Company Overview (IR)

1. Company Overview
2. Printing and Offline Advertising - Raksul
3. TV commercial related - Novasell
4. Logistics – Hacobell
5. Business and Organization that Support Realization of Our Vision
6. Governance Policy and ESG Initiatives
7. Financial Policy and Highlights
8. Reference Material

Transcript

1. Company Overview RAKSUL INC. (TSE PRIME: 4384)
2. 2 Quarterly Financial Summary Raksul Business Segment (“Raksul”): Revenue +40.8% YoY, Gross Profit +58.2％ YoY ▪ Growth accelerated with the inclusion of DANBALL ONE’s results to the segment ▪ Gross margin reached record high (30.3%), driven by pricing of organic businesses Novasell Business Segment (“Novasell”): Revenue -25.5% YoY, Gross Profit -37.5% YoY ▪ Both revenue and gross profit decreased YoY as demand from startup companies weakened resulting from changes in the financing environment. Gross profit is expected to bottom out in 3Q, and no impact on the medium-to-long term momentum ▪ Strong growth in SaaS business (Novasell Analytics) as well as launch of a new SaaS product (Novasell Trend) Hacobell Business Segment (“Hacobell”): Revenue +32.6% YoY, Gross Profit +16.5% YoY ▪ Steady growth in revenue continues. Gross margin rose to around 15% and segment losses are on a shrinking trend ▪ The segment will be transferred to a newly established joint venture (“JV”) with Seino Holdings Co., Ltd., and RAKSUL INC.’s shareholding ratio of the new JV will be 49.9% Company wide Novasell Hacobell Raksul Revenue +32.9% YoY(1), Gross Profit +36.1％ YoY, EBITDA (non-GAAP)(2) JPY 560MM ▪ Consolidated accounting introduced from 3Q. Growth accelerated with the contribution of DANBALL ONE. Inc. (“DANBALL ONE”) ▪ Achieved highest quarterly EBITDA ▪ While the medium-term growth momentum continues, we are shifting to a “Quality Growth” phase with further focus on profit and cashflow generation Notes (1) EBITDA (non-GAAP) = Operating Profit + Depreciation + Amortization of goodwill + Stock compensation expense Operating Profit (non-GAAP) = Operating Profit + Stock compensation expense (2) As consolidated accounting was not conducted prior to FY2021, non-consolidated accounting results and growth rates are provided for reference. The same applies hereinafter
3. 3 1. Company Overview 2. Printing and Offline Advertising - Raksul 3. TV commercial related - Novasell 4. Logistics - Hacobell 5. Business and Organization that Support Realization of Our Vision 6. Governance Policy and ESG Initiatives 7. Financial Policy and Highlights 8. Reference Material
4. 4 Company Overview
5. 5 Launched in April 2020 Launched in December 2015 Our Vision and What We Do ◼ We strongly believe in redesigning the structure and the value chain of conventional industries with the help of the Internet Printing & offline advertising Platform Logistics Platform Launched in March 2013 TV commercial-related Platform Better Systems, Better World Novasell Raksul Hacobell
6. 6 Raksul Customers Suppliers Before After Hacobell Customers Suppliers Novasell Customers Suppliers - Low profitability due to low utilization rate - Inefficient operations using phone and fax - Unable to allocate time for what needs to be done - Able to arrange trucks hassle-free at low cost by matching directly with shipping companies digitally - Improve utilization rate by drivers finding delivery orders in their spare time - Digitization of operations reduce operational costs ₋ Cost is too high ₋ Unable to see effectiveness ₋ Not knowing how to broadcast ₋ # of companies using TV ads not increasing, and heavy dependence on large-scale projects - # of companies using TV ads increase, leading to a stable customer base - Small-lot production at low cost - Visualize/maximize effectiveness - Easy to broadcast ₋ Unable to reduce costs ₋ Inefficient purchasing ₋ Able to place orders at a lower cost ₋ Smoother purchasing experience that increases operational efficiency ₋ Low profitability due to subcontracting, unable to grow - New demand created from businesses nationwide - Improve profitability and productivity through our material procurement support and sharing of knowledge ₋ Takes time and effort to find trucks ₋ Unit price increasing Customer/Supplier Value Created “After Raksul” ◼ Focus on creating value towards our customers and suppliers over the long term, rather than simply matching supply and demand
7. 7 BtoB Sharing Platform Business Model (Scope of Services) Business Development Methods # of Business Domains ◼ At the time of IPO, we positioned ourselves as a BtoB sharing platformer primarily in the printing market ◼ Hacobell business segment and Novasell business segment are growing, and we expect further expansion of our business domains in the future ◼ In addition to organic business development, we will expand TAM through inorganic means (M&A/ investments) ◼ RAKSUL will evolve into an Integrated Vertical Platformer that redesigns the the structure of multiple indirect cost markets Evolving into an “Integrated Vertical Platformer” Competitive advantage in realizing the above: Duplicatable business expansion through continuous accumulation of assets (business/organization/finance) Integrated Vertical Platform EC / Marketplace Services Software EC / Marketplace Organic Organic + Inorganic (M&A/investments) At the Time of IPO (2018) From Present to Mid-to-Long Term Raksul Hacobell Josys Danball one Peraichi Raksul Hacobell Novasell
8. 8 TAM Total JPY 31Tn Domestic Indirect Cost Market JPY 140Tn in Total Source: Please see Reference Materials for details Direction of Growth ▪ We will redesign the industrial structure of each indirect cost (indirect materials/services) market through our Integrated Vertical Platform ▪ The TAM of the peripheral markets is also large, and there is room for expansion (e.g., printing → packaging, logistics → warehousing) ▪ With a fragmented supply-side structure, our strength is in building businesses in markets with room for Ecommerce progression Revenue Direct Cost Indirect Cost Operating Profit Company P&L Raksul Josys Mar. 2013~ Dec. 2015~ Apr. 2020~ Sep. 2021~ Business Stationery and Commercial Printing Novelty goods Promotion Media (Offline Advertising) 6.3 Tn TV commercials Taxi Ads Novasell 1.7 Tn Trucking Hacobell 14 Tn Corporate IT 6.2 Tn Packaging 2.5 Tn Website Production (Equity method affiliates) 0.3Tn DANBALL ONE Peraichi (Equity method affiliates)
9. 9 New Businesses/ Large-scale investments ◼ An Integrated Vertical Platform with “Transactions” as the primary focus as well as “Software” and “Services” for each indirect cost market ◼ We achieve continuous monetization through transactions (current main source of revenue) by penetrating deeply into both supply and demand, rather than simply matching them ◼ As a result, our business transforms traditional industries into highly productive and profitable industries by improving the cost efficiencies of transactions and operations Business Model Integrated Vertical Platform Transactions EC / Marketplace Software SaaS Services Payment, BPO etc. Value additions based on data and transactions -> Resolving pain points on both supply and demand sides A two-sided platform with deep penetration into both supply and demand sides -> Optimizing transaction costs Data processing of clients’ internal information and source of transaction accumulation -> Optimizing operational costs Novasell Raksul Hacobell
10. 10 Portfolio Management of Multiple Businesses ◼ To further expand TAM, we have established a structure based on portfolio management of multiple businesses To increase competitiveness by combining forces as a portfolio company Duplicatable business model Allowance for time to grow Synergy Strong hiring and financing power Why We Build a Business Portfolio To utilize know-how gained from building an online printing service To share customer base and teams (technology and corporate functions) To absorb time needed for each business to penetrate its market
11. 11 Synergy between Business Segments ◼ Our system ensures a successful launch of each business by sharing our customer base and know-how, dispatching personnel and providing funds from the Raksul business segment Sharing customer base Sharing customer base Sharing business knowledge Sharing business knowledge Marketing support Large-scale Invested Companies Personnel Funds Raksul Novasell Hacobell Peraichi DANBALL ONE
12. 12 Revenue Composition by Business Segment ▪ Our newer platforms will rapidly expand while the printing EC service continues its growth, creating multiple strong revenue streams ▪ We have upwardly revised the gross margin range for Raksul to around 27%-30%, as DANBALL ONE’s contribution is now included Gross margin of Hacobell 15%-20% Gross margin of Raksul 27%-30% Gross margin of Novasell 40%-50% 77.7% 69.3% 66.3% 60.2% 55.4% 16.2% 17.8% 17.5% 19.1% 24.2% 0.8% 3.0% 4.4% 8.0% 9.3% 4.6% 9.3% 11.2% 11.5% 10.0% 0.6% 0.6% 0.6% 1.1% 1.1% FY2018 FY2019 FY2020 FY2021 FY2022 1Q - 3Q Raksul: Printing EC Offline Ads / New Domains (including DANBALL ONE) Novasell Hacobell Other Business and Internal Transaction Reconciliation
13. 13 Business Development Driven M&A ◼ The ability of our organization to create new businesses in-house is rare and continues to be a top priority ◼ On the other hand, we will continue to develop new businesses through "buy & build" type M&A of growth companies ◼ There are two criteria for M&A/investments: (1) Expansion of target areas (2) Within existing areas, the objective is not just to expand the scale, but to strengthen and integrate the value we provide ◼ The source of our competitive advantage is the creation of value through PMI support and the pursuit of synergies by fully utilizing the business, organizational, and financial assets we have accumulated to date Buy Buy & Build Build 内製での新規事業創出 Acquiring businesses that have already been developed Growth investment based on PMI support and pursuit of synergies Build Organic business development Acquisition/Start-up costs Integration costs Time required till PL contribution High Low High Low Short Long
14. 14 Management Team Yasukane Matsumoto Founder and CEO • Founded Raksul in September 2009 • Introduced the “Sharing Economy” model to the printing industry, in which idle assets are used more effectively • Ex-consultant from A.T. Kearney • Graduated from Keio University • Joined Raksul in April 2014 • Well-versed in financial strategies with a wide range of knowledge obtained through experience in the financial and investment sectors • Previously worked at Mizuho Securities, Carlyle Japan LLC, and DeNA • Graduated from Keio University; MBA from The Wharton School of the University of Pennsylvania • Joined Raksul in August 2014 • Committed to expanding the scope of our services from marketing perspectives • Previously worked at Marui Group and TAKE AND GIVE. NEEDS • Graduated from Chuo University • Joined Raksul in July 2015 • Expert in business planning, corporate development, and production control • Previously worked at Future Architect and ex-Principal of Boston Consulting Group • Graduated from Keio University • Joined Raksul in December 2015 • Leads the company’s overall technology vision including system engineering, creative and IT security • Previously worked at Morgan Stanley MUFG Securities and DeNA • Graduated from New England Conservatory Masaki Tabe CMO Yusuke Izumi CTO Yo Nagami CFO Kozo Fukushima COO • Joined Raksul in October 2017 • Has been working as a CPO and a product owner of our printing business, launched RAKSUL Vietnam and the Design Promotion Office to lead product development • Graduated from Keio University Sota Mizushima CPO
15. 15 Yumiko Murakami Outside Director Management Team (Outside Directors) • Joined Raksul as an outside director in October 2019 • Senior Chairman of ORIX Corporation since June 2014 • Long standing career at ORIX Corporation since 1964, previous positions include the Representative Executive Officer, Chairman, and CEO • Graduated from Kansai Gakuin University; MBA from the University of Washington • Joined Raksul as an Outside Corporate Auditor in October 2014 • Joined Makoto Sato Accounting Office (2013) • Joined Asahi & Co. (currently KPMG AZSA LLC)(1998) • Joined Tohmatsu & Co. (currently Deloitte Touche Tohmatsu LLC) (1997) • Graduated from Saitama University • Joined Raksul as an Outside Corporate Auditor in June 2017 • Associate Professor at Faculty of Policy Management, Keio University (2016 to present) • Associate Fellow at the Foundation France-Japon de L’École des Hautes Études en Sciences Socials (2015) • Associate Professor of College of Business Administration, Ritsumeikan University (2013) • Joined McKinsey & Company, Inc. (2004) • Graduated from Keio University; MSc. in Management Research with Distinction; D.Phil. in Management Studies from University of Oxford • Joined Raksul as an Outside Corporate Auditor in October 2018 • Established the law firm, Utsunomiya Shimizu & Haruki, and assumed office as Partner (2018 to present) • Established Utsunomiya Law Office (2011) • Temporarily transferred to the Tokyo Stock Exchange, Inc. (2007) • Registered as attorney at law and joined the law firm, Nagashima Ohno & Tsunematsu (2000) • Graduated from The University of Tokyo; LL.M. from Columbia University Yoshihiko Miyauchi Outside Director • Joined Raksul as an outside director in October 2020 • Co-Founder of Signifiant Inc., since July 2017 to present • Joined DeNA Co., Ltd., where he served as a director and executive officer (2009-2017) • Joined Corporate Direction, Inc.(2005-2009) • Graduated from The University of Tokyo; Master of Literature, Graduate School of Humanities and Sociology Kenji Kobayashi Outside Director Masahiro Kotosaka Outside Director, Audit & Supervisory Committee member Junko Utsunomiya Outside Director, Audit & Supervisory Committee member Naomi Mori Outside Director, Audit & Supervisory Committee member • Joined Raksul as an outside director in October 2021 • Founded MPower Partners Fund L.P. General Partner (2021 to present) • Managing Director at Credit Suisse Securities (Japan) Limited (2009) • Managing Director at Goldman Sachs Japan Co., Ltd.(2008) • Managing Director at Goldman Sachs and Co. (1997) • Vice President at Goldman Sachs International(1994) • United Nations Transitional Authority in Cambodia (Phnom Penh)(1998) • United Nations Secretariat (New York)(1991) • United Nations Development Programme (Barbados)(1991) • Graduated from Sophia University • M.S., Stanford University • M.A., Harvard University
16. 16 Printing & Offline ads Raksul
17. 17 Raksul 1. Business Model 2. Market Opportunities 3. Financial highlights 4. Consolidation of DANBALL ONE. Inc.
18. 18 Raksul Business Model ◼ Offer high quality printing products at low price by utilizing non-operating hours of printing companies nationwide ◼ Provide one-stop service for offline advertisement (design, newspaper inserts, and posting) through the website Posting Companies Printing Companies Service Money Users’ Targeted Customers (1) Order (1) Payment (2) Order (2) Payment (3) Delivery (4) Delivery to users’ targeted customers through posting companies (2) Order (2) Payment Users Raksul (3’)Delivery
19. 19 Raksul Self-perpetuating Platform Driven by Growing Demand and Supply Base Note 1. Number of cumulative registered users of Raksul as of January 2022 Lower Cost Empower Users More Transactions Empower Suppliers More Users Approx. 1.78 million Users(1) Manufacturing Advantage of Scale Printing/Posting Partners Raksul
20. 20 Raksul Fabless Model Brings Unique Competitive Advantages ▪ Raksul’s Value Proposition and Competitive Advantages are: ▪ Improvement in utilization rate and productivity by redistributing excess capacity →Scalable capacity →Asset-light model (Higher capital efficiency) ▪ Easier and flexible order at lower price (Able to capture the long tail of printing demand from SME) →Highly-engaged user base →Highly diversified users (not heavily relying on specific users) Printing Companies Network of suppliers Users Large Enterprises SME Individuals Non-Operating Hours Operating Hours Raksul
21. 21 Raksul Suppliers Sharing business structure Printing (Office/Industry supplies) - Small lot printing on paper such as flyers - We have achieved the highest growth in this market Market scale: JPY 3Tn EC penetration ratio: 3-4% Improve customer ARPU by cross- selling to existing customers Market scale: JPY 1-2Tn (excl. TV commercials) EC penetration ratio: less than 1% (excl. websites) Penetration into small-lot printing for office/industrial items by utilizing sharing know-how Market scale: JPY 3-5Tn EC penetration ratio: 1% - Labels - Clothing - Stationary - Mobile phone peripherals - Bags - Cardboard and packaging materials (DANBALL ONE) Printing (Paper) - Flyers - Business cards - Booklets - Envelopes - Postcards, etc. Local Advertising Services - Inserted leaflets - Posting - Direct mail - TV commercials (Novasell as an independent business segment) - Websites (Peraichi) Source: Estimated based on Yano Research Institute, METI, Dentsu “Advertising Expenditures in Japan”, financial information of domestic online printing companies Market and Growth Strategy ◼ By utilizing the customer and supplier base we have acquired through our flyer printing business, we aim to expand TAM and increase revenue per customer through the following expansions: 1) Increase ARPU of existing customers by expanding offline advertising services 2) Expand the customer base by launching additional unique product lines ◼ Making DANBALL ONE a consolidated subsidiary is an important step in expanding into the industrial supplies field related to printing Customer Base Advertising budgets of SMEs
22. Raksul Overview of Peraichi Inc. ▪ We have acquired shares in Peraichi Inc. as part of business development in sales promotion area by leveraging the customer base of existing Raksul business ▪ Accounting as equity-method affiliate from 3Q onward Company name : Peraichi Inc. Business : Operation of Website creation SaaS “Peraichi” CEO : Kunihiro Yasui Financial standing : Monthly revenue around JPY 55MM; growth accelerating under the COVID environment Deal Overview : Share purchase from existing shareholders and subscription of newly issued shares, resulting in shareholding ratio of approximately 49% Service Overview ・A SaaS service which enables anyone to easily create a website ・Offer payment function for online shops ・Highly compatible with printing EC (commercial printing) as the service is utilized by SMEs in various industries nationwide for sales promotion and marketing purposes
23. 23 Raksul 1. Business Model 2. Market Opportunities 3. Financial Highlights 4. Consolidation of DANBALL ONE. Inc.
24. 24 Raksul ▪ The overall printing market size decreased due to the shrinking publishing segment, while the segment size of business stationery printing and commercial printing (i.e. Raksul’s target segments) remained roughly flat Source: Overall printing market calculated based on “Current Production Statistics: Paper, Printing, and Plastic” (METI) on a basis of production volume 22 22 23 23 22 21 21 19 21 20 22 23 21 22 22 10 10 9 9 9 8 8 8 8 8 9 9 8 9 9 9 9 9 9 10 10 10 12 12 13 12 11 11 12 12 20 20 22 22 19 18 18 16 15 14 12 12 11 10 10 7 7 7 7 7 6 5 5 7 7 7 7 7 6 6 68 68 70 70 67 63 62 60 63 62 62 61 58 59 58 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Commercial Printing Business Stationery Printing Packaging Publishing Other (in JPY 100 Bn) Historical Trends of Japanese Printing Market
25. 25 Raksul Japan Germany TAM Expansion Driven by Further EC Penetration ◼ There is still huge potential for e- commerce penetration in the printing industry (3) （2018 Actual） Domestic Online Printing Market (2) JPY 100Bn Domestic Business Stationery and Commercial Printing Market (1) JPY 3Tn 3% ~30% Source: Yano Research Institute, METI Notes (1) Calculated based on “Current Production Statistics: Paper, Printing, and Plastic” (METI) (2) Calculated based on the financial information of domestic online printing companies (2019) (3) Source: zipcon consulting (2019)
26. 26 Raksul 40 66 87 126 172 274 337 409 489 543 590 630 700 800 910 1,000 59% 66% 31% 45% 37% 59% 23% 21% 20% 11% 8% 7% 11% 14% 14% 10% -50% -30% -10% 10% 30% 50% 70% -100 100 300 500 700 900 1100 1300 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Market YoY growth Estimated Market Size and YoY Growth of the Domestic Printing EC Market ▪ There was significant growth in the printing EC market during the post-financial crisis recession (in JPY 100MM) Source: Yano Research Institute (2004-2014), calculated based on financial information of domestic online printing companies (2015-2019)
27. 27 Raksul Room for Further Expansion of Customer Base in the SME space Restaurants 500,000 Hair Salons 240,000 Acupuncture/Orthopedic Clinics 50,000 Dental Clinics 60,000 Real Estate Agents 270,000 Prep Schools 40,000 Businesses using local marketing channels (Flyer, DM, etc.) Other: local retailer, home delivery, other professional services, etc. Source “2016 Economic Census” published by Ministry of Internal Affairs and Communications
28. Raksul Number of Registered Users on Printing Platform(1) ▪ Our customer base saw continuous growth ▪ The number of total users for 3Q was 1,788,319 Note (1) Number of total registered users for raksul.com (unit: 1,000 users) 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Individuals Enterprise 1,788 1,451 1,693
29. 29 Raksul 1. Business Model 2. Market Opportunities 3. Financial Highlights 4. Consolidation of DANBALL ONE. Inc.
30. Raksul 3,083 3,378 4,073 3,844 4,013 4,359 4,024 3,872 4,430 5,073 5,605 5,144 5,461 6,092 7,894 752 863 987 925 992 1,052 995 1,103 1,201 1,361 1,514 1,373 1,478 1,697 2,395 313 317 375 385 351 228 252 640 453 568 767 565 583 697 1,055 24.4% 25.6% 24.2% 24.1% 24.7% 24.1% 24.7% 28.5% 27.1% 26.8% 27.0% 26.7% 27.1% 27.9% 30.3% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Revenue Gross Profit Segment Profit Gross Margin ▪ Significant increase in revenue due to contribution of DANBALL ONE ▪ Gross margin was 30.3%, driven by pricing review and DANBALL ONE’s contribution ▪ For DANBALL ONE, 3Q revenue was JPY 1.5Bn, gross profit was JPY 460MM (gross margin of 30.7%), and EBITDA was JPY 164MM (EBITDA, non-GAAP) Business Segment Performance (in JPY MM) Notes (1) SG&A expenses include internal transactions (1)
31. Raksul KPI Trend(1) ▪ Continued growth for annual number of purchasers and average number of orders per year ▪ While the average revenue per order has decreased due to an increase in small-lot orders, the average number of orders (frequency) has increased ▪ For DANBALL ONE (2021/5-2022/4), the number of annual purchasers is 171k, ARPU (Average Number of Orders per Year x Average Revenue per Order) is around JPY 32k Number of Annual Purchasers Average Number of Orders per Year Average Revenue per Order (JPY) Note (1) Excluding DANBALL ONE, calculated based on management accounting, and differs from the figures disclosed in last fiscal year due to the new revenue recognition standards Enterprise Users All Users 1 2 373,263 475,497 2020/5-2021/4 2021/5-2022/4 2018/11-2019/10 2019/11-2020/10 2018/11-2019/10 2019/11-2020/10 193,267 238,390 5.13 5.30 14,753 15,673 12,320 13,163 3.94 3.86 +2.0% -6.4% +23.3% -5.9% +27.4% +3.2%
32. Raksul Comparison with the Pre-COVID situation ▪ Recurring revenue from our users acquired up to FY2019 has remained despite there being limited impact from the SoE under the COVID environment ▪ With the added revenue from the users acquired after FY2020, revenue has expanded Recurring Revenue Trend from Users acquired up to July 2019 (1) Notes (1) Excluding DANBALL ONE, calculated based on management accounting, and differs from the figures disclosed in last fiscal year due to the new revenue recognition standards (2) SoE declared in Tokyo vs Jan 2020 Revenue (Pre-COVID) 2020 2021 2022 (2) (2) (2) (2) 100% 85% 111% 94% 79% 106% 95% 50% 90% Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
33. Raksul Demand Situation Compared with the Pre-COVID situation ▪ Our ability to adapt to changes has steadily improved, for example, by strengthening products that are in demand even in the COVID environment Demand Situation Products Novelties DM Business Stationary Printing Commercial Printing Posting, etc. (local marketing) Panels, Banners, etc. Retail & Wholesale Manufacturing & Transportation Medical & Welfare IT & Telecommunications Restaurant Real estate Advertising & Production Schools Industry vs FY2020 2Q (Pre-COVID) Recovered after decline ±0% Accelerated growth More than 20% Continuously weak Less than 0% Notes (1) Excluding DANBALL ONE
34. 34 Raksul (Reference) Key Drivers and Investment Points for KPI Improvement Number of Annual Users ・Continuous improvement of marketing measures ・Expansion of business areas and product line-up Average Number of Orders per Year • Improvement of customer experience • Continuous CRM and cross-sell expansion Average Revenue per Order • Provide services to promote usage by large enterprises Gross Margin • Price optimization • Support towards suppliers in productivity and cost improvement • Cost improvement through joint procurement of materials
35. 35 Raksul 1. Business Model 2. Market Opportunities 3. Financial Highlights 4. Consolidation of DANBALL ONE. Inc.
36. 36 Raksul Investment Highlights ◼ To expand the scope of business in the Raksul business segment, we have acquired additional shares of DANBALL ONE. Inc. (“DANBALL ONE”), which has the largest share of the expanding cardboard EC market, making it a wholly owned subsidiary ◼ After the consolidation, the Raksul business segment will become one of the largest printing and packaging materials EC players in Japan ◼ Since acquiring 49% of DANBALL ONE shares in December 2020, we have taken a hands-on approach in providing comprehensive support, and will execute additional acquisition while minimizing impairment risks ◼ As a result of this acquisition, we have shifted to consolidated accounting from FY2022 3Q (February 1, 2022) ◼ With the acquisition of DANBALL ONE, a company with a high growth rate even in the COVID environment, Raksul business segment and companywide performance will have strong growth momentum
37. 37 Raksul Summary Consolidation of DANBALL ONE. Inc. Acquisition Structure Purchase of all shares held by the existing shareholder (Representative Director Toshihiro Tsuji) Share Purchase Amount Approximately JPY 2Bn + Earn-out of JPY 500MM (Including the share purchase amount of the previously acquired 49% stake, 100% equity value is JPY 4Bn + Earn-out of JPY 500MM) Financing Funds on hand (No additional financing planned) Date February 1, 2022 Future disclosure policy and forecast of companywide performance • DANBALL ONE’s results are disclosed as part of the Raksul business segment; its individual results are also disclosed separately • Since goodwill is generated as a result of the acquisition, we disclose EBITDA (non- GAAP) thereafter. While the most important financial indicator is still the gross profit, profit and CF indicators have been shifted from operating profit (non-GAAP) to EBITDA (non-GAAP) Summary ◼ DANBALL ONE Inc. became a wholly owned subsidiary of RAKSUL INC. after its large-scale investment in Dec 2020
38. 38 Raksul ◼ DANBALL ONE operates a platform for packaging materials under the same vision as RAKSUL, “Better Systems, Better World” ◼ No.1 domestic sales share for 4 consecutive years as an e- commerce site specializing in cardboards and packaging materials Company name : DANBALL ONE. Inc. Business : Operation of “Danball One,” an online order platform for cardboard and packaging materials CEO : Toshihiro Tsuji HQ : Kanazawa, Ishikawa, Japan Better Systems, Better World Vision / Overview VISION Overview No.1 domestic sales share for 4 consecutive years as an EC site specializing in cardboards and packaging materials *EC site specializing in cardboard and packaging materials, Survey by TOKYO SHOKO RESEARCH (as of September 2021) *Revenue, number of orders, number of users, number of reviews, revenue growth rate DANBALL ONE
39. 39 Raksul ◼ An online platform where users can easily purchase cardboard and packaging materials at low cost ◼ DANBALL ONE possesses the industry's largest network of cardboard manufacturers and packaging material manufacturers. It has also established a system to provide products at low cost and in small lots ◼ Similar to Raksul's business characteristics in terms of both attracting customers through marketing and building a supplier network through SCM, we can utilize Raksul's business creation model directly in the PMI process Business Model Order Order Payment Payment Custom-made products delivered directly to users Some standard products are in finished stock for short- term delivery and small-lot shipment Value to Users : Low cost, easy to order Value to Suppliers : Improve operational inefficiencies and maximize productivity Cardboard manufacturers Users Logistics warehouses DANBALL ONE
40. 40 Raksul Domestic Cardboard EC Market Share Over 50% Domestic Cardboard EC Market ◼ The market benefits from the growing demand of EC in Japan ◼ The domestic cardboard EC market is growing at a CAGR of 30％ ◼ DANBALL ONE accounts for approximately over 50% of the domestic cardboard EC market Domestic Cardboard EC Market JPY 8.5Bn (2) Domestic Cardboard Market JPY 1.8Tn (1) Source (1) Shipment volume of Japan packaging industry 2020, Japan Packaging Institute, cardboard products (2) Estimated based on financial information of domestic cardboard EC companies (2021) DANBALL ONE
41. 41 Raksul PMI/ Synergies ◼ Significant expansion of business value through hands-on approach of organizational enhancement, sharing of customer base, and marketing support by Novasell ◼ Minimizing the risk of impairment by allocating sufficient resources to PMI Organization Customer Marketing SMB / EC Companies SMB / EC Companies No.1 domestic cardboard EC site • A team of industry-savvy professionals • Experienced management team in B2B platform business • One and only global technology team in the industry Full support in providing management and technology know-how Purchase of cardboard materials Purchase of labels / DM Full support of production / planning / broadcasting / analyses Novasell DANBALL ONE
42. 42 Raksul Comprehensive Support in PMI ◼ Over 10 members from RAKSUL with management and business experience dispatched to DANBALL ONE ◼ Provides comprehensive support towards creating business and management foundations with a very hands-on approach compared to consulting firms and investment firms (such as private equity and venture capital firms) ◼ We are also creating opportunities for the next generation of leaders to gain hands-on management experience Board of Directors Marketing Product Development Technology SCM CS Corporate Functions • Sharing of RAKSUL management know-how • Strengthening governance • Growth support (from Novasell) utilizing TV commercials • Improve efficiency of digital marketing • Sharing of business development know- how: expansion of products / pricing strategies • Launch of development organization utilizing RAKSUL VIETNAM • Implementing cost management methods • Stabilization of operations • Ensuring business scalability • Implementing a personnel assessment system • Establishing accounting/legal/HR labor/internal control systems • Establishing internal infrastructure Support Details Members from RAKSUL (including concurrent positions) DANBALL ONE
43. 43 Raksul DANBALL ONE Number of Users (1) ◼ The number of total users for 1Q was over 400,000 ◼ The pace of customer acquisition is increasing due to the growing demand for EC in COVID environment and the marketing support provided by Novasell after our previous investment 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 - FY2022 （Users） 430,966 289,441 RAKSUL’s large scale investment on Dec 2020 Note (1) Includes customers who were not registered for figures prior to FY2021 403,652
44. 44 TV commercial-related Novasell
45. 45 Novasell 1. Business Model 2. Market Opportunities 3. Financial Highlights
46. 46 Novasell Business Model ▪ Novasell provides a one-stop service from research & planning, video production, broadcasting to analysis in the advertising market (TV commercials, in-taxi commercials, digital marketing, etc.) ▪ Novasell Analytics (SaaS) enables clients to broadcast programmatic video ads
47. 47 Novasell Business Model
48. 48 Novasell Novasell Analytics ▪ Novasell Analytics (SaaS) enables real-time visualization of the broadcast stations, time slots, programs, and creative materials that worked well Stations Time Slots Programs Contents Novasell Analytics
49. 49 Novasell Case Study ◼ We started the business with main customers being users of Raksul Business Segment as well as startups/ new businesses ◼ As the service matched the customer needs of visualizing advertising effectiveness, we have been acquiring larger customers SUMITOMO LIFE INSURANCE COMPANY JX PRESS Corp.
50. 50 Novasell 運用型サービス TV commercial services which visualize and improve its effectiveness via Novasell Analytics TV commercial services utilizing a unique tool which can optimize planning across on-line and off-line media, maximize target viewership, and conduct central media buying ソリューション開発 System development capability including automation etc. in addition to Novasell Analytics Development support for clients such as access to DMP(1) owned by ADK Group, and building CDP(2) 実績・ノウハウ Marketing experience and expertise from Raksul business which directly connects to customer management Experience and expertise as a full- service ad agency handling various marketing challenges Partnership with ADK Marketing Solutions Inc. ▪ This partnership aims to expand the Programmatic TV Commercials market ▪ Additionally, the business value of Novasell will greatly benefit from utilizing the various resources (programmatic online advertising, media buying function, data infrastructure) provided by a full-service ad agency Notes (1) "Data Management Platform", a platform for managing various information stored on the Internet (2) "Customer Data Platform", a data platform which collects, accumulates, and integrates data on the attributes and behavior of individual customers Novasell Service Software/Solution Development Experience and Expertise
51. 51 Novasell 1. Business Model 2. Market Opportunities 3. Financial highlights
52. 52 Novasell Domestic Advertising Market ◼ The Terrestrial TV Commercial market recovered in the second half of 2021 and growth of Internet ad spending accelerated Source: Dentsu “Advertising Expenditures in Japan” (2021) (in JPY 100Bn) 18 18 18 18 18 18 18 17 15 17 1 1 1 1 1 1 1 1 1 1 10 10 10 9 9 8 8 7 6 6 9 9 11 12 13 15 18 21 22 27 21 21 22 21 21 21 21 22 17 16 59 60 62 62 63 64 65 69 62 68 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Terrestrial TVCM Satellite Media-related Newspapers/Magazines/Radio Internet Promotional Media
53. 53 Novasell Novasell Leading the Programmatic TV Commercial Market Novasell Ratings Source: Raksul survey on “TV CM campaigns” - Scope: 300 directors/managers/employees in marketing/PR/corporate planning, ages 22-69, in companies with annual ad spend of over JPY 1bn with experience in TV CM campaigns - Method: Internet - Survey monitor provider: GMO Research, Inc. - Period: Jan 25th – 29th, 2021 ◼ The programmatic TV commercial market has been expanding due to expectations on visualization and maximization of TV ad effectiveness ◼ More and more clients are using Novasell; usage is accelerating in the market What to Focus on in TV Ad Campaigns #1 Visualization of effectiveness #2 Increase in revenue/customers #1 in frequency/willingness of usage and recognition (%, Top5 items)
54. 54 Novasell 1. Business Model 2. Market Opportunities 3. Financial highlights
55. 55 Novasell 64 149 131 143 199 274 203 177 322 498 722 498 720 1,007 538 28 61 57 51 118 122 142 102 165 206 405 305 313 433 253 1 45 29 -1 22 4 9 -25 19 17 94 -95 -18 69 -122 43.9% 41.3% 43.6% 36.2% 59.2% 44.7% 69.8% 57.6% 51.2% 41.5% 56.0% 61.3% 43.5% 43.0% 47.0% -50.0% -11.0% 28.0% 67.0% -300 -100 100 300 500 700 900 1,100 1,300 1,500 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Revenue Gross Profit Segment Profit Gross Margin Segment Performance (1) ▪ Demand weakened due to changes in the financing environment of our start-up clients, on the other hand, gross profit remained strong with an increase in gross margin ▪ Gross profit is expected to bottom out in 3Q and will continue to grow from 4Q onward ▪ By applying the new revenue recognition standards, revenue is netted for broadcasting services, and gross revenue is recognized for production and SaaS services. The gross margin will continue to be around 40-50% in medium-to-long term (in JPY MM) (EBITDA, non-GAAP) Notes (1) Including internal transactions in revenue, gross profit, and SG&A
56. 56 Novasell (Reference) Business Segment Performance based on Previous Accounting Methods(1) ▪ Amounts recorded under the previous accounting methods (all based on gross recognition basis) are disclosed for reference ▪ Maintained high level of quarterly revenue of over JPY 1.5Bn (in JPY MM) (EBITDA, non-GAAP) 86 315 278 387 732 743 847 530 872 1,248 2,613 1,983 1,727 2,641 1,614 28 61 57 51 118 122 142 102 165 206 405 305 313 433 253 1 45 29 -1 22 4 9 -25 19 17 94 -95 -18 69 -122 32.6% 19.5% 20.5% 13.4% 16.1% 16.5% 16.8% 19.3% 18.9% 16.5% 15.5% 15.4% 18.1% 16.4% 15.7% -90.0% -51.0% -12.0% 27.0% (500) 0 500 1,000 1,500 2,000 2,500 3,000 3,500 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Revenue Gross Profit Segment Profit Gross Margin Notes (1) Including internal transactions in revenue, gross profit, and SG&A
57. 57 Novasell KPI Trend Number of Annual User Companies Average Broadcasting Months Average Monthly Unit Price (JPY) ▪ KPI disclosure based on characteristics of programmatic TV commercials ▪ In addition to an increase in the number of new users, both broadcasting months and the average monthly unit price are key factors for Novasell (Ref.) Previous Accounting Methods New Revenue Recognition Standards +40.4% 2020/2-2021/4 2021/5-2022/4 154 210 2.02 2.02 5.5MM 6.5MM 18.7MM 16.9MM +36.4% +0.2% +10.7% +17.5%
58. 58 Novasell 2.4 1.6 5.6 6.6 16.0 28.1 33.3 54.3 63.5 0 10 20 30 40 50 60 70 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2021 FY2022 Growth in SaaS Business ▪ SaaS Business in Novasell has been expanding rapidly ▪ Cumulative number of companies that have implemented Novasell Analytics is 210 (including free use), with total analysis amount of more than JPY 30Bn (including transaction amounts for the broadcasting service) ▪ We have launched a new service “Novasell Trend” which visualizes the impact of the TV commercials of our clients’ competitors from April 2022. Our service platform is now more responsive to customer needs in the programmatic TV commercial market Launch of Novasell Analytics April 2020 Basic agreement on business alliance with ADK Marketing Solutions Inc. December 2020 Launch of new product (Novasell Trend) April 2022 SaaS Quarterly Revenue (in JPY MM)
59. 59 Novasell (Reference) Key Drivers and Investment Points for KPI Improvement Number of Annual User Companies • Expansion of marketing channels • Collaboration with external advertising agencies ARPU • Formulate/implement marketing strategies working closely together with the clients • Improvement in analysis contents for Novasell Analytics • Expansion and enhancement of media Gross Margin • Expansion of SaaS business (with high profit margin)
60. 60 Logistics Hacobell
61. 61 Hacobell 1. Business Model 2. Market Opportunities 3. Financial highlights 4. Company Split of Hacobell Business Segment and Establishment of a Joint Venture with Seino Holdings Co., Ltd.
62. 62 Hacobell Issues in Logistics Industry and the Solutions Hacobell Provides ▪ A matching platform to realize smooth transactions by directly connecting clients (shippers) and drivers ▪ Hacobell Connect (SaaS) to reduce operation cost for clients (shippers) and drivers Multiple-Layered Structure of Intermediaries Low Productivity due to analog operations Issues in the Industry Smooth transactions by digitizing transactions and connecting clients (shippers) and drivers Improve productivity and reduce operational costs by digitizing delivery operations - Inefficient operations using phone and fax - Unable to allocate time for what “needs to be done” Hacobell’s Solutions and Business Model Matching Platform →Transaction Fee Hacobell Connect (SaaS) →Monthly System Usage Fee - Shippers: difficulty finding trucks + price increase - Drivers: low profit and low income due to low utilization rate
63. 63 Hacobell Business Model Clients Trucking Company Designated Address (1) Order (1) Payment (2) Matching (3) Order (3) Payment (4) Delivery to designated address Service Money Clients Trucking Company A (1) Monthly fee (1) Provide system (2) Order (2) Payment Matching Platform Hacobell Connect (SaaS) Trucking Company B Trucking Company C Hacobell Hacobell Hacobell Connect
64. 64 Hacobell Value for Clients of Hacobell Connect (SaaS) ▪ Hacobell Connect (SaaS) can now realize optimal allocation to subcontractors in addition to the digitization of delivery operations. This allows for reduction in client (shipper) operation costs and outsourcing costs. 21 companies have implemented the SaaS as of October ▪ Monthly charge per office is JPY 150K- 300K; Start with one office within the client and aim to expand to other offices Case Study Major Clients Food & Beverage Other Manufacturing / 3PL • Utilizes Hacobell Connect in digitizing delivery operations • 80% reduction in operation hours • Utilizes Hacobell Connect in digitization of shipping operations and optimization of subcontractors when developing vehicle allocation plan • 5% reduction in delivery outsourcing cost and 30% reduction in operation hours YASKAWA LOGISTEC NTT LOGISCO NTT LOGISCO
65. 65 Hacobell Competitive Advantage and Current Business Focus ▪ Targeting large clients for both the matching platform and SaaS Matching platform Hacobell Connect (SaaS) Competitive Advantage Current Focus • High matching rate and low-cost delivery capacity realized through continuous improvement of algorithm • Continuous expansion of driver network • Solution-selling tailored to delivery operations of the shippers • Implementation support process tailored to the shipper's delivery operations • Simultaneous reduction of shippers' delivery costs and delivery operation costs through collaboration with the matching platform • Increased number of clients led by sales and marketing • Improvement in market share and increase in client spending especially among large clients (shippers) • Promoting paid plans to large clients (shippers) • Achieving client’s cost reductions
66. 66 Hacobell 1. Business Model 2. Market Opportunities 3. Financial highlights 4. Company Split of Hacobell Business Segment and Establishment of a Joint Venture with Seino Holdings Co., Ltd.
67. 67 Hacobell Domestic Trucking Market 11.3 11.8 12.1 12.5 12.7 13.2 13.7 14.2 2012 2013 2014 2015 2016 2017 2018 2019 (in JPY Tn) Source: Estimated based on Yano Research Institute “Logistics Market 2019” and “Japan trucking industry 2018 - current status and issues” published by Japan Trucking Association
68. 68 Hacobell Service Offerings ◼ We started with last-mile services, then expanded into intra-city and inter-city services JPY 50,000 - 100,000 JPY 20,000 - 40,000 JPY 5,000 - 10,000 Large truck (10t) Small and Medium truck (2t - 4t) Light van Inter-city Intra-city Last mile Enterprises and individuals Enterprises only Market size Note (1) Estimated based on “Japan trucking industry 2018 - current status and issues” published by Japan Trucking Association Source: Japan Trucking Association JPY 10Tn JPY 4Tn (1) (1) Unit price Suppliers / Partners Vehicle type Hacobell’s Target Market Enterprises only
69. 69 Hacobell 1. Business Model 2. Market Opportunities 3. Financial highlights 4. Company Split of Hacobell Business Segment and Establishment of a Joint Venture with Seino Holdings Co., Ltd.
70. 70 Hacobell ▪ Steady growth in revenue continues. Gross margin rose to around 15% and segment losses are on a shrinking trend ▪ 23 companies have implemented Hacobell Connect (SaaS), and the average monthly charge per client is roughly JPY280k, contributing to +1.7pt increase in gross margin Business Segment Performance (in JPY MM) 228 324 452 534 563 638 532 448 553 1,004 655 723 741 835 869 22 23 30 27 34 35 48 69 91 142 112 96 97 104 131 -16 -30 -39 -71 -99 -125 -79 -46 -21 21 -17 -59 -68 -46 -11 9.7% 7.3% 6.6% 5.2% 6.1% 5.6% 9.1% 15.5% 16.5% 14.2% 17.2% 13.3% 13.1% 12.6% 15.1% -30.0% -10.0% 10.0% -200 0 200 400 600 800 1000 1200 1400 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Revenue Gross Profit Segment Profit Gross Margin (non-GAAP, EBITDA)
71. 71 Hacobell 2020/5 -2021/4 2021/5 -2022/4 Number of Clients and Average Revenue per Client (ARPU)(1) ▪ Number of clients dropped, as we are focusing on acquiring large enterprises instead of marketing to acquire small lot clients ▪ ARPU has been improving continuously by deeply penetrating the clients’ delivery operations Note (1) Excluding Hacobell connect (SaaS), differs from the figures disclosed in last fiscal year due to the new revenue recognition standards Number of Clients ARPU (JPY) 2020/5- 2021/4 2021/5- 2022/4 748k 544k 4,812 4,157 +37.5% -13.6%
72. 72 Hacobell Number of Registered Vehicles(1) ▪ Number of registered vehicles has increased steadily, which leads to securing our transportation capacity to support business growth ▪ We have established recognition within the industry particularly for lightweight vehicles, and natural inflow will continue at a certain level (# of vehicles) Note (1) Including companies registered on Hacobell Connect (SaaS) 1,246 1,800 2,940 4,911 6,590 7,451 8,175 9,975 11,599 13,157 15,053 16,609 18,507 20,276 21,572 1,961 2,386 3,372 4,590 5,729 6,886 8,014 8,892 9,618 10,853 11,865 12,687 13,224 13,726 14,343 3,207 4,186 6,312 9,501 12,319 14,337 16,189 18,867 21,217 24,010 26,918 29,296 31,731 34,002 35,915 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Heavyweight Vehicles Lightweight Vehicles
73. 73 Hacobell (Reference) Key Drivers and Investment Points for KPI Improvement Number of Clients • Hiring of sales force • Acquisition of flagship clients and marketing based on these clients ARPU • Matching: Strengthen penetration into client operations and tailored proposals • Matching: Improve matching rate • SaaS: Strengthen integration with client systems and additional functions based on customer requests Gross Margin • Improvement of ordering algorithm • Expansion of SaaS business (with high profit margin)
74. 74 Hacobell 1. Business Model 2. Market Opportunities 3. Financial highlights 4. Company Split of Hacobell Business Segment and Establishment of a Joint Venture with Seino Holdings Co., Ltd.
75. 75 Hacobell Summary Overview • We will transfer the Hacobell business through company split, and establish a JV with Seino Holdings Co., Ltd. (“SEINO HD”), a leading company in the logistics industry • Shareholding ratio of the JV will be RAKSUL 49.9%, SEINO HD 50.1% Scheduled date • August 2022 Purpose • Implementing a capital policy that enables Hacobell to become an open public platform in solving diverse challenges of the logistics industry • Decision was made based on RAKSUL’s vision and mission to transform multiple industries Impact on companywide financials • Hacobell business segment will become an equity-method affiliate from FY2023. Losses in Hacobell business segment will not be included in our operating profit • Hacobell contribution to companywide gross profit is around 4-5%, thus the impact is negligible • As a result of this transaction, we will incorporate deferred tax assets as adjustments to income taxes (gain) in FY2022 4Q, and record extraordinary income and adjustments to income taxes (loss) in FY2023. Overall impact is on the profitable side
76. 76 Hacobell Overview ▪ We will transfer the Hacobell business through company split and establish a JV with SEINO HD, a leading company in the logistics industry in August 2022 Transfer Hacobell business through company split as of August 1, 2022 (incorporation type company split) 1. Company Split 2. Establishment of JV HACOBELL INC. HACOBELL INC. By transfer of shares from RAKSUL to SEINO HD, and issuance of new shares through third party allotment to SEINO HD, the JV will be established with RAKSUL holding 49.9% and SEINO HD holding 50.1% of the shares 49.9% 50.1% Hacobell Segment 100%
77. 77 Hacobell • Nationwide customer base and sales network • Number of customers: 120,000 Number of partners (origin and destination combined): 800,000 • No.1 share in BtoB logistics • Wide range of business in logistics (other than trucking) • Logistic warehouse / facilities • Warehouse Management System (WMS) • Investment in startup companies via CVC (drones, etc.) Purpose of the JV ▪ By choosing to establish a JV with SEINO HD instead of pursuing growth on a stand-alone basis, Hacobell can achieve significant business growth by leveraging the strengths of both companies ▪ In the medium-to-long term, Hacobell will aim to become an open public platform in solving diverse challenges of the logistics industry ▪ Decision was made based on RAKSUL’s vision and mission to transform multiple industries • Matching technology and operational capabilities based on digital knowledge and expertise in vehicle dispatch operations • Providing superior UI/UX software based on deep understanding of the logistics industry's transportation and delivery operations • Supplier network Various challenges in the logistics industry Resolving challenges through synergies between the two companies and creating an open platform within the industry in the future Promotion of carbon neutrality Low utilization rate Decrease in the number of drivers and aging of drivers
78. 78 Hacobell Outlook of Hacobell performance / impact on companywide financials • Hacobell business segment will become an equity-method affiliate from FY2023. Losses in the Hacobell business segment will not be included in our operating profit • Hacobell contribution to companywide gross profit is around 4-5%, thus the impact is negligible • As a result of this transaction, we will incorporate deferred tax assets as adjustments to income taxes (gain) in FY2022 4Q, and record extraordinary income and adjustments to income taxes (loss) in FY2023. Overall impact is on the profitable side Outlook of Hacobell performance Impact on companywide financials • Revenue growth pace will accelerate by receiving customer referral support from SEINO HD. Short-term loss will incur in view of focusing on service development and customer services • Aim for IPO in the future
79. 79 Business and Organization that Support Realization of Our Vision
80. 80 Customers Suppliers ラクスル ノバセル ハコベル Hacobell Raksul 335Companies Total # of Customers (Cumulative) National TV Stations Major taxi companies in Tokyo Novasell 1.53M Users # of registered users 43k Users # of Registered Users 130Partners (Approximately) # of Suppliers 29k Vehicles # of Registered Vehicles Customer and Supplier Base by Business Segment(1) ◼ Customer base and supplier/ partner base accumulated over the years is a strong entry barrier Notes (1)As of July 2021
81. 81 - Programmatic TV Commercial Services Effectiveness Visualization Tool Frequency of Usage / Recognition Novasell Brand Recognition ◼ We have established a high level of recognition in all business segments and will aim for further expansion - Online Printing Companies Recognition - Vehicle Allocation Planning System of Interest - Most Recognized Cargo and Vehicle Matching Services Source: Please see Reference Materials for details Raksul Hacobell No.1 No.1 No.1
82. 82 Novasell Analytics (SaaS) Novasell Hacobell Connect (SaaS) Hacobell Organic Business Development System 1 Business Portfolio Management ◼ Business portfolio management that clearly identifies points for generating CF and points for investment ◼ In the exploration phase, we invest in multiple themes with the aim of fostering growth phase businesses ◼ In the growth phase, we strengthen investments based on sound economics ◼ Compared to the time of listing, the number of businesses in the exploration and growth phases has increased while cash generation have been strengthened Profit Phase Growth Phase Exploration Phase Printing EC Business Offline Advertising Business (DM, Flyers) 3-4 Businesses Novelty Business Growth Investment CF Generation Investment Policy Positioning of Portfolio • Business themes that can be transitioned to the growth phase • High growth • Sound economics • Stable growth • CF generation (profitable) ： Main business structure at the time of IPO Raksul Ad Agency Business Logistics Matching Business
83. 83 Organic Business Development System 2 Project System that Supports Continuous Growth ◼ Implemented “project” system before going public to create discontinuous value in businesses and to develop business leaders Results (Examples) from Past Projects Purpose of the Project System ◼ To set and solve problems by thinking backwards from the discontinuous value that we want to create in the future, which is different from the continuous operational approach of businesses ◼ Develop business leaders through projects Raksul • Automatic data checking and processing system for printing data • Online design creation function • Optimal ordering infrastructure for suppliers • Automated matching mechanism • Discontinuous improvement in gross margin • Launch and service development of Novasell business (as a new business) Novasell Hacobell
84. 84 Core Technology ◼ Our competitive advantage is our capabilities to develop an Integrated Vertical Platform that can innovate the industrial structure from multiple perspectives such as purchasing experience, operational process, and ordering process ◼ Rather than relying on a specific technology, we can provide optimal solutions by combining multiple technologies Capabilities that Enable Our Core Technology Core Technology Examples of Solutions Created in Each Business skills that incorporate such core technology into software and logic skills to provide solutions based on high resolution to each industry skills to maximize customer experience Integrated Vertical Platform Development Capabilities Infrastructure that innovates purchasing experience and operational/ordering processes by industry Raksul • Automatic generation of print designs • Automation of the print data generation process Novasell • Real-time visualization of effectiveness of TV commercials (patented) Hacobell • Algorithm for optimal order placement to transportation companies (contractors) • System to simplify truck ordering operations for clients (SaaS) Engineering Product Management Design
85. 85 Organizational Structure that Enables Deep Penetration into the Industries ◼ Raksul is a technology company with operational know-how and marketing expertise - this is how we clearly differentiate ourselves from other pure-Internet players and legacy industry incumbents Technology Marketing Operation Continuous product development led by industry-leading engineers Efficient production process developed through in-house R&D with 3 printing machines Experience with total of JPY 5Bn+ advertising campaigns with in-house expertise from planning to effectiveness analysis
86. 86 Our New Technology Development Centers ◼ In order to strengthen our technology development, we have established two new technology development centers in Vietnam and India in 2020 Vietnam India • We have established a development center in Bengaluru, India, the third largest country in the world in terms of the number of IT engineers (1), to strengthen our development capabilities • Since 2018, we have been conducting operations/service development for Raksul business segment together with local companies responsible for offshore development • By establishing a center, we will strengthen our ability to recruit local development members and refine products and services mainly for the Raksul business segment ＜Overview＞ RAKSUL VIETNAM COMPANY LIMITED Location : Ho Chi Minh, Socialist Republic of Vietnam Establishment date : June 2020 ＜Overview＞ RAKSUL INDIA PRIVATE LIMITED Location : Bengaluru, Republic of India Establishment date : July 2020 Notes (1) Source: Human Resocia “IT Engineer Report” Vietnam Office
87. 87 Current Organizational Status Number of Employees (1) Average Age (2) Average Years of Service (2) Male/Female Ratio (1) 399 Employees 33.5 Years old 2.3 Years Male 63.2% Female 36.8% Notes (1) Includes non-regular employees and India/Vietnam entities, headcount based, as of July 2021 (2) Regular employees only, includes India/Vietnam entities, as of July 2021 (357 employees for Raksul JP) (61.3% for Raksul JP) (38.7% for Raksul JP) (2.5 years for Raksul JP) (33.9 years old for Raksul JP)
88. 88 HR Organization Policy ◼ Organizational design with the overall objective of realizing our vision and maximizing long- term enterprise value Our Vision and Raksul Style • Organizational design that places the highest priority on our vision “Better Systems, Better World” and the Raksul Style (Code of Conduct)* to realize such vision *Reality/System/Co-operation Strengthening Our Technology Team • Investment in technology is essential to redesign the structure of the industry, and we will focus on strengthening our teams in Japan and overseas • We have established development centers in India and Vietnam, with plans to expand Diversity & Inclusion • We will take advantage of the fact that the ratio of female employees in the company is already about 37% and the ratio of foreign nationals is about 10%, and provide an environment and opportunities to recruit and retain the best talent from both Japan and overseas • In the future, we plan to increase the ratio of female and foreign national members in management positions Productivity Improvement • To improve productivity (gross profit divided by labor cost) by year is the long-term policy for new hire planning in each business Incentive design linked to long-term equity value • In addition to cash remuneration, we have introduced a stock-based compensation system (stock options and restricted stock), which provides compensation for individual performance through long-term increase in equity value
89. 89 Strengthening Equity Incentives Notes (1) Estimated as of September 2021. The amount will be affected by stock price Purpose • To align the incentive and commitment of officers and employees with the maximization of long-term shareholder value • To ensure the competitiveness of our compensation level in order to attract and retain talent which is the foundation of our competitive advantage Structure • Structure: restricted stock (RS) and stock options • Simple design that both investors and recipients can expect Dilution • Expected dilution of up to 10% over the next 10 years (around 1% per year) • Designed with flexibility for variation in each year • Our percentage of dilutive shares was 7.3% at IPO and 5.5% as of the end of fiscal year ending July 2021 – lower than other growing companies (see next page for stock incentive balance) Impact on P&L/CF • Stock-based compensation expense for FY2021 was JPY 612MM per year • Stock-based compensation expense for FY2022 will be around JPY 750-850 MM per year (1) • As impact is neutral in terms of cash flow, non-GAAP profits excluding the impact of RS are disclosed ▪ Our basic purpose and approach to equity incentives has remained the same since our disclosure of the RS system implementation in FY2019 4Q
90. 90 Stock Incentive Balance ◼ Total stock-based compensation has been increased from the past and is fully utilized for talent acquisition and retention FY2020 FY2021 FY2022 2Q Stock Options Beginning balance 1,532,600 1,824,700 1,455,500 Granted 700,000 0 0 Vested -388,300 -367,200 -110,800 Forfeited/canceled -19,600 -2,000 -10,200 Ending balance 1,824,700 1,455,500 1,334,500 Restricted Stock Beginning balance 0 66,817 120,479 Granted 76,590 91,930 55,120 (as % of shares outstanding at year-end) 0.27% 0.32％ 0.19％ Released -8,673 -27,302 -16,381 Forfeited/canceled -1,100 -10,966 -10,124 Ending balance 66,817 120,479 149,094 Total Beginning balance 1,532,600 1,891,517 1,575,979 Granted 776,590 91,930 55,120 (as % of shares outstanding at year-end) 2.75% 0.32％ 0.19％ Vested/released -396,973 -394,502 -127,181 Forfeited/canceled -20,700 -12,966 -20,324 Ending balance 1,891,517 1,575,979 1,483,594 Equity incentive ratio (as a % of shares outstanding at year-end) 6.69% 5.49% 5.13% Shares outstanding at year-end 28,270,090 28,729,220 28,895,140 Granted Restricted Stock Information Amount (JPY MM) 275 485 376 Stock price (JPY) 3,590 5,280 6,830
91. 91 Governance Policy and ESG Initiatives
92. 92 Governance System to Support Adequate Risk- Taking Audit & Supervisory Committee Board of Directors Management Meeting Raksul Board Meeting Corporate Board Meeting Hacobell Board Meeting Novasell Board Meeting Nomination and Remuneration Committee Executive Committee (EC) Governance Companywide Optimization Autonomous Business Management Role of each structure Audit function Nomination/remuneration of Directors (majority of the members are Outside Directors) - Business portfolio/capital optimization etc. towards long term EV enhancement - Nomination of business CEO Management and execution of each business segment/corporate function Management supervision Companywide optimization/ decision-making (budgeting etc.) ◼ We have built a governance system that preserves and maximizes enterprise value while conducting portfolio management of multiple businesses ◼ We will ensure both companywide optimization and autonomous business management ◼ We established the Nomination and Remuneration Committee, with the majority of its members being outside directors, to ensure transparency in both nomination and remuneration
93. 93 Why ESG is Important for Our Business ◼ Our corporate vision, “Better Systems, Better World” which encompasses our mission to make the society a better place, is the DNA of our company and the very purpose of our business ◼ Therefore, we believe our business activities based on our corporate vision and our contributions towards resolving environmental/social issues should be compatible Various environmental/social issues to be faced as part of society Industrial/social/customer challenges we address as an industry platformer
94. 94 ESG Materiality ◼ We have identified our materiality by referring to external guidelines such as SASB and SDGs, as well as multiple discussions with stakeholders and the Board of Directors ◼ We will further strengthen our ESG initiatives in accordance with this materiality map ◼ We will review the map every 1- 2 years, taking into account changes in social conditions and dialogues with stakeholders
95. 95 External Ratings / Strengthening Information Disclosure ◼ We have been awarded a "BBB" rating by MSCI ESG Research as of April 2021. We will strive to continuously improve through constructive dialogue with stakeholders ◼ We launched our new “Sustainability / ESG” website in June 2021. We will strive to provide enhanced information related to ESG and disclose such information proactively, in addition to the ESG activities themselves *THE USE BY RAKSUL INC. OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES ("MSCI") DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION OF RAKSUL INC. BY MSCI. MSCI SERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITS INFORMATION PROVIDERS, AND ARE PROVIDED 'AS-IS' AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI As of 2021, Raksul Inc. received an MSCI ESG Rating of BBB. https://corp.raksul.com/esg/ https://corp.raksul.com/en/esg/
96. 96 Financial Policy and Highlights
97. 97 Our Value Creation Formula ◼ We focus on growing revenue and gross profit through winning customer trust and maximizing added value to customers and suppliers ◼ In addition to our existing Ecommerce business (transaction based), our SaaS business is expected to expand. Although the revenue size of SaaS is small, its gross margin is high; we consider gross profit to be the indicator which directly links to enterprise value Gross Profit Customer Trust Added Value to Customers and Suppliers Revenue Gross Margin Platform Value Financials* KPI Number of users Value added services COGS reduction / improved productivity of suppliers ARPU *Accounting standards applied to our revenue and gross profit (excluding the broadcasting services of Novasell) Revenue = gross of payments from customers Gross profit = gross revenue - cost of sales Frequency of purchases Unit price
98. 98 Upward Spiral of Value Creation Through Reinvestment ◼ By maximizing gross profit, we can continuously generate profit while reinvesting towards greater platform value Further Enhancement of Enterprise Value Growth in Gross Profit Acceleration of Growth Investments Current Enterprise Value
99. 99 FY2022 Full-Year Consolidated Forecast ▪ Although both revenue and gross profit has been revised downward by around 6% from the February forecast due to continuously extension of semi-state of emergency COVID-19 measures and other changes in the macro environment, we will continue to achieve strong growth of more than 30%. Profits are expected to be in line with the previous forecast ▪ As for 4Q, a quiet period for all businesses, revenue growth is expected to be 39-45% YoY, gross profit growth to be 43-54% YoY, and EBITDA (non- GAAP) to be around JPY 490-590MM Gross profit Continuous achievement of more than 35% gross profit growth while maintaining EBITDA Margin Notes (1) As the fiscal year ending July 2022 is the first year of consolidation, the figures are calculated by dividing the forecast for Profit (loss) attributable to owners of the parent by the assumed amount of equity capital at the end of the fiscal year ROE ROE is expected to land at around 11% for the current fiscal year Financial Implications Gross Margin Companywide gross margin is expected to improve to around 29%, driven by pricing of organic business and the acquisition of DANBALL ONE as a wholly owned subsidiary EBITDA (non-GAAP) Operating Profit (non-GAAP) Profits are expected to be in line with the previous forecast; EBITDA (non-GAAP) growth to exceed gross margin growth FY2022 Full-year （2021/8-2022/7） FY2021 Full-year （2020/8-2021/7） (in JPY Bn) Revised Forecast Disclosed on 2022/2 Previously Announced Forecast Difference Non- consolidated Result YoY Revenue 33.4 - 33.8 35.6 - 36.6 -7.7% - -6.2% 25.5 +31% - +32% Gross Profit 9.6 - 9.8 10.2 - 10.6 -7.5% - -5.9% 7.09 +35% - +38% Gross Margin 28.7% - 29.0% 28.7% - 29.0% +0.0pt - +0.1pt 27.8% +1.0pt - +1.2pt EBITDA (non-GAAP) 1.44 - 1.54 1.44 - 1.54 - 1.03 +40% - +49% Operating Profit (non-GAAP) 1.0 - 1.1 1.0 - 1.1 - 0.83 +20% - +32% Reference index EBITDA Margin 4.3% - 4.6% 4.0% - 4.2% +0.3pt - +0.3pt 4.0% +0.3pt - +0.5pt EBITDA (excl. Ad Spend, non-GAAP) Around 4.2 4.3 - 4.4 -4.5% - -2.3% 2.98 +41% ROE (1) Around 11% 4.2 - 4.8% +6.2pt - +6.8pt 2.3% +8.7pt
100. 100 Medium-Term Financial Policy: Quality Growth Correlation between gross profit amount and EBITDA (non GAAP) amount (in JPY Bn) Gross Profit 10.2 15.0 20.0 30.0 EBITDA (non-GAAP) 1.44 2.25 - 3.0 4.0 - 5.0 6.5 - 8.0 Future Medium-Term Financial Policies Previous Medium-Term Financial Policies Correlation between gross profit amount and EBITDA (non GAAP) amount (in JPY Bn) Gross Profit 10.0 15.0 20.0 30.0 EBITDA (non-GAAP) 1.5 3.0 - 4.0 5.0 - 6.0 7.5 - 10.0 Shift to “Quality Growth” Phase ▪ While the medium-term growth momentum continues, we are shifting to a “Quality Growth” phase with further focus on profit and cashflow generation ▪ Specifically, the EBITDA amount will further increase when gross profit increases. Drivers of profitability improvement are gross margin improvement and efficiency in SG&A expenses ▪ We have raised our medium-term ROE/ROIC target from 10% to over 20% ROE/ROIC＝10％ ROE/ROIC= Over 20％
101. 101 1.6 2.6 3.8 4.8 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023E FY2024E FY2025E 17.5~20.0 (in JPY Bn) 7.09 (1) Gross Profit: Medium-Term Target Gross Profit: Medium-Term Target ▪ While companywide gross profit may fall below 30% growth in the next fiscal year (FY2023) due to Hacobell becoming an equity-method affiliate, profitability will improve significantly ▪ There is no change in the gross profit target of JPY 17.5-20.0Bn for FY2025 FY2021 - FY2025 CAGR 30% FY2017 - FY2021 CAGR 44% FY2022 Consolidated Forecast 9.6~9.8 FY2023 YoY Estimate Over ~+30% Notes (1) Lower range of full-year forecast disclosed on September 10, 2020 (JPY 6.45Bn)
102. 102 Consolidated BS Summary (in JPY MM) ▪ Maintaining a level of over JPY 10Bn even after the acquisition of shares of DANBALL ONE ▪ JPY 3.6Bn bank loan (term: 5-7 years) announced today. The purpose is to establish a structure to ensure cash flow in case where CB is redeemed, and to fix the interest rate ▪ In addition, both operating cash flow and accounting profits are expected to accumulate in the future ▪ Since accumulated losses will be eliminated this fiscal year, share buybacks will be considered from next fiscal year depending on the stock price level, to improve capital efficiency 8,472 8,548 6,943 8,550 5,387 10,027 Assets Liabilities & Net Assets Bank Loan 3,417 CB 5,025 (Due on Nov 2024) (35% of Total Assets) Share Capital 2,670 Capital Surplus 5,477 Retained Earnings -518 Stock Acquisition Rights 829 Short-term borrowings 800 Current portion of long-term borrowings 1,773 Other Current Assets Non-Current Assets Cash & Deposits Current Liabilities Non-Current Liabilities Net Assets (42% of Total Assets)
103. 103 （in JPY MM) New Revenue Recognition Standards FY2022 3Q Actual (2022/2 – 2022/4) FY2021 3Q Actual (3) (2021/2-2021/4) YoY Revenue (1) 9,383 7,061 +32.9% Raksul 7,894 5,605 +40.8% Novasell 538 722 -25.5% Hacobell 869 655 +32.6% Gross Profit (1) 2,807 2,062 +36.1% Raksul 2,395 1,514 +58.2% Novasell 253 405 -37.5% Hacobell 131 112 +16.5% Gross Margin 29.9% 29.2% +0.7pt Incl.: Stock-based compensation expense 183 133 +37.5% Incl.: Ad spend 777 481 +61.7% EBITDA (2) (non-GAAP) 560 490 +14.4% Operating Profit (2) (non-GAAP) 375 440 -14.9% Quarterly Financial Highlights Ref) Based on previous accounting methods FY2022 3Q Actual (2022/2 – 2022/4) FY2021 3Q Actual (3) (2021/2-2021/4) YoY 10,483 8,966 +16.9% 7,918 5,617 +40.9% 1,614 2,613 -38.2% 869 657 +32.3% 2,832 2,076 +36.4% 2,419 1,527 +58.4% Same as left 131 114 +15.2% 27.0% 23.2% +3.9pt Same as left 802 495 +62.0% Same as left Same as left Notes (1) Results for each segment include internal transactions. Also, the difference between the total of each segment and companywide is due to “other business”, corporate expenses, and internal transaction reconciliation (2) EBITDA (non-GAAP) = Operating Profit + Depreciation + Amortization of goodwill + Stock compensation expense Operating Profit (non-GAAP) = Operating Profit + Stock compensation expense (3) As consolidated accounting was not conducted prior to FY2021, non-consolidated accounting results and growth rates are provided for reference. The same applies hereinafter ▪ Gross profit grew over 35% YoY mainly due to contribution of DANBALL ONE ▪ EBITDA reached record high, and the pace exceeds JPY 2Bn on an annualized basis
104. 104 2,727 2,980 2,325 2,816 3,377 3,189 767 838 669 814 1,030 962 28.1% 28.1% 28.8% 28.9% 30.5% 30.2% 10.0% 13.0% 16.0% 19.0% 22.0% 25.0% 28.0% 31.0% 2021/11 2021/12 2022/1 2022/2 2022/3 2022/4 Revenue Gross profit Gross margin (Reference) Monthly Financials ▪ Partially affected by the external environment as semi-state of emergency COVID-19 measures were continuously extended till March ▪ Revenue for May landed at around JPY 2.75 Bn (+45% YoY) (in JPY MM) January 21 to March 21 Semi-state of emergency COVID-19 measures (Tokyo)
105. 105 3,397 3,873 4,684 4,548 4,805 5,301 4,789 4,539 5,372 6,650 7,061 6,439 7,007 8,033 9,383 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Raksul Novasell Hacobell Other Business and Internal Transaction Reconciliation Revenue by Business Segment (in JPY MM) ▪ Companywide revenue continues to grow ▪ Under normal circumstances, the peak season for Raksul and Novasell is 3Q, and for Hacobell it is 2Q and 3Q 7,894 869 538 80
106. 106 810 956 1,077 1,014 1,154 1,221 1,197 1,292 1,484 1,740 2,062 1,804 1,921 2,274 2,807 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Raksul Novasell Hacobell Other Business and Internal Transaction Reconciliation Gross Profit ▪ Gross profit continues to grow driven by revenue growth as well as higher gross margin (in JPY MM) 2,395 131 253 27
107. 107 SG&A Spend(1) ▪ We continued to invest in growth mainly in advertising and technology development ▪ The increase in other expenses was mainly due to goodwill amortization of acquiring DANBALL ONE (JPY 123MM), increase in payment processing charges (linked to revenue), and increase in recruitment and personnel expenses to strengthen the organization Sales & Marketing Others Tech & Development Engineer personnel Expenses IT Infrastructure Expenses Ad Spend Sales Personnel Expenses Note (1) Stock-based compensation expense not included (in JPY MM, % of revenue) 172 198 211 227 246 298 336 402 420 446 489 403 564 503 232 510 529 511 541 622 695 826 622 660 635 595 566 645 773 895 831 892 1,116 0 500 1000 1500 2000 2500 3000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2020 FY2021 FY2022 (3.6%) (8.4%) (13.0%) (3.7%) (10.6%) (12.5%) (4.4%) (10.5%) (13.3%) (5.0%) (5.1%) (13.1%) (5.6%) (8.7%) (11.1%) (4.6%) (9.5%) (10.5%) (4.5%) (8.0%) (9.7%) (4.8%) (7.2%) (11.0%) (6.2%) (8.4%) (13.9%) (6.0%) (8.9%) (11.9%) (5.2%) (8.8%) (11.9%)
108. 108 Ad Spend and Percentage of Ad Spend per Revenue ▪ We continue to invest in advertising, mainly in TV commercials for Raksul ▪ The estimated ad spend per revenue for FY2022 overall is around 8% (in JPY MM) Notes (1) Ad spend for Raksul business segment added as reference 320 482 403 149 414 426 344 337 469 536 685 251 308 345 284 376 531 471 193 477 496 481 501 585 660 777 7.4% 8.0% 7.4% 6.2% 7.8% 10.0% 9.8% 4.3% 8.9% 7.5% 6.8% 7.8% 8.4% 8.2% 8.3% -70.0% -60.0% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 0 100 200 300 400 500 600 700 800 900 1000 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Ad Spend Ad Spend on Raksul Ad Spend / Revenue (1)
109. 109 EBITDA and Adjusted EBITDA (excl. Ad Spend) ▪ EBITDA (non-GAAP) reached record high, and we have achieved both growth as well as increased profitability (in JPY MM) 60 63 106 26 -10 -165 -110 289 209 315 490 15 99 292 560 311 372 452 310 365 365 360 482 686 812 971 517 685 952 1,338 (500) (300) (100) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 EBITDA (non-GAAP) Adjusted EBITDA (excl. Ad Spend non-GAAP) (Depreciation and amortization) 25 27 28 32 32 34 41 52 48 48 49 51 51 52 185
110. 110 160 172 171 172 169 166 175 169 161 161 167 175 173 180 250 6 8 10 14 16 22 22 25 29 34 40 46 57 66 80 31 40 47 57 64 70 65 58 57 54 54 57 66 58 58 34 37 39 39 41 45 53 61 57 64 77 79 91 95 88 10 18 25 34 42 48 48 57 231 257 267 282 290 303 315 323 322 338 372 399 435 447 533 0 100 200 300 400 500 600 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 Raksul Novasell Hacobell Corporate Overseas (2) Number of Employees(1) ▪ From FY2022 3Q, employees of DANBALL ONE and those seconded to DANBALL ONE (56 in total) are included in Raksul ▪ Number of employees decreased for the Corporate segment as JOSYS (an equity-method affiliate) employees and DANBALL ONE secondees are excluded Notes (1) Headcount based (2) Novasell has been operating as an independent business segment since FY2020; prior to FY2019 it was within the Raksul business segment (The figure for Novasell in FY2019 is the number of employees who were engaged in TV commercial-related services, including employees concurrently working in the printing EC services and the offline advertising services) (# of employees) (Non-consolidated)
111. 111 45% 30% 19% 6% Composition of Shareholders ◼ The percentage of shares held by institutional investors(1) remains at around 70-80% ◼ There are no alleviated concerns for overhang 45% 31% 19% 5% Notes (1) Financial institutions, financial instruments business operators, and foreign corporations, etc. (other than individuals) among attributes defined in Form No. 3 of Cabinet Office Ordinance on Disclosure of Corporate Information, etc. “Part I: Corporate Information, Section 4: Status of the Submitting Company, 1. Status of Shares, etc. ⑸ Status by each owner.” As of July 2021 As of January 2022 Total Institutional Investors 76% Total Institutional Investors 75% Institutional Investors (International) Our officers and employees Institutional Investors (Domestic) Private Investors etc.
112. 112 Approach to Shareholder Return ◼ Focus on long-term share price increase in terms of Total Shareholder Return (TSR) ◼ Achieve long-term share price increase by increasing gross profit, operating profit and CF, and improving capital efficiency ◼ We do not plan to return to shareholders through dividends in the short term ◼ No plans for share buybacks for now, but may do so in the future to improve capital efficiency TSR (Total Shareholder Return) Capital gain (Increase in share price) Income gain (Dividend) + • Our main focus • Aim for long-term increase in share price by maximizing gross profit and operating cashflow • No plans in the short-term • Will be considered for the future depending on the maturity of the businesses
113. 113 Corporate Structure Others RAKSUL INC. NOVASELL INC. Parent company Consolidated subsidiaries Affiliates accounted for by the equity method JOSYS INC. Peraichi Inc. 49% of Shares DANBALL ONE. Inc. 100% of Shares ◼ Started consolidated accounting from 3Q. We operate each of our affiliates as follows - Consolidated subsidiaries: DANBALL ONE, NOVASELL - Affiliates accounted for by the equity method: Peraichi, Net Square, JOSYS ◼ For JOSYS, a SaaS business, a third- party allotment of new shares was implemented to meet the expected large demand for funds towards future growth (becoming an equity-method affiliate). Meanwhile, we designed a structure that allows us to purchase more than half the company’s shares in the future 100% of Shares 36%(1) of Shares Notes (1) Total with 27.1% of ownership by close associates Net Square Co., Ltd. 38% of Shares Hacobell Novasell Raksul
114. 114 Reference Material
115. 115 Company Overview Name: RAKSUL INC. HQ: Shinagawa-ku, Tokyo, Japan Foundation: September 2009 Management Team: Yasukane Matsumoto, Founder and CEO Yo Nagami, CFO Masaki Tabe, CMO Kozo Fukushima, COO Yusuke Izumi, CTO Sota Mizushima, CPO Yoshihiko Miyauchi, Outside Director Kenji Kobayashi, Outside Director Yumiko Murakami, Outside Director Naomi Mori, Outside Director, Audit & Supervisory Committee Member Masahiro Kotosaka, Outside Director, Audit & Supervisory Committee Member Junko Utsunomiya, Outside Director, Audit & Supervisory Committee Member
116. 116 Changes in Accounting Methods due to New Revenue Recognition Standards ◼ Changed from the previous accounting methods as the new revenue recognition standards become compulsory from this fiscal year ◼ Changed the accounting method for Novasell’s broadcasting services from gross to net revenue ◼ The amount of discount from coupons in Raksul and Hacobell business segments has been changed from “SG&A expenses” to “sales allowance” Previous Accounting Methods Novasell Raksul Hacobell Broadcasting services: revenues excluding payments to suppliers Production / SaaS services: revenues earned from customers (unchanged) Revenues earned from customers booked as gross revenue Coupon discount amount booked as sales allowance Coupon discount amount booked as SG&A expenses Amount paid to suppliers Coupon 売上値引 Revenue Cost Gross Profit Revenue Cost Gross Profit Revenue Cost Gross Profit SG&A Amount paid to suppliers Amount paid to suppliers New Revenue Recognition Standards Amount paid to suppliers Coupon Coupon Coupon Sales allowance Operating Profit Revenue Cost Gross Profit SG&A Operating Profit Revenue Decrease Impact Gross Profit None Operating Profit None Revenue Decrease Gross Profit Decrease Operating Profit None Sales allowance
117. 117 Companywide Full Year Results ◼ Due to the changes in accounting standards, revenues and gross profits have changed from the past ◼ No changes in operating profit 11,174 17,168 21,494 30,261 2,761 3,944 4,928 7,151 93 143 -159 833 FY2018 FY2019 FY2020 FY2021 10,993 16,503 19,434 25,523 2,693 3,859 4,866 7,091 93 143 -159 833 FY2018 FY2019 FY2020 FY2021 Revenue Gross Profit Operating Profit(non-GAAP)(1) (in JPY MM) Previous Accounting Methods New Revenue Recognition Standards (in JPY MM)
118. 118 Financial Highlights by Business Segment FY2020 FY2021 FY2022 （in JPY MM） 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Revenue Raksul 4,013 4,359 4,024 3,872 4,430 5,073 5,605 5,144 5,461 6,092 7,894 Novasell 199 274 203 177 322 498 722 498 720 1,007 538 Hacobell 563 638 532 448 553 1,004 655 723 741 835 869 Others 27 27 28 40 66 73 77 73 84 97 80 Gross Profit Raksul 992 1,052 995 1,103 1,201 1,361 1,514 1,373 1,478 1,697 2,395 Novasell 118 122 142 102 165 206 405 305 313 433 253 Hacobell 34 35 48 69 91 142 112 96 97 104 131 Others 9 11 11 17 26 29 29 28 33 38 27 Segment Profit (non-GAAP, EBITDA) Raksul 351 228 252 640 453 568 767 565 583 697 1,055 Novasell 22 4 9 -25 19 17 94 -95 -18 69 -122 Hacobell -99 -125 -79 -46 -21 21 -17 -59 -68 -46 -11 Others, corporate expenses, and internal transaction reconciliation -285 -272 -294 -279 -242 -291 -354 -394 -396 -429 -361 Segment Profit (financial accounting) Raksul 329 205 207 598 408 515 711 505 534 641 863 Novasell 22 4 5 -27 16 10 85 -103 -25 63 -129 Hacobell -102 -129 -85 -52 -27 11 -28 -70 -79 -59 -25 Others, corporate expenses, and internal transaction reconciliation -292 -296 -303 -327 -330 -391 -462 -631 -534 -580 -517 EBITDA (non-GAAP) Company wide -10 -165 -110 289 209 315 490 15 99 292 560
119. 119 (Reference) Financial Highlights by Business Segment (Based on Previous Accounting Methods) FY2020 FY2021 FY2022 （in JPY MM） 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Revenue Raksul 4,028 4,382 4,043 3,876 4,444 5,090 5,617 5,158 5,473 6,107 7,918 Novasell 732 743 847 530 872 1,248 2,613 1,983 1,727 2,641 1,614 Hacobell 564 639 532 449 553 1,004 657 723 741 836 869 Others 27 27 28 40 66 73 77 73 84 97 80 Gross Profit Raksul 1,007 1,074 1,013 1,107 1,216 1,378 1,527 1,386 1,490 1,712 2,419 Novasell 118 122 142 102 165 206 405 305 313 433 253 Hacobell 35 36 48 69 91 143 114 96 97 105 131 Others 9 11 11 17 26 29 29 28 33 38 27 Segment Profit (non-GAAP, EBITDA) Raksul 351 228 252 640 453 568 767 565 583 697 1,055 Novasell 22 4 9 -25 19 17 94 -95 -18 69 -122 Hacobell -99 -125 -79 -46 -21 21 -17 -59 -68 -46 -11 Others, corporate expenses, and internal transaction reconciliation -285 -272 -294 -279 -242 -291 -354 -394 -396 -429 -361 Segment Profit (financial accounting) Raksul 329 205 207 598 408 515 711 505 534 641 863 Novasell 22 4 5 -27 16 10 85 -103 -25 63 -129 Hacobell -102 -129 -85 -52 -27 11 -28 -70 -79 -59 -25 Others, corporate expenses, and internal transaction reconciliation -292 -296 -303 -327 -330 -391 -462 -631 -534 -580 -517 EBITDA (non-GAAP) Company wide -10 -165 -110 289 209 315 490 15 99 292 560
120. 120 Balance Sheet
121. 121 Difference between non-GAAP Profit and Accounting Profit ▪ From FY2020, we have been disclosing non-GAAP profits after adding back stock-based compensation expense ▪ The amount in “Difference (stock- based compensation expense)” varies between operating profit and ordinary profit as RS held by resignees is expensed off as non- operating expenses
122. 122 Cash Flow Statement (in JPY MM) FY2021 1Q - 2Q FY2021 full-year FY2022 1Q - 2Q Cash flow from operating activities 635 1,539 -87 Cash flow from investing activities -3,509 -3,618 -438 Cash flow from financing activities 55 75 -449 Net change in cash and cash equivalents -2,818 -2,003 -976 Cash and cash equivalents at end of period 12,633 13,447 12,471
123. 123 Issuance of Convertible Bonds (CB) in Nov 2019 Purpose • By adopting a scheme that promotes conversion, we will further strengthen our financial position by acquiring funds that are of equity-like nature and realize acquisition of growth funds • Access to CB investors that are different from pure equity investors leads to acquiring of new funds as well as sales of shares from existing shareholders • To minimize dilution • Funds will be used for investment in the transportation business Conversion price • JPY 4,074 Maturity date • November 29, 2024 Soft call provision • If the closing price of our common stock is at least 130% of the conversion price on 20 trading days out of 30 consecutive trading days, we can call all of the remaining notes on or after November 29, 2022 upon prior notice (partial transaction prohibited) Information on dilution from the potential stock issuance • The percentage of potential shares due to issuance of CB is 4.25% Note (1) The ratio of the number of dilutive shares is calculated by dividing the number of shares newly issued when all the warrants related to the Bonds are exercised at the initial conversion price by 28,895,140 shares which is the total number of issued shares (excluding treasury shares) at the end of 2Q ended July 31, 2022. ▪ Financing totaling JPY10 bn through loan in Sept 2019 and issuance of CB in Nov 2019 ▪ Achieved acquisition of growth investment funds while minimizing dilution through issuance of CB (1)
124. 124 Sources P8 Direction of Growth Indirect cost market Total selling, general and administrative expenses of all stocks listed on the Tokyo Stock Exchange (excluding ETFs, REITs and securities investments) Raksul Business stationery and commercial printing Calculated based on “Current Production Statistics: Paper, Printing, and Plastic” (METI), production volume basis Novelties Estimate based on "Corporate Gift Market“ (Yano Research Institute Report, 2020) Promotional media = Offline advertising Total of inserts, DM, and free papers from “Advertising Expenditures in Japan” (Dentsu, 2020) Hacobell Trucking Estimated based on “Japan Trucking Industry 2018 - Current Status and Issues” (Japan Trucking Association) Novasell TV commercials "Advertising Expenditures in Japan" (Dentsu, 2019) Taxi advertising Not added as value since it is part of the transportation digital signage market Josys Total device value in the domestic IT market shipment forecast “Domestic IT Market Forecast by Industry Sector / Employee Size / Annual Sales Size, 2021-2025: Considering the Impact of COVID- 19 as of the End of March 2021” (IDC Japan, May 2021) Industry general- purpose SaaS "2021 Current Status and Future Prospects of Cloud Computing <Market>" (Fuji Chimera Research Institute, March 2021) DANBALL ONE Packaging materials Shipment volume of Japan packaging industry 2020, Japan Packaging Institute, paper and cardboard products Peraichi Website production Estimated based on “Web Integration & Internet Advertising Platform Market Status and Outlook 2017 Edition” (Mick Economic Research Institute) + CMS providers’ revenue P81 Brand Recognition ・Raksul: Online Printing Companies Recognition - Raksul survey on “Online Printing” - Scope: 500 male/female, ages 20-69, nationwide, in companies over 100 employees and revenue JPY 10Bn yen, that have ordered printing services within a year (excluding students, housewives/stay-at-home husbands, part-timers, unemployed) - Method: Internet - Survey monitor provider: GMO Research, Inc. - Period: Sep 11th - 14th, 2021 ・Hacobell: Vehicle Allocation Planning System of Interest - Logistics Today August 2021 “Top 40 Vehicle Allocation Planning System of Interest” Most Recognized Cargo and Vehicle Matching Services - Logistics Today November 2021 ““Most Recognized Cargo and Vehicle Matching Services” ・Novasell: Programmatic TV Commercial Services Effectiveness Visualization Tool Frequency of Usage / Recognition - Raksul survey on “TV CM campaigns” - Scope: 300 directors/managers/employees in marketing/PR/corporate planning, ages 22-69, in companies with annual ad spend of over JPY 1bn with experience in TV CM campaigns - Method: Internet - Survey monitor provider: GMO Research, Inc. - Period: Jan 25th - 29th, 2021
125. 125 Better Systems, Better World
126. 126 Disclaimer Handling of this material This material includes forward-looking statements. These forward-looking statements were created based on the information available at the time they were created. They do not guarantee our future results and involve certain risks and uncertainties. Please note that actual results may differ materially from those discussed in the forward-looking statements due to changes in environments surrounding Raksul or any other factors. The factors which may affect actual results include but are not limited to: Japanese and global economic conditions, and conditions of markets in which Raksul operates. Raksul is not obligated to update or revise any content of the forward-looking statements within this material, even in cases such as where new information becomes available or future events take place. Information contained within this material on other topics besides Raksul is quoted from published information and other sources. As such, the accuracy, appropriateness, etc. of such information has not been verified, nor do we guarantee them thereof. Contact Us IR Group E-mail: ir@raksul.com IR Information: https://corp.raksul.com/en/