Q2 FY2019 Financial Update

RPA Holdings (TSE:6572)

Table of Contents

01 Company Overview P.2

02 Q2 Financial Overview P.11

03 Growth Strategy P.18

01 Company Overview
Vision
・Create a New Society Where People Co-work with Robot
・Redefine Old Industries Enabled by Robot Transformation

AI/Robot
Transformation

FY2018

Mobile
Transformation

FY2008
Internet
Transformation

Before Internet Long Journey to Digitalization

FY1998

3
Company Overview Mission
Create a New Business with Technology & Wisdom

Company RPA Holdings, Inc.

name

Foundation April 2000

Common JPY 546,972,000

stock Business
Creation
Location Akasaka 1-12-32 ARK Mori Building 13F, ×
Minato-ku, Tokyo
Technology
Board of Representative Tomomichi Takahashi
directors Director
Director Nobuyuki Osumi
Director Satoshi Matsui Business
Director* Takashi Nishiki Creation
Director* Toshihiro Hanyu
Director* Eiichi Nagai Business
Director* Tomohiro Fujita
Consulting
Director* Yoshihiko Masuda

Business
Creation

* Audit and supervisory committee member

4
Business Overview

RPA-centric Business Portfolio

• Provide an RPA solution “BizRobo!” to over 440 end users

Robot
across various industries
Outsourcing

• Envision to redefine old-fashioned industries by applying RPA solutions

Robot • Operate “PRESCO”, an online advertising/affiliate business utilizing in-
Transformation house RPA technologies

• Consulting service Others

• Sales outsourcing

5
Robot Outsourcing Segment Overview
 Provide RPA solutions to various enterprises through direct sales and sales partnerships

RPA Holdings End Users

RPA Solution
Direct Sales

License fee
Provide RPA solutions
through OEM licenses from
RPA software vendors

Through Sales
RPA Solution Partners RPA Solution
440 install base as of
the end of August 2018
License fee License fee
Lease “Digital Labor” (Revenue share)

6
Quality End User Base

Type of Robot Major End Users

Business
Process Robot

Research/
Detection Robot

E-commerce
Support Robot

Marketing
Robot

Others  System Integrators, etc.

7
 Robot Transformation Segment Overview (1/3)
 Apply RPA solutions to redefine old-fashioned industries
 Changed the segment name from “Advertising Network” to “Robot Transformation”

Old-fashioned Industries Redefining Old-fashioned Industry Enabled by RPA/AI

End User End User

Agency Robot Coordination

✔ On-demand & real time delivery

✔ Easy to manage & customize

✔ Efficient coordination

Coordination by RPA×AI
Coordination by ✔ Transparent & low price
an agency

Service
Provider / Service Provider / Media
Media

8
Robot Transformation Segment Overview (2/3)

Solid expertise as a leading RPA solution provider in Japan

RPA know-how Cognitive know-how AI know-how

BizRobo! Scanning Robot AI Robot

 Free
✔ up office workers from
manual & repetitive tasks and
allow them to focus on value-
added works
 Automatically
✔ scan
unstructured data such as
handwritings
 Enable
✔ to coordinate the
most efficient option in
real-time

9
Robot Transformation Segment Overview (3/3)
 Offer online affiliate marketing services as the first application of Robot Transformation

For online advertising players,

01
PRESCO Robo enhances the
One-stop Solution PRESCO Robo efficiency of data collection
Provide one-stop solutions related to and reporting tasks
affiliate marketing services

02 Diversified & Strong Ecosystem

Build media platform leveraging strong network
Ex. Get search results Ex. Examine Ex. Create outputs
of online advertising/affiliate players and
search trends
influencers

10
02 Q2 Financial Overview
 Financial Highlights
 Significant revenue growth and profit expansion

JPY MM
3,645
Robot Outsourcing Segment Operating
Robot Transformation Segment Profit
Other

YoY +102%

1,908 YoY +95%

1,806

342

964
175
1,481

612

H1 FY2018/2 H1 FY2019/2 H1 FY2018/2 H1 FY2019/2

12
Segment Financials: Robot Outsourcing Segment
Significant Increase of Enterprise Accounts

 Accumulated number of enterprise accounts

440

300

91
50

2016/2 2017/2 2018/2 2018/8

14
Both Revenue and Profit Growing Rapidly

Revenue Operating Profit

JPY MM JPY MM
1,481

290
YoY+142%
YoY+175%

612

105

H1 FY2018/2 H1 FY2019/2 H1 FY2018/2 H1 FY2019/2

15
Segment Financials: Robot Transformation Segment
Robot Transformation Gaining Traction

Revenue Operating Profit

JPY MM JPY MM 111

1,908
YoY+93％
YoY+106%

58

964

H1 FY2018/2 H1 FY2019/2 H1 FY2018/2 H1 FY2019/2

17
03 Growth Strategy
Growth Strategy
 Significant growth opportunities through further scaling of Robot Outsourcing and multiple new business
developments driven by Robot Transformation

1 2
Robot
Robot Outsourcing
Transformation

19
Robot Outsourcing Segment
Gaining momentum led by RPA/AI expansion
Attractive Market Opportunity
 RPA market is still in an early stage and offers huge potential to penetrate in Japan

Japan RPA Market is expected to reach JPY130bn by 2021 Huge potential to expand our user base
Japan RPA solution market forecast(1) BiziRobo! LAND2018
% of existing BizRobo! user
JPY MM Existing users/partners of
BizRobo!
12%

66,000

61,000

46,300

28,730 64,000
49,000
Have not installed
30,900 BizRobo!
13,080
15,670
5,265 88%
FY2017 FY2018 FY2019 FY2020 FY2021 Approx. 90% of attendee companies of
Recurring Spot BizRobo! LAND have not installed BizRobo!
リカーリング スポット

Source：Mic Research Institute “RPS solution market report (2018)”

Note:
1. Recurring = License fee + Other related services (maintenance), Spot = Consulting service + System integration 21
Untapped RPA Market Opportunity in Japan

Lack of engineers Dissatisfaction with Most of IT investments by Japan

in end user side incumbent IT system enterprises are for maintenance
Breakdown of type of engineers Do you agree that incumbent IT system slow Allocation of IT investments by
in Japan and U.S. down the pace of digital transformation? Japan enterprises (2016)

disagree
Agree New investment
End user side 2.8%
65%
17.2% 21.2%
Almost disagree
30.0%

End User side Vendor side

28% 35%
Vendor side 72%

Almost agree Maintenance

# of engineers: # of engineers: 50.0% 78.8%
1.05MM 4.2MM

Source：METI ”DX report” (2018) Source：METI ”DX report” (2018) Source：METI ”DX report” (2018)

Easy-to-install software architectures and cost effective

features are required in Japan RPA market

22
BizRobo! Uniquely Positioned in Japan RPA Market

Designed by
on-site operation

✔ No need of coding
Product X BizRobo!

Scalable
✔ Scalable architecture for
RDA(1)
continuous improvements

Product Y Product Z ✔ Low cost

Designed by IT system
division/management

Note:
1.Robotic Desktop Automation
23
Clear Strategic Vectors to Scale Robot Outsourcing

a b c

Further Strengthen Upsell in Existing Expand Market

Partnership Nurturing Customers Opportunity

24
 a Further Strengthen Partnership Strategy to Capture
Untapped User Base
 Increase market share through diversified sales partnerships
 Accelerate business developments associated with various enterprises
 Explore to tap international markets with Japan consulting firms with international offices

Sales Partnership

Ex

Business Development Social Innovation

Ex
Ex

RPA girl
project

25
b Upsell in Existing Customers by Providing Further
Enhanced RPA Solutions
 Keep developing advanced AI solutions including EPA (enhanced process automation) or CA (cognitive
automation) to upsell in existing customers

Class Robotic Process Class Enhanced Process Class

Cognitive Automation
1 Automation 2 Automation 3

• Automation of routine work • Automation of non-routine work • Autonomously execution of

utilizing rule engine and image • Deep learning process analytics/improvements
Feature
recognition, etc. • Unstructured data processing and decision making utilizing
advanced AI technologies

• Crawling • Unstructured data processing • Decision making

• Scanning • Automatic response utilizing • Advanced data processing
• Data processing knowledge data base • Advanced data analytics, etc.
Application
• Data verification • Data analytics with support by
• Log-in multiple IT systems, etc. staff, etc.

Macro Cognitive Computing Advanced AI

Technology
Natural language processing, big
Rule Image Unstructured Data
Work-flow Data Analytics data analytics, etc.
Engine Recognition Processing

26
 c Expand into SMB Market by Providing Cloud-based RPA
Solutions
 “Easy” “Fast” “Effective” Solution for SMB

Back-office

“Robot As A Service” Concept

White-collar
• RPA templates which are customized
for back-office tasks with cost
efficient pay-per-use fee model
• Plan to add Azure based services
Task
with Microsoft
• Develop crowd-based RPA platform
RPA
(Digital Labor)

SAP SalesForce
Industry specific
Tool IT System Accounting software
software HR software

27
Robot Transformation Segment
Redefining old-fashioned industry
Huge TAM Driven by AI
 AI-related market size in Japan is expected to reach JPY86Tn by 2030

JPY86Tn in 2030

Japan AI-related market forecasts

JPY23Tn in 2020

JPY3.7Tn in 2015

Source: EY Institute (2015) 29

Competitive Advantages
Low Cost
Significant cost advantage
achieved through the utilization
of third-party resources
including RPA licenses and
engineering network
Technology
Highly advanced technology and
in-house engineering capability
backed by robot outsourcing
business expertise
Know-how
Extensive know-how based on
10+years experiences in RPA field
30
Robot Transformation Case Study
 Online affiliate marketing market is huge (JPY940bn), but there is still room to optimize
 RPA enabled robot coordinator streamlines incumbent agency structure

Incumbent Online Ad Agency

Agency

Purchase ad spot Purchase ad spot

Robot Client Purchase ad spot Purchase ad spot

Media
Transformation

Robot Robot coordinator is able to optimize the

Coordinator operation of incumbent agency

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Appendix
Consolidated P/L & Projection
JPY MM FY2019/2
H1 FY2018/2 H1 FY2019/2
(Projection)
Total Revenue 1,806 3,645 9,104

Robot Outsourcing Segment 605 1,481 -

Robot Transformation Segment 919 1,983 -

Other 281 273 -

Operating Profit 175 342 906

OP Margin 9.7% 9.4% 10.0%

Adjusted Operating Profit (1)

- - 1,016

Adjusted OP Margin - - 11.2%

Net Income 113 210 497

NI Margin 6.3% 5.8% 5.5%

Adjusted Net Income(1) - - 607

Adjusted NI Margin - - 6.7%

Note:
1.Adjusted Operating Profit = Operating Profit + Amortization related to the acquisition of Direct. Adjusted Net Income = Net Income + Amortization
related to the acquisition of Direct
33
Segment Financials (FY2018/2 H1)

JPY MM

Robot Outsourcing Robot Transformation Adjust- Consoli-

Total Other
Segment Segment ment dated

Revenue 1,481 1,983 3,465 273 △93 3,645

Revenue from external customers 1,481 1,908 3,390 254 - 3,645

Adjustments - 74 74 19 △93 -

Operating Profit 290 111 402 33 △93 342

OP Margin 19.6% 5.6% 11.6% 9.4%

Depreciation 72 1 74 0 5 79

34
Consolidated B/S

JPY MM

FY2018/2 H1 FY2019/2 Difference

Current assets 2,750 3,384 633

Cash & cash equivalents 1,846 2,129 282

Non-current assets 405 527 122

Total assets 3,156 3,911 755

Current liabilities 1,237 1,708 470

Non-current liabilities 222 132 △89

Total liabilities 1,459 1,840 381

Total debt 401 511 110

Common stock 530 546 16

Capital surplus 535 683 147

Retained earnings 625 835 210

Total equity 1,696 2,071 374

35
Company Projection for FY2019/2
 Revised up the projection for FY2019/2 thanks to the robust growth of each segment

JPY MM
FY2019/2 FY2019/2
FY2019/2 単位：百万円
（revised projection （revised projection
（Initial projection）
as of 7/13） as of 10/15）

Total Revenue 5,647 7,207 9,104

YoY +34.8% +72.1% +117.4%

Operating Profit 658 658 906

OP Margin 11.7% 9.1% 10.0%

Adjusted Operating Profit (1)

- - 1,016

Adjusted OP Margin - - 11.2%

Net Income 435 435 497

NI Margin 7.7% 6.0% 5.5%

Adjusted Net Income(1) - - 607

Adjusted NI Margin - - 6.7%

Note:
1.Adjusted Operating Profit = Operating Profit + Amortization related to the acquisition of Direct. Adjusted Net Income = Net Income + Amortization
related to the acquisition of Direct
36
Company Structure Overview

RPA Holdings, Inc.

Robot Outsourcing Segment Robot Transformation Segment Others

Foundation: October
2013

Common Stock: JPY30MM Direct, Inc.

RPA Technologies, Inc. Representative: Nobuyuki SEGMENT Inc. LEAGLE Inc. OPEN ASSOCIATES
Osumi
Japan, Inc.
% holdings: 100%

Foundation: February Foundation: April Foundation： February Foundation： December Foundation： January
2017 2005 2014 2008 2016

Common Stock: JPY10MM Common Stock: JPY30MM Common Stock： JPY9.5MM Common Stock： JPY30MM Common Stock： JPY30MM

RPA Engineering, Inc. Representative: Junji Representative: Takayuki Representative： Takayuki Representative： Yutaro Representative： Takayuki
Oishi Ishii Ishii Noji Ishii

% holdings: 100% % holdings： 100% % holdings： 100% % holdings： 100% % holdings： 100%

37
Revenue Projection Progress
 Exceeding the revenue projection for Q2 FY2019/2 (JPY3.4Bn)

Revised projection
for Fiscal Year
: JPY9.1Bn

Progression rate vs
the revised projection
Initial projection
for Fiscal Year
: JPY5.6Bn Progression rate vs
the initial projection
40%
Q2 revenue
65%
JPY 3.6Bn

COLUMN1
Revenue: FY2019/2
38
The Issuance of Third-party Allotment of Stock Acquisition Rights

• Amount of funds to be raised : JPY9.1Bn (estimated net proceeds)

• Total number of stock acquisition rights to be issued: No.4 200,000, No.5 300,000
• Potential dilution %: 9.7%
• Exercise price
➢ Initial exercise price: No.4 JPY15,230, No.5 JPY20,000
➢ Floor exercise price: No.4 JPY14,280, No.5 JPY20,000
Overview ➢ Exercise Price shall, on any exercise date, be reset to the amount equal to 90% of the closing price of shares on the
previous trading day, rounded up to the nearest 1 yen; provided, however, that if the Exercise Price after the reset
relating to any reset date would be less than JPY 14,280 for Series 4 and JPY 20,000 for Series 5, the exercise price shall be
equal to the Floor Exercise Price
➢ We may reset the Floor Exercise Price of Series 5 to the higher of 90% of the previous business day’s closing price or JPY
14,280 by the board resolution (effective on the next business day)
• Expiry date : November 5, 2020

•1 Product and business development: Plan to invest in the cutting-edge AI/RPA technologies and purchase software licenses

Use of •2 M&A, strategic partnership: Plan to acquire or invest in companies which are served in RPA markets to expands its business area
proceeds •3 HR cost and advertising expense: Plan to hire and retain experts who serve on business development for new businesses and
enhance our name recognition through strategic advertisement

Taking care of existing shareholders

• The upper limit of potential dilution is fixed to 9.7% vs total outstanding shares as the number of new issues through stock
Advantage acquisition rights is not changed
s of this • The purchaser is able to exercise when the share price exceeds the floor exercise price
Securing the flexibility of our capital policy
financing • The flexibility of choosing financing options is secured when the board of directors want to change the capital policy as the
exercise permission is controlled by the board of directors

39
Illustrative Scheme

Illustrative share price(1)

Request the permission
of exercise
Share price
Purchaser
Exercise price
Permission of exercise

The floor exercise price of series 5 stock acquisition rights (2)

Exercise period
(60 business
Share price day/series)

Exercise price

The floor exercise price of series 4 stock acquisition rights

Exercise period
(60 business
day/series)

November 2018
Notes:
1.This is for illustrative purpose only and there is no guarantee on future stock performance
2.The floor exercise price of series 5 is able to be adjusted to the higher of 90% of the previous business day’s closing price or JPY 14,280 by their board
resolution (effective on the next business day)
40
Disclaimer

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 RPA Holdings or any other factors.

The factors which may affect actual results include but not limited to: Japanese and global
economic conditions, conditions of markets in which RPA Holdings operates.

RPA Holdings is not obligated to update or revise any contents of the forward-looking
statements within this material, even in cases such as where new information becomes
available or future events take place.

41