ＡＬＢＥＲＴ（3906） – FY12/2022 1Q Financial Results

FY12/2022 (from Jan. 1,2022 to Dec. 31, 2022)1Q Financial ResultsMay 11, 2022ALBERT Inc.（Ticker: 3906, TSE Growth Market）Contents1234― Highlights― Key Performance Indicators― Business Strategy― Appendix© 2022 ALBERT Inc.21. Highlights© 2022 ALBERT Inc.3HighlightsExecutive Summary1Q Performance Highlights(million JPY) Sales / ProfitNet Sales962(YoY)Operating ProfitProfit263(YoY)179(YoY)+11.1%+86.2%+56.4% Key Performance IndicatorsNum. of Data ScientistsUtilization RateShare of Sales from Priority Industries251名76.3％85.7％Record-high sales and operating profit in 1Q.Focusing on aggressive recruitment and training of HR for growth in 2H and beyond.• Steady growth in “AI Implementation support business” as projects with alliance partners and large-clients become larger and longer.• The AI Implementation project which is accounting provision due to delays was completed in May. (No additional accounting in 1Q)• Transferred the AI chatbot business “Sugres” to concentrate our resources on core businesses with growth potential.© 2022 ALBERT Inc.4HighlightsPerformance Record-high sales and operating profit driven by a couple of large-scale projects. With the completion of the delayed AI system implementation project, man-hours contributed to sales, and profit margin remained high. (Normal level of our business profitability) FY2021 1Q(Actual)FY2022 1Q(Actual)Amountchange（million JPY）PercentagechangeNet SalesGross Profit(Profit Margin)Operating Profit(Profit Margin)Profit© 2022 ALBERT Inc.866962482（55.7％）141（16.3％）114680（70.7％）263（27.3％）179961971216411.1％41.0％86.2％56.4％5HighlightsProgress against The Forecast Net sales were generally in line with expectations. Profit margin increased due to profit contribution from man-hours worked on delayed project and charge ups etc..（million JPY）FY2022(Forecast)FY2022 1Q(Actual)ProgressrateNet SalesOperating Profit（ Profit Margin ）Ordinary Profit（ Profit Margin ）Profit© 2022 ALBERT Inc.4,100657（16.0％）657（16.0％）446962263（27.3％）263（27.3％）17923.5％40.1％40.0％40.3％6HighlightsQuarterly Performance Record-high sales and operating profit on a quarterly basis. Profit in 2Q is expected to be at the same level as 2Q FY2021 due to seasonal factors and focusing recruitment. Expect earnings growth from 2H FY2022 to FY2023 due to aggressive recruitment in 1H.（million JPY）Net-SalesOperating ProfitOP Margin1,2001,0008006004002000-200© 2022 ALBERT Inc.YoY11.1%Expect earnings growth from 2H9389622Q forecast (against 1Q)866814718Net sales: Decrease by seasonal factors and focusing training of HRExpense: Increase by new employeesProfit: Remained low (at the same level as 2Q FY2021)141508026316540%35%30%25%20%15%10%5%0%-5%-10%71Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q202020212022HighlightsBalance SheetCash and depositsCurrent assetsNon-current assetsAssets（利益率）Current liabilitiesNon-current liabilities（利益率）LiabilitiesNet assetsLiabilities and net assets© 2022 ALBERT Inc. Decrease in liabilities through repayment of loans, etc.. With the completion of the delayed AI system implementation project, work in process (current assets) and provision for loss on order received (current liabilities) will be reversed in 2Q.FY2021FY2022 1Q（as of Dec. 31, 2021）(as of March 31, 2022)Amountchange（million JPY）Percentagechange3,2464,0155354,551763-7633,7874,5513,2194,0775094,587619-6193,9684,587-2662-2636-144–14418036-0.8%1.5%-4.9%0.8%-18.9%–18.9%4.8%0.8%8Highlightsaccelerate growth.Transfer of The AI Chatbot Business “Sugres” Concentrate management resources on “AI Implementation support” and “Data scientists training support” expected to Our policy of transferOur business policy after the transfer••••Continued gradual growth as a service for municipalities and enterprises sinceits release in 2016.Commoditization is progressing due to increase competing products.Compare to the 2 core businesses for which demand is strong due to the momentum of DX, it is difficult to accelerate growth by the chatbot function alone. The impact of the transfer will be limited due to the sales ratio of the business is about 3.8% of the total sales.Accelerate our business growth by concentrating resources on 2 core businesses.Shift AI system development resources and sales resources to the core businesses. •• Aiming for expanding AI implementation support business as a No.1 data scientist group through recruitment and training of data scientists.• Offer a support for advancement of interactive communication in the AI implementation support business based on the technical capabilities acquired through the operation of the chatbot business.© 2022 ALBERT Inc.9HighlightsThe Forecast (Unchanged) Sales is expected to grow due to the continuation of large-scale projects. And profitability is also expected to continue to A special profit is expected to record by the transfer. (To be disclosed as soon as the amount of impact on the forecast is FY2021(Actual)FY2022(Forecast)Amountchange（million JPY）Percentagechange3,3384,100436（13.1％）435（13.0％）353657（16.0％）657（16.0％）4467612202219222.8％50.4％50.9％26.1％10raise.determined.)Net SalesOperating Profit(Profit Margin)Ordinary Profit(Profit Margin)Profit© 2022 ALBERT Inc.Highlights（million JPY）Breakdown of The Forecast (Unchanged) Assumed performance has reached a level as 1,000 million JPY in sight. Aiming to further growth and achieving “Japan’s No.1 Scale” in FY 2023 by aggressively recruitments.Action plan• Accelerating to hiring permanent employees (data scientists etc.).• Strengthen to admin ability for expanding our business.957© 2022 ALBERT Inc.11FY2022Operating Profit(assumed)2. Key Performance Indicators© 2022 ALBERT Inc.12Key Performance IndicatorsSales by Transaction Periodtransactions.（million JPY） Business growth is underway with a stable customer base, with approximately 80% of sales is came from continuous Forecast4,1003,3382,7037182,324432593StrategyChange1,6304881,1422,619248 714 Other salesThe transactionover 1 year※note1,000959 812 872 1,8912,1105,0004,0003,0002,000020152016201720182019202020212022 1Q※ Results for 2015-2017, before the change in strategy, are shown in gray.※ Total amount of transactions ( once or multiple) with client companies that have been doing business with us for more than one year.© 2022 ALBERT Inc.13Key Performance IndicatorsNet Sales by Priority Industries Maintain a sales share of around 80% in priority industries.Changes in SalesChanges in Sales Share(million JPY)4,0003,0002,0001,00002,7032,3241,630Forecast4,1003,338OthersFinanceInfrastructureDistributionCommunicationsManufancturingAutomotive962100%80%60%40%20%0%Our policy of sales share by priority industriesaround 80％18 1042014 14 4 22 3435 585 6 OthersFinance86%InfrastructureDistributionCommunicationsManufancturingAutomotive20182019202020212022 1Q20182019202020212022 1Q© 2022 ALBERT Inc.14(Reference) TopicsProviding a DX Human Resource Development Curriculum with Mynavi Jointly development and launch DX human resource development curriculum for students and businesspersons. Combining Mynavi ‘s knowledge and big data related recruitment and job placement support with ALBERT’s analytical technology and human resource training know-how.The service that leverage the strengths of both companiesMaking all students and businesspersons be DX human resource学生から社会人まで総DX人材化© 2022 ALBERT Inc.15(Reference) TopicsDeveloped an Automatic Measurement System for EC Operations Jointly development with Treasure Factory of an automated measurement system “Clothcanner (clothes + scanner)”. The system introduced at each store from March 30, 2022, in response to the growing needs to display items online due to the COVID-19. AI automatically inputs size and item information from images. Aiming for a 10% increase in the number of EC listings.PhotographingAutomatic measurementOCR model for clothing tags© 2022 ALBERT Inc.16Key Performance IndicatorsThe Number of Data Scientists We focused on training many data scientists hired in 2021 and securing assignment in FY2021. Planning to increase the num. of employees by about 30, aiming for further growth.Num. of data scientistsUp to 400 to 500The group of250 data scientists(people)500450400350300250200150100500Expected at theend of FY2022270253239251as of Apr. 1Incl. newly employees19515420182019202020212022 1QData Scientist’s Final Educationother31%Doctor’s13%Master’s56%Full-time employees about 70% are master’s or doctor’s degreeArea of expertise• mathematical informatics• Quantum information, measurement, and information thermodynamics• Statistical mechanics• Clinical Pharmacokinetics• AI system engineering• Behavioral and Statistical Sciences etc.© 2022 ALBERT Inc.17Key Performance IndicatorsUtilization Rate Utilization rate (the portion correlated with earnings) is remain high level. And focusing on maintaining and improving competitiveness over the medium to long term by using underutilization time to technical training and know-how sharing.Changes in data scientist utilization rateUtilization rateUnderutilization rate79 76 83 78 74 75 80 74 79 78 71 71 74 76 66 59 53 Utilization rate indication75～80％100%90%80%70%60%50%40%30%20%10%0%1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q20182019202020212022© 2022 ALBERT Inc.183. Business Strategy© 2022 ALBERT Inc.19Business StrategyBasic Policies Aiming to establish the position of “ DX promote partner for domestic companies” as below 4 policies. 1234Strengthen our scheme for training data scientists Promote the “CATALYST strategy”Strengthen our basement of existing businesses Expanding our portfolios through M&A© 2022 ALBERT Inc.20Business Strategy1Focusing Training Data Scientists To address the issue of recruiting data scientists, we shifted its thinking from “competition for a limited number of human resources” to “increasing the number of human resources, both within the company and in society“, thereby simultaneously achieving business growth and solving social issues.PresentThe worldview we aim forThe situation of competition for a limited DS-HR.(≒ Zero-Sum)ALBERT Focuses on human resource development to Increase for Both Society and our company. DS-HR . (≒ Plus-Sum) Supply shortage of DS-HRIncreasing DS-HR in societyIncreasing our DS-HRDependance on external recruitment is risk of slowing growth rate. DS-HR※ “DS-HR” means human resources specialized in data science. © 2022 ALBERT Inc.DS-HRExternal support(the same as before)Recruiting(the same as before)Recruiting talented HR and training“Not” DS-HR21Business Strategy1Solid Training Capabilities Training can be provided according to skill level based on accumulated experience and know-how.Established training capabilities through our businessData Scientist Skill Level※1Senior Data ScientistIndustry-leading levelFull Data ScientistProfessional levelKnow-how about data science skills and evaluationNumerous achievement of analysis and assignmentAssociate Data ScientistIndependent levelSystematic curriculumsExperienced InstructorsAssistant Data ScientistAssistant level※ “DS-HR” means human resources specialized in data science. ※1 Source: “Data Scientist Skill Check-list” The Japan Data Scientist Society.© 2022 ALBERT Inc.We have conducted training for various skill levels. For advanced users• Data analytical exercises (incl. industry-specialized exercises)• On-the-job training For intermediate users• Specialized analytical theory• On-the-job training (assistant) For beginning users• Basics of tools (python, SQL)• Basics of machine learning For general users• Fundamentals of data analysis (statistics)• How to proceed with an analysis project22Business Strategy2Promoting the CATALYST Strategy We will create data sharing overt the boundaries of industries and contribute to the resolution of various issues and the development of the themes emerged in society by increasing the number of partners of CATALYST strategy.The worldview we aim forAutonomous drivingInformation bankAI robotsAutomakersIT companyManufacturerFinancialinstitutePromoting DXSystem developerAutomotiveTravelagentRegional revitalizationCommunicationsManufacturingReal estate developerLogisticscompanyDistributionFinanceInfrastructureLocalgovernmentEnergysupplierSmart citySmart grid© 2022 ALBERT Inc.23Business Strategy3Strengthen Our Basement of Existing Businesses Strengthen human resources and systems in the area of consulting and AI system implementation in the AI implementation support business and start expanding the business and strengthening profitability.Area of Consultinglseeyopme fo .muNStrengthen areasTop class data scientist group(already retained)Area of AI system implementationProblem identification Hypothesis buildingData maintenanceModel developmentProof of Concept(PoC)System implementation© 2022 ALBERT Inc.24Business Strategy4Expanding Our Portfolios through M&A Proactively consider expanding the business portfolio through M&A by utilizing external and internal capital while ensuring financial soundness.htworg suounitnocsiDAcquiring external AI productDeployment of general-purpose products in priority industriesSecuring big dataDeveloping a data business based on analytical capabilitiesExisting businessAI implementation supportData scientist training supportSecuring capabilitiesExpansion of consulting and AI engineering resourcesAffinity with existing businesses© 2022 ALBERT Inc.25Business StrategyMid-Long Term Road Map Continued linear growth centered the AI implementation support business on the back of strong demand. Aiming for discontinuous business expansion through joint development with companies and M&A.Japanese top class data scientist group to realize the social implementation of AI .New Business for realize discontinuous growthExpanding our portfolios through M&AJoint development of AI product with alliance partnersAchieving sales growth with higher profitability than the existing businesses.PresentData scientist training supportAI implementation supportRealizing lienor growth of core businessesExisting portfolio (Scale to be achieved in the next couple of years)Over 5,000 million JPY© 2022 ALBERT Inc.264. Appendix© 2022 ALBERT Inc.27AppendixProfileJapan’s top class data scientist group to realize the social implementation of AI . Company Name Head Office EstablishmentALBERT Inc.Shinjuku Front Tower 15F2-21-1, Kita-Shinjuku, Shinjuku-ku,Tokyo, Japan, 169-0074July 1, 2005 Capital ※1 CAR※1JPY 1,051 million Takeshi Matsumoto Representative Director and President No. of Employees※1※286.5% Affiliated OrganizationThe Japanese Society for Artificial intelligence294employeesIncl. No. of Data Scientists251employees Top3 Shareholders Listing market / Security codeSBI HoldingsToyota Motor / Mynavi※1 as of March 31, 2021. (incl. new employees as of April 1.)※2Employees include dispatch employees (including those in training) , part-time workers and subcontract workers.TSE Growth Market 3906© 2022 ALBERT Inc.28AppendixBusiness OverviewProviding 2types of businesses for social implementation of AI.1AI Implementation Suppor t(Project-based ser vices)• Project-based support service for AI utilization mainly for major companies.•Integrated support system for AI utilization consulting, big data analysis, AI algorithm development, and AI system implementation.2Data Scientist Training Suppor t• Service to support the development of data scientists in companies.• Providing practical curriculum that incorporates ALBERT’s support know-how.Revolution Skills Course” by Ministry of Economy, Trade and Industry.• Customized services can be provided according to industry • Certified as “Fourth Industrial characteristics and customer needs.※ AI and image recognition service “Takumino-Me” is continue to offer depend on needs of clients in AI implementation support.© 2022 ALBERT Inc.29AppendixBusiness Structure Provide AI implementation support and data scientist training support to corporates and local governments etc..Major domestic corporate groupsLocal governmentsProject-based servicesAI Implementation Support• A project-based services depend on needs of clients.• Forming teams with multiple data scientists and assignment over a period of months to year.• Contract and quasi contractUtilizeKnow-how• Revenue recognition criteria under which revenue is recognized based on the percentage of completion of obligations is applied from FY2022.Data scientist training support• Provide practical learning by integrating knowledge gained from AI implementation support into a curriculums.• Wide range of curriculum lineup for beginner to advanced level.• Sales are reported at the end of the curriculums.Integrated support(From consultation to implementation)AbundantDS-HR.The project contract fee based onthe size / difficulty / duration CustomerbaseProviding curriculums according customers The contract fee based on combined multiple curriculumsKnow-howIn each industriesMultifaceted transactions with multiple departments within the same company and group companies.Value proposition• Analysis of big data accumulated through business and extraction of knowledge• Development and implementation of AI systems, Strategic consulting, DX support• Co-development of AI systems, operations, maintenance※ DS-HR. ; Data science human resources© 2022 ALBERT Inc.30AppendixMissionBuilding the future with data scienceWe are the CATALYST.ALBERT connects the world with data science and co-create new values for a better future. © 2022 ALBERT Inc.31AppendixThe CATALYST StrategyThe CATALYST strategy, in which we act as a catalyst to promote AI and data sharing between industries.Promote AI and data sharing between industries, aiming for an AI networked society.© 2022 ALBERT Inc.32AppendixThe Alliances Based on The CATALYST Strategy New alliances are being formed to realize the CATALYST strategy, mainly in priority industries. Accelerating efforts for social implementation.May 2018Oct. 2018Dec. 2018The alliance with TOYOTA motor Corp.The alliance with TokioMarine & Nichido Fire Insurance Co., Ltd.The alliance with KDDI Corp.Dec. 2020The alliance with Mynavi Corp.2018201920202021July 2019Nov. 2019Nov. 2019The alliance with Sumitomo Mitsui Financial Group Inc.The alliance with MACNICA Inc.The alliance with Nihon Unisys, Ltd.June 2021The alliance with SBI Holdings Inc.© 2022 ALBERT Inc.33AppendixTransaction Results Extensive business experience with domestic leading companies incl. CATALYST partners. (incl. group companies)CATALYSTPartners(Alliance partners)Priority Customers &Other Business Partners© 2022 ALBERT Inc.34AppendixShareholder Composition (as of Decmber 31, 2021) Maintaining to solid shareholder composition centered alliance partners. RankName of shareholderGreen：Alliance partner11222244556677889910101111SBI Holdings Inc.Toyota motor corporationMynavi corporationMACNICA Inc.Nihon Unisys, Ltd.BBH(LUX) FOR FIDELITY FUNDS PACIFIC FUNDKDDI CorporationSUMITOMO LIFE INSURANCE COMPANYRakuten Securities, Inc.JAPAN SECURITIES FINANCE CO., LTD.Tokio Marine & Nichido Fire Insurance Co., Ltd.No. of shares holdPercentage of total shares1,383,10031.0%165,800165,800163,000133,600132,00097,70078,30070,90055,40046,8003.7%3.7%3.7%3.0%3.0%2.2%1.8%1.6%1.2%1.0%※ Excluding treasury stocks. And including the shareholder change from SBI Financial Services Co., Ltd. to SBI Holdings Inc. as of March 31, 2022, which was the largest shareholder.© 2022 ALBERT Inc.35Disclaimer• The materials and information provided in this announcement contain so-called “forward-looking statements”. Forward-looking statements are based on the assumptions and beliefs of the Company and its management in light of the information currently available to it and involve known and unknown risks and uncertainties. These statements or assumptions may not be realized in the future due to changes in the business environment surrounding our business, market trends, and various other factors. Translated with www.DeepL.com/Translator (free version)• Such risks and uncertainties include general industry and market conditions, fluctuations in interest and currency exchange rates, and other general domestic and international economic conditions. InquiriesALBERT IR+81-3-5937-1389ir@albert2005.co.jpALBERT Inc.www.albert2005.co.jp/english/Head officeShinjuku Front Tower 15F 2-21-1, Kita-Shinjuku,Shinjuku-ku, Tokyo, Japan, 169-0074Tokai Branch OfficeNagoya Lucent Tower 8F 6-1 Ushijima-cho, Nishi-ku,Nagoya-shi, Aichi, Japan 451-6008 The names of the companies, products, and services mentioned in this document are the registered trademarks or trademarks of the respective companies. In addition, “™” Reproduction or reuse of all or part of this material without permission is prohibited, except in the case of “reproduction for personal use” or “quotation” as permitted under and “®” are not specified in this document.the Copyright Law.