジネスの伸長 Accelerate expansion of consultants, sales, Expanding areas such as cloud, DX, and technical personnelAI, etc. Developing Western Japan and other areas Increasing the size of projectsImage of sales targetsAverage annual growth rate : 7.2％（FY2021-FY2024）4.985.126.165.91Unit: billion yen201920202021202220232024* For the fiscal year ending December 31, 2022, we expect net sales to decrease by 0.56 billion yen due to the application of the “Accounting Standard for Revenue Recognition” and other regulations.© Segue Group Co.,Ltd. All rights reserved. 22Medium-term Numerical TargetsSelected “prime market” as of December 29, 2021 and set new medium-term numerical targetsFY12/21Net salesOperating incomeNet income12 billion yen0.63 billion yen0.45 billion yenFY12/24 Target（announced on December 29, 2021）Net salesOperating incomeNet income17 billion yenAverage annual growth rate12.2%1.2 billion yenAverage annual growth rate23.3%0.8 billion yenAverage annual growth rate20.7%* The target for the fiscal year ending December 31, 2024 is the figure after applying the “Accounting Standard for Revenue Recognition” and other standards.© Segue Group Co.,Ltd. All rights reserved. 23Medium-term Numerical Targets：Net Sales by BusinessAchieve medium-term targets through balanced growth of three businessesImage of sales targetsAverage annual growth rate : 12.2％（FY2021～FY2024）Unit: billion yen17.0010.9912.0313.308.769.642018201920202021202220232024© Segue Group Co.,Ltd. All rights reserved. 24Initiatives to Achieve Medium-Term Targets：Business TransformationExpansion of stock-type service business Establishment of new service-specific division Strengthen cloud-based service delivery model Improve customer satisfaction Development of new servicesBusiness Transformation Recruitment and training of digital engineers Recruitment and training of advanced security engineers Regional Expansion Promotion of DXEstablishment of new domestic officesConsideration of Overseas Expansion© Segue Group Co.,Ltd. All rights reserved. 25Initiatives to Achieve Medium-Term Targets： M&A, etc.Capital and business alliances, M&AChallenge to make a larger scale M&A that contributes to the advancement of existing business.Expansion of alliances with companies with cutting-edge and proprietary technologies.新規事業© Segue Group Co.,Ltd. All rights reserved. 26Other InitiativesIR ・ Capital Policy Proactive information disclosure and easy-to-understand explanations Aiming for stable dividend growthInitiatives for the SDGs Training and producing IT & security personnel Provide engineering training to customers Develop human resources to achieve high value-added results Maintenance of a more rewarding work environment Continuous investment in companies with new and proprietarytechnologies such as AI© Segue Group Co.,Ltd. All rights reserved. 27３FY2022 ForecastsFY2022 Full-year Business ForecastsAiming for steady growth centered on the Value Added Distributor business and In-house Development business despite concerns about continued delivery delays due to semiconductor shortages and yen depreciationFY2021FY2022（Forecast）Unit: million yenYoYChangeChange ratioNet sales12,03813,300Operating income（Profit margin）Ordinary income（profit margin）Net income6385.3%6865.7%4547605.7%7605.7%5201,261121736510.5%19.0%10.8%14.3%* The forecast for the fiscal year ending December 31, 2022 is after the application of the “Accounting Standard for RevenueRecognition” and other standards.© Segue Group Co.,Ltd. All rights reserved. 29FY2022 Plans by BusinessIn-house Development business aims to expand sales and significantly increase profits by acquiring projects to strengthen municipal information systems. In Value Added Distributor business, there are concerns about continued delivery delays, but the backlog oforders accumulated in the previous fiscal year should lead to sales growth. System Integration business is expected to remain flat due to the impact of the application of accounting standards for revenue recognition.In-houseDevelopment7.2%In-houseNet salesGross profit0.96 billion yen＋58.1%0.65 billion yen＋97.8%DevelopmentBusinessValueAddedDistributionBusinessSystemIntegrationBusinessNet salesCompositionratioValue AddedDistributor48.3%Net salesGross profit6.42 billion yen＋22.1%1.49 billion yen＋13.6%System Integration44.4%© Segue Group Co.,Ltd. All rights reserved. Net salesGross profit5.91 billion yen▲4.2%1.43 billion yen▲0.5%30Winning of Local Government Resilience ProjectsNew model presented by MICImage of model（β）SeparationUtilization of the Internet spaceImproving operational efficiency through the public cloudTelework via the InternetDivision(Untraceable communication)Municipal Information Security CloudAdministrative work for My NumberLGWAN connection systemInternet connection systemResident records, family registers, tax, late-stage elderly, long-term care, national insurance, national pension, welfare-relatedTwo-factor authenticationInformation take-out disabled settingPersonnel wagesDocument managementFinancial accountingGroupwareGroupwareWebsite managementInternet mailPartial reallocationReallocationtermnailWork-issued personal identification number access terminalLGWAN access terminalInternet access terminalExample of corresponding RevoWorks imageInternet spacePublic cloudWeb ConferenceInternet Internet Separation and DetoxificationLGWAN connection systemInternet connection systemGroupwareMunicipal Information Security CloudLGWAN mailPersonnel wagesFinancial accountingDocument managementGroupwareRevoWorks ServerProxyBusiness PCLocal Container Virtual BrowserAreas that deal with highly sensitive information when it centers on resident informationAreas that handle highly confidential information, mainly sensitive and non-public information about employeesAreas dealing with Internet mail and less sensitive informationDetoxDownload© Segue Group Co.,Ltd. All rights reserved. 31RevoWorks Case Studies of Introduction to Local GovernmentsUki City, Kumamoto prefecture- All staff can use the Internet from their own seatsOta Ward, Tokyo- Detoxify cumbersome files with a single clickUki City Ota WardEfforts by Uki City, KumamotoNetwork isolation through browser virtualizationVirtual container system for web separation to enable all staff to “use the Internet at their own seats”Information and Statistics Division, Planning Department, Uki City Office[Provided by] J’s Communication Co., Ltd.Efforts by Ota Ward, TokyoImplementing Web Isolation SolutionHow to use the system to detoxify cumbersome files with a single click 【Example of an initiative by a municipality (Ota Ward, Tokyo)】Information System Office, Planning and Management Department, Ota Ward Office© Segue Group Co.,Ltd. All rights reserved. Source: Local Government Communication Online32Shareholder ReturnsWe aim for stable dividend increase, taking into consideration the past dividend trendsFY12/18FY12/19FY12/20FY12/21（Plan）FY12/22（Forecast）Dividend pershare5 yen(Commencement of dividends)10 yen（Including 5 yen commemorative dividends）16 yen(10 yen planned at the beginning of the term)16 yen16 yenDividend payout ratio15.1%27.9%29.2%40.0%34.7%© Segue Group Co.,Ltd. All rights reserved. 33Performance Trends and ForecastsWe continued consecutive revenue growth since listing on TSE, and aiming to achieve the new plan（Million yen）Net salesOperating income14,00012,00010,0008,0006,0004,0002,00009,6468,7674845487,7926,881382218（Million yen）13,3001,2001,00076080012,03810,9928436386004002000FY2016Full-yearFY2017Full-yearFY2018Full-yearFY2019Full-yearFY2020Full-yearFY2021Full-yearFY2022Full-year(Forecasts)34© Segue Group Co.,Ltd. All rights reserved. W e w i l l c o n t i n u e t o g r o w t o g e t h e r w i t h o u r c u s t o m e r s b y l e v e r a g i n g I T t o c r e a t e v a l u e . W e c o n t r i b u t e t o t h e r e a l i z a t i o n o f a p r o s p e r o u s s o c i e t y.J’s TelecomSystem Co., Ltd.J’s Communication Co., Ltd.© Segue Group Co.,Ltd. All rights reserved. 35JC Technology Co., Ltd.J’s solution Co., Ltd.４Reference MaterialApr 1995Oct 2002Aug 2012Dec 2014Dec 2016Dec 2018Jun 2019History of Segue GroupEstablished (founded) J’s Communication Co., Ltd. Concluded a distribution contract with NetScreenTechnologies (Currently JuniperNetworks, Inc) in the U.S. for the firewall productsConcluded a distribution contract with RuckusWirelessCorporation(Currently CommScope, Inc) in the U.S.Established Segue Group Co., Ltd.Listed on the Tokyo Stock Exchange JASDAQ (Standard)Listed on the Second Section of the Tokyo Stock ExchangeListed on the First Section of theTokyo Stock ExchangeAgency agreement 3,525 4,094 NetScreenCorporationAgency agreementAgency agreement Into a holdingcompany5,863 6,172 Agency agreement Start of handlingAI security productsAgency agreement Release7,792 6,881 BrandintegrationRelease12,038 10,992 9,646 8,767 199520022012201320142015201620172018201920202021Established J’s Communication Co., Ltd.Established JC TechnologyEstablished J’s Telecom SystemsSegue GroupEstablishmentListed on JASDAQListed on TSE2Listed on TSE1Made a FalconSystem Consulting as a subsidiaryMade an ASTEM as a sub-subsidiary© Segue Group Co.,Ltd. All rights reserved. 37Company Profile：Business DomainSupporting customers’ business foundationsby providing total solutions for security and IT infrastructureSecurityTarget attack countermeasuresInformation leakage countermeasuresVulnerability countermeasuresTelework securityIT infrastructureNetworkVirtualizationCloudWirelessCarrier date centerService providerGovernment agencies and local governmentsAcademic institutionsMedical institutionsEnterpriseManufacturing industryFinancial institution etc..© Segue Group Co.,Ltd. All rights reserved. 38Company Profile：Segue GroupNumber of Group Employees : 473 employees(70% are Engineers)J’s Communication Co., Ltd.J’s TelecomSystem Co., Ltd.J’s solution Co., Ltd.JC Technology Co., Ltd.Solution productsNetwork SecurityProductsIn-house developmentSecurity softwareIT infrastructureProductsProviding Solutions Combining Security and IT Infrastructure ProductsSystem IntegrationSolution servicesDesign andconstruction ServicesMaintenanceServicesHelp deskServicesOthers（Monitoring, dispatch, etc.）IT engineer SE services© Segue Group Co.,Ltd. All rights reserved. 39Company Profile：Business StructureProviding a variety of added value in response to the needs of partners, system integrators, and customersIn-houseDevelopment（Software development）Value Added DistributionOverseas focusSystemIntegration Security software license Sales of security ・ IT sales Support services, Help deskinfrastructure products, and software license Support services, help desk On-site maintenance services Design, construction, and installation of IT infrastructure and securityIn-house productsIn-house productsProducts distributorSever, etc.（H/W,S/W）Support servicesSupport servicesProducts distributorProfessional servicesDesign and constructionSE servicesContracting and dispatchingManaged servicesOperation of monitoring, management, etc.© Segue Group Co.,Ltd. All rights reserved. 40Our Business：In-house Development BusinessAbout In-houseDevelopment businessProviding our in-house development security software supporting the safety of our customers with our technologies” RevoWorks” series improve security and business efficiency to enhance the quality of workServer-based Virtual Browser ”RevoWorks SCVX”Local Virtual Browser ”RevoWorks Browser”Local Virtual Desktop ”RevoWorks Desktop””WisePoint” series use visually-friendly images and random number tables for passwordsAuthentication & Telework Solution ”WisePoint Authenticator”Authentication & Single Sign-on Solution ”WisePoint 8”© Segue Group Co.,Ltd. All rights reserved. 41In-house Developed Products：RevoWorksRevolutionWorkImprove security and operational efficiency to enhance the quality of work！RevoWorks SCVXRevoWorks BrowserRevoWorks DesktopVirtual browser with server containerVirtual Browser with local containerVirtual Desktop with local containerInternet isolation／ Content SanitizerInformation leakage countermeasures,Work style reforms／Telework© Segue Group Co.,Ltd. All rights reserved. 42Structure of RevoWorks SCVXTraditionalsecurityAnticipated attacksUnanticipated and unknown attacksAnticipated attacksCorporate information security measures especially internet security is like a cat-and-mouse-gameSecurityVirtual containerInternet isolationProtectionbased on theassumption of intrusionAnticipated attacksUnanticipated and unknown attacksAnticipated attacksTransfer only images1. Even if attacks occur, their impact is limited to virtual containers, and their PCs remain intact2. By closing your PC browser, the virtual container disappears with malware© Segue Group Co.,Ltd. All rights reserved. 43Our Business：Value Added Distribution BusinessImporting of products with cutting-edge technologies, globaltechnologies, niche technologies, etc. from United States and other developed security countries, and providing technical value-added services such as design, construction, and support in response tocustomer requestsAbout Value Added Distribution BusinessLine-up of Security products WAF Security vulnerability diagnosis and management IP address management Network management Firewall / VPN Nest-generation Firewall UTM Malware protectiveMajor manufactures with distribution contracts© Segue Group Co.,Ltd. All rights reserved. 44Our Business：System IntegrationSales of software and appliances for security and IT infrastructure, etc., combined with the provision of services such as system, after-sales services, and monitoring servicesDetaileddesignPriorinspectionConstructionProposalMaintenanceProviding one-stop servicesIdentify issuesSupport services for installed equipment systems（24H/365D）Remote Monitoring ServicesMonitoringCheck thecurrentsituationPlanning© Segue Group Co.,Ltd. All rights reserved. 45Focus on Security SoftwareProviding safe and comfortable solutions by compensating for a shortage of security technicians with AI and automation softwareCybersecurity protective softwareNW infrastructureGW securitySwitchEX/QFXシリーズRouterSDNMXシリーズContrailTotal proposal for integrationMobility and certificationWi-FiRemote workCertification© Segue Group Co.,Ltd. All rights reserved. 46Business Environment：Security Market Environment Outflow of virtual currency Stolen information and hacking toolswere traded in underground community Resilience of local government information system Enhancement of security measuresBig dataDarkWebMy NumbersystemIoT, IIoT Ransomware(Ransom Demand Malware) Phishing scam Discontinuation and falsification of Web servicesCyber-attacks In the early days ofviruses, many hackersattack for enjoymentand the appeal of theirtechnologicalstrengthsVirus, etc.MalwareFurther expansion of security demandin the advanced information societyComputers around the world are connected to the internet Diffusion and stealing of factoryautomation network Spread and stealing of data in IoT home appliances Some risks arise such as not only stealing information but also hacking automobiles etc. that affect human livesAI/RoboticsAfterCOVID-19 Rapidly developing telework environment Rough-and-ready digitalization© Segue Group Co.,Ltd. All rights reserved. 47Business Environment：Security (Products and Services) Market623,120 669,230 567,240 709,190 745,630 778,690 807,840 Unit: million yenJapaneseMarket6.1％2020202120222023202420252026WorldMarket10.0％1,564.52019Source: Fuji Chimera Research Institute, “2021 Network Security Business Survey“Grand View Research「Cyber Security Market Size & Share Report, 2020-2027」© Segue Group Co.,Ltd. All rights reserved. 48Unit: 100 million dollar3,263.6 2027AverageannualgrowthrateAverageannualgrowthrateOur Sales TrendsCAGR of Sales: 14.6 ％（2012-2021）Continuing to exceed the growth of the security market!Unit: million yen12,038 10,992 9,646 8,767 7,792 6,172 6,881 5,863 4,094 3,525 2012201320142015201620172018201920202021* Figures for 2012 and 2013 are based on results of J’s Communication Co., Ltd.© Segue Group Co.,Ltd. All rights reserved. 49NotesThe material is prepared solely for the purpose of providing information and is not intended for the purpose of offering, soliciting, or selling specific products, including our shares.The information provided in this material is not required by or based on the Financial Instruments and Exchange Law, government ordinances and regulations, or the Tokyo Securities Exchange listing regulations.The material contains certain forward-looking statements about our financial condition, results of operations, management plan, and plans and objectives. Please note that such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results or results of our performance to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based on our current and forecast management strategies and various assumptions regarding the political and economic environment surrounding our business.The information provided in this material is subject to all possible risks and uncertainties, however, there is no assurance of the accuracy, certainty, appropriateness, and fairness of the information provided in this presentation. Please note that the content may be changed or eliminated without notice.Segue Group Co., Ltd. Investor Relations Office, Corporate Administration DepartmentInquiries about IRhttps://segue-g.jp/ir/contact/© Segue Group Co.,Ltd. All rights reserved. 50