AZoom uses information technology to put idle real estate to productive use. Its target properties are mainly parking lots rented on a monthly basis. Since its inception, the company has built up a database of information on available monthly parking lots and their potential renters, which it now uses to operate one of the most extensive online parking space matching systems in Japan with some 50,000 listings. Still, given that Japan has some 5mn parking spaces available, the company has ample room to grow, and hence, it continues to expand its scope of information in both urban and rural areas. AZoom generates around 98% of sales from the parking lot business and provides two main service types. With the Monthly Parking Lot Introduction Service (around 12% of sales in FY09/19), it matches available parking lots with people who wish to rent them. The company earns commissions when the introduction results in a rental agreement. With the Monthly Parking Lot Subleasing Service (around 85% of sales with 8,361 subleased spaces as of end-FY09/19), the company leases parking lots from their owners and then subleases them using its matching system.

The company leverages its parking lot search website (the online parking lot introduction service) to increase the number of parking spaces it can introduce. The site acts as a marketplace for parking lots in Japan, providing applicants with vacancy information. In the subleasing service, the company guarantees the parking lot owners a certain amount of rental income for the parking spaces it leases. AZoom’s main source of earnings is the difference between the rental income paid to these owners and that received from the renters (introduced through its search website). This sort of service has expanded rapidly in recent years to alleviate the problem of vacancies in parking lots, including lots for condo residents and building parking lots erected to conform to urban planning requirements. (See the “Market and value chain” section.)

AZoom’s property management system for its subleasing service differs from those of other companies in a key way: it allows the company to monitor the rental status of properties in detail through the duration of their contracts. Using the information on parking spaces that are currently vacant and those that will become vacant, the company tailors its sales efforts and efficiently manages and prevents vacancies. The company also taps into the information gathered through its search website, and applies the big data on parking lots throughout Japan and on registered users to optimize its property management system. Such data allows it to grasp parking-lot market prices in target locations and helps distinguish the company’s subleasing service.

Trends and outlook

FY09/21 results: The company reported record-high sales and earnings for FY09/21, with full-year consolidated sales coming in at JPY5.0bn (+30.4% YoY), operating profit coming in at JPY507mn (+126.1% YoY), recurring profit coming in at JPY505mn (+126.5% YoY), and net income coming in at JPY326mn (+133.9% YoY). The top-line gains were driven by a combination of increases in the number of parking spaces subleased to end-users at its Monthly Parking Lot Subleasing Service business and increases in the number of referrals from its Monthly Parking Lot Introduction Service and the resulting increase in both the number of parking spaces under contract and subleased to end-users. On the earnings front, the company benefited from the strong top-line growth and, even after front-loading extra marketing expenses into SG&A expenses in Q4, still managed to more than double its operating profit over the previous fiscal year.

FY09/22 forecast: For FY09/22, the company is projecting full-year consolidated sales of JPY6.4bn (+28.7% YoY), an operating profit of JPY850mn (+67.5% YoY), recurring profit of JPY850mn (+68.1% YoY), and net income of JPY540mn (+65.5% YoY). The company did not quantify the extent to which it expects any ongoing fallout from the coronavirus pandemic to act as a drag on business, but did say it saw the economy continuing to recover as more and more people were vaccinated and infection mitigation measures otherwise kept infections under control both at home and abroad. At its the mainstay of the Idle Real Estate Utilization business, the company is looking for continued strong growth in sales and earnings from its Monthly Parking Lot Subleasing Service operations, where it expects to continue expanding the number of parking spaces under contract with owners and subleased to end-users, and also sees further growth in earnings at its Visualization business.

In terms of its growth strategy, the company continues to believe three measures will drive growth: 1) increasing the quantity and quality of information in its parking lot database; 2) further penetrating existing markets and expanding the operating area for the subleasing service; and 3) expanding the scope of the company’s business through the creation of businesses that utilize other kinds of idle real estate than parking lots.

Strengths and weaknesses

Strengths
◤ Leverages technology to manage parking lots
◤ Maintains the trust of real estate management companies
◤ Portal site has extensive information on monthly parking lots

Weaknesses
◤ Subleasing business skewed toward certain property types
◤ A shortage of IT personnel familiar with parking lot leasing
◤ Brand recognition low compared to real estate-related websites

Key financial data

Income statement		FY09/13	FY09/14	FY09/15	FY09/16	FY09/17	FY09/18	FY09/19	FY09/20	FY09/21	FY09/22
(JPYmn)		Parent	Parent	Parent	Parent	Parent	Parent	Parent	Cons.	Cons.	Cons. Est.
Sales		245	320	510	804	1,221	1,845	2,728	3,814	4,974	6,400
	YoY	-	30.6%	59.6%	57.5%	51.9%	51.2%	47.9%	39.8%	30.4%	28.7%
Gross profit		-	-	-	370	555	828	1,169	1,542	2,106	-
	YoY	-	-	-	-	50.2%	49.1%	41.2%	31.9%	36.6%	-
	Gross profit margin	-	-	-	46.0%	45.5%	44.9%	42.8%	40.4%	42.3%	-
Operating profit		-	-	-	-27	31	165	94	224	508	850
	YoY	-	-	-	-	-	430.2%	-43.2%	139.1%	126.1%	67.5%
	Operating profit margin	-	-	-	-3.3%	2.6%	9.0%	3.4%	5.9%	10.2%	13.3%
Recurring profit		-9	-29	-44	-28	30	150	95	223	506	850
	YoY	-	-	-	-	-	400.5%	-36.8%	135.5%	126.5%	68.1%
	Recurring profit margin	-3.7%	-9.2%	-8.6%	-3.4%	2.5%	8.1%	3.5%	5.9%	10.2%	13.3%
Net income		-11	-35	-50	-28	37	110	56	139	326	540
	YoY	-	-	-	-	-	197.6%	-48.8%	147.9%	133.9%	65.5%
	Net margin	-	-	-	-	3.0%	6.0%	2.1%	3.7%	6.6%	8.4%
Per-share data (JPY)
Shares issued (year-end; '000)		0	21	21	23	2,406	2,906	2,922	2,922	2,956	-
EPS		-10.9	-33.7	-47.3	-25.7	32.0	90.8	38.5	95.9	112.9	185.5
EPS (fully diluted)		-	-	-	-	-	-	-	-	109.2	-
Dividend per share		-	-	-	-	-	-	-	-	20.0	30.0
Book value per share		58.2	-33.2	-80.4	-89.4	28.5	574.1	611.5	660.5	441.3	-
Balance sheet (JPYmn)
	Cash and cash equivalents	-	-	-	21	169	1,007	769	1,078	1,481	-
Total current assets		-	-	-	87	273	1,168	1,037	1,397	1,885	-
Tangible fixed assets		-	-	-	14	16	19	84	89	106	-
Investments and other assets		-	-	-	47	57	93	284	268	317	-
Intangible assets		-	-	-	12	11	11	117	137	168	-
Total assets		-	-	-	160	357	1,290	1,522	1,891	2,475	-
	Accounts payable	-	-	-	0	0	0	0	0	0	-
	Short-term debt	-	-	-	0	10	12	30	37	48	-
Total current liabilities		-	-	-	114	140	241	228	416	564	-
	Long-term debt	-	-	-	29	39	18	105	143	125	-
Total fixed liabilities		-	-	-	148	183	215	400	521	616	-
Total liabilities		-	-	-	262	323	456	629	937	1,180	-
Total net assets		-	-	-	-103	34	834	893	953	1,295
Total liabilities and net assets		-	-	-	160	357	1,290	1,522	1,891	2,475	-
Total interest-bearing debt		-	-	-	29	49	30	135	180	172	-
Cash flow statement (JPYmn)
Cash flows from operating activities		-	-	-	38	62	192	17	367	519	-
Cash flows from investing activities		-	-	-	-5	-12	-17	-353	-63	-114	-
Cash flows from financing activities		-	-	-	-13	98	664	98	-37	-2	-
Financial ratios
ROA (RP-based)		-	-	-	-17.3%	11.6%	18.2%	6.7%	13.1%	23.2%	-
ROE		-	-	-	-	-	25.3%	6.5%	15.2%	29.2%	-
Equity ratio		-	-	-	-	9.6%	64.7%	58.7%	50.3%	51.9%	-

Source: Shared Research based on company data; per-share data are adjusted for stock splits.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company moved to consolidated accounting in FY09/20. YoY changes shown for projected FY09/20 results reflect comparisons of consolidated results in FY09/20 with parent company results in FY09/19.
Note: The company plans to carry out a 2-for-1 stock split on February 1, 2021.

Recent updates

Reduction of capital and establishment of subsidiary

2021-11-25

On November 24, 2021, AZoom Co., Ltd. announced a reduction of capital.

The company announced that it had resolved at a board of directors' meeting held on the same day to add to the agenda of the 12th ordinary general meeting of shareholders scheduled for December 21, 2021 a proposal to reduce its equity capital.

The reason for reducing the amount of capital is to make its capital policy more nimble and flexible going forward as part of its overall financial strategy. Capital of JPY419,905,000 as of September 30, 2021 is to be reduced by JPY372,905,000, which is to be transferred to other capital surplus. The remaining capital amount is JPY47,000,000. This does not affect the number of outstanding shares or the number of shares held by shareholders. Net assets per share is also unaffected, because there is no change to total net assets.

AZoom Co., Ltd. also announced the establishment of a subsidiary.

The company announced that it had resolved at a board of directors' meeting held on the same day to establish a subsidiary.

The new subsidiary will be named Divers Co., Ltd., a wholly owned subsidiary of AZoom engaging in the employment agency and recruitment-related consultancy businesses. AZoom plans to harness the know-how it has acquired in its hiring activities in the new business. The date of establishment is scheduled for December 24, 2021. See company release for details.

Full-year FY09/21 flash update

2021-11-12

On November 11, 2021, AZoom Co., Ltd. announced earnings results for full-year FY09/21; see the results section for details.

The company also made an announcement on dividends of surplus.

Announcement of the establishment of a subsidiary

2021-10-11

AZoom Co., Ltd. announced the establishment of a subsidiary.

The company announced that its Board of Directors reached the decision to establish a subsidiary during a meeting held on the same day.

This new subsidiary will be named Teppeki Co., Ltd. and will primarily conduct rent guarantee operations. It will be a wholly owned subsidiary of AZoom (capital of JPY50mn), and Yuji Takahashi, who currently holds the office of director at AZoom, will serve as president and representative director of the subsidiary. The company plans to establish this subsidiary on October 15, 2021, and expects that it will begin conducting business on November 1, 2021.

AZoom operates within the monthly parking space industry, where parking lot owners face the headache of sending reminder notices to individuals who have failed to pay their rental fees and performing corresponding administrative work. The company decided to establish a new subsidiary with the goal of providing solutions to these issues. The new subsidiary will primarily furnish rent guarantee and payment reminder services for parking lot owners while also providing management systems.

Due to the spread of the COVID-19 pandemic, needs associated with digitalization (elimination of in-person meetings, paper-based communication, personal seals, etc.) have become more prevalent within the monthly parking space industry. Accordingly, businesses within the industry have expressed demand for communication methods that do not require in-person meetings or face-to-face contact and operational streamlining, as well as other means of achieving further improvements in productivity. AZoom believes that the establishment of this subsidiary will help facilitate digitalization of operations related to the acquisition of monthly parking space users, the forming of contracts with them, and associated administrative tasks. At the same time, it projects that this subsidiary will contribute to improved efficiency and revitalization throughout the industry.

Trends and outlook

Quarterly trends and results

Cumulative		FY09/19				FY09/20				FY09/21				FY09/21
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Sales		575	1,224	1,941	2,728	843	1,775	2,749	3,814	1,109	2,328	3,625	4,974	103.6%	4,800
	YoY	-	-	46.2%	47.9%	46.7%	45.0%	41.7%	39.8%	31.6%	31.2%	31.9%	30.4%		25.8%
Gross profit		240	533	849	1,169	326	696	1,088	1,542	459	985	1,546	2,106
	YoY	-	-	38.9%	41.2%	35.4%	30.5%	28.1%	31.9%	40.9%	41.6%	42.1%	36.6%
	Gross profit margin	41.8%	43.6%	43.8%	42.8%	38.6%	39.2%	39.6%	40.4%	41.4%	42.3%	42.7%	42.3%
SG&A expenses		224	494	775	1,075	325	651	980	1,317	358	732	1,145	1,598
	YoY	-	-	61.5%	62.2%	44.8%	31.8%	26.5%	22.5%	10.2%	12.3%	16.8%	21.3%
	SG&A ratio	39.0%	40.4%	39.9%	39.4%	38.5%	36.7%	35.7%	34.5%	32.3%	31.4%	31.6%	32.1%
Operating profit		16	39	74	94	1	44	108	224	101	254	401	508	112.8%	450
	YoY	-	-	-43.6%	-43.2%	-93.8%	14.4%	45.0%	139.1%	9,968.3%	470.4%	272.8%	126.1%		100.5%
	Operating profit margin	2.8%	3.2%	3.8%	3.4%	0.1%	2.5%	3.9%	5.9%	9.1%	10.9%	11.1%	10.2%		9.4%
Recurring profit		16	39	75	95	1	44	107	223	101	253	400	506	112.4%	450
	YoY	-	-	-42.4%	-36.8%	-95.4%	13.8%	43.1%	135.5%	13,599.7%	471.9%	274.7%	126.5%		101.6%
	Recurring profit margin	2.8%	3.2%	3.8%	3.5%	0.1%	2.5%	3.9%	5.9%	9.1%	10.9%	11.0%	10.2%		9.4%
Net income		11	20	45	56	-2	23	58	139	64	159	255	326	113.3%	288
	YoY	-	-	-45.6%	-48.8%	-	18.2%	27.2%	147.9%	-	581.2%	341.7%	133.9%		106.5%
	Net margin	1.8%	1.6%	2.3%	2.1%	-	1.3%	2.1%	3.7%	5.8%	6.8%	7.0%	6.6%		6.0%
Quarterly		FY09/19				FY09/20				FY09/21
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Sales		575	650	716	788	843	932	974	1,065	1,109	1,220	1,296	1,350
	YoY	-	-	-46.0%	52.0%	46.7%	43.5%	36.0%	35.2%	31.6%	30.9%	33.1%	26.7%
Gross profit		240	293	316	320	326	370	392	454	459	527	561	560
	YoY	-	-	-48.3%	47.5%	35.4%	26.5%	24.0%	41.9%	40.9%	42.2%	43.0%	23.3%
	Gross profit margin	41.8%	45.1%	44.1%	40.6%	38.6%	39.7%	40.2%	42.6%	41.4%	43.2%	43.2%	41.5%
SG&A expenses		224	270	281	300	325	327	329	337	358	374	413	453
	YoY	-	-	-41.5%	64.0%	44.8%	21.0%	17.1%	12.3%	10.2%	14.4%	25.7%	34.5%
	SG&A ratio	39.0%	41.6%	39.2%	38.1%	38.5%	35.1%	33.8%	31.6%	32.3%	30.7%	31.9%	33.6%
Operating profit		16	23	35	20	1	43	63	117	101	153	147	106
	YoY	-	-	-73.2%	-41.7%	-93.8%	92.0%	78.8%	494.3%	9,968.3%	251.1%	133.5%	-9.0%
	Operating profit margin	2.8%	3.5%	4.9%	2.5%	0.1%	4.7%	6.5%	11.0%	9.1%	12.5%	11.4%	7.9%
Recurring profit		16	23	36	20	1	43	63	117	101	152	147	106
	YoY	-	-	-72.4%	-1.6%	-95.4%	91.5%	74.9%	476.8%	13,599.7%	249.6%	135.3%	-9.2%
	Recurring profit margin	2.8%	3.5%	5.0%	2.6%	0.1%	4.7%	6.4%	10.9%	9.1%	12.5%	11.3%	7.8%
Net income		11	9	26	11	-2	26	34	82	64	95	96	71
	YoY	-	-	-69.2%	-59.1%	-	179.4%	34.0%	656.9%	-	269.8%	179.7%	-13.2%
	Net margin	1.8%	1.4%	3.6%	1.4%	-	2.8%	3.5%	7.7%	5.8%	7.8%	7.4%	5.3%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company moved to consolidated accounting in FY09/20. YoY changes shown for projected FY09/20 results reflect comparisons of consolidated results in FY09/20 with parent company results in FY09/19.

Sales by quarter

Vehicle spaces leased from lessors

Operating profit by quarter

Vehicle spaces subleased to end-users

Source: Shared Research based on company data
Note: Figures displayed indicate financial year-end results; Average utilization rates were calculated using annual averages.

FY09/21 results (out November 11, 2021)

Overview

Full-year consolidated results FY09/21 (October 2020–September 2021)

Sales: JPY5.0bn (+30.4% YoY)
Operating profit: JPY508mn (+126.1% YoY)
Recurring profit: JPY506mn (+126.5% YoY)
Net income: JPY326mn (+133.9% YoY)

Industry trends and operating environment

At the Idle Real Estate Utilization segment, where its main focus is parking lots, the company saw continued growth in demand on both sides of its business with its online service generating more inquires from would-be users for parking spaces available to rent on a monthly basis, as well as more interest from property owners seeking to monetize the empty parking spaces at their office buildings, condominium complexes, and other properties. In years past, the company said most people looking for rental parking spaces would have made an inquiry at a real estate broker with a brick-and-mortar storefront. The COVID-19 pandemic changed that, and since the outbreak the company has been seeing more and more people do online searches for monthly rental parking spaces using its portal website, and this in turn has led to increases in the total number of rental parking space inquires it has received.

At its Visualization business, demand for its cloud-based CG imaging services has been generally weak in the wake of the pandemic as businesses that would normally be the biggest users of its real estate visualization services—real estate developers of lodging and commercial properties—were hit hard by the pandemic-driven downturn in the economy. That said, demand on this front appears to be slowly on the mend now that vaccinations against the virus have started, and economic activity is starting to pick up again. Adding further to the momentum, the company has launched a new initiative to expand its business reach with the rollout of its new Open Office VR service in June 2021.

Sales and earnings both stronger than expected

FY09/21 saw continued growth in the number of inquiries into the availability of monthly rental parking spaces through the company's portal website (CarParking), with the total number of inquires rising 34.1% YoY as more people took to the internet in search of longer-term parking spaces; this in turn led to further contributions to sales and earnings from increases in both the number of parking spaces under contract with owners and subleased to end-users. The Visualization business saw positive growth in sales thanks increases in project work using its virtual reality and 3-D computer graphics imaging technology, and this brought this segment into the black at the operating profit level.

Breakdown of results by segment

Idle Real Estate Utilization segment

Earnings at the Idle Real Estate Utilization segment come mainly from the company's Monthly Parking Lot Introduction Service and its Monthly Parking Lot Subleasing Service (previously disclosed when the company reported on a non-consolidated basis).

For FY09/21, the Idle Real Estate Utilization segment reported full-year sales of JPY4.8bn (+29.4% YoY) and a segment operating profit of JPY502mn (+98.0% YoY).

Monthly Parking Lot Introduction Service

For FY09/21, the Monthly Parking Lot Introduction Service reported full-year sales of JPY482mn (+18.4% YoY).

The number of inquiries about parking spaces continued to grow, rising 34.1% YoY to 250,098.

Monthly Parking Lot Subleasing Service

For FY09/21, the Monthly Parking Lot Subleasing Service reported full-year sales of JPY4.3bn (+30.7% YoY).

Subleasing metrics: As of the end of FY09/21, the number of leased parking spaces under management totaled 14,403 while the number of spaces subleased to end-users total 13,261 (for an occupancy rate of 92.1%).

Visualization segment

The Visualization segment consists mainly of the two new subsidiaries (CGWorks Co., Ltd. and Azoom Vietnam Inc.) that were included in the company's publically reported accounts when it began reporting on a consolidated basis.

FY09/21 segment sales of JPY132mn were up 84.6% YoY; a full-year segment operating profit of JPY6mn compares with a year-earlier loss of JPY29mn.

In addition to laying the groundwork for future growth by helping existing employees improve their technical skills and building out its sales team so as to be in a position to offer a wider variety of proposals to client companies, in June 2021 the company launched its new Open Office VR service.

Although the long shadow of the pandemic continues to hang over operating environment, with this new service the company aims to expand its business by using VR technology to reach out to clients in a remote work environment.

Company forecast for FY09/22

		FY09/20 (consolidated)			FY09/21 (consolidated)			FY09/22 (Cons.)
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	1H Est.	2H Est.	FY Est.
Sales		1,775	2,039	3,814	2,328	2,646	4,974	2,800	3,600	6,400
	YoY	45.0%	35.6%	39.8%	31.2%	29.8%	30.4%	20.3%	36.0%	28.7%
Cost of sales		1,079	1,194	2,273	650	1,526	2,869
Gross profit		696	846	1,542	985	1,120	2,106
	Gross profit margin	39.2%	41.5%	40.4%	42.3%	42.3%	42.3%
SG&A expenses		651	666	1,317	358	1,240	1,598
	SG&A ratio	36.7%	32.6%	34.5%	15.4%	46.9%	32.1%
Operating profit		44	180	224	254	254	508	335	515	850
	YoY	14.4%	227.4%	139.1%	470.4%	41.0%	126.1%	32.0%	102.9%	67.5%
	Operating profit margin	2.5%	8.8%	5.9%	10.9%	9.6%	10.2%	12.0%	14.3%	13.3%
Recurring profit		44	179	223	253	253	506	335	515	850
	YoY	13.8%	220.0%	135.5%	471.9%	41.3%	126.5%	32.5%	103.6%	68.1%
	Recurring profit margin	2.5%	8.8%	5.9%	10.9%	9.6%	10.2%	12.0%	14.3%	13.3%
Net income		23	116	139	159	167	326	214	326	540
	YoY	18.2%	218.0%	147.9%	581.2%	44.1%	133.9%	34.7%	94.8%	65.5%
	Net margin	1.3%	5.7%	3.7%	6.8%	6.3%	6.6%	7.6%	9.1%	8.4%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Company forecast for full-year consolidated results for FY09/22

Sales: JPY6.4bn (+28.7% YoY)
Operating profit*: JPY850mn (+67.5% YoY)
Recurring profit: JPY850mn (+68.1% YoY)
Net income: JPY540mn (+65.5% YoY)
*Assumes operating profit margin of 13.3% (versus 10.2% in FY09/21)

Idle Real Estate Utilization business

Based on its expectation of continued growth in the number of parking space inquiries in the year ahead, the company sees sales and earnings at both its Monthly Parking Lot Introduction Service and Monthly Parking Lot Subleasing Services continuing to grow in FY09/22 and, to meet these goals, plans to expand its marketing teams in both these areas.

FY09/22 plans also call for the further development of its business in regions where it already has a presence, with this effort not limited to just the Tokyo metropolitan area but including major cities outside of Tokyo.

Visualization business

The Visualization business entails using 3D computer graphic processing and virtual reality technology to visually convey real estate information, including showing how spaces might be put to use and what finished properties will look like.

The company sees demand for its virtual reality technology service picking up in the year ahead as demand for computer imaging services recovers among large customers (particularly the display industry) and more consumption spending goes to online markets. In addition to the top-line growth, the company also sees production costs coming down and capacity utilization rates rising as more CG production work is done offshore by its subsidiary in Vietnam.

Medium-term outlook

The company’s management plan through FY09/21 reflects its largely unchanged expectations that growth in the parking lot business will remain robust, driving earnings. Since the plan was drawn up before the COVID-19 outbreak, its FY09/21 performance forecast differs from that which the company announced along with its FY09/20 results on November 9, 2020. For FY09/21, the company targets sales of JPY6.5bn, operating profit of JPY1.1bn, OPM of 17%, and ROE of 36%. To reach these levels, CAGR for the three years leading up to FY09/21 would be 52% for sales and 88% for operating profit. The company expects expansion in the parking lot business, particularly the subleasing service, to drive this growth.

Medium-term management plan

Number of leased parking spaces

Source: Shared Research based on company data

The company’s medium-term strategy also calls for growth on three fronts:

Expand the parking lot database

Increase the business area and service the area more thoroughly

Move into business areas that utilize idle real estate in other ways

The first two items refer to expansion of the company’s two existing services, the Monthly Parking Lot Introduction Service and the Monthly Parking Lot Subleasing Service. The company is currently searching for ways to enact the third strategy, of moving into areas other than parking lots. This business would fall under the “Other Services” category. Although some services are gaining traction, this category currently accounts for about 2% of total sales.

Expanding the parking lot database

One medium-term strategy is to expand listings on CarParking, the portal site that underlies the parking lot business, onto a nationwide scale. Increasing both the quality and quantity of information on parking spaces listed on the site should attract more people, the company thinks. A second aim in expanding the site is to obtain more information about people who wish to rent parking lots. This would help increase the quality of the database the company uses to analyze parking lot market prices. In fact, the company’s parking lot database is already nationwide, but it has relatively few listings outside the Tokyo metro area. In central Tokyo and regional hubs, parking lots are being built in line with the new construction of office buildings and condos, but many of these areas are not yet covered by the company’s database. The company plans to expand coverage by implementing the measures outlined below.

Gathering local information efficiently

Expanding the quantity of parking lot data is important to the company as it is a way to ensure AZoom’s site ranks highly on search websites. Gathering local parking lot data is labor-intensive, however. The company is addressing this situation by using the “coconi” framework to form a network of crowdworkers throughout Japan. Through this network, the company asks people who live in a specific region for the information it requires and pays a small monetary compensation for their service; local people take a moment from their daily routines to send local parking lot information to the company. These workers use their smartphones to gather information on local parking lots (dimensions, overview, image, local conditions, and other details that might be useful to a person interested in renting space). This arrangement suits crowdworkers, as it requires little time or effort. The company benefits by obtaining the information it needs inexpensively. coconi has three key features.

A crowd service specialized for obtaining location information

Matches location information with the people who wish to use spaces (or their proxies)

Smartphones used to gather local information

How coconi works

Source: Shared Research based on company data

Penetrate the existing business area more deeply and expand its scope

AZoom’s parking lot database covers all of Japan, but currently the Monthly Parking Lot Subleasing Service is focused mainly on the Tokyo metro area, which has numerous office buildings and condos. However, condos and office buildings are being built in major cities nationwide, and problems related to vacancies in parking lots are possible in these areas as well. Accordingly, the company plans to expand the coverage of its subleasing service to include these locations. AZoom currently has five regional branches: for Tokyo, Kanto (centered on Yokohama), Kansai (Osaka), Chubu Tokai (Nagoya), Kyushu (Fukuoka), and Hokkaido (Sapporo). To expand nationwide, the company plans to open more regional branches in Tohoku, Chugoku, Shikoku, and other areas.

AZoom says its strategy has been to stabilize earnings by shifting from the spot earnings model to a recurring-revenue model. The company receives one-time earnings for the online introduction of parking lots (receives commissions from both the property owner and the lessor when a rental contract is concluded). The amount of cash the company receives at the time of contract can also vary. For instance, the company sometimes discounts the introduction fee it receives from a property owner if the owner agrees to list his property on the company’s website. Owners also may not pay as expected.

The subleasing service generates a different type of cash flow. Once the company leases a property from an owner and subleases it to an end-user, the company continues to earn income as long as the contract with the owner remains in place. Increasing the number of owner contracts leads to more properties under management, increasing the likelihood of business growth.

That said, the parking lot introduction and subleasing businesses are interdependent. Having the introduction business makes the company’s subleasing service more efficient, it believes. Thus, AZoom plans to continue operating both businesses while shifting the weight of its business toward the recurring-revenue business, with the aim of stabilizing earnings.

Plans to expand in new areas

Source: Shared Research based on company data

Expanding from parking lots into other categories of real estate

The company currently utilizes idle real estate in a number of ways other than for parking spaces, but sales from these businesses are small. The company is also looking for new ways to create a new pillar of business by leveraging the expertise acquired through the parking lot business. Focusing initially on other ways to use idle real estate, the company has launched businesses involving information on open outdoor advertising space, and vacant parking lots for motorcycles. Shared Research understands that each of these businesses uses know-how acquired through the parking lot business.

Expanding application of parking-lot operation expertise

Source: Shared Research based on company data

Business

Business model

The company combines information technology and real estate to realize its management philosophy of “putting idle real estate to productive use.” Businesses that make effective use of vacant parking spaces by matching property owners with renters account for the lion’s share of AZoom’s sales. The business model of the company’s Monthly Parking Lot Introduction and Monthly Parking Lot Subleasing services are explained below. AZoom focuses on monthly parking lots rather than lots where space is rented by the hour.

The company has a portal site, CarParking, which lists monthly parking lots, as well as a site called CarPark, which concentrates specifically on Tokyo’s 23 wards (below, referred to collectively as “CarParking”). The company provides two main services: Monthly Parking Lot Introduction and Monthly Parking Lot Subleasing. The first service involves matching property owners and renters through the CarParking platform; with the second, the company leases vacant parking spaces from property owners and subleases them to end-customers.

The company’s business model for the Monthly Parking Lot Introduction Service involves expanding its database of information on monthly parking sites throughout Japan through its portal site. As the number of introductions increases and the properties available for subleasing are added to the pool during the process, the number of people using the company’s services grows, boosting earnings. From another perspective, parking lot introductions generate spot earnings, while subleasing provides recurring revenue. In this sense, the company leverages information amassed through its Monthly Parking Lot Introduction Service (spot business model) to achieve business growth in the Monthly Parking Lot Subleasing Service (recurring-revenue business model).

Spot business model: Increase number of search website listings  Increase number of introductions

Recurring-revenue business model: Increase spaces taken on for subleasing  Increase number of subleased properties and the occupancy rate

Monthly parking lot business (introduction and subleasing services)

Sales by service category

Source: Shared Research based on company data

Overview of business by segment

AZoom moved to consolidated accounting in Q1 FY09/20. Prior to that, the company only reported nonconsolidated results of AZoom Co., Ltd. Included in consolidated results are two subsidiaries established in 2019: CGworks Co., Ltd. (established in March 2019) and AZoom Vietnam Inc. (established in September 2019). The company’s two reportable segments are the Idle Real Estate Utilization business, which includes the Monthly Parking Lot Introduction and Monthly Parking Lot Subleasing services and related businesses run by the parent company, and the Visualization business operated chiefly by the newly consolidated CGworks and AZoom Vietnam.

Idle Real Estate Utilization business

This segment comprises the Monthly Parking Lot Introduction and Monthly Parking Lot Subleasing services and real estate utilization-related businesses. Sales and operating profit mostly derive from the two parking lot-related services, with the Monthly Parking Lot Introduction service generating 10.9% of the JPY3.7bn in sales in FY09/20, Monthly Parking Lot Subleasing service generating 85.9%, and other businesses generating 3.2%. The company does not report service-specific operating profit.

Monthly Parking Lot Introduction Service

With this service, the company matches the owners of available parking spaces with people who wish to rent them. When the introduction results in a rental agreement, the company receives parking space introduction fees from renters and, depending on their business practices, sometimes receives customer introduction fees from owners. This service is available nationwide, with data on vacant parking spaces throughout Japan listed on the company’s search website (vacancy statuses at the time of search must be individually verified). Owners of monthly parking lots post information about available spaces on the site. People searching for monthly parking spaces can search for them via the company’s website, and, assuming that they wish to sign a rental agreement, fill in an inquiry form on the site (name, contact information, desired area, model of car, etc.). In this way, potential renters verify current parking space vacancy statuses and proceed with rental agreements. Earnings for the company are proportional to the number of agreements reached, so it works to make the site as attractive as possible to potential renters.

People who wish to rent a parking space have several options. They can physically go to look, contact a real estate agent directly, or conduct an internet search. Before the internet, people typically walked around their neighborhood looking for a spot and then contacted a management company (real estate agent) for an introduction. The internet has made it possible to list vacant spaces, expanded the pool of potential customers, and spawned numerous specialized search websites like the one AZoom provides. The company says that each of the three methods have advantages and disadvantages, but that internet searches are the most convenient for customers.

AZoom’s parking lot search website lists monthly parking lots around Japan. The company believes its site ranks higher than peer companies that publicize their number of listings and that its own site is the most extensive in Japan, by number of listings. The company explains it achieved this level of differentiation by concentrating its data gathering on monthly parking sites from early on and building a website based on this information. The structure of AZoom’s search website is not markedly different than those of similar companies. However, the company says it has created a virtuous cycle by being popular with users for its number of listings, which in turn attracts more listings.

Business model

With its Monthly Parking Lot Introduction Service, the company matches available parking lots with people who wish to rent them. For this reason, assembling registrations of parking lots from their owners is clearly important, but the company must also secure a higher number of inquiries from potential renters than its competitors. Consequently, gathering more data from parking lot owners and renters than other companies have is important. Having large amounts of data allows the company to be more active in proposing (introducing) parking lots to potential customers. The company does not disclose its rate of successful contracts relative to the number of inquiries it receives. Fees are success-based; when an introduction via its site results in a rental agreement, the company typically receives the equivalent of one month’s rent from the renter. The company sometimes receives parking lot introduction fees from owners, although this depends on each owner’s individual business practices. These fees are the main source of revenue for this business, which therefore generates spot earnings.

Monetization framework

AZoom earns introduction fees from inquiring users who locate properties using the portal site when the two parties conclude a rental agreement. AZoom is not a party to that agreement; it merely provides the introduction. The company receives no usage fees from inquiries alone, which accordingly provide no earnings on their own. Inquiring users must reach rental agreements with parking lot owners in order for the company to receive introduction fees. Basically, rental agreements are normally formed between just property owners and inquiring users. However, the company will sometimes participate in the process in a variety of ways, including assisting with the paperwork and sending invoices.

Registered users contact owners (or owners’ real estate agents) via the website when they find a property that meets their requirements. Although AZoom is not involved in contracts between the property owner and renter, it requires a rental agreement confirmation document in order to bill the introduction fee. Based on that document, the company invoices the renter for the introduction fee, receiving cash in return. Every month thereafter, the individual pays rent directly to the owner.

Parking lot renters pay a commission to the company when a rental contract is concluded as the result of an introduction on the company’s site. Commission levels differ somewhat depending on the price of monthly rent, but they typically equal one month’s rent. Owners as well often pay introduction fees to the company that are equivalent to one month of the rent paid by the user. However, the rates for these introduction fees may vary due to differences in offers made by owners during negotiations regarding conditions for posting parking lot data.

Differences between conventional business customs and the Monthly Parking Lot Introduction Service

Source: Shared Research based on company data

AZoom’s search website (CarParking)

The parking lot data on the company’s CarParking website comes from local real estate agents and property owners throughout Japan. The site is configured to allow drill-down searches, but so are many of the sites operated by AZoom’s peers. Rather, the company’s differentiator is its number of listings.

The top page of the CarParking site shows a map of Japan, divided by region. Selecting the target area takes the user to a more detailed map of that area. From there, s/he can decide what registered properties to view. The user can also select one of the green pointers to access further detail (property address, rental conditions, etc.). Some data is incomplete; some property records may not indicate monthly rents or other details (often, according to the owner’s wishes). In such cases, the potential renter needs to make direct contact to obtain more detailed information.

AZoom’s parking lot search website (CarParking)

Top page

Area search page (in AZoom’s vicinity, for illustrative purposes)