Smaregi, Inc. · TSE:4431
Smaregi — Q1 FY2023 Earnings Presentation
35 slides from Smaregi's earnings presentation, September 2022
Slide 1: Presentation Materials for 1Q FY2023
Presentation Materials for 1Q FY2023 Merged with its consolidated subsidiary, ROYAL GATE INC, on July 1, 2022. Transitioned from consolidated to unconsolidated financial statements. May 1 – July 31, 2022
Slide 2: Contents
Contents 2 P3 1Q FY4/23 Financial Summary P14 Business Summary P24 Business Outline P32 Appendix
Slide 3: Absorption Merger of a Consolidated Subsidiary (Reference)
Absorption Merger of a Consolidated Subsidiary (Reference) 1Q FY4/23 Financial Summary 3 ROYAL GATE INC. earnings from April to June are not included in 1Q FY4/23 FY4/2022 FY4/2023 Consolidated financial statement Non-consolidated financial statement 3Q 4Q 1Q Smaregi, Inc. Nov. Dec. Jan. Feb. Mar. A
Slide 4: 1Q FY4/23 Highlights
1Q FY4/23 Highlights 1Q FY4/23 Financial Summary 4 • 1Q sales grew 33.6% YoY to 1.22 billion yen due to steady business growth despite two months of unrecorded sales (see P3) from ROYAL GATE INC. (former consolidated subsidiary). • Income taxes-deferred (gain) was recorded due to the absorption merg
Slide 5: Statement of Income
Statement of Income 1Q FY4/23 Financial Summary 5 Operating profit declined YoY due to aggressive investment in marketing and recruiting activities but steadily progressed as planned. Quarterly profit increased due to the merger with a subsidiary, and net sales grew 33.6% YoY. 1Q FY4/23 1Q FY4/22 Yo
Slide 6: Balance Sheet
Balance Sheet 1Q FY4/23 Financial Summary 6 Non-current assets increased 50.4% YoY due to changes caused by the absorption merger of a subsidiary. Cash and deposits slightly decreased due to share buybacks. Equity ratio is 80.8%. 1Q FY4/23 1Q FY4/22 YoY 4Q FY4/22 QoQ Equity Ratio (million yen) resul
Slide 7: Changes in Net Sales, Operating Profit, and Operating Margin
Changes in Net Sales, Operating Profit, and Operating Margin 1Q FY4/23 Financial Summary 7 The sales progress rate for 1Q FY4/23 was 22.0%, and operating profit progress rate was 28.6%, on track toward the fiscal year forecast. (million yen) Net sales Operating profit Operating margin 6,000 40.0% Sa
Slide 8: Quarterly Changes in Net Sales, Operating Profit and Operating Margin
Quarterly Changes in Net Sales, Operating Profit and Operating Margin 1Q FY4/23 Financial Summary 8 S&M investment in the Medium-term Management Plan is continuing. Operating margin, which had declined due to intensive investment in bonuses and advertising expenses, recovered to 15.2%. (million yen
Slide 9: Changes in Sales Composition
Changes in Sales Composition 1Q FY4/23 Financial Summary 9 Sales of products and others declined QoQ due to seasonal factors, but grew 28.2% YoY. Subscription sales (monthly fees and others) grew 33.9% YoY despite the impact of the merger (see P3). Monthly fees and others Sales of products and other
Slide 10: Analysis of Changes in Operating Profit (YoY change)
Analysis of Changes in Operating Profit (YoY change) 1Q FY4/23 Financial Summary 10 (million yen) 308 -120 Higher Sales Higher cost of sales Higher sales • Number of fee-based contracts increased. • Growth of consistent sales (monthly fees) due to low churn rate. -57 Personnel expenses Effects of CO
Slide 11: Quarterly Changes in SG&A Expenses
Quarterly Changes in SG&A Expenses 1Q FY4/23 Financial Summary 11 The SG&A expense ratio, which had temporarily risen due to concentrated investments in bonuses and advertising expenses, recovered to 47.7%. Advertising expenses were 277.5% YoY, with continuing investment in S&M toward achieving the
Slide 12: Quarterly Changes in Advertising Expenses
Quarterly Changes in Advertising Expenses 1Q FY4/23 Financial Summary 12 In parallel with expanding awareness through mass marketing such as TV commercials, we are also implementing measures to acquire leads. 300 (million yen) 300 Lead acquisition 266 Increasing recognition (mass marketing) Others 8
Slide 13: Growth in Number of Employees
Growth in Number of Employees 1Q FY4/23 Financial Summary 13 We further strengthened our organization through an absorption merger with a subsidiary. Up 60.9% compared to the previous year. Average age is 33 years old. 250 250 200 210 214 ROYAL GATE INC. 200 32 30 Corporate Customer service 150 25 S
Slide 14: Business Summary
Se rll ae —_—— = _—~ Business Summary
Slide 15: Annual Recurring Revenue (Subscription Sales)
Annual Recurring Revenue (Subscription Sales) Business Summary 15 Even amid the COVID-19 pandemic, the number of fee-paying stores has remained solid. Acquisition of payment service (ROYAL GATE) and growth of Smaregi TimeCard also contributed, with ARR growing 43.9% YoY. Smaregi (POS) Payment servic
Slide 16: 1Q FY4/23 Topics
1Q FY4/23 Topics Business Summary 16 Jul. 2022 • Held the 17th Annual General Meeting of Shareholders • Merged with consolidated subsidiary ROYAL GATE INC. • Resumed active participation in exhibitions • Our engineers participated in the "U-22 Programming Contest" on-site workshop for student engine
Slide 17: POS Quarterly GMV Progress
POS Quarterly GMV (Gross Merchandise Value) Progress Business Summary 17 Although there are fluctuations due to the COVID-19 pandemic and contractions in economic activity, Smaregi's economic zone is steadily expanding (cumulative transaction amount exceeded 5 trillion yen in August 2022). 4,000 Cum
Slide 18: Registered Stores and Fee-Paying Stores
POS Quarterly Progress in Number of Registered Stores and Fee-Paying Stores Business Summary 18 Despite the long-running COVID-19 pandemic, the customer base expanded continuously. The fee-paying store ratio also increased by 1.6 percentage points YoY, to 22.4%. Fee-paying stores No-fee stores 0.25
Slide 19: POS Composition of Plan Categories with Fees
POS Composition of Plan Categories with Fees Business Summary 19 The proportion of low-priced Premium plans has increased. 30,000 (stores) 25,000 260 270 YoY QoQ 231 Food Retail 180 227 8,013 16,500 yen monthly/store +50.0% +3.8% 20,000 148 7,782 116 7,622 106 7,387 92 7,042 Retail Business 87 94 10
Slide 20: POS Active Stores (Including No-Fee Stores)
POS Active Stores (Including No-Fee Stores) Business Summary 20 Steadily building up toward the goal of reaching 300,000 active stores. 40,000 YoY V QoQ +22.5% +5.3% (stores) Other Apparel 30,000 Special demand 11% related to the 19% reduced tax rate Retail 20,000 3% 4% Industry 31,977 Cosmetics, 31
Slide 21: POS Churn Rate
POS Churn Rate Business Summary 21 We have continued measures to strengthen onboarding and improve service quality, and in 1Q FY4/23 the average churn rate remained at a low level. 5.00% 1Q FY4/23 4.00% Churn rate Churn rate FY4/20 Churn rate Churn rate May 2022 - Jul. 2022 FY4/21 FY4/22 0.48% 0.73%
Slide 22: Average Revenue per Account and User (ARPA/ARPU)
POS Average Revenue per Account and User (ARPA/ARPU) Business Summary 22 Both ARPA and ARPU slightly decreased due to changes in existing customer plans and the number of stores. The average number of stores per paid subscription is 2.37. ARPA ARPU YoY QoQ YoY QoQ 143 yen 127 yen 105 yen 39 yen 20,0
Slide 23: POS Monthly Fees by Quarter of Start of Services
POS Monthly Fees by Quarter of Start of Services Business Summary 23 Achieving Sustainable Growth in the SaaS sector even during the COVID-19 pandemic because of a net increase in MRR due to new contracts and the continuous use of services by customers due to a low churn rate. 200,000,000 (million y
Slide 24: Business Outline
Business Outline— “= ~—
Slide 25: Businesses
Businesses Business Outline 25 With Smaregi (POS) and Smaregi TimeCard (HR) as the core cloud services businesses, we are aiming to expand the Smaregi economic zone through venture investments and IT human resources discovery and training businesses. Cloud Services Business Other Businesses Smaregi
Slide 26: Smaregi Platform
Cloud Services Business Business Outline 26 Society is moving towards an era of storing and utilizing data, and Smaregi supports store management based on data with a rich set of APIs that other companies lack. Smaregi Platform Sales data Attendance data Smaregi provides a platform centered around O
Slide 27: Unique Features of Smaregi (POS) - Exceptional High Performance
Unique Features of Smaregi (POS) - Exceptional High Performance Business Outline 27 The basic functions of Smaregi’s POS are provided free of charge. Smaregi is a highly-functional cloud-based POS register that uses sales data to make store management a science. Open API User-centered design Outstan
Slide 28: Our Users
Our Users Business Outline 28 Smaregi (POS) is adopted by a wide range of stores and businesses operating from single-store to more than 600 stores. Retail/Apparel Restaurants Others *Random order. Posted some stores that got approval to publish.
Slide 29: Domestic Market Size and Main Target
Domestic Market Size and Main Target Market Environment 29 Our goal is a 38% share of the targeted 770,000 stores Sales opportunities half-and-half; The POS system market will remain competitive rather than dominated by newly-opened stores and a single company because a company that monopolizes this
Slide 30: Domestic Market: Product distribution by store size and industry
Domestic Market Market Environment 30 Product distribution by store size and industry. Smaregi shows its strengths among retail and midsize businesses. Retail stores Restaurants Many Conventional Cloud-based Conventional Enterprises Conventional Cash registers POS system POS system POS system Conven
Slide 31: Smaregi's M&A Strategy
Smaregi's M&A Strategy Business Outline 31 We are actively considering M&A with a focus on companies that have direct business synergies. We are also considering acquiring IT engineers as well. Acquire Increase Acquire Customer Numbers Revenue per Customer IT Engineers (Full lineup of products/servi
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Slide 33: VISION 2034
VISION 2034-
Slide 34: Disclaimer
34 Disclaimer Business plans, forecasts, and other forward-looking statements in this presentation are based on the reasonable judgments of Smaregi based on information that was currently available. The actual results of operations may differ because these statements include uncertainties involving
Slide 35: FY2023 1Q
FY2023 1Q May 1 – July 31, 2022