Kufu Company Holdings Inc. · TSE:4376
Kufu — Locoguide — Q2 FY2021 Earnings Presentation
61 slides from Kufu's earnings presentation, Nov 13, 2020
Slide 1: Financial Results for the 2nd Quarter of the Fiscal Year Ending on March 31, 2021
Financial Results for the 2nd Quarter of the Fiscal Year Ending on March 31, 2021 Locoguide Inc. November 13, 2020
Slide 2: Locoguide's Vision
Locoguide’s Vision To Deliver Smarter and More Enjoyable Way of Living the Local Community Life + To Deliver Safety Shopping Relaxation Drop-by Community Spots Events Learning/ Education Dining Creating Services that Change Japanese Consumers’ Behaviors by Maximizing Value of “Time” x “Place” © 2020
Slide 3: Agenda
Agenda 1. Outline of Financial Results for the 2nd Quarter of FY2021 2. Transition of KPIs 3. Strategies for the 3rd Quarter of FY2021 and After 4. Appendix © 2020 Locoguide Inc. All Rights Reserved. 2
Slide 4: Summary
Summary 1• 1st half of FY2021: 10.5% increase in revenue YoY and 20.8% increase in operating profit YoY, but lower than expectation. 2• KPIs are improving as expected. • Monthly Active Users: 14.4% increase YoY • Subscriber Shops: 12.7% increase YoY, including shops with pay-for-performance contract
Slide 5: 1. Outline of Financial Results for the 2nd Quarter of FY2021
1. Outline of Financial Results for the 2nd Quarter of FY2021 Locoguide Inc.
Slide 6: Results for the 1st Half of FY2021
Results for the 1st Half of FY2021 ✓ 10.5% increase in revenue YoY and 20.8% increase in operating profit YoY ✓ Revenue from “Tokubai” service has increased due to measures for unit price increase; Revenue from advertisements has decreased due to weakening environment; Operating profit has increased
Slide 7: Revenue in the 1st Half of FY2021
Revenue in the 1st Half of FY2021 ✓ Revenue from “Tokubai” service: 14.0% increase YoY due to increase in number of subscribers and unit price ✓ Revenue from advertisements: 15.4% drop due to 24.1% drop in unit price of ad-network advertisements Revenue from “Tokubai” Service Revenue from Advertisem
Slide 8: SGA Expenses in the 1st Half of FY2021
SGA Expenses in the 1st Half of FY2021 ✓ Aggressive recruiting for business development, resulting in +17 employees YoY ✓ Reduced expenses for promotion, travel, and others (Million Yen) 600 Personnel Outsourcing Rent System Usage Others 537 501 500 Breakdown of SGA Expenses 96 19 176 22 106 employe
Slide 9: 2. Transition of KPIs
2. Transition of KPIs Locoguide Inc.
Slide 10: Monthly Active Users and Subscriber Stores in the 1st Half of FY2021
Monthly Active Users and Subscriber Stores in the 1st Half of FY2021 ✓ Monthly active users: 14.4% increase YoY due to enhancement of contents ✓ Subscriber stores: 12.7% increase YoY due to recontract of stores that have temporarily stopped operation due to COVID-19 and increase of stores with pay-f
Slide 11: Monthly Active Users
Monthly Active Users ✓ Increasing due to expansion of categories of information and enrichment of contents ✓ Continue efforts for achieving 24 million users at the end of FY2022 Monthly Active Users (Unit: 10K Users) Active Users Increase End of Sep. 2020 10.8M Users = Improvement of Platform Value
Slide 12: Enrichment of Contents
Enrichment of Contents ✓ Enriching contents on “Tokubai News” ✓ Generated some popular articles with large number of viewers © 2020 Locoguide Inc. All Rights Reserved. 11
Slide 13: Number of Subscriber Stores
Number of Subscriber Stores ✓ Number of subscriber stores with fixed price contract rebounded and increased to the maximum in the past ✓ Started listing fitness gyms and other facilities as pay-for-performance subscribers 28,007 Number of Subscriber Stores* stores (Unit: Stores) End of Sep. 2020 28,
Slide 14: New Listings of Subscribers with Pay-for-Performance Contract
New Listings of Subscribers with Pay-for-Performance Contract ✓ Started listings of pay-for-performance subscriber stores in addition to fixed price subscriber stores. 2,658 pay-for-performance subscriber stores now ✓ More sales opportunities with service providers such as restaurant chains, private
Slide 15: Transition of Subscriber Stores Churn Rate
Transition of Subscriber Stores Churn Rate ✓ Maintaining low level excluding stores that have temporarily stopped operation due to COVID-19 12-Months Average Churn Rate*1 3.0% Churn Rate Churn Rate Excluding Temporal Factors 2.5% Churn Rate in September, 2020 2.0% Excluding Subscriber Stores that ha
Slide 16: Efforts for Increasing Unit Price
Efforts for Increasing Unit Price ✓ 9.8% increase in unit price YoY by introduction of up-selling plan Details of Up-Selling Plan Unit Price for Fixed Price Subscribers 4,247Yen Better Promotional Messages 3,867Yen • Enabling detailed information provision such as +9.8% unique feature of items and e
Slide 17: Development of Optional Functions to Increase Unit Price
Development of Optional Functions to Increase Unit Price ✓ Plan to release new functions as options, such as information distribution within stores and automated information distribution by data linkage ✓ Plan to achieve increase in unit price with option plans, in addition to new price plan Existin
Slide 18: 3. Strategies for the 3rd Quarter of FY2021 and After
3. Strategies for the 3rd Quarter of FY2021 and After Locoguide Inc.
Slide 19: Strategies for the 3rd Quarter of FY2021 and After
Strategies for the 3rd Quarter of FY2021 and After Platform for Retailers and Facilities ・Aggressive sales activities to get more subscribers ・Introduction of new optional functions to fixed price subscribers to increase unit price ・Accelerating increase of pay-for-performance subscribers such as se
Slide 20: Increased Connections with Local Governments with "Congestion Lamp" Service
Increased Connections with Local Governments with “Congestion Lamp” Service ✓ Introduction of “Congestion Lamp” to local governments across Japan, adopted by 139 service counters of local government offices at the end of September, 2020 ✓ Working with local governments to promote digitalization of l
Slide 21: Examples of "Congestion Lamp"
Examples of “Congestion Lamp” Hamamatsu City Kurume City Retail Stores Gifu City Museum of Gifu City “Awaiting Kirin" Gifu Taiga History Drama Museum Locoguide provides congestion information for 22,322 retail stores and 269 service counters in local governments offices/facilities * End of September
Slide 22: Digitalization of Local Information
Digitalization of Local Information ✓ Aggressively pursuing service for supporting digital transformation of local communities cooperating with local governments Example of Digital Transformation of Facilities Example of Digital Transformation of Local Governments (Development of App. and Website) (
Slide 23: Outline of Shizuoka Online Co., Ltd.
Outline of Shizuoka Online Co., Ltd. ✓ Acquired shares of Shizuoka Online Co., Ltd. to accelerate digitalization of local information ✓ Shizuoka Online covers local information in home and outside activities categories in Shizuoka area, and there are more allowances for digitalization List of Media
Slide 24: Synergy with Shizuoka Online Co., Ltd.
Synergy with Shizuoka Online Co., Ltd. • Long-term business relationships with major New Sales companies across Shizuoka area Opportunities More Subscribers • Advantages in business with small community-based business operators • Issues large number of types of free newspapers to Utilization of wide
Slide 25: Investment to istyle Inc.
Investment to istyle Inc. ✓ Accepted allocation of new shares of istyle Inc., which operates Japan’s largest comprehensive website for cosmetics and beauty ✓ Yoshiteru Akita, Representative Director of Locoguide, will serve as outside director of istyle* Company Profile • Company Name: istyle Inc. •
Slide 26: Investment to Tauns Holdings
Investment to Tauns Holdings ✓ Acquired Shares of Tauns Holdings, who supply COVID-19 antigen test kits Company Profile • Company Name: Tauns Holdings • Location: Izunokuni, Shizuoka • Capital: 100 Million Yen • Date of Stock Assignment: October 26, 2020 • Our Ownership: 3.0% Business • Specialized
Slide 27: Business of Tauns Holdings
Business of Tauns Holdings ✓ Antigen test kits for COVID-19 have great potential as future essential item in local life • Plan to improve capacity of antigen qualitative tests for COVID-19 with simple kits to ensure local clinics can easily and rapidly examine patients Antigen Qualitative Test Test
Slide 28: 4. Appendix
4. Appendix o3 Locoguide Inc.
Slide 29: Results for the 2nd Quarter of FY2021
Results for the 2nd Quarter of FY2021 ✓ Revenue: 8.0% increase YoY; 2.2% increase QoQ ✓ Operating Profit: 61.4% increase YoY; 34.7% drop QoQ ・Expenses increased QoQ due to enhancement of human resources acquisition Results for the 2nd Quarter of FY2021 (Million Yen) 2nd Quarter of 1st Quarter of FY2
Slide 30: Progression of Revenue and Operating Profit
Progression of Revenue and Operating Profit ✓ Trend of 2nd half bias. 7 points (revenue) and 6 points (operating profit) behind from the same timing of last year Progression of Revenue and Operating Profit (Million Yen) 1st Half 2nd Half Full Year Progression Progression Progression Actual Rate Actu
Slide 31: Company Profile
Company Profile Locoguide Inc. Company name (Renamed from Tokubai Inc. on August 1, 2019) Head office Minato-ku Tokyo, Japan Establishment July, 2016 Yoshiteru Akita, Representative Director Tetsuya Fujiwara, Director Yuichiro Okimoto, Director (Audit and supervisory committee member) Takatoshi Maed
Slide 32: Management Team Profile
Management Team Profile Yoshiteru Akita, Representative Director Yuichiro Okimoto, Director and CFO • Yoshiteru Akita served as Representative Director and CEO of • Yuichiro Okimoto served Cookpad Inc. and launched the predecessor Kakaku.com. Inc., where he led the listing of the company’s stock on
Slide 33: Locoguide's Concept
Locoguide’s Concept Transition from Shopping Information Service Provider to Service Provider that can Change Consumers’ Behaviors Local Shopping Services Drop-by spots Groceries, Dining, Community events, Daily necessities, Recreation/Relaxation, Outing, Hobby items… Learning/Education… Tourism/Sig
Slide 34: Background: Japanese Newspaper Advertising Flyers
Background: Japanese Newspaper Advertising Flyers ✓ Newspaper advertising flyers has evolved uniquely in Japan as advertising method where flyers are inserted into newspapers and distributed to subscribers across the nation ✓ Size of the newspaper advertising flyers market is still large at 355.9 bi
Slide 35: Background: Ad Industry in Japan is Underdigitalized
Background: Ad Industry in Japan is Underdigitalized Free-of-charge Local Direct Mails Posting Magazines • Estimated 5,740 million mails in a year • Local information and ads are placed • Posting of local job ads and real estate are sent to target customers *2 ads is increasing • Estimated 1,419 com
Slide 36: Business Overview of Shopping Domain Service "Tokubai"
Business Overview of Shopping Domain Service “Tokubai” ✓ Provides real-time information of supermarkets, drug stores, and hardware stores ✓ Aims to influence and change Japanese consumers’ behaviors Shopping “Tokubai” has won Google Play Awards two consecutive years * Google Play Best Daily Helper A
Slide 37: Values Offered by Tokubai
Values Offered by Tokubai ✓ Enables users to browse information in real time, even on the move, that is not possible by newspaper advertising flyers Coupons Limited-time special offers Guide for smart & fun shopping Values - No need to keep and bring newspaper ad flyers offered to consumers - Real-t
Slide 38: Tokubai's Scheme
Tokubai’s Scheme ✓ SaaS service providing cost-effective sales promotions replacing legacy newspaper ad flyers ✓ Consumers can enjoy wide coverage, browsability, and searchability by smartphones Real-time JPY5,000/mon 〜 Free Retailers (SaaS) Tokubai Consumers > Real-time > Highly convenient > Low co
Slide 39: Our Competitive Advantages
Our Competitive Advantages ✓ Advantages in price, churn rate, and coverage 1 • Cheaper than paper advertisements and competitors Price • Fixed price system 2 • Keeping low platform churn rate Churn Rate • SaaS business model: new customers directly lead to revenue 3 • High coverage of supermarkets a
Slide 40: Competitive Advantages: Low-Cost Services
Competitive Advantages: Low-Cost Services ✓ Offers lower cost solutions compared to newspaper advertising flyers and peer's pay-per-view on-line advertising solutions ✓ Enables clients to reduce operating expenses by replacing expensive newspaper advertising flyers Significantly reduced Monthly JPY5
Slide 41: Competitive Advantages: High Coverage Ratio
Competitive Advantages: High Coverage Ratio ✓ High coverage ratio in major retail and distribution industries, which account for more than 50% of the newspaper advertising flyers market Coverage of Subscriber Stores by “Tokubai” by Store Category Grocery Drug Stores Hardware / DIY stores Supermarket
Slide 42: Breakdown of Subscriber Stores by Business Categories
Breakdown of Subscriber Stores by Business Categories ✓ Proportion of subscriber stores adopting pay-for-performance price has increased Breakdown of Subscriber Stores by Business Categories Pay-for-Performance 9% Others adopting fixed price system Supermarkets 21% 28,007 39% stores Hardware / DIY S
Slide 43: [Example] Optimization of Sales Promotion Costs: Drugstore Chain Operator A
[Example] Optimization of Sales Promotion Costs : Drugstore Chain Operator A ✓ A drug store chain operating 165 stores in the central Japan has achieved significant reduction in “Costs” and “Processes” Measures • Introduced “Tokubai” service in 2015 • Delivers real-time store information of each sto
Slide 44: [Example] Sales Increase: Increase Sales of Products Posted on the Platform
[Example] Sales Increase : Increase Sales of Products Posted on the Platform ✓ Subscriber companies have been increasing their sales volume by posting sales information on “Tokubai” instead of issuing newspaper advertising flyers or in-store notices Grocery supermarket chain operator B • Store clerk
Slide 45: Current Target Market in Japan
Current Target Market in Japan ✓ Daily shopping information for grocery supermarkets, drug stores, and other retail stores account for market size of approximately 190 billion Yen Newspaper Advertising Flyers Market 355.9 billion Yen *1 • Grocery supermarkets • Drug stores • Hardware / DIY stores, e
Slide 46: Market Opportunities Beyond Retailing
Market Opportunities Beyond Retailing ✓ Sectors other than retailing account for almost half of the entire flyer ad market size Flyer Ad Market Size (other than retailing) 166.5 billion Yen Newspaper Advertising Flyers Market Services Real estate 355.9 billion Yen *1 Manufacturing 5%*2 Education 6%*
Slide 47: Increase in Number of Subscriber Stores Due to Expansion of Service Targets
Increase in Number of Subscriber Stores Due to Expansion of Service Targets ✓ Target markets are enormous compared to the current number of stores using paid services of about 25,000 and the total number of stores using services of about 50,000 Target Markets: Total 2.48 million*2 (Unit: no. of stor
Slide 48: Expanding Customers from Major Categories to Others in Retailing Industry
Expanding Customers from Major Categories to Others in Retailing Industry ✓ Locoguide has been steadily increasing the number of stores using its services in new categories of the retailing industry, including home appliance retailers and sporting-goods retailers ✓ There are more allowances for expa
Slide 49: More Allowances for Raising Prices
More Allowances for Raising Prices ✓ Benefits of using the services in store operation are expanding. There are more allowances to raise unit price. ✓ It is also possible to shift to pay-per-use system and expand the scope of offered services such as operational support Change in the Number of Follo
Slide 50: New Service Plans
New Service Plans ✓ Launched up-selling plans in FY2021 ✓ Added new functions “better promotional messages,” “detailed reports,” “better exposure to consumers,” etc. Better Promotional Messages Detailed Reports Better Exposure to Consumers • User stores can deliver information about • User stores ca
Slide 51: Enhancement of Advertisement Business
Enhancement of Advertisement Business ✓ Promoting digitalization of sales promotion by business corporations such as manufacturers to retailers ✓ Providing systems to accommodate various advertisement and sales promotion needs by cooperation with retail media and apps Business Corporations such as R
Slide 52: Release of New Advertisement Services
Release of New Advertisement Services ✓ Developed and released new advertisement services Joint Campaigns by Retailer and Manufacturer Moving Advertisements • Developed lottery system that can be easily customized • Providing various formats for distributing moving according to campaign planned by r
Slide 53: Expanding Business into Local Information Area: Releasing New Services
Expanding Business into Local Information Area : Releasing New Services ✓ “Your Town’s Best Deals” was released in limited areas (October 2019) ✓ Consider introduction of paid services to local tourist spots and local governments Top of “Your Town’s Best Deals” List of Discount Coupons List of Event
Slide 54: Launch of "Congestion Lamp" Service
Launch of “Congestion Lamp” Service ✓ Launched “Congestion Lamp” as service to support new ways of life in response to COVID-19 “Congestion Lamp” Service Information Update Management Tool • Provision of information enabling consumers to check congestion of stores in one glance • Possible to update
Slide 55: Exposure in the Media
Exposure in the Media ✓ Increased appearances in media about cooperation with local governments 2020年07月07日 中日新聞 朝刊 14頁 (July 7, Chunichi Shimbun) (August 29, Shizuoka Shimbun) (Major media that featured “Congestion Lamp” between July and September, 2020) • July 4, Chubu Yomiuri Shimbun • August 26,
Slide 56: Digitalization by Linkage of Local Information
Digitalization by Linkage of Local Information ✓ Digitalizing local community information in cooperation with free-of-charge magazines, local governments, and local news Optimized Information Distribution Local Governments Increased Usage Frequency Linkage of due to Substantial Local Information Inf
Slide 57: Capital and Business Alliance with Shizuoka Online Co., Ltd.
Capital and Business Alliance with Shizuoka Online Co., Ltd. ✓ Acquired shares of Shizuoka Online in order to accelerate activities for “To Deliver Smarter and More Enjoyable Way of Living the Local Community Life” Company Profile • Company Name: Shizuoka Online Co., Ltd. • Location: Aoi-ku, Shizuok
Slide 58: Expansion of Targets
Expansion of Targets ✓ Expansion of paying customers from retailers to various service providers due to new information demand from impact of COVID-19 Provision of Must-Buy Provision of New Information + Information Featured Products Information Congestion Limited-time Offers Operating Hours Coupons
Slide 59: Delivery of Knowledge on Digitalization
Delivery of Knowledge on Digitalization ✓ Established “Retail Research Institute Inc.” to study and research retail/distribution industries ✓ Started distributing information on digitalization via “Retail Guide,” specialized medium. Accelerating business meetings with top management of retailers Com
Slide 60: Accelerating Changes
Accelerating Changes From Paper to Digital Social changes are our business opportunities and From Far to Near we create new services “To Deliver Smarter, More Enjoyable, and Safer Way of Living the Local Community Life” From Contact to Contact- Less © 2020 Locoguide Inc. All Rights Reserved. 59
Slide 61: Disclaimer
Disclaimer Important notes This document contains forward-looking statements. These forward-looking statements are based only on the information made available to Locoguide as of the date this document were prepared. These statements are not guarantees of future results and involve risks and uncerta