Strategic Acquisition of Yayoi November 2014 ORIX Corporation

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2 Overview of Yayoi Company Name Address Business Activities Established 1978 Capital Representative Yayoi Co., Ltd. SIA Kanda Square, 17 Kanda Konya-cho, Chiyoda-ku, Tokyo Development, marketing, and support of business management software Yayoi Series and related services for small businesses 50 million yen Koichiro Okamoto, Chief Executive Officer History 1978 Established Nihon All Systems KK 1980 Established Milkyway KK 1987 Released the first version of Yayoi Series 1997 Established Intuit KK as a result of merger Opened Osaka Customer Center 2003 Changed company name to Yayoi Co., Ltd Opened Sapporo Customer Center 2009 Launched business help desk service 2012 Achieved 10 billion yen in revenues Reached 1 million in registered users Launched cloud-based software 2014 BCN AWARD 2014: Ranked No.1 in business management software category for 15 consecutive years No. of Employees 541 Copyright 2014 ORIX Corporation All rights reserved. 1

3 Four Characteristics No. 1 Share in the Business Management Software Market High Growth Potential Business Platform that Generates Strong, Stable, Recurring Income Robust Customer Base Centered on Small Businesses Copyright 2014 ORIX Corporation All rights reserved. 2

4 Business Model Lead customers who purchased the products to join annual fee-based YSS membership program Recurring income (service income such as annual membership fee) comprise about 80% of revenues Purchase product Business Model Unit: JPY Bn Trend in Revenues User registration Purchase of associated supplies Upgrades YSS member registration Updates for regulatory changes/free updates Software help desk Data backup service using cloud system Business Helpdesk on accounting, tax filing, etc. Recurring income (Annual membership fee, etc.) Note: YSS is an abbreviation for Yayoi Support Service. Customers are able to receive product support and business support services by joining YSS and paying annual membership fees Copyright 2014 ORIX Corporation All rights reserved. 3

5 Rational for the Acquisition Acquisition of new business platform -Stable, long-term revenue base- Acquisition of new customer base -Access to small businesses- Expansion of service lineup -Growth support services for small businesses- Copyright 2014 ORIX Corporation All rights reserved. 4

6 Acquisition of New Business Platform Market share of around 60%. Lead new customers to join YSS with retention rate of about 90% ORIX acquires new service business platform that generates recurring income Market Share Trend in Number of YSS Members Unit: Thousands of members New customers join YSS 9 out of 10 companies retain the contract Note: The market share is Yayoi s share among business management software (units sales) sold at electronics retailers and leading online retailers (value packs are counted separately as individual products) Source: Calculated by Yayoi based on the data from GfK and BCN during FY10.9 to FY12.9, and data from Gfk during FY13.9 and FY14.9 Copyright 2014 ORIX Corporation All rights reserved. 5

7 Acquisition of New Customer Base Yayoi has robust customer base of over 1,250,000 companies centered on small businesses Creates access to small businesses which ORIX was unable to approach Large/Medium-Sized Companies Approx. 520,000 companies (13%) No. of employees:46,140,000 Small Businesses Approx. 3,340,000 (87%) No. of employees: 11,920,000 More than 200,000 companies launch their business every year Registered users More than 1,250,000 companies YSS members 410,000 companies Creates access to the customer base that comprises 87% of the domestic businesses Note: Small businesses refer to companies with less than 20 employees (Less than 5 employees for wholesalers, retailers, and service providers). Registered users refer to customers who purchased Yayoi products that became registered as users. Source: White Paper on Small and Medium Enterprises (FY2014) Copyright 2014 ORIX Corporation All rights reserved. 6

8 Expansion of Service Lineup Enhance services that are tailored to the needs of small businesses by combining the capabilities and knowhow of the two companies Support small businesses growth and improvement of business efficiency Leasing/finance Rental/sharing Insurance Benefit program Cost reduction Risk management New service lineup Existing services Registered users more than 1,250,000 Support the growth of small businesses Business management software Business support Existing services YSS Members 410,000 Copyright 2014 ORIX Corporation All rights reserved. 7

10 About Yayoi Aims to be the infrastructure for start-up and growth of small businesses in Japan Customers include small corporations, individual business owners, and entrepreneurs Support customers by providing both products and services Aims to be the infrastructure that is accessible and affordable to everyone Dominant market leader Double award winner in the BCN AWARD 2014* No.1 in business management software category for 15 consecutive years No.1 in tax filing software category for 10 consecutive years Award winner in the 9th GfK BEST1** No.1 in business management (accounting) software for 9 consecutive years * Based on the POS data of PC and electronic retailers nationwide (2,431 stores) during to ** Based on the sales data of leading electronic retailers nationwide (approx. 4,000 stores) during to Copyright 2014 ORIX Corporation All rights reserved. 9

12 Yayoi - Dominant Market Leader Market share in units (FY14) : 57.8% Note: The market share among electronic retailers and leading online retailers (value packs are counted separately as individual products) FY14: Source: Calculated by Yayoi based on GfK data Copyright 2014 ORIX Corporation All rights reserved. 11

13 Share in Value Exceeds 80% for Accounting Software Market Share in Units (Accounting Software) Market Share in Value (Accounting Software) Note: The market share among electronic retailers and leading online retailers (value packs are counted separately as individual products) FY14: Source: Calculated by Yayoi based on GfK data Copyright 2014 ORIX Corporation All rights reserved. 12

14 Expanding Cloud Application Lineup Yayoi WhiteTax Filing Online * Released January 2014 Yayoi Blue Tax Filing Online * Released October 2014 *The products above serve to support tax filing for small businesses. Users can select between the products depending on the format in which they submit their tax filing. Copyright 2014 ORIX Corporation All rights reserved. 13

15 Yayoi s Growth Strategy: Five Pillars Strengthen Relationships with Existing Customers Build sustainable relationships with more customers Develop New Customer Base Continue to focus on small corporations and individual business owners Product Enhancement and Response to Regulatory Changes Aptly respond to large-scale regulatory changes Use of Cloud-Based Services Provide customers with improved usability through cloud-based solutions Evolve into Business Concierge From software infrastructure to business infrastructure Copyright 2014 ORIX Corporation All rights reserved. 14

16 Four-Stage Boosters to Realize Growth Strategy Time Line FY14 FY13 Provide new value-added services Cultivate the untapped market with cloud applications Lead customers into YSS by offering first-year for free Capture special demand stemming from consumption tax raise Revenues 16bn 10bn Copyright 2014 ORIX Corporation All rights reserved. 15