Zigexn Co., Ltd. · TSE:3679
Zigexn — Investor Presentation (November 2023)
68 slides from Zigexn's investor presentation, November 2023
Slide 1: Presentation for New Investors
ZIGExN Co., Ltd. Presentation for New Investors
Slide 2: Contents
Contents 1. Company & Business Overview 2. Competitive Advantage 3. Growth Strategy 4. Recent Financial Results 5. Financial Policy 6. Reference Materials 2 Copyright(C) ZIGExN Co., Ltd. All Rights Reserved.
Slide 3: Company & Business Overview
1 Company & Business Overview
Slide 4: Company Overview
1. Company & Business Overview Company Overview Overview Basic Principle ZIGExN aims at “maximizing opportunities in life” and seeks harmony and sustainable development with society by providing a platform to connect to the world Company name ZIGExN.Co.,Ltd Location of through the Internet. 3-4-8 To
Slide 5: CEO Profile
1. Company & Business Overview CEO Profile Representative Director, President and CEO Joe Hirao Publication of the Book Brief record Entrepreneurial Thinking Born in 1982. Graduated from the Faculty of Established the forerunner to ZIGExN in 2006, Environment and Information Studies, Keio University
Slide 6: History of ZIGExN
1. Company & Business Overview History of ZIGExN Changed from the 1st section of 15th anniversary of establishment. TSE market to the Prime Market. Released 2nd medium-term management plan “Z CORE”. 2023 Moved headquarters to Toranomon, Minato-ku, Tokyo. 2022 Changed company name to ZIGExN Co., Ltd.
Slide 7: Performance Summary
1. Company & Business Overview Performance Summary ⚫ Achieved increased revenue for 13 straight terms from founding to FY3/2020. ⚫ Despite being heavily impacted by COVID-19 in the travel and Human Resource segment, revenue and profits returned to a YoY growth trend starting from Q4 of FY3/2021 than
Slide 8: Overview of main services by segment
1. Company & Business Overview Overview of main services by segment ⚫ Hair salon/ Job search platform specializing in the REJOB beauty industry https://relax-job.com/ health care Vertical HR Job placement specialized in the ⚫ Manufacturing Ties manufacturing industry https://www.ee-ties.com/ Consist
Slide 9: Vertical HR segment: Business model
1. Company & Business Overview Vertical HR segment: Business model ⚫ The Vertical HR segment consists of domain-specific HR businessess (job search platform and job placement / temporary staffing). Corporate Clients Vertical HR Users Search and Application Recruitment support Job search platform (Pr
Slide 10: Living Tech segment: Business model
1. Company & Business Overview Living Tech segment: Business model ⚫ The Living Tech consists of (1) "Aggregation platform“, which allows users to search and apply for information from multiple websites at once, "Specialized platform" and "Business Support Tools“, which have their own direct clients
Slide 11: Living Tech segment: Business model (2)
1. Company & Business Overview Living Tech segment: Business model (2) ⚫ The Living Tech consists of (1) "Aggregation platform“, which allows users to search and apply for information from multiple websites at once, "Specialized platform" and "Business Support Tools“, which have their own direct cli
Slide 12: Life Service segment: Business model (1)
1. Company & Business Overview Life Service segment: Business model (1) ⚫ The Life Service segment has a vast databse similar to a core business and is recognized as the foundation of our management resources. We have three types of business model: aggregated media, specialized media, and system dev
Slide 13: Life Service segment: Business model (2) (Travel)
1. Company & Business Overview Life Service segment: Business model (2) (Travel) Hotel/ Hotel/Airline Travel Agencies Users Airline ticket wholesalers APPLE WORLD Provide Posting hotels/ information Air tickets on hotels/ Hotel/Air tickets Travel Air tickets reservations Reservations BtoB Business H
Slide 14: Life Service segment: Business model (2) (Travel)
1. Company & Business Overview Life Service segment: Business model (2) (Travel) Hotels/ Hotel/Airline TSD Travel Agencies Users Airline ticket wholesalers Airline Airline ticket Airline Ticket ticketing issuance Arrangement BtoB Business Airline ticket Paying price fees Provide hotels Information p
Slide 15: Competitive Advantage
2 Competitive Advantage
Slide 16: Sources of strength (1) - Matching Technology
2. Competitive Advantage Sources of strength (1) -Matching Technology- ⚫ We quickly build clients and users contact points and have collected and analyzed information on both for over ten years. ⚫ We then collect and compile more detailed information by also focusing on alliances with individual com
Slide 17: Sources of strength (1) - Specific Example of Matching Technology
2. Competitive Advantage Sources of strength (1) -Specific Example of Matching Technology - ⚫ Matching technology is the ability to provide users with the most appropriate information to encourage them to take action. ⚫ Establish a cycle of analysis, learning, and distribution to generate highly acc
Slide 18: Sources of strength (2) - ZIGExN Value Integration (ZVI)
2. Competitive Advantage Sources of strength (2) -ZIGExN Value Integration (ZVI)- ⚫ Established our unique and highly replicable PMI methodology called "ZVI (ZIGExN Value Integration)" based on the extensive M&A experience, various knowledge and resources such as PMI personnel. ⚫ We achieve performa
Slide 19: Example of improvement through ZVI: Vertical HR REJOB
2. Competitive Advantage Sources of strength (2) – Example of improvement through ZIGExN Value Integration (ZVI)- ⚫ Identifying opportunities for marketing enhancements, recognizing potential improvements in customer acquisition and conversion rates, and the utilization of our core strength in match
Slide 20: Example of improvement through ZVI: Living Tech renovation business
2. Competitive Advantage Sources of strength (2) – Example of improvement through ZIGExN Value Integration (ZVI)- ⚫ Identifying opportunities for marketing enhancements, recognizing potential improvements in customer acquisition and conversion rates, and the utilization of our core strength in match
Slide 21: M&A performance - Payback period
2. Competitive Advantage M&A performance - Payback period - ⚫ Regarding the payback period, the majority of investments, including those with payback schedules, have achieved payback at an early date, generally in the range of 3-5 years because of the successful PMI. ⚫ In terms of return on investme
Slide 22: Results of M&A Investment
2. Competitive Advantage Results of M&A Investment ⚫ Regarding 19 deals out of the 25 cumulative M&As conducted in the past years until FY3/2023 (excludes 6 businesses sold or acquired within a year), EBITDA was 3.3 billion yen, against EV of 11.7 billion yen. ⚫ Annual return of 28.6%; cumulative re
Slide 23: Growth Strategy
3 Growth Strategy
Slide 24: 2nd Medium-term Management Plan Z CORE
3. Growth Strategy 2nd Medium-term Management Plan “Z CORE” Purpose Update Your Story ―For a Better Future Updating the future of everyone standing at life's crossroads In FY3/2026 Management ⚫ Revenue of more than 35bn yen Plan EBITDA of more than 10bn yen ⚫ Create Z CORE (revenue of 10bn yen) KPI
Slide 25: Progress of the 2nd Medium-term Management Plan and Projection
3. Growth Strategy Progress of the 2nd Medium-term Management Plan and Projection ⚫ (1) The initially assumed unit price per client increases due to the group-in of high unit price businesses through M&As, price increase in some businesses, and other factors. ⚫ (2) We plan to focus on the developmen
Slide 26: Progress of the Plan and Projection - Vertical HR
3. Growth Strategy Progress of the 2nd Medium-term Management Plan and Projection - Vertical HR - ⚫ In Vertical HR, the progress was 72% towards the target of 10 billion yen in revenue for FY3/26. ⚫ We aim to achieve revenue of 9,300 million yen (progress rate: 93%) in FY3/24 and 10 billion yen by 3
Slide 27: Progress of the Plan and Projection - Living Tech
3. Growth Strategy Progress of the 2nd Medium-Term Management Plan and Projection- Living Tech - ⚫ In Living Tech, the progress was 48% towards the target of 10 billion yen in revenue for FY3/26. ⚫ We aim to achieve revenue of 5,800 million yen (progress rate: 58%) in FY3/24 and 10 billion yen by 3/
Slide 28: Highlights of Strategy in Each Segment
3. Growth Strategy Highlights of Strategy in Each Segment ⚫ Further refine medium-term strategies in each segment. ⚫ Implemented both organic and alliance/M&A strategies to achieve the goals set forth in Z CORE. Details of strategies for each segment ⚫ Selecting our own target areas based on Increas
Slide 29: Market Size and Strategy in Vertical HR
3. Growth Strategy Market Size and Strategy in Vertical HR ⚫ Based on internal criteria, we select targets for Vertical HR. ⚫ Extend to areas where optimal unit economics can be achieved, and expand and reproduce laterally. Room for Market Expansion Growth Strategies Optimize the business model Busi
Slide 30: Existing business domains in Vertical HR
3. Growth Strategy Existing business domains in Vertical HR ⚫ Accelerate the speed of growth of each business by consolidating know-how in sales, marketing, systems, etc., while comprehensively strengthening business models based on the analyze of each business's strengths and success factors. ⚫ At
Slide 31: Growth strategy in Vertical HR
3. Growth Strategy Growth strategy in Vertical HR ⚫ The HR market is a fragmented market, and commonality is not always optimal, so the value of domain-specific intervention is significant. ⚫ Within the HR market, we select the areas considering the size of the supply-demand gap, the competitive env
Slide 32: Growth Strategy in Living Tech
3. Growth Strategy Growth Strategy in Living Tech ⚫ Aim for growth through the website-based domain expansion, the business model expansion, and enhancement of the value provided through cross-selling. ⚫ Explore opportunities for expansion into higher value-added business models while maintaining hi
Slide 33: M&A Strategy - Overview
3. Growth Strategy M&A Strategy -Overview- ⚫ (1) Expand TAM through MA&s with the main focus on user-attracting website, aiming for horizontal expansion into adjacent/new areas. ⚫ (2) Expand SAM through M&As based on cross-sell and up-sell synergies generated by the contact points with users and cor
Slide 34: M&A Strategy - an entry to new business domains
3. Growth Strategy M&A Strategy -an entry to new business domains- ⚫ In order to further promote the discontinuous growth, we will maintain our strategic investment policy, using accumulated cash flow as funding for future M&As. ⚫ We recognize that there are plenty of domains where there is a demand
Slide 35: Recent Financial Results
4 Recent Financial Results
Slide 36: Yearly financial results - Revenue
4. Recent Financial Results Yearly financial results - Revenue - Consolidated revenue Recurring revenue Non-recurring revenue ⚫ The growth of recurring revenue was driven by contributions from SEKAI PROPERTY, which joined the 18,709M 10,981M 7,728M Group through M&A in the FY3/2023, and a recovery i
Slide 37: Rate of achievement against the financial forecast for FY3/2023
4. Recent Financial Results Rate of achievement against the financial forecast for FY3/2023 ⚫ Achieved consolidated financial forecasts in all items, including revenue, EBITDA, and operating income Revenue EBITDA Operating income Vertical HR 18,709M 5,334M 4,180M New M&A activities such as Ties and
Slide 38: Transition of Revenue Structure
4. Recent Financial Results Transition of Revenue Structure Non-recurring ⚫ Revenue from the traditional mainstay of aggregation media now constitutes a mere Recurring revenue revenue 10% of total revenue, reflecting a departure from an uncontrollable revenue structure. ⚫ Non-recurring revenue is pr
Slide 39: Number and unit price of corporate clients
4. Recent Financial Results Number and unit price of corporate clients ⚫ The number of corporate clients has reached a record high, mainly due to Number of Unit price per contributions from REJOB, travel business APW/TSD, and the previous corporate clients corporate client period's group-in companie
Slide 40: Organic Growth and Inorganic (M&A) Growth
4. Recent Financial Results Organic Growth and Inorganic (M&A) Growth ⚫ Aggressive M&A activities to achieve discontinuous growth ⚫ Growth in organic growth was +37.5% YoY Organic/Inorganic Revenue (yen in millions) 25,000 FY3/23 Inorganic Growth (M&A) FY3/22 FY3/21 Organic Growth 23,300 20,000 FY3/
Slide 41: Yearly financial results - Profits
4. Recent Financial Results Yearly financial results - Profits - EBITDA Operating income ⚫ Consolidated EBITDA exceeded 5.0 billion yen, reaching a record high due to the recovery of the travel business and the contributions from new M&As mainly 5,334M 4,180M Ties. ⚫ Consolidated operating income re
Slide 42: Quarterly financial results
4. Recent Financial Results Quarterly financial results Revenue EBITDA Operating income ⚫ The Q4 marked record highs in revenue, EBITDA and operating income. 5,590M 1,738M 1,313M ⚫ EBITDA margin for the Q4 landed at 31.1%, the highest level in nearly two years and the highest since the Covid- (YoY +
Slide 43: Yearly financial results - Cash Flow
4. Recent Financial Results Yearly financial results – Cash Flow - ⚫ CF from operations: Record high due to steady growth in existing CF from Operations CF from Investing CF from Financing businesses and M&As that are expected to contribute to earnings at an early stage. 5,706M -4,601M 267M ⚫ CF fro
Slide 44: Revenue by business segment
4. Recent Financial Results Revenue by business segment ⚫ In Vertical HR, stable growth in REJOB and contributions from newly Vertical HR Living Tech Life Service acquired businesses such as Ties resulted in a significant increase in revenue. ⚫ Living Tech achieved steady growth mainly due to growth
Slide 45: Business situation in mainstay businesses - Vertical HR
4. Recent Financial Results Business situation in mainstay businesses - Vertical HR - 15,000 12,752 12,835 ⚫ Monthly fee model achieved a record high due to an increase in Number of clients hiring needs. 10,000 (companies) ⚫ The pay-for-performance (=Hire) model has greatly increased due to M&As. 5,
Slide 46: Business situation in mainstay businesses - Living Tech
4. Recent Financial Results Business situation in mainstay businesses -Living Tech- 4,000 3,802 ⚫ The number of members remained steady, and the number of 3,632 corporate clients grew steadily year-over-year. 3,000 Number of clients ⚫ Unit price per client rose due to the contribution of a new group
Slide 47: Other business situation - Life Service: Travel domain
4. Recent Financial Results Other business situation -Life Service: Travel domain- ⚫ In the overseas domain, revenue was at the same level as before Covid-19 pandemic and operating income has steadily increased due to the recovery of APW’s performance and the contribution of TSD, a newly acquired co
Slide 48: Financial forecast for FY3/2024
4. Recent Financial Results Financial forecast for FY3/2024 ⚫ We aim for more than 20% growth in all items, including revenue, EBITDA, and operating income. Vertical HR Revenue EBITDA Operating income Expect high growth due to 23,300M 6,500M 5,300M stable growth of existing (YoY: 125%) (YoY: 122%) (
Slide 49: Financial Policy
5 Financial Policy
Slide 50: Financial policy
5. Financial Policy Financial policy ⚫ In principle, we continue the financial policy that the maximum amount of share buyback limit for the following year shall be the amount of net income for the year less the amount of strategic investments and the total amount of dividends. ⚫ The acquired treasu
Slide 51: Financial strategy and strategic investments (M&A)
5. Financial Policy Financial strategy and strategic investments (M&A) ⚫ In accordance with the Company's financial policy, the Company will not conduct a share Strategic Dividend investment forecast buyback in FY2024/3, as the total amount of strategic investments and dividends exceeded the net inc
Slide 52: Balance sheet condition
5. Financial Policy Balance sheet condition Goodwill-to-capital Total amount of ⚫ Financial health remained solid with the goodwill-to-capital ratio of ratio goodwill 0.6x and the ratio of equity attributable to owners of the parent to total assets at 52.9%, which are within the Company's financial
Slide 53: Goodwill impairment testing
5. Financial Policy Goodwill impairment testing ⚫ A total of 16 CGUs comprising goodwill were tested for impairment by comparing the carrying amount with the recoverable amount in accordance with IFRS. ⚫ In FY3/23, the recoverable amount of each CGU significantly exceeded its carrying amount, and no
Slide 54: Reference Materials
6 Reference Materials
Slide 55: Executive Structure - Officers and Corporate
6. Reference materials Executive Structure -Officers and Corporate- ⚫ Promote sophistication of business execution functions from the perspectives of both business growth and expansion of corporate functions. ⚫ A rich executive structure with diverse skills through a variety of routes, including pro
Slide 56: Executive Structure - Business Officers and Specialists
6. Reference materials Executive Structure -Business Officers and Specialists- ⚫ Abundant business officers and specialists with diverse backgrounds and skills lead the business and execute PMI for M&A. Businesses and Areas of Name Responsibility Career Ippei Suzuki REJOB Joined the Company in 2011
Slide 57: Members of the Board of Directors and Board of Statutory Auditors
6. Reference materials Members of the Board of Directors and Board of Statutory Auditors ⚫ Subject to approval by the General Meeting of Shareholders, the committee consists of members (candidates) with extensive experience and expertise. ⚫ The Board of Directors is positioned as a supervisory body
Slide 58: Board of Directors
6. Reference materials Board of Directors ⚫ The Company aims to grow its core business and manage its expanding business through a management team that is both offensive and defensive, by injecting the experience in business operations and strategy execution at other companies that the candidate for
Slide 59: SDGs materiality set by ZIGExN
6. Reference materials SDGs materiality set by ZIGExN ⚫ Create value for all stakeholders, making efforts from those through business, such as updating society/industry by DX/cultivating SDGs engagement by media to those related to the increased satisfaction of employees. Relevant ZIGExN's materiali
Slide 60: Major SDG/ESG initiatives (1)
6. Reference materials Major SDG/ESG initiatives (1) ⚫ Working on the SDGs initiatives through "business" and ensuring a rewarding work environment by providing career development PJT for new graduates. Update society and industry with DX/ Fostering SDGs engagement through the media Equality of empl
Slide 61: Major SDG/ESG initiatives (2)
6. Reference materials Major SDG/ESG initiatives (2) ⚫ By utilizing our regional offices and services, we also focus on "regional development" through our unique methods, which also contributes to recruiting activities, name recognition, etc. Creation of local communities Initiatives in Kyoto Prefec
Slide 62: Number of clients posting ads on the platform of the mainstay businesses
6. Reference materials Number of clients posting ads on the platform of the mainstay businesses Vertical HR Living Tech ⚫ In Vertical HR, the number of clients posting ads on its platform grew steadily due to Number of clients posting Number of clients posting the stable expansion of existing busine
Slide 63: Trend in the number of employees at end of quarter
6. Reference materials Trend in the number of employees at end of quarter ⚫ The number of employees stood at 802 at the end of March 2023. While carefully selecting hiring positions, we will continue to strengthen our organization as our business expands. ⚫ Going forward, we plan to invest in human
Slide 64: Quarterly trend of expenses
6. Reference materials Quarterly trend of expenses ⚫ Advertising + promotion expenses remained stable as they were implemented while properly assessing the ROI. ⚫ Although personnel-related expenses are trending slightly upward due to an increase in personnel as a result of M&As, they have remained
Slide 65: Trend of balance sheets as at the end of quarters
6. Reference materials Trend of balance sheets as at the end of quarters Equity attributable to owners Goodwill-to-capital ratio ⚫ The percentage of equity attributable to the owners of the parent to total assets of the parent (the equity ratio in the JGAAP) stood at 52.9% 0.6x 52.9% and the goodwil
Slide 66: Financial Strategy: Shareholder Structure
6. Reference materials Financial Strategy: Shareholder Structure ⚫ The ratio of foreign investors increased to 19.2%, up 3.1% from the end of the previous period and the highest level since FY18/3. 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 0.5% 0.5% 3.0% 3.2% 3.2% 3.2% 6.6% 6.9% 6.9% Treasury Stocks 50.9%
Slide 67: EPS & PER
6. Reference materials EPS & PER ⚫ EPS reached a record high due to share buybacks totaling approximately 1.4 billion yen, the solid growth of the performance of existing businesses and the contributions of new M&As . ⚫ Regarding FY3/24, the continued growth of EPS will be sought through the full-ye
Slide 68: Disclaimer
Disclaimer This briefing and briefing materials are based on information available as of the date of the announcement and the judgment of the company. We will assume no obligation for updating or changing the information if future events changed the details. In addition, please understand that actua