Sansan Inc

Ladies and gentlemen, this is Tarada from Sansan. I do appreciate your precious time for Sansan EFI 2018 results. Allow me to use the slides in front of you to make my presentation. Since this is the very first earnings brief since we were listed, as shown here in the table of contents, I'd like to first look into the Samsung Group overview. Then I'd like to go through the outline of the financial results as well as growth strategies. First, allow me to explain our mission. Our mission is turning encounters into innovation, and we do our businesses based upon this. Our targets are both businesses and business people. We do offer our services in order to solve many issues, including business cards management, by leveraging products, technologies, and data. Our B2B services for corporations is referred to as Samsung, the same name as the company, and our B2C services for individuals is eight. We also have the DSOC, Data, Strategy, and Operations Center. This center has been engaged in many activities and initiatives, including R&D. The core of our business is business cars. Why we are focusing upon business cars? The reason is we do believe that business cars have very unique values. Business cards are almost always in exchange when business people meet for the first time. They have accurate information representing the person's name, company or organization, title and contact information. Moreover, there is also value in the history of the fact that the business card has been exchanged. As you see, it is a very important source of important valuable information. But business cards are still used in the paper format. Not much digitalization is underway. So we do believe that there is going to be great opportunities for improved business operations and better utilization. We have two main business segments, and the first is a Samsung business. Samsung is on a contract management service for corporations with the concept of business begins with business card management. Samsung reached the number one position in the market with more than 5,800 contracts with a very low return rate as of the end of May 2019. The second is 8Business. 8 is a business card application for individuals with the concept of business social networking based on business card information. It has more than 2.4 million users as of the end of May 2019 and holds the number one position in terms of active users in the Japanese business SNS market. These two services are engaged in different domains, but both services are utilized as a platform where you can use your business cards as assets. Here, I'd like to explain what makes our business platform unique. Majority of the people working in companies own business cards. So, Samsung can design its services assuming that all the employees are going to use our services. I don't think you'll find a service like this any other places. It is a service that individuals can use the service for his or her own entire life, ignoring the changes in employment. More often, as the two platforms respond to the basic business needs for contact management, they are suitable for customers in all industries and occupations, and our business model enables customers to build databases through automated information gathering. They also have high extensibility, as they can be linked with the functions of other services. Thus, our platforms have great potential to become a key part of the business ecosystem, enabling various opportunities for mid-term and long-term growth opportunities. Next, I will touch upon our competitive edge. With the contact management service, the accuracy of information is a fundamental element that determines the quality and competitiveness of the service. Now, the sensor is having 99.9% accuracy. We are digitalizing the business cards information in the combination of the ever-advancing technologies such as machine learning and manual labor. Since its inception, we have a track record of dealing with tons of business cards. mainly by manual input, but now it became possible to develop our own unique operations, and this has given us a very high level of competitiveness, and I think we're going to be standing out compared with the rest of the players. Samsung, being a creator of a business cost management service, is actually enjoying a dominant market share of 81.9% in terms of revenue. We are still driving this market as a pioneer. For information, we do have a solid on a customer basis of 5,800 plus businesses, including enterprises. The average monthly return rate for the last 12 months has been as low as 0.66%. This high switching cost is functioning as a high entry barrier against other competitors. This concludes Samsung Group's overview, and here now I'd like to go through the results for FY 2018. First, three highlights. Our top priority, namely the growth of consolidated sales, it grew 39.3% year-on-year. we achieved continued high growth. As for operating loss, on top of the Samsung business growth, monetization for its business started falling. So our loss came down dramatically year on year. Now we have reached our point making a forecast of profit making in FY 2019. Sansan has been a strategically important growth area, and actually we are recruiting salespeople, and now the total number of employees became 549, up 147 year-on-year. This shows an outline of our consolidated figures. Each exceeded the full-year forecast announced on June 19, 2019. Net sales was 10,206,000,000 yen at 39.3% year-on-year, and operating loss substantially decreased. This shows the breakdown between net sales and operating profit. A particular notice in FY18 was on top of the increased growth of net sales, and due to the smaller spend in advertising, our opening loss became much smaller. At Samsung, we are still investing in ad activities at a certain level, but it became much smaller at 8. Eight in this phase, and actually was trying to acquire new phases, and so that resulted in a high spend in advertisement. But now, in this fiscal year, we moved into the monetization, so not to spend much. And actually, our cash flow from the operating activities turned out to be positive. For your information, this shows gross profit and gross profit margin for the past five years. The bar chart on the left shows sales. Actually, in terms of CAGR, it is more than 50%. As for the gross profit, we are able to reduce the cost in digitalizing the information. Actually, our margin has been quite high, as much as 80% plus. But it should be mentioned that the eight business digitization costs are included in HN&A expenses as they are less related to the net sales. In this section, I will explain actual results by segment. First, Sansa business net sales increased by 36.8%, becoming 9,639,000,000 yen. Operating profit increased quite dramatically. grew 102.4% to 2.99 billion yen. As for key indices, total number of the subscription became 5,823, up 13.1% year-on-year. Monthly revenue per subscription became 156,000 yen, up 21.9%. As for the total number of employees for the entire Samsung business operation, it grew 65 to 390 people due to the aggressive recruiting, mainly for sales side, starting from the second half of the year. Next is the AID business. Again, we have been working on the monetization for these activities. Net sales became 566 million yen, up 102.8% year-on-year basis. As I have already explained, A518 shows a big decline in operating loss due to the declined spend for advertising compared with A517. The graph on the right shows the growth in eight users. As you see, it is growing rather smoothly. It reached 2,440,000, up 300,000 year-on-year. This shows net sales on a quarterly basis in the four-year reference. As you see, there is no particular seasonality As for sales, another point here is having to do with the particular timing for advertising campaigns. It has been the case that the first quarter tends to generate a higher profit. As for details of the profits and others, we have already disclosed them in the appendix. Please refer to them. Next, I will expand on the growth strategies going forward. Allow me first to expand on our target markets. I have already said our market share is 81.9%. And I do believe that there is still a big room for further growth in this marketplace. Vis-a-vis the total number of workers in Japan, Sansho's users account for only 1%. Theoretically speaking, we still have room for further growth by 100 times. Of course, it is rather difficult to get everything fully, but we still believe that we can grow 10x or 20x at minimum. On top of that, work style transformation and digital transformation are gaining more traction, may drive higher needs for the contact management through cloud. These factors are acting as our tailwinds. We aspire to grow our business in a big way going forward. For this strategy, we intend to increase the number of subscriptions as well as the sales per subscription. To increase the number of subscribers, we will establish good sales organizations for enterprise deals. And we also plan to have a variety of sales engagements utilized in our domestic as well as overseas offices. In parallel, we intend to gain large deals where we can expect the entire organization can use our services, and we intend to expand usage among existing customers. By introducing value-added services, we intend to increase our sales value per subscription. We are already utilizing open APIs and others to become a better connectivity with SFA, CRM, marketing automation, ERP tools, and others. We will further strengthen the connectivity, being more specific, we have in mind M&A, capital and business alliances, and others, so that we can further advance our availability on the Samsung's business platform. So far, we have made efforts in order to strengthen our advertising activities in order to improve our awareness as well as establishing our brands. Of course, we would like to continue these kinds of activities for small and medium-sized companies. While continuing these business activities, we will focus on enhancing our sales structure in order to increase enterprise opportunities as well as overseas expansion opportunities. Furthermore, from the perspective of products, we will strive to expand our services not only via the company's platforms but also in new domains by leveling M&A and business alliance. While generating synergistic effects from these stronger structures, we will work to further improve our stations on the mid- to long-term basis. As for 8, in addition to the $408.8 premium plan for individual users, there are various paid services for corporate customers. By strengthening monetization measures on the B2B side, including development of new services, we'll aim at better profitability as soon as possible. Lastly, I will touch upon the FY19 forecast. In FY19, Consolidated Net Sales is expected to grow 35.4% to 13,816,000,000 yen, mainly due to the continued growth of the Samsung business and the monetization of the 8th business. In addition, with the increase in net sales, we expect to make a profit. We are also expecting profit attributable to owners of the parent to be profitable. Though no figures have been disclosed, as it is going to be rather difficult to refine them. As just been announced, when we got registered, the current phase is focusing on the revenue maximization instead of the profit maximization. That said, right now we do not attach much value to the profit, but on the annualized basis, we believe that we can be profitable. This concludes my presentation. Thank you indeed for your kind attention.