Cacco : （Delayed) Financial Results for the Fiscal Year Ending December 31, 2020

April 05, 2021 at 07:04 am

Cacco Inc.｜ Stock Code: 4166 February 10, 2021

Financial Results for the Fiscal Year Ending December 31, 2020

Note: This document is an excerpt translation of the original japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original japanese document, the latter shall prevail.

Contents

. Inc Cacco 2021 ©

Table of Contents

Business Description

Financial Results for FY2020

Growth Strategies

Forcast of Financial Results for FY2021

APPENDIX

Business Description

Business Description / Company Profile

Company name	Cacco Inc.
Foundation	January 28, 2011
Capital stock	362,499,000 yen
Officers	H i r o y u k i	I w a i , Representative Director, President and CEO
	K e n t a r o	S e k i n e , Senior Managing Director, CFO in charge of administration unit
	Ta k e o N a r i t a , Director, COO in charge of business unit
	To m o t s u g u O k a d a , Director, CPO in charge of system development unit
	S a d a h i r o S u z u k i , Director (Audit and Supervisory Committee Member)
	To s h i h i d e N a k a y a m a , Director (Audit and Supervisory Committee Member)
	G e n i c h i r o O g a w a , Director (Audit and Supervisory Committee Member)
	Yu t a N a k a z a w a , Executive Officer
	Ya s u t a k a A o k i , Executive Officer

Head office location	Arai Building 4F, 1-5-31, Motoakasaka, Minato-ku, Tokyo JAPAN
Business Description	Provision of SaaS-type algorithm solutions
	(Fraud detection service, payment consulting service, and data science service)

Business Description / Management Vision

Cacco Evolutionary Purpose

Shaping the "Let's Do It" for a next game changer.

Since its foundation, "Cacco Evolutionary Purpose" has been the driving force for everything we do.

In the changing world with the spread of the Internet and smart phones, businesses will not survive if they just remain as they are. If we don't push for a change, we will not be able to create new industries; we want to break through the slowdown of growth persisting since the year 2000. It is a strong faith that moves Cacco to support the innovation of people and companies who will become game changers of the future.

Business Description / Our Business Model

		's Core Technology
					AI (Artificial

Security	x	Data	Intelligence)

	Science			Statistics


Payment					Mathematical

				Optimization

Provision of

SaaS-Type Algorithm

	Fraud
	Detection
	Service
	Core Services
Payment	Data Science
Consulting
Service	Service

Business Description / 3 Services of SaaS-Type Algorithm

Provision of

SaaS-type Algorithm

Fraud

Detection

Service

Core Service

Payment	Data Science
Consulting
Service	Service

(1) Fraud Detection Service

Real-time detection service for fraudulent orders such as non-payment in EC payment, ticket reservations or resale.

Real-time detection service for unauthorized access and login at financial institutions.(Internet banking or securities)

(2) Payment Consulting Service

Provision of settlement systems and consulting services for setting up and operating BNPL (Buy Now, Pay Later) agents.

"O-PLUX" is provided as the screening engine for

BNPL settlement

(3)Data Science Service

Service that develops and provides data analysis and algorithms for various fields using AI, statistics, and mathematical optimization technologies.

Business Description / Circular Growth Model Business Structure

Increase		Fraud	mid-term
	Detection
Volume		Service	Develop and provide
Increase
Transaction			type services in new
Volume
		Core Services
Payment Consulting	Improve		Operate EC / Financial
Accuracy		Businesses
Service			Utilize Knowledge
	Data Science

Utilize Knowledge		Services

Enhance experience

and skills

SaaS- areas

Business Description / Commercial Flow of Cacco

Cacco

Provision of fraud detection service

Client

Alliances

System Development

Payment


Fraud Detection			Payment	Provision of fraud
	detection service
Service	Sales Partners
	Payment			Payment
	Referral of Client	Referral Partners

	Payment

Payment Consulting			Provision of payment consulting service

Service
		Payment

Data Science			Provision of data science service

Service
		Payment

	（C）Cacco Inc. All Rights Reserved.

EC businesses,

financial

institutions, etc.

BNPL agents, etc.

Retailers, distributors,

manufacturers,

service providers, etc.

Business Description / Our Strengths

	Expertise in data science and advanced technical capabilities in the
1	security domain
(High technological level supported by patented technologies "Patent #6534255" and "Patent
	#6534256")
2	Top selling service in the EC and payment domains in Japan
(Based on "Survey on EC site fraud detection services (as of the end of May 2020)" performed by
	Tokyo Shoko Research)
3	Steady growth in ARR (Annual Recurring Revenue) driven by
increased users for mainstay product O-PLUX
	(ARR out of this product accounted for 71.5%of total sales in FY2020)

Business Description / Fraudulent Order Detection Service "O-PLUX"

｜ Overview

Screening Process

Main Functions

Purchaser	EC Businesses
BNPL Agents

Order

Shipment	OK
REVIEW
Visual
Confirmation	NG
Cancellation

Order data

Screening

Results

Real-time screening via

API

(Approx 0.5 to 1 second)

Name

Device Information

External DB linkage

Behavioral Analysis

Normalize and utilize the same addresses and names with different notation.

eg: 3-2, Akasaka 4-chome4-3-2 Akasaka

Identification by IP and cookie Detection of access from overseas Detection of impersonation by a non- Japanese based on language setting or time zone, etc...

Vacancies detection (weekly apartments or hotels)

Detection of overseas forwarding service

Validation of phone numbers, etc...

Detection of fraudsters by analyzing information and behavioral patterns that are characteristic of fraudsters, such as large purchases over a short

SaaS-type service that uses a unique screening model to detect fraudulent orders such as non- payment in EC in real time.

Shared Negative Data

period of time and identity theft. Finding of the match with the negative database shared among user companies.

Business Description / Fraudulent Order Detection Service "O-PLUX"｜ Example of Application

O-PLUX is offered mainly to BNPL settlement agents and e-commerce businesses.

BNPL

BNPL Agent

Default

Provision of

payment services

Purchaser Purchase

Credit Card Payment

Credit Card Company

	Payment Service
	Provider
	Connection	Payment service
Connection
and contract	and contract

EC Businesses	Purchase	Purchaser
	Default

In the event of non-payment, etc. in the BNPL system, the BNPL agents will bear the loss.

In the event of fraudulent use of a card in a non-face-to-face transaction (EC), EC business will bear the loss.

Business Description / Fraudulent Order Detection Service "O-PLUX"
｜ Case Study			Approx.
Client	General retail business	700	Significant reduction in	250	10%
600	fraudulent losses	9%
Annual		500	reduced fraudulent	million yen	8%
	reduced in 5	7%
Distribution	7 billion yen per year		Continuous screening	years
400	orders and kept	6%
	Fraudulent use of credit	fraudsters away	Continuous rule	5%
	300		4%
Customer's Issue	cards in e-commerce	200		tuning reduced the	3%
(Up to 10 million		efforts for checking	2%
	yen/month)	100			1%
	100 million yen of	0			0%
	fraudulent use was
Outcome	detected in the 1st year
250 million yen in total		Losses by fraudulent use (in tens of thousands yen)
	reduced over approx. 5		The amount of fraud detected (in tens of thousands yen)
	years of use		REVIEW rate

The amount of fraud detected is the total amount of transactions that are confirmed as fraudulent (negative registration) before chargeback due to mismatch of card attributes, identity verification before shipment, etc., with screening result of "NG" or "REVIEW".

The REVIEW rate is the ratio of "REVIEW" returned as a result of screening to the total number of screeings.

Business Description / Fraudulent Order Detection Service "O-PLUX"|

Revenue Structure

3 reasons why ARR grow

Number of Clients

BNPL	EC Business	x
EC Business
Agents
	EC Business
⇒Sustainable growth in
theproportionBNPL marketto the expansion of
EC Businesses
(Direct sales clients)

⇒Expansion through an alliance with EC package / cart vendors

2	Unit Price		3 Cross Sell
per Client
				Cross-selling with other
		Screening Fee	x	products and services
		(Pay-per-use)	■
		Monthly fee	■Payment consulting
		(Fixed Price)
			■Data Science
As the expansion of the EC market
boosts the number of transactions
(i.e. screening cases), revenue
growth from the pay-per-use fees
can be expected

A stable revenue structure in which about 70% of total sales comes from ARR, the sum of pay-per-use and fixed fees.
In addition, pay-per-use billing system enables us to capture the upside potential associated with the expansion of the EC market and
BNPL market.	14
（C）Cacco Inc. All Rights Reserved.

Business Description / Fraudulent Order Detection Service "O-PLUX"|

Differentiating Factors

What differentiates O-PLUX from competitors

Large volume of data on domestic fraudulent orders
(No. 1 in Japan for the number of installations)

Unique fraud detection model with data science security technology and know-how

Monitoring and support system tailored for domestic and in-house products

Virtuous cycle for our speriority

No.1	Accumulated
Results of	large volume
Installation	of data

Installation accelerated

Improved accuracy of detection

FY2020 for Results Financial

Financial Results for

FY2020

. Inc Cacco 2021 ©

Financial Results for FY2020 / Summary for FY2020

Achieved sales and profit growth for five consecutive years

Sales of the O-PLUX fraudulent order detection service and payment consulting service for BNPL providers grew steadily, supported by an expansion in the use of EC services as remoteworking and staying at home due to the COVID-19 pandemic boosted demands for them. Sales and profits increased for the fifth consecutive year.

All profit margins growing steadily

Despite aggressive investments in advertising and corporate identity (logo, corporate website, etc.) renewal, profit margins at all levels increased due to higher revenue and cost reductions, including the control of server costs.

					(Unit: Millions of yen)
	FY2019	FY2020	YoY	FY2020	Compared with
	(Jan. 27,
	(Actual)	(Actual)		Forecast)	expectation
Net sales	745	831	+11.5%	831	±0
Operating	99	138	+39.5	138	±0
income
(Profit	13.3	16.6	+3.3pt	16.6	±0
margin)
Ordinary	91	115	+26.2	115	±0
income
(Profit	12.3	13.9	+1.6pt	13.9	±0
margin)
Net income	114	130	+13.6%	130	±0
(loss)
EPS (yen)	48.99	55.37	+13.0%	55.37	±0


Financial Results for FY2020 / Summary on Business Progress &
TOPICS		TOPICS
	Summary of Business Progress		Jan
1	Strengthened alliances		Started offering RPA option to companies using O-PLUX with no development
		O-PLUX: Alliance with 2 EC packages		fee.
2	O-MOTION: Alliances with 2 security services		O-MOTION started providing a function that automatically asks for additional
Expansion of service areas		authentication service of OSTEARIES, Inc.
		- Industry-specific fraud detection service for travel,		authentication only for unauthorized access, in cooperation with the incoming
		May	Started providing fraud detection services specialized for travel, ticketing, and
		ticketing, and web services
		- Release of "D2Cart", a cart system specialized for D2C		web service industries.
		- Research for enhancement of O-MOTION's device	Jul	Started providing "Fraudulent / Mischievous Order Prevention" function in
		identification technology
3	cooperation with "Tsukuru" by Net advertising company "Tsukuru -Best Selling
Expansion of BNPL system	Aug	Net Advertisement"..
		Preparation for the development of a SaaS-type	O-MOTION started tying up with "Ice Wall MSA," multi-factor authentication
		BNPL settlement system		platform of Hewlett-Packard Japan, Ltd. for additional authentication only for
4	Promotion of data science services	Oct	unauthorized access.
		Release of new data analysis service "SAKIGAKE KPI"	O-PLUX began tie-up with Salesforce.com's e-commerce platform, "Salesforce
5	Other Initiatives		Commerce Cloud".
		Expansion of owned media for brand awareness		Launched "SAKIGAKE KPI," a new data analysis service that aggregates,
		Active implementation of online seminars		analyzes, and reports up to 100 million records in 30 business days for 2
		System development for O-PLUX architecture renewal,		million yen.
		etc.	Dec	Launched "D2Cart," a D2C-specific cart system equipped with functionality for
		Free offer of O-PLUX's RPA option without
		development charges		proactive and preventive actions.	18
			（C）Cacco Inc.	All Rights Reserved.

Financial Results for FY2020 / Net Sales, and Sales Composition by Service

Fraud detection, the core service, increased by YOY13.1%, and its sales composition expanded to 80.5%.

Net Sales

(Unit: Millions of yen)

Sales composition ratio by service

(Unit: %)

Fraud Detection Services		745		51	Fraud Detection Services	Payment consulting services	Data Science Services
Data Science Services			6.7	4.4	4.8	6.3		6.1
Payment consulting services	720			831						13.4
	700	47		111		26.7	20.9	14.3
	30	34	106			39.2
489	187	150

	+13.1%							80.5
32			669
191			591			68.9	74.3	79.4
482	535			54.1

264

FY2016	FY2017	FY2018	FY2019		FY2020	FY2016	FY2017	FY2018	FY2019	FY2020
				（C）Cacco Inc.	All Rights Reserved.					19

Financial Results for FY2020 / Gross Income and Operating Income

Both gross income and operating income are expanding steadily with income margins growing.

Gross Income

(Unit: Millions of yen)

Operating Income

(Unit: Millions of yen)

700		Gross income on sales	Gross income margin	70.7%		Operating income	Operating income ratio	16.6%
		59.0%	64.0%	66.7%		70.0%.	11.5%	13.3%
600				587	60.0%.	6.4%	138
500	44.5%			497	50.0%.	99
	460		82
400	413		40.0%.
			45
300					30.0%.

217					▲90
200					20.0%.

100						10.0%.	▲18.5%

0.0%.

FY2016

FY2017

FY2018

FY2019

FY2020

Financial Results for FY2020 / Factors Affecting Operating Results and Operating Income

Operating income increased YOY39.5% due to higher sales and lower costs (e.g., server costs), despite aggressive investments to increase headcount and renew corporate identity (CI) as well as service websites.

Revenue	Server cost	Personnel
increase	saving, etc.	increase
	5	Service site
		renewal
		CI renewal	Other
			savings
				7

(Unit: Millions of yen)

+39.5%

from FY2019

Advertising

HR Expenses

Net Sales

Costs

Outsourcing

Other SG&A

FY2020

FY2019

Operating

Expenses

Operating

Income

remuneration)

Income

Financial Results for FY2020 / EBITDA and Cash Flows

EBITDA increased steadily in line with profit growth, and EBITDA margin expanded to 17.5%. Although free cash
flow was temporarily negative due to aggressive investment in software development, it is expected to increase in
the future.
Operating cash flow margin increased to 20.1%.						Cash flows from operating activities (Unit: Millions of yen)
										EBITDA				(Unit: Millions of yen)
200														17.5%	20.0%
																	Cash flows from operating activities
					EBITDA					14.2%



150								12.3%	15.0%			Cash flows from investing activities						20.1%

											200		Free cash flows


							7.0%									Free cash flow margins						20.0%


100													145		10.0% 150			7.0%		9.9%						15.0%


50									88		105			5.0%	100								166	10.0%
																94
														50
			▲ 69	48									73								5.0%
0												0.0%	0		50		43
																												0.0%

																						▲112	▲38			▲30
-50																	-5.0%	-50							▲197		-5.0%


																-100											-10.0%

-100	-14.2%											-10.0%-150													-15.0%
-150												-200													-20.0%
FY2017		FY2018		FY2019				FY2018		FY2019					FY2020
			FY2016			FY2020 -15.0%-250						-25.0%
				EBITDA = Operating income + Depreciation and amortization				Free cash flow = cash flows from operating activities + cash flows investing activities
-200				EBITDA margin = EBITDA / Net sales						Free cash flow margins = cash flows from operating activities / net sales
																-20.0%Cash flow statements for FY2016 and FY2017 are not available.			22
															（C）Cacco Inc. All Rights Reserved.

Financial Results for FY2020 / ARR / Screening Volume of O-PLUX

Both ARR from and the volume of screening with O-PLUX are steadily increasing, with the ARR ratio expanding to 71.5%.

Monthly Fee		O-PLUX" ARR		(Unit: Millions of yen)

Screening fee		68.0%	70.3%	71.5%
ARR ratio
			594
	64.3%	489	524
51.3%	450

		251			416	406	443
				399


	213

							150
							117
					73
		37		50


FY2016	FY2017	FY2018	FY2019	FY2020

	Screening Volume with O-PLUX	(Unit: Thousands)
				56,523
		38,818	44,638
	33,652

16,267
FY2016	FY2017	FY2018	FY2019	FY2020

ARR = Fixed monthly fee + screening fee based on the number of screenings (spot revenue such as initial installation fee is not included)	23
ARR ratio = ARR / net sales (total of all services)	（C）Cacco Inc. All Rights Reserved.

Financial Results for FY2020 / Monthly Churn Rate for O-PLUX

The monthly churn rate of O-PLUX has remained low, and negative churn has been realized.

Gross churn rate	1.02%
	0.67%

Annual average

0.27%

0.02%

0.73%

0.00%

0.13%

0.00%

0.13%

0.48%

Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct
					FY2020

Gross churn rate = annual average of current month's churned ARR / (current month's ARR - current month's new ARR)

Net churn rate

Nov Dec

Annual average

▲0.35%

▲0.08%	0.39%

Jan	Feb

0.07%

0.00%

Mar Apr

▲1.81%	▲0.10%	▲0.47%

May	Jun	Jul
	FY2020

▲0.58%	0.29%

Aug Sep

0.75%

Oct

0.26%	1.42%

Nov	Dec

Net churn rate = (annual average of current month's churned ARR - current month's new ARR) / (current month's ARR - current month's new ARR)	24
（C）Cacco Inc. All Rights Reserved.

Financial Results for FY2020 / Balance Sheet for FY2020

				(Unit: Millions of yen)
	FY2019	FY2020	YoY	Main drivers
	(Actual)	(Actual)
Current	695	1,402	+101.8%	Increase in cash and cash equivalents
assets
(Cash and	590	1,293	+119.2%	Improvement in operating CF, increase in borrowings,
deposits)	capital increase through IPO
Fixed assets	199	420	+110.6%	Increase in software in progress
Total assets	894	1,822	+103.8%
Current	157	383	+143.9%	Increase in borrowings
liabilities
Fixed	243	291	+19.6%	Increase in borrowings
liabilities
Net assets	494	1,148	+132.4%	Profit recognition, capital increase through IPO
Capital ratio	54.9	62.8	+7.9pt
	2017		2018	2019	25
			（C）Cacco Inc. All Rights Reserved.

Growth Strategies

Growth Strategy

Growth Strategies / Existing Domains

Create our own market by further accelerating and expanding the virtuous cycle that drives the superiority of O-PLUX

EC Package

Shopping Cart

API linkage

No.1

Results of

Installation

Architecture

reform

Accelerate installation

Improved

accuracy of

detection

Accumulated large volume of data

SaaS-type

BNPL

settlement

system

Growth Strategies / Existing Domains | Overview

The funds raised through IPO will be actively invested in software development to further grow O-PLUX.

EC Package

Shopping Cart

API linkage

	SaaS-type
Architecture	BNPL
Settlement
Reform	System

Already started, WIP

By establishing API with EC packages and shopping carts, the core systems for EC businesses, the application can be introduced immediately without development efforts.

2021 (planned)

O-PLUX reform will improve service quality, maintainability, and reduce costs, and will enable us to offer our services to fields that we have not been able to offer before.

2021 (planned)

Rather than conventional way of development upon contract, development of SaaS-type BNPL settlement system will accelerate its use and lead to the expansion of O-PLUX.

Planning to invest the funds raised by IPO

Growth Strategies / Existing Areas | Expansion of client base through O-PLUXand API collaboration

API with EC packages and shopping carts will accelerate installation of this application to EC businesses of all sizes.

Sales scale of EC businesses

Previous Targets		Annual sales of 100 million yen or more
large-scale	8.3%
	stores

Further accelerate installation

API enables us to

New Targets	mid-sized
	stores

small-scale stores

Annual sales of 10 million yen to less than 100 million yen

27.3%

Annual sales of less than 10 million yen

64.4%

approach any business

scales

Newly introduced

Source: "2009 Survey on Electronic Commerce for Consumers," Research and Statistics Department, Economic and Industrial Policy Bureau, Ministry of Economy, Trade and Industry	29
（C）Cacco Inc. All Rights Reserved.

Growth Strategies / Existing Areas | O-PLUX / Increase in Screening Volume

25.0The company aims to achieve sustainable growth in MRR by strategically adding price flexibility , expanding the fields of service application, and accelerating the volume of screenings through architectural innovation.

(# cases)

6,000,000

20.0	MRR per screening
	Number of screenings
	MRR
15.0

10.0

5.0

0.0	1	2	3	4	5	6	7	8	9 10 11 12	1 2	3	4	5	6	7	8	9 10 11 12 1 2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1 2	3	4	5	6	7	8	9 10 11 12
	201601				FY2016	201701			FY2017	201801			FY2018	201901				FY2019	202001			FY2020
																								Reserved

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

Growth Strategies / Mid/Long-Term | Building SaaS-type Services in New Fields

Build SaaS-type services in new fields by accumulating new knowledge in data science services.

Our Core Domains	Domains currently being	Future New Domains
cultivated	(FY2023~)

EC Finance

Advertise Human

ment Resources

Retailer

Distributor Manufacturer Service Provider

Fraud Detection Service	Real	Overseas
Estate
Payment Consulting Service	SaaS-type services for new fields
Data Science Service

Growth Strategies / Mid/Long-Term| Global Expansion Starting with Southeast Asia

Considering entering the following 3 markets in Southeast Asia (Market research is currently underway.)

Demand for funds is growing for both individuals and companies. We will provide loan screening and other services utilizing our data science and security technologies based on the fraud detection services.

E-Commerce

Market

In order to expand credit transactions, which is essential for the development of the EC market in Southeast Asia, we will promote our fraud detection and payment consulting services.

Micro

Finance

Real Estate / Car

Secured Loan

Using ourdata science technology, we will develop and provide algorithms for value assessment and risk calculation in various types of collateralized

loans.32

FY2021 for Results Financial of Forecast

. Inc Cacco 2021 ©

Forecast of Financial

Results for FY2021

FY2021 Forecast / Summary for the Full Year Forecast

Net sales +9.4% from FY2020

Fraud detection services are expected to grow YOY12.9% by expanding sales of "O-PLUX" and "O-MOTION".

Sales of payment consulting services are expected to decrease by YOY7.1% due to a decrease in system development projects, and sales of data science services are expected to be the same as FY2020.

Ordinary income +29.3% from FY2020

			(Unit: Millions of yen)
	FY2020	FY2021	YoY
	(Actual)	(Forecast)
Net sales	831	909	+9.4%
Operating	138	154	+11.8%
income
(Profit margin)	16.6	17.0	+3.4pt

Ordinary	115	149	29.3
income

Operating income is expected to increase by YOY11.8%, and ordinary income by YOY29.3%, as the expenses for listing will not be incurred in FY2021.

Net income is expected to decrease due to an increase in adjustments for corporate tax, etc. (tax expenses) resulting from a decrease in deferred tax assets.

(Profit margin)	13.9	16.4	+2.5pt

Net income	130	102	▲21.3%
EPS (yen)	55.37	39.05	-

2019	34
（C）Cacco Inc. All Rights Reserved.

FY2021 Forecast / Net Sales and Sales Composition by Service

Fraud detection service, Cacco's core service, is expected to increase by 12.9% y-o-y, with its sales composition expected to expand to 83.0%.

							Net sales				(Unit: Millions of yen)			Sales composition ratio by service	(Unit: %)
		Fraud Detection Services		Payment consulting services		Data Science Services		Fraud Detection Services			Payment consulting services		Data Science Services


														909		4.4	4.8		6.3		6.1	5.6

										831			51										11.3
																		14.3		13.4


	700	720		745		51			103				26.7	20.9

						47		111
	30		34				106
	187		150									+12.9% 755							83.0



482	535		591		669					68.9	74.3		79.4	80.5

FY2017

FY2018

FY2019

FY2020

FY2017

FY2018

FY2019

FY2020

FY2021

Forecast

Rights Reserved.

（C

）Cacco Inc. All

FY2021 Forecast / Gross Income and Operating Income

Although the gross income margin is expected to decline slightly due to an increase in depreciation expenses related to software (O-PLUX architecture renewal and SaaS-type BNPL settlement system), the operating income margin is expected to increase steadily.

Gross Income

(Unit: Millions of yen)

Operating Income

(Unit: Millions of yen)

700	Gross income on sales	64.0%	66.7%	70.7%	69.9%	70.0%.	180	Operating income		16.6%	17.0%
Gross income margin	160	Operating income margin
600	59.0%				635	60.0%.			13.3%		154
			587	140		11.5%	138

500		460	497		50.0%.	120
400	413			40.0%.	100			99
			6.4%
300					30.0%.	80	82

					60
200						20.0%.
					40	45
100						10.0%.	20

0	FY2017	FY2018	FY2019	FY2020	FY2021	0.0%.	0	FY2017	FY2018	FY2019	FY2020	FY2021


							Forecast
					Forecast
					（C）Cacco Inc. All Rights Reserved.

18.0%.

16.0%.

14.0%.

12.0%.

10.0%.

8.0%.

6.0%.

4.0%.

2.0%.

0.0%.

Appendix

Introduction of Our Services

Service Introduction / Unauthorized Access Detection Service

"O-MOTION"

Real-time analysis of the operation information, device information, etc. of users accessing the website. Identifies identity theft and prevents fraudulent activities (personal information leakage, unauthorized purchases, etc.) resulting from unauthorized access.

address

User Unauthorized access

Agent access time detection

User	Device
Info
operatio	Identificati
n info	on

POINT 01

Fraud detection using unique device and operation information

It can determine and detect fraud that cannot be detected by conventional detection methods using User Agent or Cookie.

POINT 02

No additional authentication is required for users to access the site.

It is possible to take measures against unauthorized access without additional authentication, which would otherwise become a burden for site users, improving both usability and security.

POINT 03

Easy installation with only embedded JS tags

It can be used by simply embedding JavaScript tags in the target page, reducing development time and cost.

Service Introduction / Payment Consulting Services

We provide one-stop support for businesses that are considering building or using BNPL settlement system, including service building, payment system development, and operational support. We offer O-PLUX" as the screening engine.

Consideration /

Building of a solution

service

Development of BNPL

system

Operational Support

Providing screening engine

POINT 01

Extensive experience in supporting BNPL business

- Experience in building payment systems for millions of transactions/month

- Experience in supporting start-ups (creating business plans and various requirement definitions, etc.)

- Post-launch support (credit lines, operation process flow development, etc.)

POINT 02

Support from consultants with real-world experience

Consultants with extensive experience in BNPL operations will make the best proposal from the customer's perspective.

POINT 03

Data science technology cultivated for financial institutions and EC businesses

We have a proven track record in fraud detection in the financial and payment fields, where severe judgment is required, utilizing O-MOTION to detect unauthorized access and logins targeting financial institutions and O-PLUX to detect unauthorized orders targeting e-commerce businesses.

O-PLUX is the No. 1 solution in terms of volume of installation in Japan (*).

(*)As of the end of May 2020 (Tokyo Shoko Research, Inc. "Survey on the number of sites introducing paid fraud detection services on EC sites in Japan")
（C）Cacco Inc. All Rights Reserved.	40

Service Introduction / Data Science Services

Based on the technologies of AI, statistics, and mathematical optimization, we develop and provide algorithms that contribute to the core of corporate activities, such as modeling predictions and automating the application of machine learning.

	Our approach					Case studies
					optimization	Wall material manufacturer with annual sales

							of 119 billion yen
	Packaged analysis support including data aggregation
	and visualization to factor analysis, KPI calculation,			Created production plans for 1700 products and 12 production lanes. Made a
	analysis reporting, and subsequent proposals, that			plan for the production order to maximize the production volume and
	generates value from up to 100 million pieces of data			minimize the loss while observing the complex conditions.
	within 30 business days with an investment of 2					Annual cost reduction of 130 million yen
	million yen.		Statistics	AI	Stationery manufacturer with annual sales of
Data Science Branch Office
		5.5 billion yen
	Data science resources that can be utilized on a			Developed algorithms for demand forecasting and production instructions that
	monthly contract basis as if it were a division of your			can maximize profits on calendars, organizers, and stationery. Minimized
	company. It realizes the concept of a "data science			opportunity loss due to shortages.
	branch office" to meet all kinds of analysis needs at					70% reduction in sales opportunity loss
	various stages.			optimization	Call Center
Algorithm development
					Established automatic prediction of demand on a daily and hourly basis for the
	Development of algorithms that seek to increase profits
			following month and generation of a staffing plan that satisfies multiple
	in the processing of business operations, including			constraints such as management indicators, employee work preferences, and
	optimization beyond human experience, productivity			working conditions.
	improvement through automated processing, and
	forecasting of demand and risk.		Inc. All Rights Reserved.Annual cost reduction of 0.6 billion yen	41

Appendix

Relevant Market

Information

Relevant Market Information / Growth of the Japanese EC Market and Expansion of Fraudulent Damages

In proportion to the growth of the EC market, credit card fraud (number theft) has been increasing.

With the announcement of the "Action Plan" and the revision of the Installment Sales Act, social demand for anti-fraud measures is increasing.

				June 2018
300,000				Amendments to Installment Sales			250
			Act came into effect, requiring
	Japan EC Market	Credit Card Fraud Damage		security measures for merchants		222	(Unit: Billions of yen)
				in addition to credit card
250,000	The Credit Card Transaction Security		companies.	187.6		200
	February 2016			176.7
	Council announced the "Action Plan," which
200,000	stipulates specific measures that should be
taken by credit card transaction-related					150
150,000	businesses.
		88.9				100
100,000	67.3	72.2	165,054	179,845	193,609
151,358
50,000	127,970	137,746		50

0	2014	2015	2016	2017	2018	2019	0

Source: "FY2036 Report on the International Economic Research Project for the Establishment of an Integrated Economic Growth Strategy for Japan and the World (Market Research on Electronic Commerce),"
Information Economy Division, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry.			43
"Credit Statistics in Japan 2019" (Japan Credit Association)	（C）Cacco Inc. All Rights Reserved.

Relevant Market Information / Expansion of Use of Credit Cards and BNPL Settlement System

The use of both credit cards and BNPL settlement system is expanding, with BNPL in particular growing rapidly at 30% per year.

Trend in Credit Amount for Credit Card Shopping

Trendin BNPLMarket

(Unit: Billions of yen)

(Unit: Billions of yen)		734,311				More	2,108
						than	20,108
		666,877				billion yen
					2x
498,341	539,265	583,711					15,833
					9749,740	12,467

						billion yen
		2,200	2,900	4,400	5,720	7,550

2015	2016	2017	2018	2019	2015	2016	2017	2018	2019	2020	2021	2022	2023
Source: Japan Credit Association, "Credit Statistics in Japan 2019".						(Forecast)	(Forecast)	(Forecast)	(Forecast)	(Forecast)
（C）Cacco Inc.	Source: Yano Research Institute, "Trends in the size of the BNPL market.		44
				All Rights Reserved.

Relevant Market Information / Damage from Unauthorized Access in Japan

There has been a sharp increase in the number of fraudulent access victims, with fraudulent money transfers in online banking and fraudulent purchases in e-commerce accounting for over 70% of the total.

Number of recognized cases of unauthorized access

Approx. 2,960 2x

2,051 1,840

Actions taken after unauthorized access (2019)

Unauthorized transmission at
virtual currency exchange
companies, etc.,	Others, 318cases,
22cases(0.7%)
(10.7%)
Unauthorized operation of

Internet auctions,
47cases(1.6%)

1,486

1,202

Unauthorized

operation of online

game and

community sites,

60cases,(2.0%)

Unauthorized acquisition

of information such as snooping on e-mails,329cases,(11.1%)

Unauthorized purchase in

Internet shopping, 376cases,

(12.7%)

Fraudulent money transfer in internet banking, etc., 1808cases,(61.1%)

2015

2016

2017

2018

2019

Source: Metropolitan Police Department and Ministry of Internal Affairs and Communications, "Status of Occurrence of
Unauthorized Access Acts and Research and Development of Technologies for Access Control Functions," 2020.	45
（C）Cacco Inc. All Rights Reserved.

Relevant Market Information / Financial Service Penetration Rate and EC Fraud Rate in Southeast Asia

The market for financial services and e-commerce fraud prevention is expected to grow in Southeast Asia.

1.31

0.31

Bank account ownership rate

Credit card ownership rate

EC fraud rate

						82%	85%	98%

31%	40%	34%	30%	49%	44%	43%	21% 17%	49%
		10%	19%
	4%		2%		2%
Vietnam	Philippines	Indonesia	Thailand	Malaysia	Singapore

Source: WORLD BANK GLOBAL FINANCIAL INCLUSION DATA [ACCESEDED JANUARY 2019], THE ASEAN POST, AppsFlyer2019	46
（C）Cacco Inc. All Rights Reserved.

Disclaimer and Cautionary Statement Regarding Forward-Looking Statements

In preparing this document, we have relied on and assumed the accuracy and completeness of the information available to us, but we make no representations or warranties as to its accuracy or completeness. These forward-looking statements are based on information currently available to us and certain assumptions that we consider reasonable, and we do not promise that they will be achieved. Actual results may differ materially from these forecasts due to various factors in the future, including changes in economic conditions, changes in customer needs and user preferences, competition with other companies, and changes in laws and regulations. We assumes no obligation to update or revise any forward-looking statements contained in this document, even if new information or future events occur after the announcement of this document.

Shaping the "Let's Do It" for a next game changer

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Cacco Inc. published this content on 05 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 April 2021 06:03:03 UTC.

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