20240208financial-results-presentation.pdf

© SIOS Corporation. All rights Reserved.
Financial Results
for Fiscal Year
Ended December 31, 2023
February 8,2024
SIOS ,Corp.
（Stock Code: 3744 on the Second Section of Tokyo Stock Exchange）

Table of Contents
1. Review of Business Results for the Fiscal Year
Ended December 31, 2023 (FY 2023)
2. Business Forecasts for the Fiscal Year
Ending December 31, 2024 (FY 2024)
3. Growth Strategies for FY 2024
4. Medium-Term Business Plan for FY 2024-2026
5. Appendix

1. Review of Business Results for the
Fiscal Year Ended December 31, 2023
(FY 2023)

FY2022
Results
FY2023
Results
Change %Change
Net Sales 14,420 15,889 ＋1,469 ＋10.2%
Gross profit 4,666 5,216 ＋549 ＋11.8％
Operating
income △572 △208 ＋364 －
Ordinary income △499 △15 ＋483 －
Profit (loss)
attributable to
owners of parent
△639 △18 ＋620 －
EBITDA △469 △147 ＋322 －
ROIC △25.1% △10.1% －－
4
Consolidated Financial Results for FY 2023
(In millions of yen)
*EBITDA: Operating profit + Depreciation + Amortization of goodwill
*ROIC: Operating profit after tax / (Shareholders’ equity + Interest-bearing debts)

© SIOS Corporation. All rights Reserved. 5
Consolidated Net Sales
Up 10.2%
year on year
（In millions of yen）
14,420
15,889
FY2022 FY2023

Consolidated Operating Profit, EBITDA, and R&D Spending
 Operating loss decreased
by ¥364M from the
previous year.
 Negative EBITDA
decreased by ¥322M YoY.
 R&D expenses increased
by ¥1M YoY.
(572)
(208)
(469)
(147)
838 839
FY2022 FY2023
Operating Profit EBITDA R&D Spending

Consolidated Balance Sheets
As of December 31, 2023
As of December 31, 2022
 Property, plant and equipment 112
 Intangible assets 79
Current
assets 5,195
(including
cash and
deposits of
2,505)
Total
liabilities
4,778
(including
interest-
bearing
debts of
222)
Investment and other
assets 634
Total net
assets 1,243
Current
assets 5,741
(including
cash and
deposits of
2,604)
負債合計
5,518
(内有利子
負債181)
Total net
assets 1,187
 Property, plant and equipment 132
 Intangible assets 72
Total assets
6,022
Total liabilities
and net assets
6,022
Investment and other
assets 760
Total assets
6,706
Total liabilities
and net assets
6,706
 Current assets: Reflected an increase of ¥404M in notes and accounts
receivable trade, as well as contract assets.
 Current liabilities: Reflected an increase of ¥451M in contract liabilities.

Analysis of Consolidated Cash Flows
2,604
-157
2,505
28
188
39
Cash and cash
equivalents as of
December 31,2022
Cash flows from
operating
activities
Cash flows from
investing activities
Cash flows from
financing activities
Effect of exchange
rate change on cash
and cash equivalents
Cash and cash
equivalents as of
December 31, 2023

Cash Flow Analysis
Cash flows from
operating activities
Cash flows from
investing activities
Cash flows from
financing activities
Net cash provided or used ¥28M net cash provided ¥188M net cash provided ¥157M net cash used
Breakdown
Amount of cash
provided
• Increase in trade
payables: ¥150M
• Proceeds from refund
of guarantee deposits:
¥49M
• Increase in contract
liabilities: ¥399M
• Proceeds from
derivative
transactions: ¥103M
• Increase in accrued
consumption taxes:
¥117M
• Proceeds from
distributions from
investment
partnerships: ¥97M
• Increase in trade
receivables and
contract assets: ¥393M
• Dividends paid:
¥86M
Amount of cash
used
• Increase in advance
payments to suppliers:
¥260M
• Repayments of
long-term
borrowings: ¥66M

Open System Infrastructure Business
Net sales 9,909 million yen, Up 13.7％ YoY
 Sales of software products sourced
from Red Hat Inc.* increased YoY.
 Sales of LifeKeeper* were strong
for both on-premise* and cloud*
application.
Note: See the Glossary on page 38 for descriptions
of terms with an asterisk.
8,716
9,909
FY2022 FY2023

Open System Infrastructure Business
Segment income
90 million yen, compared with a loss of
13 million yen the year before
Segment income was up YoY,
driven by robust sales in this
segment.
-13
90
FY2022 FY2023

Application Business
Net sales 5,967 million yen, Up 4.8％ YoY
 Revenues from the provision of support
for system development and
implementation were up YoY, especially
from the support provided for API*
projects and business management
systems of stock brokerage firms.
 Revenues from the Gluegent series*
achieved steady growth.
 Sales of the management support system
to financial institutions were slow.
5,691
5,967
FY2022 FY2023

Application Business
Segment income
-311 million yen, compared with a loss
of 570 million yen the year before
Segment loss decreased YoY
with increases in personnel
expenses and investments in
new products and services
partially offset by increased
sales in this segment.
-570
-311
FY2022 FY2023

2. Business Forecasts for the Fiscal Year
Ending December 31, 2024 (FY 2024)

Consolidated Business Forecast for FY2024
FY2023
Results
FY2024
Results
Change %Change
Net Sales 15,889 16,600 +710 +4.5%
Gross profit △208 250 +458 ー
Operating
income △15 330 +345 ー
Ordinary income △18 220 +238 ー
Profit (loss)
attributable to
owners of parent
△147 310 +457 ー
EBITDA △10.1% 11.6% ーー
The Company projects an increase in consolidated net sales for two
consecutive years and a return to operating profit for FY 2024.

Analysis of Projected Operating Profit for FY 2024
We expect to return to operating profit for FY 2024, due to an increase
in gross profit resulting from robust sales and a cutback in R&D and
other SG&A expenses.
△326
△208
710
74
250
０
Operating profit
for FY 2023
(result)
Increase in gross
profit resulting
from robust sales
Increase in cost
of sales
Cutback in
SG&A
Projected
operating profit for
FY 2024

3. Growth Strategies for FY 2024

Growth Strategies for FY 2024
We will continue to focus on our SaaS* and subscription-based*
businesses while developing new businesses into growth drivers.
1
2
3
Continue to invest in our SaaS and
subscription-based businesses
Expand our API solutions business
Maximize the benefits of generative AI*
solutions in our business development and
operations

Revenue from the Gluegent Series
Combined ARR of Gluegent Flow and Gluegent Gate
Our enhanced product development and
user support have been keeping the ARR¹ of
the series on a solid growth path.
Gluegent Flow
Up 22.2%
Gluegent Gate
Up 16.7%
270
375
414
488
577
2019.12 2020.12 2021.12 2022.12 2023.12
Combined ARR for FY 2023
was up 18.2% YoY
1. ARR: Annual Recurring Revenue, obtained by multiplying MRR (monthly recurring revenue, which is a predictable revenue that a business counts on
receiving every month from subscriptions) by 12

Actions to Drive ARR
To drive ARR, we must increase A while stemming B.
ARR = MRR × 12 months
MRR = MRR for the previous month + New + Upgrade - (Downgrade + Churn)
New: Revenue increase from new clients
Upgrade: Revenue increase from clients who upgraded to a higher-
tiered subscription plan
Downgrade: Revenue decline from clients who downgraded to a lower-
tiered subscription plan
Churn: Revenue decline from cancellation of subscription
A B
Formula for ARR

We have made it work more closely with Microsoft 365.
 Gluegent Flow has been upgraded to work seamlessly with corporate clients'
enterprise systems via Excel and help their end users achieve greater efficiency
at work.
21
Actions Taken to Drive the Revenue Growth of
the Gluegent Series
We made it work more closely with Microsoft 365
to help corporate users achieve greater
operational efficiency.
We have set up a customer-facing support team.
 Assist corporate clients in making Gluegent Flow work with their enterprise
systems
 Provide a training program to assist end users in familiarizing with Gluegent Flow
A. Increase revenue from new and upgrading clients
B. Stem a revenue decline from downgrading and churning clients

Awards and Recognition Accorded to the Gluegent Series
Received many awards for its highly rated
performance.
 Gluegent Flow received a High Performer award in the workflow system category in ITreview
Grid Award 2024 Winter, announced by the IT reviewing platform ITreview in January 2024. It
was the third consecutive year of award winning for Gluegent Flow, which made it into the
award's Hall of Fame.
 Gluegent Flow has been also rated highly by online word-of-mouth review sites for SaaS
solutions.

Enables efficient management of user IDs of employees
across a corporate group and its supply-chain partners
in a zero-trust* environment.
Implementation of integrated user ID management
 Requesting workflows and updating human-
resources data trigger automatic addition and
deletion of user IDs.
 Enables integrated management of user IDs across
a corporate group and its supply-chain partners.
We have set up a customer-success team to provide end-to-end support that starts
with pre-project consulting and continues well after the system becomes operational.
IT
infrastructure
SaaS and
other cloud-
based services
Suppliers Regional offices Head office
Workflow requests
CSV data
Master human-
resource data
A. Increase revenue from new and upgrading clients
B. Stem a revenue decline from downgrading and
churning clients
Actions Taken to Drive the Revenue Growth of
the Gluegent Series

FY2019 FY2020 FY2021 FY2022 FY2023
24
Bolster the Subscription Business
of LifeKeeper
Subscription Revenue of LifeKeeper Outside Japan
 Subscription revenue of
LifeKeeper has been following a
solid growth path outside Japan.
 We have also stepped up our
sales and marketing efforts for its
subscription business in Japan.
 Launched "My Page" service to
make it easy for corporate clients
to review their subscription
terms and available options.
Revenue for FY 2023:
Up 22.6% YoY
CAGR: Up 55.8%

FY2022 FY2023
25
A cloud-based e-medical records
system that assists psychiatric
hospitals in making greater use of DX
solutions
A system that manages employees'
seating arrangement and attendance
records in a teleworking and hot-
desking environment
Sales of YourDesk
 The Japanese government has
established the Office of Promoting
Medical DX to encourage hospitals to
make greater use of DX solutions and
e-medical data.
 We have discontinued INDIGO NOTE
Version 1.0 and started developing
the next-generation INDIGO NOTE
Version 2.0, which will be a radical
departure from conventional e-
medical records systems.
Up 464.9%
YoY
Enhanced marketing
efforts have driven
the sales growth of
YourDesk.

API Solutions Business
Map app
Online
payment
app
Company
API
API
API
 A company can launch a new
service by sharing data with
other companies via APIs.
 An API economy that
facilitates shared use of APIs
among businesses has been
gaining momentum.
Example of How APIs Work in Business
API stands for application programming interface, which is a set of
protocols that enables different software programs and applications to
share functions.

 SIOS launched its API solutions business in 2017 in anticipation of the
emergence of APIs that connect many systems to make them work with
each other.
 We have since hired and developed engineers to upgrade our API-
related technologies and have been designing, developing, and offering
cutting-edge applications.
 As a next step, we intend to work more closely with system developers,
consultancies, and cloud service providers and hire additional talent so
that we can accommodate broader business needs.
27
Our Approaches to the API Solutions Business
We have been upgrading our API-related technologies
to be able to meet diverse business needs.

API Solutions Business Model
Our dedicated API infrastructure team uses their wealth of
professional business and API knowledge to assist corporate clients in
designing, developing, operating, and supporting API solutions.
One-Stop API Solutions
Assisting in
developing a
business
model
STEP 1
Assisting in
developing
and testing a
system
STEP 2
Assisting in
encouraging
business
partners and
users to use
the system
STEP 3
Assisting in
operating the
system
STEP 4

Performance of Our API Solutions Business
Revenue in Our API Solutions Business
Our revenue in this business has
been following a solid growth path,
as our engineering strengths in the
field of API economy have met
surging business needs.
Revenue for FY 2023:
Up 40.3% YoY
CAGR: Up 48.9%
FY2019 FY2020 FY2021 FY2022 FY2023

Maximize the Benefits of Generative AI Solutions
in Our Business Development and Operations
Make greater use of generative AI to achieve higher operational
productivity and efficiency internally and create greater value for clients
1
2
3
Launch a consulting service focused on
generative AI solutions
Use generative AI to achieve greater
operational efficiency internally
Maximize the benefits of generative AI
in our existing products and services

Consulting Service Focused on Generative AI Solutions
We have launched a consulting service
focused on Azure OpenAI Service.*
Assist in the
planning phase
Identify the
client's needs
Make a complete
list of required
tasks
Assist in creating
a project schedule
Assist in the PoC
phase
Create a PoC
environment
Conduct technology
research
Assist in evaluating
PoC results
Assist in the design
and development
phase
Train the client's
staff
Create a
development
environment
Assist in setting up
Azure Security
Assist in the
operation phase
Develop operating
scenarios
Assist in ongoing
system adjustment
Conduct
operational quality
assurance
We provide corporate clients that intend to implement, but are not familiar with,
Azure OpenAI Service with end-to-end consulting that spans from the planning
through to operation phases.

4. Medium-Term Business Plan for FY
2024-2026

Our goal is to bring our ROIC ratio well above our WACC ratio by FY 2026.
33
Medium-Term Business Plan for FY 2024-2026
2023 2024 2025 2026
EBITDA -147 310 610 880
ROIC -10.1% 11.6% 21.3% 24.3%
We intend to continually bolster our EBITDA and ROIC performance
by expanding our SaaS business and growing new businesses.
Our WACC ratio is in the range between 7 and 9%.

Increasing Our Enterprise Value
with a Keen Eye on Our Capital Cost
The SIOS Group has been using the ROIC as a key metric to keep track of its financial
performance since FY 2019. After experiencing a business downturn in FY 2022, we have
taken a variety of actions to bolster our financial strengths. As a result, our ROIC is
projected to go above our WACC¹ in FY 2024 and to continue to rise from FY 2025
onward.
We intend to keep a keen eye on our WACC and stock price performance so that we can
continually increase our enterprise value and meet the expectations of investors and
shareholders.
ROIC
Our WACC ratio is in the
range between 7 and 9%.
WACC
1. Weighted average cost of capital, which
indicates the blended cost that a company pays
on all its debt and equity
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026

Dividend Rates for FY 2023 and 2024
26th term 27th term 28th term
Fiscal Year Ended
December 31, 2023
Fiscal Year Ended
December 31, 2023
Fiscal Year Ended
December 31, 2023
Annual cash
dividend per
share
¥10 ¥５ ¥10
¥5
Dividend rate
for FY 2023
¥10 (up by ¥5 from the previous year)
Projected
dividend rate
for FY 2024

5. Appendix

About SIOS Corporation
Headquarters SIOS Building, 2-12-3 Minami Azabu Minato-ku, Tokyo, Japan
Capital 1,481 million yen
Established May 23, 1997
Stock listed on TSE Standard Market (stock code: 3744)
No. of employees 550 on a consolidated basis (as of December 31, 2023)
Main consolidated subsidiaries
Japan:
SIOS Technology, Inc.
U.S.A.:
SIOS Technology Corp.
SIOS Corporation started as a system integrator that provided solutions based on Linux and other varieties of open
source software. Today, the company serves as a holding company of the SIOS Group, which includes technology
firms specializing in software products and SaaS solutions.
Under the mission of making the impossible possible for the people of the world, the SIOS Group is committed to
pursuing innovative solutions that resolve issues affecting people and contributing to a better society.
Visit https://www.sios.com/en to learn more about us.
SIOS is Innovative Open Solutions

Glossary
page Term Description
10
Software products sourced
from Red Hat, Inc.
Open-source software products developed by Red Hat, Inc., a provider of open-source solutions
10 LifeKeeper A failover software product that automatically switches a failed primary server to a backup server
10 On-premises A user enterprise owns and operates servers and software on its premises
10 Cloud
A user enterprise uses services provided by networks without owning servers or software on its
premises
12 API
A set of protocols that enables different software programs and applications to share information
and functions
12 Gluegent series
Service products designed to assist corporate clients in achieving greater operational efficiency
using cloud solutions. The series includes the Gluegent Gate cloud-based management of user IDs,
the Gluegent Flow cloud-based workflow system, and the Gluegent Apps Group Scheduler, which
incorporated a function to manage schedules of team members into Google Calendar
18 SaaS
Software as a Service. A software licensing and distribution model that allows users to connect to
and use cloud-based software applications over the internet
18 Subscription business model
A business model that charges customers a recurring monthly or annual fee to access a software
product or service
18 Generative AI An AI system capable of generating new data and content from learned data
23 Zero-trust environment
A security framework that assumes there is no traditional network edge and requires all users,
whether inside or outside the organization’s network, to be authenticated, authorized, and
continuously validated for security before being granted access to information assets
31 Azure OpenAI Service
A service that enables the use of an AI model developed by OpenAI in the Microsoft Azure cloud
service environment

Forward-looking statements about the Company’s business outlook contained in this document reflect
management’s assumptions and judgments made on the basis of available information, and may include
risks and uncertainties. We caution that significant risks and uncertainties could cause actual performance
to differ materially from what is discussed in the forward-looking statements. Significant risks and
uncertainties that might affect our performance include, but are not limited to, the economic environment
and market conditions in which we operate.
For inquiries about this document
39
Cautionary Statement
Call the IR Section of SIOS Corporation on 03-6401-5111
(+81-3-6401-5111 from outside Japan)
or fill in and send an online inquiry form available at:
https://mk.sios.com/SIOS_Inquiry_english.html

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