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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Hello, everyone. Welcome to Asteria Corporation's presentation for the consolidated financial results for the first quarter fiscal 2023. [Operator Instructions]. Now allow me to introduce you to today's speaker, Asteria's Founder and CEO, Pina Hirano.
Thank you for taking time to watch Asteria's Group's financial results conference. My name is Pina Hirano, Founder and CEO of Asteria Corporation. Today, I will walk you through our group's first quarter financial results for the fiscal year ending in March 2024.
Our group has 2 business segments: Software and Investment. Software segment consists of software business and design business. Investment segment focuses on the corporate investment business. The software segment consists of the software business, which we have been doing since our establishment. And the design business, the design business is led by 100% subsidiary in U.K. The Investment segment focuses on the corporate investment business. It is led by a 100% subsidiary in U.S.
First, let me explain about the Software segment. In the first quarter, revenue rose 16% and gross profit 25% compared with the same period last year. This growth was fueled by our flagship product, data integration middleware, Warp, which saw a 10% increase in revenue, notably, subscription revenues surged 41%.
Our growing product, Platio also achieved a 55% revenue increase. Within this segment, the design business experienced a remarkable 45% growth contributing to the double-digit expansion of the overall revenue.
However, profit from our Investment segment declined due to a sharp fall in the stock price of Gorilla Technology, one of our 6 software companies, which went public on NASDAQ last year. This downturn led to profit losses in our consolidated financial results.
Let's take a closer look at the concrete numbers. Revenue is generated from the software and design businesses. Revenue increased by 16% to JPY 929 million, surpassing the JPY 900 million mark for the first time. Gross profit generated from the software and design business as well. Gross profit was JPY 803 million, representing a 25% increase.
Now turning to our operating profit and net profit. Looking at the Software segment alone, the segment generated a profit of JPY 186 million. However, including the corporate investment business, our operating profit and net profit fell into the negative territory. This is because we hold around 10% of shares in corporate company Gorilla Technology. The decline in its stock price caused us a book and unrealized loss of JPY 2.6 billion. However, it is important to note that these losses are unrealized and there is no impact on cash. We already announced it for annual disclosure on July 4. As a result, we ended up with a net loss of JPY 1,353 million, due mainly to Gorilla Technology's performance.
Let's take a closer look at the reason of the revenue growth. First, software business alone saw a 9% increase in revenue compared with the same period last year. Notably, products such as Warp; Platio, a mobile app building tool; and Gravio, node integration platform have been key growth drivers. As for Warp, due to increased orders spruced by expansion of iPaaS-related product sales and focus on small and medium businesses, subscription revenue was up 41% year-on-year. Meanwhile, Platio revenue rose 55% due to the growing demand for digital transformation and mobile app best solutions from various industry, which are facing a talent shortage.
As for Gravio, while the pandemic-related demand have eased, we are aiming for further growth in the recently launched next-generation product, which supports both edge and cloud environment.
Among our software products, Warp revenue hit highest level in the first quarter. The license version of Warp revenue amounted to JPY 180 million, while support revenue reached JPY 310 million. Subscription revenue was up 41% year-on-year. We are pleased to announce that as of August 1, the number of customers exceeded our milestone of 10,000.
Let's move to the design business, which is operated by our U.K.-based subsidiary, This Place. The acquisition of new clients in the United States delivered a revenue increase of 45% year-on-year to JPY 222 million. This reflects the growing demand for design services, particularly among major tech companies in the U.S. In addition, we remain committed to driving the design business in Japan. Now I'd like to discuss SG&A expenses. This year amongst the third year of our medium-term management plan and focuses on seeing return on our earlier investment. During the first and second years, we allocated additional budget to invest heavily in marketing activities as we ended such investment. Marketing expenses decreased in the first quarter. We also expanded our workforce throughout the previous fiscal year. This, along with the wage hikes, pushes up human resources cost, however, the overall SG&A expenses declined slightly year-on-year.
This slide shows the bridge from revenue to operating profit. After taking into account the investment variation loss related to Gorilla Technology, our operating loss stood at JPY 2,456 million.
The next slide was added to answer the frequently asked question, how much profit the Software segment alone generates? Operating income exclusively from software segment by deducting the cost of product and service and SG&A expenses. The profit derived from the Software segment amounts to JPY 186 million. When looked solely as the Software segment, it delivered an operating profit margin of 20%. This is a bridge from operating profit to net profit. We posted an operating loss of JPY 2,456 million after taking into account financial income and costs, the pretax loss amounted to JPY 2,232 million.
After deducting cooperate income taxes and attribute adjustment, our net loss stood to JPY 1,353 million. Since this fiscal year amongst the final year of our midterm management plan, our target is to achieve an EBITDA of JPY 1 billion. Our basis for this target is the fact that our Software segment is capable of generating an operating profit margin of over 20% if additional budgets are excluded. When looking at Software segment only, the gross profit of Software segment stood at JPY 803 million, and the profit amounted to JPY 186 million in the first quarter. We already achieved an operating profit margin of 20% in this quarter.
Finally, I show you the financial statement. In summary, we maintain sound financial position and cash flow with an equity ratio of 73%. Cash flow from operating activity was a negative number compared with the same period last year. Cash flow from investment and financing activities as well as cash and cash equivalents at the end of the first quarter was a positive number.
That concludes my presentation. Thank you for taking time to watch Asteria Group's financial results.
Now based on his presentation and the information disclosed by Asteria, I would like to ask Pina a few questions that are often asked by our investors in Japan and aboard.
Question number one, the growth of the software business continued into the first quarter of fiscal 2023. Can we expect this growth trend further down the road?
Thank you for the question. The ongoing upward trend in the software business is attributed to the consistently high demand for no-code data integration solutions. Moreover, we are constantly receiving inquiries stemming from the new demand created by the deepening labor shortage and the increase scope of people. Given these factors, we anticipate that this growth trend will continue into the fourth quarter of this fiscal year.
Question number 2, the design business is showing a recovery trend. What are the main factors behind this shift? And what are the future prospects of this business?
Thank you for the question. The design business has grown for the second consecutive year. In the first quarter, revenue was up 45% compared with the same period last year. The driving factor behind this expansion is the successful acquisition of clients and projects in the U.S. Around 2 years ago, we changed our target client to major IT companies, which resulted in this remarkable growth. As the business enjoyed a strong demand and ongoing project, we expect this revenue growth trend will continue.
Question number 3, how do you think the rise of generative AI will change the software industry? And what initiatives is Asteria undertaking in this field? Could you elaborate on the company's current and future endeavors in this regard?
Thank you for the question. We use the generative AI intensively in our products. We have 4 products, and we have already incorporated generative AI into 2 of them, Warp and Gravio. As for Warp, we've already released the generative AI adapter for ChatGPT in this May. The adapter enables the integration of corporate data and ChatGPT by Asteria Warp without coding. Based on the massive internal data, ChatGPT can generate analysis and reports.
Gravio extend the scope of no-code data integration, including massive sensor data. The combination of Gravio and ChatGPT enable users to access necessary data from massive sensor data set without coding, but with natural language input. Looking forward, we plan to leverage generative AI in other 2 products, Platio and Handbook X to improve usability and productivity. In addition, we have an AI dedicated subsidiary Asteria ART. Founded in 2019, Asteria ART is researching advanced usage of generative AI in our future products and services.
Thank you very much for the explanation. This is the end of our presentation. If you're interested in setting up a meeting with Pina, please feel free to contact us. Thank you for watching.
Thank you.