Financial Results for Q1 FY06/24

(July 1 to September 30, 2023)

[Non-Consolidated]

Intelligent Wave Inc.

Announced on November 6, 2023

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

Financial Results for Q1 FY06/24

Forecast for FY06/24

Key initiatives in FY06/24

Reference

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

2

Overview

Both sales and profits declined from the previous fiscal year due to large-scale hardware upgrade in the previous fiscal year. Excluding the impact of this upgrade, however, both sales and profits were up year on year. The amount of orders increased 36.0% year on year, and orders on hand increased 33.4% year on year, making steady progress against 1H forecast.

Million yen

Q1 FY06/23

Q1 FY06/24

Change

Sales

Sales

(YoY)

Results

composition

Results

composition

ratio

ratio

Net sales

3,646

-

3,158

-

(488)

(13.4％)

Gross profit

1,134

31.1%

955

30.2%

(179)

(15.8％)

SG&A expenses

651

17.9%

691

21.9％

＋40

＋6.1％

Operating

483

13.2%

263

8.3％

(220)

(45.5％)

income

Ordinary income

480

13.2%

259

8.2％

(221)

(46.0％)

Net income

324

8.9%

175

5.5％

(149)

(46.0％)

Amount of orders

3,130

-

4,257

ｃ

-

＋1,127

＋36.0％

Orders on hand

9,047

-

12,073

-

＋3,026

＋33.4％

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

3

Sales by Category

System development and cloud services grew significantly YoY. Third-party products and services fell sharply YoY due to large-scale hardware sales in the previous fiscal year. Security increased YoY due to efficient sales activities focused on core products.

Million yen

Q1 FY06/23

Q1 FY06/24

Change(YoY)

Net sales

3,646

3,158

(488)

％

)

(13.4

Payment and finance

2,972

2,246

(726)

％

)

(24.4

1,278

1,596

＋

318

＋

24.9

System development

％

395

397

＋

2

＋

0.5

Maintenance

％

136

60

(76)

(55.9

)

In-house products and services

％

Third-party products and

1,162

191

(971)

(83.6

％

services (hardware, etc.)

)

Cloud services

434

592

＋158

＋36.4％

Security

239

319

＋80

＋33.5％

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

4

Sales by Business Domain

Payment systems, etc., grew YoY due to large-scale projects for credit card companies. FEP sales fell sharply YoY due to large-scale hardware upgrade in the previous fiscal year. Cloud services grew YoY. Security increased YoY due to efficient sales activities focused on core products.

Million yen

Q1 FY06/23 Q1 FY06/24 Change(YoY)

Net sales

3,646

3,158

(488)

％

(13.4

)

Payment and finance

2,972

2,246

(726)

(24.4％)

FEP* and fraud detection

2,086

1,230

(856)

(41.0

％

)

Payment systems, etc.

678

855

＋

＋

％

177

26.1

Finance and others

207

160

(47)

(22.7

％

)

Cloud services

434

592

＋158

＋36.4％

Security

239

319

＋

＋

％

80

33.5

＊Front-end processor (FEP) system: Hardware and software with network connectivity, card usage authentication, and other functions required for credit card payment processing

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

5

Top Three Clients by Sales

System integrator increased YoY due to large-scale project for credit card company. Credit card company increased YoY due to an expanded scale of system development in multiple areas. As for DNP, security- related sales are expected to increase from Q2 onward.

Million yen

Q1 FY06/23

Q1 FY06/24

Change

Main projects

(YoY)

Tokenization service system (for

1.

D N P

445

426

(18)

smartphone payment transaction),

payment platform, system operations

(24/7)

2.

System

217

349

＋132

System development for credit card

Integrator

company

3.

Credit card

118

226

＋107

System development in multiple areas

(FEP, fraud detection, Digital

company

transformation of payments)

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

6

Sales by Type (Recurring and Spot)

Recurring revenue is increasing steadily due to higher sales of cloud services and maintenance.

■ …Spot ■ …Recurring

4,000

120.0%

Million yen

3,500

100.0%

3,000

2,500

2,216

2,175

1,517

1,442

1,681

1,350

80.0%

1,634

2,000

1,382

60.0%

1,055

1,500

40.0%

1,000

1,625

1,664

1,796

1,808

1,312

1,442

1,470

20.0%

1,196

1,252

500

0

0.0%

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

FY06/22

FY06/23

FY06/24

Spot: Categories with contracts that are not fixed in terms of amount or timing

Recurring: Categories with contracts that allow us to record sales of a fixed amount on a regular basis

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

7

Operating income

Gross profit decreased YoY due to high-marginlarge-scale hardware upgrade in the previous fiscal year, but gross profit on system development and cloud services increased YoY due to higher sales and improved profit margins. SG&A expenses increased from the second half of the previous fiscal year due to investments in human capital and improvements to the office environment. However, SG&A expenses were in line with plans for the full fiscal year.

■ … Operating income

600 ●… Operating margin

500483

400

300

13.2%

263

200

1268.3%

100 5.6%

0

Q1 FY06/22

Q1 FY06/23

Q1 FY06/24

25.0%

1,600

20.0%1,400

1,200

15.0%

1,000

800

10.0%

600

5.0% 400

200

0.0% 0

Million yen

Gross profit

SG＆A expense

Operating income

Gross profit margin

SG&A expense ratio

Operating margin

33.3%

34.4%

32.4%

31.1%

31.3%

32.2%

33.0%

30.2%

40.0%

27.5%

21.2%

21.5%

21.9%

19.9%

18.7%

16.7%

17.9%

20.9%

21.9%

20.0%

13.4%

15.7%

15.7%

13.2%

10.1%

10.7%

12.1%

5.6%

8.3%

0.0%

-20.0%

-40.0%

1,015

1,186

1,134

985

1,000

1,149

877

955

-60.0%

728

620

550464

610

651

665

667

691

493

525

576

483

420

-80.0%

352

319

332

263

126

-100.0%

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

FY06/22

FY06/23

FY06/24

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

8

Cloud Service Business

Net sales increased YoY due to an increase in the number of users (nine companies in total), mainly due to IFINDS, a fraud detection service. Profit is improving due to changes in the service composition ratio and stabilization of the operation system.

Million yen

FY06/23

FY06/24

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

Amount of orders

507

822

2,794

297

614

Net sales

434

447

469

515

592

Orders on hand

4,214

4,589

6,913

6,695

6,717

Gross profit

(4)

29

44

71

96

Number of customers

Overview

35

40

IOASIS

IFINDS

30

IGATES

IPRETS

25

1

20

20

9

15

1

6

9

10

4

10

11

5

0

0

23年６月期 24年６月期

Q1 FY06/23 Q1 FY06/24

1Q 1Q

1

Service

Overview

1

9

■ IOASIS

Demand for additional functionality from existing customers

9

increased. Inquiries from local banks increased.

1

1

6

6

9

The number of customers is steadily increasing due to the addition

3

■ IFINDS

of new services such as fraud detection by AI-scoring and sharing of

2

2

4

fraudulent data among issuers. We are promoting cross-industry

3

3

3

10

11

11

fraud countermeasures.

5

5

4

■ IGATES

We received a large-scale project for the development of a multi-user

platform. (The platform is scheduled to begin operating in June

2024.)

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

9

Amount of orders

■ …Payment & Finance (System Development) ■ …Payment & Finance (Maintenance, Hardware, etc.)

Million yen

■ …Cloud Services

■ …Security

5,421

4,500

4,257

286

4,686

4,000

807

228

4,252

4,257

3,954

3,500

3,130

299

807

273

610

339

3,329

2,794

1,876

3,000

2,829

322

311

3,130

132

2,904

86

2,829

610

507

322

2,500

839

86

1,930

822

273

1,000

507

297

839

2,000

1,000

2,146

903

1,189

945

864

807

476

903

1,500

476

1,000

2,001

2,001

1,267

1,398

1,750

1,527

500

1,267

1,393

1,158

1,398

1,430

1,477

0

Q1 FY06/22

Q1 FY06/23

Q1 FY06/24

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

FY06/22

FY06/23

FY06/24

Copyright © 2023, INTELLIGENT WAVE INC. All rights reserved.

10

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IWI - Intelligent Wave Inc. published this content on 06 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 November 2023 03:01:51 UTC.