Smaregi, Inc. · TSE:4431
Smaregi — 1H FY4/21 Earnings Presentation
50 slides from Smaregi's earnings presentation, December 2020
Slide 1: Results of Operations for the First Half of the Fiscal Year Ending April 30, 2021
Results of Operations for the First Half of the Fiscal Year Ending April 30, 2021 (16th Period) May 1 – October 31, 2020 Smaregi, Inc. Securities code: 4431
Slide 2: Contents
Contents 2 P3 Impact of COVID-19 P7 1H FY4/21 Financial Summary P20 Business Summary P33 Business Plan for FY4/21 P41 Medium-Term Plan P46 Appendix
Slide 3: Impact of COVID-19
3 Impact of COVID-19
Slide 4: Monthly Fees for Cloud and Other Services
Monthly Fees for Cloud and Other Services Impact of COVID-19 4 Monthly fees have been recovering along with the number of retail transactions, following the plunge in economic activity in April 2020 as consumers heeded government requests to stay at home. Business volume (Based on Smaregi POS data)
Slide 5: Sales of Cloud Service Products (Initial Cost)
Sales of Cloud Service Products (Initial Cost) Impact of COVID-19 5 The method of counting the number of customer sales The number of new sales meetings was lackluster Number of customer sales contracts and YoY change contracts has changed from the year under review. through August. By October, this
Slide 6: Smaregi's Responses
Smaregi’s Responses Impact of COVID-19 6 Activities for employees Shorter core time Use of teleworking A shorter core working time allows people to avoid peak We established a teleworking framework on a trial basis for commuting times when going to and leaving work. safety during the COVID-19 crisis
Slide 7: 1H FY4/21 Financial Summary
7 1H FY4/21 Financial Summary May 1 – October 31, 2020
Slide 8: 1H FY4/21 Financial Highlights
1H FY4/21 Financial Highlights 1H FY4/21 Financial Summary 8 • Straight YoY comparisons may be misrepresentative, as 1H FY4/21 performance was affected by COVID-19, whereas performance in 1H FY4/20 benefited from extraordinary demand stemming from a tax reduction. That said, net sales reached ¥1,479
Slide 9: Financial Highlights
Financial Highlights 1H FY4/21 Financial Summary 9 Despite COVID-19, performance was favorable, with net sales reaching 45.5% of our full-year target, and operating profit achieving 50.9%. SG&A expenses rose due to expenditures associated with Smaregi 4, such as hiring more people and relocating the
Slide 10: Balance Sheet
Balance Sheet 1H FY4/21 Financial Summary 10 Non-current assets increased due to the Tokyo office relocation and other factors. Favorable equipment orders pushed up advances received, causing current liabilities to rise. The equity ratio decreased slightly as the result of a share buyback, but remai
Slide 11: Statement of Income
Statement of Income 1H FY4/21 Financial Summary 11 The gross profit margin rose, as subscription sales (monthly fees for cloud services) exceeded initial costs (sales of cloud service products). Gross profit was mostly flat year on year, and performance at the ordinary profit level was unchanged. 1H
Slide 12: Changes in Net Sales, Operating Profit, and the Operating Margin
Changes in Net Sales, Operating Profit, 1H FY4/21 Financial Summary 12 and the Operating Margin Despite COVID-19, subscription sales increased, and the gross profit margin improved 1.6 percentage points QoQ, to a robust 64.1%. The operating margin was 23.4%, up 4 percentage points QoQ, despite highe
Slide 13: Quarterly Statement of Income
Quarterly Statement of Income 1H FY4/21 Financial Summary 13 Operating profit rose 49.3% QoQ and has been recovering since Q4 FY4/20, when we made business investments. Performance is going according to plan. FY4/20 FY4/21 (Millions of yen) (May 2019–Apr. 2020) (May 2020–Apr. 2021) QoQ change Q1 Q2
Slide 14: Quarterly Changes in Net Sales, Operating Profit, and the Operating Margin
Quarterly Changes in Net Sales, Operating Profit, 1H FY4/21 Financial Summary 14 and the Operating Margin Although temporarily falling to 5.8% in Q4 FY4/20 due to business investments, the quarterly operating margin has rebounded steadily since. In Q2, the operating margin was 27.1%, up 7.8 percenta
Slide 15: Changes in Sales Composition
Changes in Sales Composition 1H FY4/21 Financial Summary 15 Despite COVID-19, subscription sales (monthly fees for cloud services) have been favorable. Also, initial costs (sales of related products) have gradually returned to pre-COVID levels, following the extraordinary demand stemming from a tax
Slide 16: Changes in ARR (Subscription Sales)
Changes in ARR (Subscription Sales) 1H FY4/21 Financial Summary 16 Despite COVID-19, subscription sales (monthly fees for cloud services) have been steady, rising 7.1% QoQ and 12.9% YoY in Q2. End-of-quarter ARR *2 ARR (Millions of yen) YoY 2,000 +12.9% ¥1.84 billion *1 1,704 QoQ +7.1% 1,722 1,845 1
Slide 17: Analysis of Changes in Operating Profit (YoY)
Analysis of Changes in Operating Profit (YoY) 1H FY4/21 Financial Summary 17 (Millions of yen) In 1H FY4/20, extraordinary demand stemming from a tax reduction (37) 5 (1) • Increase in fee-based contracts because of POS system Personnel expenses Logistics (54) Advertising replacement demand (346) co
Slide 18: Quarterly Changes in SG&A Expenses
Quarterly Changes in SG&A Expenses 1H FY4/21 Financial Summary 18 SG&A expenses returned to normal levels following a rise in business investments in Q4 FY4/20 (for Smaregi 4, TV commercials, and the Tokyo office relocation). Accordingly, the SG&A expense ratio decreased 4.6 percentage points QoQ, t
Slide 19: Growth in Number of Employees
Growth in Number of Employees 1H FY4/21 Financial Summary 19 We suspended active hiring due to COVID-19. The number of personnel rose YoY but was down slightly QoQ, as we continued recruiting with caution while monitoring the effects of COVID-19. The average age of employees is 32.4, and the average
Slide 20: Business Summary
20 Business Summary
Slide 21: Q2 FY4/21 Topics
Q2 FY4/21 Topics Business Summary 21 October 2020 • Began soliciting monitors for the beta version of Smaregi EC PLUG • Opened the Smaregi Shinjuku Showroom • DX promotion: Request by Taro Kono (Minister of State for Special Missions) for the Ministry of Justice to move toward digitalization of rece
Slide 22: Acquisition of Treasury Shares (October 2020)
Acquisition of Treasury Shares (October 2020) Business Summary 22 We acquired treasury shares in off-hours trading. We plan to utilize these shares for future M&A activities and as internal incentives. Class of shares acquired Common stock of the Company Total number of shares 73,900 shares (0.76% o
Slide 23: Launch of the Smaregi app market
Smaregi スマレジ44Progress の進捗 BusinessBusiness SummarySummary 23 23 Launch of the Smaregi app market Easy for anyone to create an app! The Smaregi app market is a platform where people can sell apps made exclusively for Smaregi. These apps can be easily created using the Smaregi API. (Development partn
Slide 24: Began Soliciting Monitors for the Beta Version of Smaregi EC PLUG
Began Soliciting Monitors for the Beta Version of Business Summary 24 Smaregi EC PLUG As we move toward the release of the Smaregi EC PLUG, we have begun soliciting monitors for the beta version. Smaregi EC PLUG allows stores and online shops to be managed centrally, handling control operations rang
Slide 25: Transaction Volume
Transaction Volume Business Summary 25 Transaction volumes declined at many stores due to the impact of COVID-19. Changes in lifestyles and consumer behavior have led to a decrease in cash transactions and rise in cashless transactions. (Billions of yen) Credit Cash Others 1,000 841.0 800 10.8% 698.
Slide 26: Quarterly Changes in the Number of Stores and Fee-Paying Stores
Quarterly Changes in the Number of Stores and Fee-Paying Stores Business Summary 26 The number of fee-paying stores decreased in Q4 FY4/20 due to COVID-19, but increased in Q1 and Q2, returning to a path of gradual recovery. The percentage of fee-paying stores rose 0.2 percentage points QoQ, to 19.4
Slide 27: Percentage of Active Stores (Including Stores Paying No Fees)
Percentage of Active Stores (Including Business Summary 27 Stores Paying No Fees) As in Q1, the percentage of active stores continued to recover in Q2 (increasing 0.7 percentage points QoQ, to 24.8%), returning to nearly pre-COVID levels. 39.5% 31.3% 28.6% 25.1% 25.3% 25.1% 24.1% 26.5% 22.1% 20.2% 1
Slide 28: Breakdown of Usage Plans
Breakdown of Usage Plans Business Summary 28 The decline in fee-paying plans due to temporary store closures and plan downgrades associated with COVID-19 is moving toward a recovery and back to the previous growth trajectory. Performance remained favorable, with the Premium Plus and Retail Business
Slide 29: Attrition Rate
Attrition Rate Business Summary 29 In Q2, the attrition rate fell back down to a historic low of 0.61%. The average for 1H FY4/21 was 0.75%. We attribute this low attrition rate, despite the impact of COVID-19, to our provision of customer service. 5% Attrition rate* Attrition rate* Attrition Attrit
Slide 30: ARPU/ARPPU
ARPU/ARPPU Business Summary 30 Average revenue per user, down slightly due to COVID-19, is trending back upward due to the provision of customer services. ARPU ARPPU ¥8,000 ¥7,411 ¥6,000 ¥4,000 ¥2,000 ¥1,431 ¥0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY4/18 FY4/19 FY4/20 FY4/21 (May 2017–Apr. 2018
Slide 31: Monthly Fees by Quarter when Service Commenced
Monthly Fees by Quarter when Service Commenced Business Summary 31 Monthly fees decreased in Q4 FY4/20 due to COVID-19. However, the reopening of stores that had been closed and an increase in fee-paying stores led to growth continuing from Q1 to Q2 FY4/21. (Millions of yen) COVID-19 led to store cl
Slide 32: Business Systems for Small and Medium-Sized Companies
Business Systems for Small and Medium-Sized Companies Business Summary 32 Sales of Smaregi Time Card remained strong despite COVID-19 because of the growth of teleworking, working style reforms, and other social trends. Average revenue per user and the acquisition of new customers are both contribut
Slide 33: Business Plan for FY4/21
33 Business Plan for FY4/21
Slide 34: Highlights of the FY4/21 Plan
Highlights of the FY4/21 Plan Business Plan for FY4/21 34 • The business climate remains extremely uncertain because of the impact of COVID-19 on the Japanese and global economy • Demand for Smaregi products and services remains strong; expect a return to sustained growth • Planning on no change in
Slide 35: Highlights of the FY4/21 Plan
Highlights of the FY4/21 Plan Business Plan for FY4/21 35 We anticipate no significant changes in net sales and operating profit compared with FY4/20. However, the FY4/21 plan effectively calls for continued growth, if we exclude last year’s extraordinary contribution stemming from a tax reduction.
Slide 36: Forecasts for Net Sales, Operating Profit, and the Operating Margin
Forecasts for Net Sales, Operating Profit, and the Business Plan for FY4/21 36 Operating Margin We anticipate no significant changes in net sales and operating profit compared with FY4/20. However, the FY4/21 plan effectively calls for continued growth, if we exclude last year’s extraordinary contri
Slide 37: Quarterly Sales Breakdown (Forecast)
Quarterly Sales Breakdown (Forecast) Business Plan for FY4/21 37 The temporary interruption in sales growth caused by COVID-19 has ended. Q2 sales were higher than in Q4 FY4/20 as the gradual but favorable sales recovery continues. (Millions of yen) Monthly fees for cloud services Sales of products
Slide 38: Impact of COVID-19 and Smaregi Initiatives
Impact of COVID-19 and Smaregi Initiatives Business Plan for FY4/21 38 COVID-19 has provided an opportunity to rethink retail and restaurant operations from the ground up. For the retail sector For the restaurant sector Stronger ties with e-commerce Omnichannel services centered on raising efficienc
Slide 39: Impact of COVID-19 and Smaregi Business Strategies
Impact of COVID-19 and Smaregi Business Strategies Business Plan for FY4/21 39 Strengthen the showroom 1 strategy 2 More online sales meetings Open showrooms in 10 cities over the Increase the online sales share of KPI KPI next two years new contracts Open low-cost showrooms mainly in large Upgrade
Slide 40: Launch of Smaregi Ventures
Launch of Smaregi Ventures Business Plan for FY4/21 40 We aim to expand our business through a combination of M&A and startup investments. Reinforcing the Smaregi platform and helping Investment Our venture capitalists will stores address the issues they face and become offer investment consulting a
Slide 41: Medium-Term Plan
41 Medium-Term Plan
Slide 42: The Steadily Increasing Use of the Cloud
The Steadily Increasing Use of the Cloud Medium-Term Plan 42 The public cloud market, including SaaS, continues to grow. Due to the higher name recognition and trust following the February 2019 stock listing, there are more large orders and steady growth in orders that are not related to the reduced
Slide 43: Smaregi 4: Launched in Summer of 2020
Smaregi 4: Launched in Summer of 2020 Medium-Term Plan 43 Building a platform centered on POS data will enable Smaregi to achieve the full potential of POS data utilization. The first platform service that Expansion/utilization Establish ties with developers to create many utilizes POS data types of
Slide 44: Focusing on Data Utilization and the Digital Transformation
Focusing on Data Utilization and the Digital Transformation Medium-Term Plan 44 Our goal is to become Japan’s largest holder of sales (POS) data and use big data analytical research to grow worldwide in the data utilization field. Ticketvending Ticket vending Artificial Artificial machines machines
Slide 45: Appendix
46 Appendix ABOUT SMAREGI
Slide 46: Business Profile
Business Profile Appendix 47 High-performance cloud-based POS systems Smaregi is a supplier of innovative cloud-based POS systems with capabilities that go far beyond those of conventional POS systems. Smaregi products analyze sales, perform sophisticated inventory management tasks, and have many ot
Slide 47: The Smaregi Marketing Strategy
The Smaregi Marketing Strategy Appendix 48 Our goal is a 30% to 40% share of the targeted 770,000 stores Big businesses The POS system market will remain competitive rather than dominated by a (at least 40 stores) single company because a monopolist would not benefit from the larger scale of 100,000
Slide 48: Smaregi Services and Support
Smaregi Services and Support Appendix 49 Smaregi provides a complete lineup of services and support for companies in the retail, restaurant and service sectors. Our goal is to help create more pleasant and productive workplaces by using the capabilities of Smaregi to make a broad range of business p
Slide 49: Business plans, forecasts and other forward-looking statements in this presentation are based on reasonable
Business plans, forecasts and other forward-looking statements in this presentation are based on reasonable judgments by Smaregi based on currently available information. Actual results of operations may be different because these statements include uncertainties involving market conditions, politic
Slide 50: Results of Operations for the First Half of the Fiscal Year Ending April 30, 2021
Results of Operations for the First Half of the Fiscal Year Ending April 30, 2021 May 1 – October 31, 2020 Smaregi, Inc.