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© SIOS Corporation. All rights Reserved.
© 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)
© SIOS Corporation. All rights Reserved.
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
© SIOS Corporation. All rights Reserved.
1. Review of Business Results for the
Fiscal Year Ended December 31, 2023
(FY 2023)
© SIOS Corporation. All rights Reserved.
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
© SIOS Corporation. All rights Reserved. 6
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.
(In millions of yen)
(572)
(208)
(469)
(147)
838 839
FY2022 FY2023
Operating Profit EBITDA R&D Spending
© SIOS Corporation. All rights Reserved. 7
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.
(In millions of yen)
© SIOS Corporation. All rights Reserved. 8
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
(In millions of yen)
© SIOS Corporation. All rights Reserved. 9
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
© SIOS Corporation. All rights Reserved. 10
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.
(In millions of yen)
8,716
9,909
FY2022 FY2023
© SIOS Corporation. All rights Reserved. 11
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.
(In millions of yen)
-13
90
FY2022 FY2023
© SIOS Corporation. All rights Reserved. 12
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.
(In millions of yen)
5,691
5,967
FY2022 FY2023
© SIOS Corporation. All rights Reserved. 13
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.
(In millions of yen)
-570
-311
FY2022 FY2023
© SIOS Corporation. All rights Reserved.
2. Business Forecasts for the Fiscal Year
Ending December 31, 2024 (FY 2024)
© SIOS Corporation. All rights Reserved. 15
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.
(In millions of yen)
© SIOS Corporation. All rights Reserved. 16
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
(In millions of yen)
© SIOS Corporation. All rights Reserved.
3. Growth Strategies for FY 2024
© SIOS Corporation. All rights Reserved. 18
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
© SIOS Corporation. All rights Reserved. 19
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
(In millions of yen)
© SIOS Corporation. All rights Reserved. 20
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
© SIOS Corporation. All rights Reserved.
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
© SIOS Corporation. All rights Reserved. 22
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.
© SIOS Corporation. All rights Reserved. 23
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
© SIOS Corporation. All rights Reserved.
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%
© SIOS Corporation. All rights Reserved.
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.
© SIOS Corporation. All rights Reserved. 26
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 Corporation. All rights Reserved.
 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.
© SIOS Corporation. All rights Reserved. 28
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
© SIOS Corporation. All rights Reserved. 29
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
© SIOS Corporation. All rights Reserved. 30
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
© SIOS Corporation. All rights Reserved. 31
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.
© SIOS Corporation. All rights Reserved.
4. Medium-Term Business Plan for FY
2024-2026
© SIOS Corporation. All rights Reserved.
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%.
(In millions of yen)
© SIOS Corporation. All rights Reserved. 34
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
© SIOS Corporation. All rights Reserved. 35
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
© SIOS Corporation. All rights Reserved.
5. Appendix
© SIOS Corporation. All rights Reserved. 37
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
© SIOS Corporation. All rights Reserved. 38
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
© SIOS Corporation. All rights Reserved.
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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20240208financial-results-presentation.pdf

  • 1. © SIOS Corporation. All rights Reserved. © 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)
  • 2. © SIOS Corporation. All rights Reserved. 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
  • 3. © SIOS Corporation. All rights Reserved. 1. Review of Business Results for the Fiscal Year Ended December 31, 2023 (FY 2023)
  • 4. © SIOS Corporation. All rights Reserved. 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)
  • 5. © 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
  • 6. © SIOS Corporation. All rights Reserved. 6 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. (In millions of yen) (572) (208) (469) (147) 838 839 FY2022 FY2023 Operating Profit EBITDA R&D Spending
  • 7. © SIOS Corporation. All rights Reserved. 7 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. (In millions of yen)
  • 8. © SIOS Corporation. All rights Reserved. 8 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 (In millions of yen)
  • 9. © SIOS Corporation. All rights Reserved. 9 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
  • 10. © SIOS Corporation. All rights Reserved. 10 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. (In millions of yen) 8,716 9,909 FY2022 FY2023
  • 11. © SIOS Corporation. All rights Reserved. 11 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. (In millions of yen) -13 90 FY2022 FY2023
  • 12. © SIOS Corporation. All rights Reserved. 12 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. (In millions of yen) 5,691 5,967 FY2022 FY2023
  • 13. © SIOS Corporation. All rights Reserved. 13 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. (In millions of yen) -570 -311 FY2022 FY2023
  • 14. © SIOS Corporation. All rights Reserved. 2. Business Forecasts for the Fiscal Year Ending December 31, 2024 (FY 2024)
  • 15. © SIOS Corporation. All rights Reserved. 15 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. (In millions of yen)
  • 16. © SIOS Corporation. All rights Reserved. 16 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 (In millions of yen)
  • 17. © SIOS Corporation. All rights Reserved. 3. Growth Strategies for FY 2024
  • 18. © SIOS Corporation. All rights Reserved. 18 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
  • 19. © SIOS Corporation. All rights Reserved. 19 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 (In millions of yen)
  • 20. © SIOS Corporation. All rights Reserved. 20 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
  • 21. © SIOS Corporation. All rights Reserved. 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
  • 22. © SIOS Corporation. All rights Reserved. 22 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.
  • 23. © SIOS Corporation. All rights Reserved. 23 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
  • 24. © SIOS Corporation. All rights Reserved. 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%
  • 25. © SIOS Corporation. All rights Reserved. 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.
  • 26. © SIOS Corporation. All rights Reserved. 26 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.
  • 27. © SIOS Corporation. All rights Reserved.  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.
  • 28. © SIOS Corporation. All rights Reserved. 28 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
  • 29. © SIOS Corporation. All rights Reserved. 29 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
  • 30. © SIOS Corporation. All rights Reserved. 30 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
  • 31. © SIOS Corporation. All rights Reserved. 31 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.
  • 32. © SIOS Corporation. All rights Reserved. 4. Medium-Term Business Plan for FY 2024-2026
  • 33. © SIOS Corporation. All rights Reserved. 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%. (In millions of yen)
  • 34. © SIOS Corporation. All rights Reserved. 34 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
  • 35. © SIOS Corporation. All rights Reserved. 35 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
  • 36. © SIOS Corporation. All rights Reserved. 5. Appendix
  • 37. © SIOS Corporation. All rights Reserved. 37 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
  • 38. © SIOS Corporation. All rights Reserved. 38 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
  • 39. © SIOS Corporation. All rights Reserved. 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