ZIGExN is an online media company that matches the needs of individuals and companies in areas surrounding major life events (such as employment, housing, travel, auto purchase, and marriage). It operates a number of websites dedicated to job search, rental property information, home renovation company comparisons, hotel and airline reservations, used car sales, marriage agency comparisons, and other services. In FY03/21, the company had revenue of JPY12.6bn and an operating loss of JPY1.1bn, stemming from impairment losses of JPY4.0bn. Adjusted for the impairment loss, EBITDA was JPY3.8bn. As of FY03/20, revenue has grown YoY in each of the 13 years since establishment in June 2006. In addition to organic growth, ZIGExN has expanded through the acquisition of 19 companies. In FY03/21, performance was affected by COVID-19.

The company reports under a single segment, the Life Service Platform segment. The company divides this segment into three categories. Vertical HR (FY03/21 revenue of JPY4.8bn, 38.2% of total revenue) handles recruitment media for beauty services and nursing care. Living Tech (FY03/21 revenue of JPY3.4bn, 27.0% of total revenue) covers media related to properties and housing. Life Service (FY03/21 revenue of JPY4.4bn, 34.8% of total revenue) oversees media related to travel, used vehicle sales, and some other areas. The company sees Vertical HR and Living Tech as core businesses and aims to generate annual revenue of more than JPY10.0bn from each by FY03/26.

In Vertical HR, the company operates recruitment portals in the fields of beauty services (REJOB) and nursing care and childcare (MIRAxS Kaigo and MIRAxS Hoiku). With REJOB, the company generates revenue from monthly posting fees (several thousand yen) paid by beauty salons and other customers, as well as success fees (approximately JPY100,000) when a hire is made. For MIRAxS Kaigo, the company generates recruitment referral fees and staff dispatching fees. (Success fees equate to around 20% of annual salaries.) The company's strategy is to expand its customer base by consistently charging lower posting fees than other sites. The company keeps fees low by using its proprietary matching technology (technology that connects the needs of users and companies). The company attributes its revenue growth to success in making media generally more efficient for beauty salons and other clients. The company acquired REJOB in 2014. REJOB is the industry leader by number of job listings (more than 14,000 listings as of November 2021).

In Living Tech, the company operates SMOCCA, a website for rental property information that targets individuals (matching real estate brokers and individuals), and RESHOP-NAVI, which enables individuals to search for home renovation companies. Revenues come from success fees linked to user inquires (requests for materials or inquiries for properties) and fees for referrals. SMOCCA’s application fees are around JPY3,000 each (as of March 2021). The company launched SMOCCA in 2010. SMOCCA is large by industry standards, though it has fewer listings than industry leader SUUMO. (Approximately 4mn listings as of October 2021, compared with around 7mn listings for SUUMO, which is operated by Recruit Holdings Co., Ltd., TSE1: 6098). RESHOP-NAVI, which the company acquired in 2020, led the industry by number of quotes provided (7,509) in the same year.

In Life Service, the company posts information related to life events in such fields as travel, automobiles, and part-time jobs, matching the needs of individuals and companies. In the travel category, the company handles information related to hotels and airline tickets. It generates revenue from service fees (i.e., difference between the amount received from the travel agency or traveler and the cost of accommodation or air tickets). In the non-travel category, the company operates matching sites that provide information on used cars and part-time jobs, as well as a sites that compare marriage agencies. Arubaito EX (part-time jobs) and Chukosha EX (cars) are aggregation media, meaning they post information in bulk, operating in collaboration with multiple large search sites. Aggregation sites provide more information than a single search site can, which attracts more visitors, reducing the information provider’s cost of attracting customers.

According to the company, the reason its specialized media are among the largest in their respective industries (by number of listings) is that the company has the technology to attract users (individuals) to its websites and excellent matching technology to connect the needs of companies and users. By operating about 30 media in multiple domains, the company accumulates diverse and abundant data, as well as algorithms (methods for combining data) based on the data. The company's value proposition to customers and users is that it encourages users to take action (such as applying for jobs or making purchases) through enhanced matching technology.

For the 10 years following its establishment in 2006, the company took the lead over competitors in building aggregation sites that allow bulk searches of information from major media on its own platform. However, in FY03/20 the company shifted its focus to building specialized media for each area of expertise on its own platform. The company changed strategy for three reasons: aggregation media are highly dependent on each of its customers (i.e., major site operators); the resulting customer risk leads to earnings volatility; and the scalability of earnings is limited, based on customers’ budgets. Now, the company is building a revenue structure based on its own media that can manage content autonomously by leveraging its ability to attract users, as well as its matching technology.

Between FY03/16 and FY03/20, the average GPM was 85.9%, and OPM was 32.2%. Both margins gradually trended downward from FY03/16 (GPM of 88.8%, OPM of 35.0%) to FY03/20 (GPM of 84.3%, OPM of 28.8%). ZIGExN has acquired 19 companies since FY03/15. As a result, growth in personnel costs (CAGR of 26.0%) and depreciation/amortization (CAGR of 73.2%) has outpaced the rise in revenue. Revenue grew at a CAGR of 20.1% over that period, but personnel costs as a percentage of revenue increased 5.5pt. In FY03/21, the company recorded impairment losses on goodwill, due to the impact of COVID-19 on travel and lower profitability of some job portals.

Earnings trends

In FY03/22, revenue was JPY15.3bn (+21.6% YoY), operating profit was JPY3.3bn (operating loss of JPY1.1bn in FY03/21), and the profit attributable to owners of the parent was JPY2.3bn (loss of JPY2.0bn in FY03/21). In Vertical HR, the number of business sites posting advertisements for REJOB and MIRAxS reached a record high. In Living Tech, the number of postings in real estate-related media by real estate brokers and home renovation companies was solid. In Life Service, the company made favorable progress on integrating the comparison sites it acquired in December 2020.

For FY03/23, the company forecasts revenue of JPY18.3bn (+19.5% YoY), operating profit of JPY3.9bn (+17.7% YoY), EBITDA of JPY4.9 (+13.7% YoY), pre-tax profit of JPY3.9bn (+17.9% YoY), and profit attributable to owners of the parent of JPY2.7bn (+17.2% YoY). The company anticipates revenue growth in all service categories, with revenue of JPY6.6bn (+9.6% YoY) from Vertical HR, JPY5.1bn (+27.0% YoY) from Living Tech, and JPY6.5bn (+25.2% YoY) from Life Service. In FY03/23, which is the second year of its second medium-term management plan, the company plans to continue making upfront investments and driving further revenue growth.

In May 2021, the company announced its second medium-term management plan, called Z CORE. The five-year plan runs from FY03/22 to FY03/26, targeting final-year revenue of JPY35.0bn and EBITDA of more than JPY10.0bn. In its core businesses (Vertical HR and Living Tech), the company expects to generate average annual growth of 25% and 35%, respectively. If it reaches these targets, each of these businesses will be generating revenue of around JPY15.0bn by FY03/26. In the first half of the five-year period, the company intends to focus on expanding the customer base by frontloading investment (advertising and product investments). In terms of its business model, in addition to expanding its domains in the media business, the company plans to provide a business-support type of SaaS to help customers with digitalization. While the company plans to meet its numerical targets through organic growth, M&A also remains a viable option.

Strengths and weaknesses

Strengths

In 2008, the company took the lead over competitors in developing aggregation media. It also developed matching technology (to connect the needs of individuals and businesses) by leveraging attribution data about clients and users that it accumulated through its specialized media.

ZIGExN has amassed expertise in acquiring companies with established user bases and high growth potential, smoothly integrating them into its own operations, and using them to drive its own growth.

The company operates around 30 types of services (specialized media and system development), so risk is dispersed; the business structure is capable of weathering economic fluctuations and delivering stable earnings.

Weaknesses

The company had a head start in the business of matching individuals and companies in areas surrounding major life events. However, barriers to market entry are low, and new entrants could imitate the company’s business model.

Since establishment, the company’s expansion strategy has focused mainly on aggregation (working with major media companies) and acquiring companies with customer bases. As a result, the company lacks the resources and sales expertise to acquire customers on its own.

The company has a goodwill-to-equity ratio of 0.51x (below 1x, which is considered a stability threshold), but competitors have ratios of 0.1x to 0.3x. As a result, the company has relatively less room to make acquisitions.

Key financial data

International Financial Reporting Standards (IFRS )

Income statement			FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)			IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	Est.
Revenue			5,019	7,534	10,267	12,854	13,199	12,564	15,272	18,255
	YoY		61.1%	50.1%	36.3%	25.2%	2.7%	-4.8%	21.6%	19.5%
Gross profit			4,457	6,585	8,566	11,025	11,130	10,484	12,779
	YoY		54.3%	47.7%	30.1%	28.7%	1.0%	-5.8%	21.9%
	Gross profit margin		88.8%	87.4%	83.4%	85.8%	84.3%	83.4%	83.7%
Operating profit			1,756	2,483	3,322	4,077	3,806	-1,062	3,314	3,900
	YoY		45.0%	41.4%	33.8%	22.7%	-6.6%	-	-	17.7%
	Operating profit margin		35.0%	33.0%	32.4%	31.7%	28.8%	-	21.7%	21.4%
EBITDA				2,677	3,590	4,509	4,619	3,808	4,265	4,850
	YoY				34.1%	25.6%	2.4%	-17.6%	12.0%	13.7%
	EBITDA margin			35.5%	35.0%	35.1%	35.0%	30.3%	27.9%	26.6%
Pre-tax profit			1,743	2,475	3,318	4,075	3,800	-1,069	3,309	3,900
	YoY		40.9%	42.0%	34.1%	22.8%	-6.7%	-	-	17.9%
	Pre-tax profit margin		34.7%	32.9%	32.3%	31.7%	28.8%	-	21.7%	21.4%
Profit attributable to owners of the parent			1,043	1,473	2,170	2,811	2,669	-1,964	2,262	2,650
	YoY		52.1%	41.3%	47.3%	29.5%	-5.1%	-	-	17.2%
	Profit margin		20.8%	19.6%	21.1%	21.9%	20.2%	-	14.8%	14.5%
Per-share data (split-adjusted; JPY)
Shares issued (year-end)('000 shares)			51,691	53,451	110,972	111,641	111,700	111,700	111,700
		Treasury shares ('000)	-	-	0	577	577	3,577	3,577
EPS (JPY)			10.1	14.0	19.7	25.2	24.0	-18.1	20.9	25.2
EPS (fully diluted; JPY)			9.7	13.6	19.5	25.2	24.0	-18.1	20.9
Dividend per share (JPY)			-	-	-	2.0	3.0	3.0	3.5	4.0
Book value per share (JPY)			37	62	103	124	146	120	138
Balance sheet (JPYmn)
		Cash and cash equivalents	3,988	5,873	6,936	7,278	6,631	7,420	8,588
Total current assets			4,935	7,455	8,882	9,580	9,430	9,960	10,897
		Goodwill	3,240	5,426	7,555	8,263	9,428	6,655	6,934
		Intangible assets	227	726	948	1,209	1,348	1,251	1,600
Noncurrent assets			4,122	6,661	9,495	10,467	12,977	10,141	10,707
Total assets			9,057	14,116	18,378	20,047	22,406	20,101	21,604
		Short-term debt	1,734	2,291	2,326	2,543	2,226	2,236	2,357
Total current liabilities			2,695	4,191	5,310	5,815	4,560	4,271	4,627
		Long-term debt	2,557	3,171	1,491	210	1,375	2,632	1,878
Noncurrent liabilities			2,587	3,330	1,690	430	1,582	2,834	2,047
Total liabilities			5,283	7,521	7,000	6,245	6,142	7,105	6,675
		Shareholders' equity	3,774	6,596	11,378	13,802	16,261	12,988	14,929
Total net assets			3,774	6,596	11,378	13,802	16,264	12,997	14,929
Total interest-bearing debt			4,290	5,462	3,817	2,753	3,601	4,868	4,235
Cash flow statement(JPYmn)
Cash flows from operating activities			1,197	2,036	2,866	3,139	2,144	2,567	3,847
Cash flows from investing activities			-376	-2,539	-2,585	-729	-1,642	-1,746	-1,283
Cash flows from financing activities			-671	2,388	783	-2,068	-1,160	-29	-1,391
Financial ratios
ROA (RP-based)			20.0%	21.4%	20.4%	21.2%	17.9%	-5.0%	15.9%
ROE			32.0%	28.4%	24.1%	22.3%	17.8%	-13.4%	16.2%
		Equity ratio	41.7%	46.7%	61.9%	68.8%	72.6%	64.6%	69.1%
		Total asset turnover	57.5%	65.0%	63.2%	66.9%	62.2%	59.1%	73.2%
		Profit margin	20.8%	19.6%	21.1%	21.9%	20.2%	-15.6%	14.8%

Source: Shared Research based on company data

Japanese GAAP

Income statement		FY03/10	FY03/11	FY03/12	FY03/13	FY03/14	FY03/15	FY03/16
(JPYmn)		Parent	Parent	Cons.	Cons.	Cons.	Cons.	Cons.
Revenue		229	316	538	1,173	1,927	3,116	5,032
	YoY	80.3%	38.0%	70.4%	117.9%	64.4%	61.7%	61.5%
Gross profit		184	251	454	1,047	1,800	2,888	4,471
	YoY	102.8%	36.5%	-	130.9%	71.9%	60.5%	54.8%
	Gross profit margin	80.3%	79.4%	84.3%	89.3%	93.4%	92.7%	88.8%
Operating profit		61.6	68	227	592	926	1,211	1,609
	YoY	174.7%	9.9%	-	160.3%	56.5%	30.9%	32.9%
	Operating profit margin	26.9%	21.5%	42.2%	50.4%	48.0%	38.9%	32.0%
Recurring profit		62	68	227	592	907	1,237	1,603
	YoY	172.7%	10.0%	-	160.1%	53.3%	36.4%	29.6%
	Recurring profit margin	26.9%	21.5%	42.3%	50.4%	47.0%	39.7%	31.9%
Net income		36	39	120	357	536	686	899
	YoY	231.9%	11.1%	-	198.0%	50.3%	27.9%	31.1%
	Net margin	15.5%	12.5%	22.2%	30.4%	27.8%	22.0%	17.9%
Per-share data (JPY)
Shares issued (year-end; '000)		36,295	36,295	47,950	50,050	51,691	51,691	51,691
EPS		0.98	1.09	2.50	7.28	10.58	13.26	17.39
Dividend per share		0.00	0.00	0.00	0.00	0.00	0.00	0.00
Book value per share		4.89	5.97	4.94	12.19	39.73	53.09	70.48
Balance sheet (JPYmn)
	Cash and cash equivalents	143	173	203	584	1,904	3,837	3,988
Total current assets		194	239	349	910	2,345	4,661	4,979
Tangible fixed assets		13	13	16	6	84	84	103
Investments and other assets		16	17	26	29	82	495	478
Intangible assets		7	5	3	14	24	3,149	3,289
Total assets		231	274	394	959	2,534	8,389	8,848
Total current liabilities		53	57	157	349	463	4,069	2,620
Total fixed liabilities		0	0	0	0	18	1,575	2,584
Total liabilities		53	57	157	349	481	5,644	5,205
Total net assets		178	217	237	610	2,054	2,744	3,643
Total interest-bearing debt		0	0	0	0	0	4,583	3,912
Cash flow statement (JPYmn)
Cash flows from operating activities		-	-	173	406	588	817	1,200
Cash flows from investing activities		-	-	-7	-41	-154	-3,432	-377
Cash flows from financing activities		-	-	-107	17	884	4,532	-671
Financial ratios
ROA (RP-based)		31.6%	26.8%	30.4%	87.5%	51.9%	22.6%	18.6%
ROE		22.3%	20.0%	50.6%	84.3%	40.3%	28.6%	28.2%
Equity ratio		77.1%	79.2%	60.1%	63.6%	81.0%	32.7%	41.2%

Note: The company adopted International Financial Reporting Standards (IFRS) in FY03/17.
Source: Shared Research based on company data

Revenue by business

Segment results			FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)			Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Est.
Revenue			3,116	5,031	7,534	10,267	12,854	13,199	12,564	15,272	18,255
	YoY		61.7%	61.5%	49.8%	36.3%	25.2%	2.7%	-4.8%	21.6%	19.5%
	Vertical HR							4,530	4,800	6,010	6,585
		YoY						-	6.0%	25.2%	9.6%
		% of total						34.3%	38.2%	39.4%	36.1%
	Living Tech							2,512	3,391	4,051	5,145
		YoY						-	35.0%	19.5%	27.0%
		% of total						19.0%	27.0%	26.5%	28.2%
	Life Service							6,164	4,373	5,212	6,525
		YoY						-	-29.1%	19.2%	25.2%
		% of total						46.7%	34.8%	34.1%	35.7%
(Old segments)
	Human Resources		2,359	3,677	5,415	7,388	8,562	8,684	7,685
		YoY	-	55.9%	47.3%	36.4%	15.9%	1.4%	-11.5%
		% of total	75.7%	73.1%	71.9%	72.0%	66.6%	65.8%	61.2%
	Real Estate		524	963	1,459	1,895	2,322	2,512	3,391
		YoY	-	83.8%	51.5%	29.9%	22.5%	8.2%	35.0%
		% of total	16.8%	19.1%	19.4%	18.5%	18.1%	19.0%	27.0%
	Lifestyle		233	390	659	982	1,970	2,003	1,488
		YoY	-	67.4%	69.0%	49.0%	100.6%	1.7%	-25.7%
		% of total	7.5%	7.8%	8.7%	9.6%	15.3%	15.2%	11.8%
(Old segments 2)
	Recruitment		2,358	3,680
		YoY	-	56.1%
		% of total	75.7%	73.1%
	Lifestyle		690	1,130
		YoY	-	63.8%
		% of total	22.1%	22.5%
	Other		67	221
		YoY	-	229.9%
		% of total	2.2%	4.4%

Source: Shared Research based on company data

Recent updates

ZIGExN announces resolution to acquire treasury stock and reduce equity

2022-05-16

On 13 May 2022, ZIGExN Co., Ltd. announced a resolution to acquire treasury stock.

Details of the acquisition

Category of shares to be acquired: Ordinary shares
Number of shares to be acquired: Up to 4,700,000 shares (4.3% of shares issued and outstanding, excluding treasury stock)
Total acquisition price: Up to JPY1.4bn
Acquisition period: May 16, 2022 to May 10, 2023
Acquisition method: Market purchase on the Tokyo Stock Exchange

On the same day, the company announced that it would reduce its capital stock.

Objectives for reducing capital stock

The company intends to reduce its capital stock in accordance with the provisions of Article 447, Paragraph 1 of the Companies Act to facilitate the flexibility and mobility of its equity policy. This move will not affect the total number of outstanding shares or net assets, and the number of shares held by shareholders and net assets per share will not be affected.

Outline of the reduction in capital stock

Reduction in capital stock: The company will reduce its capital stock by JPY2,426,457,058, from JPY2,526,457,058 to JPY100,000,000.
Method of reducing the amount of capital stock: The amount of capital stock will be reduced without refund, the total number of outstanding shares will remain unchanged, and an amount corresponding to the entire reduction in capital stock will be transferred to the equity reserve.

Trends and outlook

Quarterly trends and results

Earnings (cumulative)		FY03/20				FY03/21				FY03/22				FY03/22
(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.
Revenue		3,489	6,626	9,711	13,199	2,807	5,575	8,841	12,564	3,823	7,593	11,225	15,272	94.2%	15,500–17,000
	YoY	15.9%	10.0%	4.9%	2.7%	-19.5%	-15.9%	-9.0%	-4.8%	36.2%	36.2%	27.0%	21.6%		23.4 - 35.3%
Gross profit		2,945	5,591	8,186	11,130	2,339	4,653	7,347	10,484	3,224	6,369	9,385	12,779
	YoY	13.6%	7.5%	2.4%	1.0%	-20.6%	-16.8%	-10.2%	-5.8%	37.8%	36.9%	27.7%	21.9%
	Gross profit margin	84.4%	84.4%	84.3%	84.3%	83.3%	83.5%	83.1%	83.4%	84.3%	83.9%	83.6%	83.7%
SG&A expenses		1,890	3,608	5,344	7,393	1,753	3,443	5,426	7,661	2,308	4,703	7,075	9,533
	YoY	16.7%	9.9%	5.8%	5.8%	-7.2%	-4.6%	1.5%	3.6%	31.7%	36.6%	30.4%	24.4%
	SG&A ratio	54.2%	54.5%	55.0%	56.0%	62.5%	61.8%	61.4%	61.0%	60.4%	61.9%	63.0%	62.4%
EBITDA			2,401	3,496	4,619	834	1,740	2,663	3,808	1,151	2,152	3,050	4,265	90.3%	4,400–5,100
	YoY	-	-	-	-	-	-27.5%	-23.8%	-17.6%	38.0%	23.7%	14.5%	12.0%		15.5 - 33.9%
	EBITDA margin		36.2%	36.0%	35.0%	29.7%	31.2%	30.1%	30.3%	30.1%	28.3%	27.2%	27.9%
Operating profit		1,069	2,028	2,893	3,806	599	-2,691	-1,980	-1,062	931	1,700	2,356	3,314
	YoY	9.6%	5.3%	-2.3%	-6.6%	-44.0%	-	-	-	55.4%	-	-	-
	Operating profit margin	30.6%	30.6%	29.8%	28.8%	21.3%	-	-	-	24.4%	22.4%	21.0%	21.7%
Pre-tax profit		1,067	2,026	2,889	3,800	597	-2,694	-1,985	-1,069	929	1,697	2,352	3,309
	YoY	9.7%	5.3%	-2.4%	-6.7%	-44.0%	-	-	-	55.6%	-	-	-
	Recurring profit margin	30.6%	30.6%	29.7%	28.8%	21.3%	-	-	-	24.3%	22.3%	21.0%	21.7%
Profit		732	1,386	1,976	2,670	421	-3,014	-2,573	-1,958	659	1,202	1,654	2,266
	YoY	8.6%	6.0%	-1.3%	-5.0%	-42.5%	-	-	-	56.5%	-	-	-
	Profit margin	21.0%	20.9%	20.3%	20.2%	15.0%	-	-	-	17.2%	15.8%	14.7%	14.8%
Profit attributable to owners of the parent		733	1,386	1,976	2,669	423	-3,013	-2,576	-1,964	657	1,198	1,650	2,262
	YoY	8.8%	6.0%	-1.3%	-5.1%	-42.3%	-	-	-	55.3%	-	-	-
	Profit margin	21.0%	20.9%	20.3%	20.2%	15.1%	-	-	-	17.2%	15.8%	14.7%	14.8%
Earnings (quarterly)		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue		3,489	3,137	3,085	3,488	2,807	2,768	3,266	3,723	3,823	3,770	3,632	4,047
	YoY	15.9%	4.1%	-4.6%	-3.0%	-19.5%	-11.8%	5.9%	6.7%	36.2%	36.2%	11.2%	8.7%
Gross profit		2,945	2,646	2,595	2,944	2,339	2,314	2,694	3,137	3,224	3,145	3,016	3,394
	YoY	13.6%	1.4%	-7.1%	-2.9%	-20.6%	-12.5%	3.8%	6.6%	37.8%	35.9%	12.0%	8.2%
	Gross profit margin	84.4%	84.3%	84.1%	84.4%	83.3%	83.6%	82.5%	84.3%	84.3%	83.4%	83.0%	83.9%
SG&A expenses		1,890	1,718	1,736	2,049	1,753	1,690	1,983	2,235	2,308	2,395	2,372	2,458
	YoY	16.7%	3.2%	-1.8%	5.9%	-7.2%	-1.6%	14.2%	9.1%	31.7%	41.7%	19.6%	10.0%
	SG&A ratio	54.2%	54.8%	56.3%	58.7%	62.5%	61.1%	60.7%	60.0%	60.4%	63.5%	65.3%	60.7%
EBITDA		-	2,401	1,095	1,123	834	906	923	1,145	1,151	1,001	898	1,215
	YoY	-	-	-	-	-	-62.3%	-15.7%	2.0%	38.0%	10.5%	-2.7%	6.1%
Operating profit		1,069	959	865	913	599	-3,290	711	918	931	769	656	958
	YoY	9.6%	0.8%	-16.5%	-18.1%	-44.0%	-	-17.8%	0.5%	55.4%	-	-7.7%	4.4%
	Operating profit margin	30.6%	30.6%	28.0%	26.2%	21.3%	-	21.8%	24.7%	24.4%	20.4%	18.1%	23.7%
Pre-tax profit		1,067	959	863	911	597	-3,291	709	916	929	768	655	957
	YoY	9.7%	0.8%	-16.8%	-18.2%	-44.0%	-	-17.8%	0.5%	55.6%	-	-7.6%	4.5%
	Pre-tax profit margin	30.6%	30.6%	28.0%	26.1%	21.3%	-	21.7%	24.6%	24.3%	20.4%	18.0%	23.6%
Profit		732	654	590	694	421	-3,435	441	615	659	543	452	612
	YoY	8.6%	3.3%	-15.1%	-14.2%	-42.5%	-	-25.3%	-11.4%	56.5%	-	2.5%	-0.5%
	Profit margin	21.0%	20.8%	19.1%	19.9%	15.0%	-	13.5%	16.5%	17.2%	14.4%	12.4%	15.1%
Profit attributable to owners of the parent		733	653	590	693	423	-3,436	437	612	657	541	452	612
	YoY	8.8%	3.2%	-15.1%	-14.3%	-42.3%	-	-25.9%	-11.7%	55.3%	-	3.4%	0.0%
	Profit margin	21.0%	20.8%	19.1%	19.9%	15.1%	-	13.4%	16.4%	17.2%	14.4%	12.4%	15.1%

Source: Shared Research based on company data
Note: Figures may differ from those in company materials due to differences in rounding. Note: Rates of progress for the full year are calculated by using the midpoint of the range.

KPIs

(quarterly)		FY03/20				FY03/21				FY03/22
		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Number of corporate clients		16,805	17,424	18,271	18,720	18,149	19,063	19,241	18,968	19,568	20,163	20,374	20,491
	YoY	11.7%	14.9%	20.2%	14.4%	8.0%	9.4%	5.3%	1.3%	7.8%	5.8%	5.9%	8.0%
Recurring revenue (JPYmn)						2,009	2,017	2,160	2,229	2,351	2,299	2,296	2,463
	YoY					-	-	-	-	17.0%	14.0%	6.3%	10.5%
Number of businesses posting advertisements
Vertical HR						52,497	55,402	58,009	59,006	60,968	62,268	64,415	65,305
	YoY					-	-	-	-	16.1%	12.4%	11.0%	10.7%
Living Tech							20,332	22,070	22,576		23,057	23,633	25,129
	YoY					-	-	-	-	-	13.4%	7.1%	11.3%

Note: Blanks indicate areas where data is not disclosed. The number of businesses posting advertisements in Vertical HR includes business sites posting advertisements without charge that may be charged in the future. The number of businesses posting advertisements in Living Tech indicates only the number of offices that had placed at least one ad during the last month of each quarter. (Offices that continue to post ads free of charge are not included.)
Source: Shared Research based on company data

Revenue by business

Segment results (cumulative)			FY03/20				FY03/21				FY03/22				FY03/22
(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.
Revenue			3,489	6,626	9,711	13,199	2,807	5,575	8,841	12,564	3,823	7,593	11,225	15,272	94.2%	15,500–17,000
	YoY		15.9%	10.0%	4.9%	2.7%	-19.5%	-15.9%	-9.0%	-4.8%	36.2%	36.2%	27.0%	21.6%		23.4 - 35.3%
	Vertical HR		1,184	2,257	3,383	4,530	973	1,941	3,378	4,800	1,640	3,139	4,572	6,010	97.2%	5,900–6,500
		YoY	-	-	-	-	-17.8%	-14.0%	-0.1%	6.0%	68.6%	61.7%	35.3%	25.2%		22.9–35.4％
		% of total	33.9%	34.1%	34.8%	34.3%	34.7%	34.8%	38.2%	38.2%	42.9%	41.3%	40.7%	39.4%		38.1–38.2％
	Living Tech		589	1,157	1,647	2,512	780	1,560	2,366	3,391	934	1,927	2,864	4,051	90.2%	4,300–4,700
		YoY	-	-	-	-	32.4%	34.8%	43.7%	35.0%	19.7%	23.5%	21.0%	19.5%		26.8–38.6％
		% of total	16.9%	17.5%	17.0%	19.0%	27.8%	28.0%	26.8%	27.0%	24.4%	25.4%	25.5%	26.5%		27.6–27.7％
	Life Service		1,717	3,213	4,683	6,164	1,054	2,074	3,097	4,373	1,249	2,527	3,789	5,212	94.1%	5,300–5,800
		YoY	-	-	-	-	-38.6%	-35.4%	-33.9%	-29.1%	18.5%	21.8%	22.3%	19.2%		21.2–32.6％
		% of total	49.2%	48.5%	48.2%	46.7%	37.5%	37.2%	35.0%	34.8%	32.7%	33.3%	33.8%	34.1%		34.1–34.2％
(Old segments)
	Human Resources		2,367	4,401	6,492	8,684	1,714	3,335	5,450	7,685
		YoY	12.1%	6.4%	2.4%	0.0%	-27.6%	-24.2%	-16.1%	-11.5%
		% of total	67.8%	66.4%	66.9%	65.8%	61.1%	59.8%	61.6%	61.2%
	Real Estate		589	1,157	1,647	2,512	780	1,560	2,366	3,391
		YoY	24.3%	15.5%	6.9%	0.0%	32.4%	34.8%	43.7%	35.0%
		% of total	16.9%	17.5%	17.0%	19.0%	27.8%	28.0%	26.8%	27.0%
	Lifestyle		533	1,068	1,571	2,003	313	680	1,025	1,488
		YoY	25.4%	20.5%	14.3%	0.0%	-41.3%	-36.3%	-34.8%	-25.7%
		% of total	15.3%	16.1%	16.2%	15.2%	11.2%	12.2%	11.6%	11.8%
Segment results (quarterly)			FY03/20				FY03/21				FY03/22
(JPYmn)			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue			3,489	3,137	3,085	3,488	2,807	2,768	3,266	3,723	3,823	3,770	3,632	4,047
	YoY		15.9%	4.1%	-4.6%	-3.0%	-19.5%	-11.8%	5.9%	6.7%	36.2%	36.2%	11.2%	8.7%
	Vertical HR		1,184	1,073	1,126	1,147	973	968	1,437	1,423	1,640	1,499	1,433	1,438
		YoY	-	-	-	-	-17.8%	-9.8%	27.6%	24.1%	68.6%	54.9%	-0.3%	1.1%
		% of total	33.9%	34.2%	36.5%	32.9%	34.7%	35.0%	44.0%	38.2%	42.9%	39.8%	39.5%	35.5%
	Living Tech		589	568	490	865	780	780	806	1,025	934	993	937	1,187
		YoY	-	-	-	-	32.4%	37.3%	64.5%	18.5%	19.7%	27.3%	16.3%	15.8%
		% of total	16.9%	18.1%	15.9%	24.8%	27.8%	28.2%	24.7%	27.5%	24.4%	26.3%	25.8%	29.3%
	Life Service		1,717	1,496	1,470	1,481	1,054	1,020	1,023	1,276	1,249	1,278	1,262	1,422
		YoY	-	-	-	-	-38.6%	-31.8%	-30.4%	-13.8%	18.5%	25.3%	23.4%	11.4%
		% of total	49.2%	47.7%	47.6%	42.5%	37.5%	36.8%	31.3%	34.3%	32.7%	33.9%	34.7%	35.1%
(Old segments)
	Human Resources		2,367	2,034	2,091	2,192	1,714	1,621	2,115	2,235
		YoY	12.1%	0.5%	-5.2%	-1.3%	-27.6%	-20.3%	1.1%	2.0%
		% of total	67.8%	64.8%	67.8%	62.8%	61.1%	58.6%	64.8%	60.0%
	Real Estate		589	568	490	865	780	780	2,366	1,025
		YoY	24.3%	7.6%	-9.1%	10.8%	32.4%	37.3%	382.9%	18.5%
		% of total	16.9%	18.1%	15.9%	24.8%	27.8%	28.2%	72.4%	27.5%
	Lifestyle		533	535	503	432	313	367	1,025	463
		YoY	25.4%	16.1%	2.9%	-27.4%	-41.3%	-31.4%	103.8%	7.2%
		% of total	15.3%	17.1%	16.3%	12.4%	11.2%	13.3%	31.4%	12.4%

Source: Shared Research based on company data
Note: Rates of progress for the full year are calculated by using the midpoint of the range.

Cost structure

(quarterly)			FY03/20				FY03/21				FY03/22
			Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4
Cost of revenue			544	1,035	1,525	2,069	468	922	1,494	2,081	598	1,224	1,840	2,493
	YoY		30.5%	26.1%	20.8%	13.1%	-14.0%	-10.9%	-2.0%	0.6%	27.8%	32.8%	23.2%	19.8%
	% of revenue		15.6%	15.6%	15.7%	15.7%	16.7%	16.5%	16.9%	16.6%	15.6%	16.1%	16.4%	16.3%
	Personnel related costs(Cost of revenue)		200	368	545	693	333	623	1,064	1,505	440	898	1,339	1,794
		YoY	68.1%	57.9%	39.0%	21.8%	66.5%	69.3%	95.2%	117.2%	32.1%	44.1%	25.8%	19.2%
		% of revenue	5.7%	5.6%	5.6%	5.3%	11.9%	11.2%	12.0%	12.0%	11.5%	11.8%	11.9%	11.7%
	Other cost of revenue		344	667	980	1,376	135	299	431	577	158	325	500	698
		YoY	15.1%	13.2%	12.4%	9.1%	-60.8%	-55.2%	-56.0%	-58.1%	17.0%	8.7%	16.0%	21.0%
		% of revenue	9.9%	10.1%	10.1%	10.4%	4.8%	5.4%	4.9%	4.6%	4.1%	4.3%	4.5%	4.6%
SG&A expenses			1,890	3,608	5,344	7,393	1,753	3,443	5,426	7,661	2,308	4,703	7,075	9,533
	YoY		16.7%	9.9%	5.8%	5.8%	-7.2%	-4.6%	1.5%	3.6%	31.7%	36.6%	30.4%	24.4%
	% of revenue		54.2%	54.5%	55.0%	56.0%	62.5%	61.8%	61.4%	61.0%	60.4%	61.9%	63.0%	62.4%
	Personnel related costs(SG&A expenses)		516	1,053	1,579	2,164	656	1,281	2,024	2,860	838	1,641	2,460	3,298
		YoY	11.9%	15.2%	15.4%	15.8%	27.1%	21.7%	28.2%	32.2%	27.7%	28.1%	21.5%	15.3%
		% of revenue	14.8%	15.9%	16.3%	16.4%	23.4%	23.0%	22.9%	22.8%	21.9%	21.6%	21.9%	21.6%
	Advertising and promotional expenses		938	1,714	2,439	3,422	700	1,348	2,103	3,051	1,024	2,184	3,284	4,434
		YoY	15.0%	1.1%	-7.8%	-6.5%	-25.4%	-21.4%	-13.8%	-10.8%	46.3%	62.0%	56.2%	45.3%
		% of revenue	26.9%	25.9%	25.1%	25.9%	24.9%	24.2%	23.8%	24.3%	26.8%	28.8%	29.3%	29.0%
	Amortization of customer-related assets		27	54	81	110	30	60	92	129	37	74	111	133
		YoY	22.7%	22.7%	22.7%	18.3%	11.1%	11.1%	13.6%	17.3%	23.3%	23.3%	20.7%	3.1%
		% of revenue	0.8%	0.8%	0.8%	0.8%	1.1%	1.1%	1.0%	1.0%	1.0%	1.0%	1.0%	0.9%
	Other SG&A expenses		408	786	1,245	1,696	366	754	1,206	1,620	408	803	1,219	1,667
		YoY	27.6%	25.0%	28.0%	24.4%	-10.2%	-4.2%	-3.1%	-4.5%	11.3%	6.5%	1.0%	2.9%
		% of revenue	11.7%	11.9%	12.8%	12.9%	13.1%	13.5%	13.6%	12.9%	10.7%	10.6%	10.9%	10.9%
Other income			17	31	56	76	15	102	106	131	15	35	49	74
Other expenses			3	1	5	7	1	4,003	4,008	4,016	0	1	2	5
(quarterly)			FY03/20				FY03/21				FY03/22
			Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Cost of revenue			544	491	490	544	468	454	572	587	598	626	616	653
	YoY		30.5%	21.5%	11.1%	-4.1%	-14.0%	-7.5%	16.7%	7.9%	27.8%	37.9%	7.7%	11.2%
	% of revenue		15.6%	15.7%	15.9%	15.6%	16.7%	16.4%	17.5%	15.8%	15.6%	16.6%	17.0%	16.1%
	Personnel related costs(Cost of revenue)		200	168	177	148	333	290	441	441	440	458	441	455
		YoY	68.1%	47.4%	11.3%	-16.4%	-	-	-	-	32.1%	57.9%	0.0%	3.2%
		% of revenue	5.7%	5.4%	5.7%	4.2%	11.9%	10.5%	13.5%	11.8%	11.5%	12.1%	12.1%	11.2%
	Other cost of revenue		344	323	313	396	135	164	132	146	158	167	175	198
		YoY	15.1%	11.4%	10.6%	1.8%	-	-	-	-	17.0%	1.8%	32.6%	35.6%
		% of revenue	9.9%	10.3%	10.1%	11.4%	4.8%	5.9%	4.0%	3.9%	4.1%	4.4%	4.8%	4.9%
SG&A expenses			1,890	1,718	1,736	2,049	1,753	1,690	1,983	2,235	2,308	2,395	2,372	2,458
	YoY		16.7%	3.2%	-1.8%	5.9%	-7.2%	-1.6%	14.2%	9.1%	31.7%	41.7%	19.6%	10.0%
	% of revenue		54.2%	54.8%	56.3%	58.7%	62.5%	61.1%	60.7%	60.0%	60.4%	63.5%	65.3%	60.7%
	Personnel related costs(SG&A expenses)		516	537	526	585	656	625	743	836	838	803	819	838
		YoY	11.9%	18.5%	15.9%	17.0%	-	-	-	-	27.7%	28.5%	10.2%	0.2%
		% of revenue	14.8%	17.1%	17.1%	16.8%	23.4%	22.6%	22.7%	22.5%	21.9%	21.3%	22.5%	20.7%
	Advertising and promotional expenses		938	776	725	983	700	648	755	948	1,024	1,160	1,100	1,150
		YoY	15.0%	-11.8%	-23.5%	-3.2%	-25.4%	-16.5%	4.1%	-3.6%	46.3%	79.0%	45.7%	21.3%
		% of revenue	26.9%	24.7%	23.5%	28.2%	24.9%	23.4%	23.1%	25.5%	26.8%	30.8%	30.3%	28.4%
	Amortization of customer-related assets		27	27	27	29	30	30	32	37	37	37	37	22
		YoY	22.7%	22.7%	22.7%	7.4%	11.1%	11.1%	18.5%	27.6%	23.3%	23.3%	15.6%	-40.5%
		% of revenue	0.8%	0.9%	0.9%	0.8%	1.1%	1.1%	1.0%	1.0%	1.0%	1.0%	1.0%	0.5%
	Other SG&A expenses		409	378	458	452	367	387	453	414	409	395	416	448
		YoY	27.8%	22.3%	33.5%	15.3%	-10.3%	2.4%	-1.1%	-8.4%	11.4%	2.1%	-8.2%	8.2%
		% of revenue	11.7%	12.0%	14.8%	13.0%	13.1%	14.0%	13.9%	11.1%	10.7%	10.5%	11.5%	11.1%
Other income			17	14	25	20	15	87	4	25	15	20	14	25
Other expenses			3	-2	4	2	1	4,002	5	8	0	1	1	3

Source: Shared Research based on company materials (financial results and briefing materials).

Full-year FY03/22 (out May 13, 2022)

Overview

Revenue: JPY15.3bn (+21.6% YoY, rate of progress vs. the company’s full-year forecast: 94.2%)

Operating profit: JPY3.3bn (operating loss of JPY1.1bn in FY03/21; forecast for FY03/22 undisclosed)

Profit attributable to owners of the parent: JPY2.3bn (loss of JPY2.0bn in FY03/21; forecast for FY03/22 undisclosed)

EBITDA*: JPY4.3bn (+12.0% YoY, rate of progress vs. the company’s full-year forecast: 90.3%)

*EBITDA = operating profit (loss) + depreciation and amortization + impairment loss + loss on retirement of fixed assets and valuation loss - negative goodwill

KPIs

Number of corporate clients: 20,491 (+8.0% YoY, at same point in previous year: 18,968)

Recurring revenue*: JPY2.5bn (+10.5% YoY, at same point in previous year: JPY2.2bn)

*The company defines recurring revenue as businesses/services that are highly scalable, controllable, and sustainable, and are embedded in the commercial flow of mainly small and medium-sized corporate clients.

Highlights

Revenue was JPY15.3bn (+21.6% YoY), operating profit was JPY3.3bn (operating loss of JPY1.1bn in FY03/21), EBITDA was JPY4.3bn (+12.0% YoY).

In FY03/21, earnings were down as a result of COVID-19. In FY03/22, earnings trended toward recovery.

In Vertical HR, the number of business sites posting advertisements for REJOB and MIRAxS reached a record high. In Living Tech, the number of postings in real estate-related media by real estate brokers and home renovation companies was solid. In Life Service, the company made favorable progress on integrating the comparison sites it acquired in December 2020.

Results by business category

In FY03/22, the company renamed its business segment and changed its business categories. For details, see the “Medium-term management plan” section.

Segment name change: From “Life Media Platform Business” to “Life Service Platform Business.” (The company has just one reportable segment.)

Changed the names of three business categories: Vertical HR, Living Tech, and Life Service (before the change: Human Resources, Real Estate, and Lifestyle)

Vertical HR

Revenue: JPY6.0bn (+25.2% YoY, rate of progress vs. full-year company forecast: 97.2%)

Number of businesses posting advertisements on this platform (REJOB, MIRAxS Kaigo, MIRAxS Hoiku): 65,305 (+10.7% YoY, at same point in previous year: 59,006)

Vertical HR includes REJOB Co., Ltd. (operates REJOB, a site for the beauty, relaxation, and nursing care industries) and MIRAxS Co., Ltd. (operates MIRAxS Kaigo and MIRAxS Hoiku, which focus on the recruitment and worker dispatch in the nursing care and childcare industries).

Revenue rose 25.2% YoY, due largely to the contribution from MIRAxS Co., Ltd., which the company acquired in September 2020. One of the MIRAxS media, MIRAxS Kaigo, is seeing a steady rise in the number of businesses posting advertisements. Reflecting chronic labor shortages, even during the COVID-19 pandemic the ratio of job openings to job applicants has remained high relative to other industries. On the user end, the number of job applicants has returned to pre-pandemic levels, but volatility is up slightly.

For REJOB, the number of businesses posting advertisements grew steadily, with the number of businesses posting job advertisements reaching a record high of 65,305. Even though the number of salon visits is recovering, employers’ recruiting demand remained below pre-pandemic levels. As a result, job-hunting was sometimes a protracted process in FY003/22.

Living Tech

Revenue: JPY4.1bn (+19.5% YoY, rate of progress vs. full-year company forecast: 90.2%)

25,129Number of businesses posting advertisements on the company’s platforms (SMOCCA, RESHOP-NAVI): 23,633 (+11.3% YoY, 22,576 at end-FY03/21)

Living Tech comprises real estate-related media (such as SMOCCA) and a home renovation comparison site (RESHOP-NAVI).

For SMOCCA, demand for ad postings on internet media was relatively strong. On the user side, however, home-search demand and the number of searches tailed off due to the emergence of the Omicron variant.

The company's clients, real estate brokers and home renovation companies, are increasingly focusing on efficiency in their online advertising. Even so, ad placement was relatively firm. In the renovation business, the number of member companies rose steadily.

Demand for home renovation remained solid, even as specific demand factors (the growing prevalence of remote working and prolonged periods of people refraining from going outside) ran their course. Demand for switching gas suppliers continued to rise due to soaring utility costs.

Life Service

Revenue: JPY5.2bn (+19.2% YoY, rate of progress vs. full-year company forecast: 94.1%)

In the Life Service category, the company operates Franchise Hikaku.net (a site for comparing franchises, mainly targeting individual users) and Kekkon Sodansho Hikaku.net (a site for comparing marriage agencies). Life Service also contains Brainlab, Inc. (operates CAREER PLUS and MatchinGood, business support systems for recruitment and temporary employment agencies) and Apple World Inc. (operates Apple World, a site for making overseas hotel reservations).

In FY03/22, the company made steady progress on integrating the comparison sites it acquired in December 2020. This was the main reason for the higher revenue in this service category. For Franchise Hikaku.net (site for comparing franchises), demand was brisk, both for ad postings and from users wanting to open their own businesses. To stabilize earnings, the company says it plans to concentrate on diversifying the channels it uses to attract users.

At Brainlab, some clients are postponing system investments due to uncertainty in the operating environment. However, Brainlab provides core systems, so the churn rate has been relatively stable.

Apple World, a hotel information service, was affected by the emergence of the Omicron variant and the resulting self-restraint in going out, but domestic travel demand trended toward recovery. Similarly, signs of a recovery in overseas travel demand, especially for business travel, are gradually becoming apparent as restrictions are eased.

Company forecast for FY03/23 (out May 13, 2022)

		FY03/21			FY03/22			FY03/23	YoY
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	FY Est.	FY Est.
Revenue		5,575	6,989	12,564	7,593	7,679	15,272	18,255	19.5%
Cost of revenue		922	1,159	2,081	1,224	1,269	2,493
Gross profit		4,653	5,831	10,484	6,369	6,410	12,779
	Gross profit margin	83.5%	83.4%	83.4%	83.9%	83.5%	83.7%
SG&A expenses		3,443	4,218	7,661	4,703	4,830	9,533
	SG&A ratio	61.8%	60.4%	61.0%	61.9%	62.9%	62.4%
EBITDA		1,740	2,068	3,808	2,152	2,113	4,265	4,850	13.7%
	EBITDA margin	31.2%	29.6%	30.3%	28.3%	27.5%	27.9%	26.6%
Operating profit		-2,691	1,629	-1,062	1,700	1,614	3,314	3,900	17.7%
	Operating profit margin	-	23.3%	-	22.4%	21.0%	21.7%	21.4%
Pre-tax profit		-2,694	1,625	-1,069	1,697	1,612	3,309	3,900	17.9%
	Pre-tax profit margin	-	23.3%	-	22.3%	21.0%	21.7%	21.4%
Profit		-3,013	1,049	-1,964	1,202	1,060	2,262	2,650	17.2%
	Profit margin	-	15.0%	-	15.8%	13.8%	14.8%	14.5%

Source: Shared Research based on company data

Revenue by business

		FY03/21			FY03/22			FY03/23	YoY
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	FY Est.	FY Est.
Vertical HR		1,941	2,859	4,800	3,139	2,871	6,010	6,585	9.6%
	% of revenue	34.8%	40.9%	38.2%	41.3%	37.4%	39.4%	36.1%
Living Tech		1,560	1,831	3,391	1,927	2,124	4,051	5,145	27.0%
	% of revenue	28.0%	26.2%	27.0%	25.4%	27.7%	26.5%	28.2%
Life Service		2,074	2,299	4,373	2,527	2,685	5,212	6,525	25.2%
	% of revenue	37.2%	32.9%	34.8%	33.3%	35.0%	34.1%	35.7%

Source: Shared Research based on company data

Overview

Company forecasts for FY03/23:

Revenue: JPY18.3bn (+19.5% YoY)
EBITDA: JPY4.9bn (+13.7% YoY)
Operating profit: JPY3.9bn (+17.7% YoY)
Pre-tax profit: JPY3.9bn (+17.9% YoY)
Profit attributable to owners of the parent: JPY2.7bn (+17.2% YoY)

*EBITDA = operating profit + depreciation and amortization + impairment loss + loss on retirement of fixed assets and valuation loss―negative goodwill

Revenue by business category

Vertical HR: JPY6.6bn (+9.6% YoY)
Living tech: JPY5.1bn (+27.0% YoY)
Life Service: JPY6.5bn (+25.2% YoY)

For FY03/22, the company provided a target range for its full-year forecast due to uncertainties in the operating environment. The company has reverted to providing specific figures in its FY03/23 forecast, as it believes the pandemic is moving toward conclusion. ZIGExN has also provided FY03/23 forecasts for operating profit and profit attributable to owners of the parent, which it did not disclose for FY03/22.

In FY03/23, the second year of the medium-term management plan, the company plans to continue making upfront investments and aims to drive revenue growth further.

Medium-term management plan

Overview

Second medium-term management plan, Z CORE

Overview

Z CORE focuses on businesses generating annual revenue of more than JPY10.0bn. These categories are Vertical HR (comprising the recruitment businesses for beauticians and nursing care/childcare workers) and Living Tech (the real estate and renovation businesses).

In the first half of the five-year period, the company intends to focus on expanding the customer base by frontloading investment (mainly in advertising). While the company plans to meet its numerical targets through organic growth, it also considers M&A of businesses providing services ancillary to its core business to be a viable option.

Numerical targets

Earnings targets

Companywide, the company aims to reach JPY35.0bn in revenue and JPY10.0bn in EBITDA by FY03/26. In the three years of the five-year period, the company intends to focus on expanding the customer base by frontloading investment (spending mainly to attract customers). By category, CAGR targets for revenue are as follows.

Vertical HR (recruitment businesses for beauticians and nursing care/childcare workers): CAGR of 25% from FY03/22 to FY03/26
Living Tech (real estate and renovation businesses): CAGR of 35%

If revenue grows at the forecast CAGR, by the final year of the plan Vertical HR would be producing revenue of JPY14.6bn. (FY03/21 revenue was JPY4.8bn). In Living Tech, the target CAGR of 35% would produce revenue of JPY15.2bn (FY03/21 revenue was JPY3.4bn). At these rates, by FY03/26 Vertical HR and Living Tech would both meet the company’s criteria for “Z CORE” companies.

If these two core business grow at the target CAGR levels, their combined revenue would be around JPY30.0bn in FY03/26. The company has not disclosed its CAGR target for the Life Service category, but the FY03/22 forecast is for revenue of JPY5.3bn to JPY5.8bn (+21.2% to +32.6% YoY). SR understands that if Life Service continues to perform well through FY03/26 and if the core businesses meet their CAGR targets, the company would likely hit JPY350bn in revenue in FY03/26.

Major KPIs (leading indicators)

The company continues to use the number of corporate clients and recurring revenue* as KPIs, considering them to be leading indicators of performance. In core businesses, the company also discloses an additional KPI: number of businesses posting advertisements.

ZIGExN plans to increase the number of corporate clients from 18,968 at end-FY03/21 to 50,000 by end-FY03/26.

The company plans to increase the number of businesses posting advertisements to 150,000 by end-FY03/26. As of end-Q1 FY03/22, in Vertical HR the number of businesses was 60,968. In Living Tech, the figure was 33,615, for a total of 94,583 businesses.

The company says it plans to expand recurring revenue, but does not disclose a target value.

Strategies for realizing Z CORE’s objectives

The company has three strategies for realizing the objectives outlined in Z CORE.

Business concentration: The company has revised its service categories and plans to concentrate on appropriately selecting markets for growing its business.

Expanding matching technologies: In addition to attracting users, the company will utilize technology for customer follow-up (introducing properties to prospective customers, making them aware of campaigns) and customer management.

Making upfront investments to accelerate expansion of the client base: The company plans to frontload advertising and investments (expenses) in the first three years of the five-year period.

Concentrating businesses through ZIGExN Portfolio Management (ZPM)

Shifting from diversification to concentration

Under the first medium-term business plan, the company concentrated on diversifying risk by diversifying its portfolio of businesses. Under the second plan, the ZIGExN plans to make its business domain more focused. To grow as it does so, the company aims to concentrate management resources on core (Z CORE) businesses.

COVID-19 was behind this shift in corporate policy. Revenue and profits fell in FY03/21, compelling the company to record goodwill impairments. Although earnings had been growing, the company came to the conclusion that it had not prepared adequately for changes in external factors. While remaining attentive to tail risk, going forward the company plans to develop businesses in high-growth markets, which it positions as core businesses.

Business restructuring

As part of its shift in business strategy, from diverse to focused, the company realigned some 30 services from its former business segments (Human Resources, Real Estate, and Lifestyle) into the Vertical HR, Living Tech, and Life Service categories.

Some specialized media in the Human Resources segment (REJOB, MIRAxS Kaigo, and MIRAxS Hoiku) went into the new Vertical HR category. Other specialized media (Job Information Bis, Arubaito EX, Franchise Hikaku.net (site for comparing franchises), and Brainlab) went into Life Service.

Within Vertical HR, the company narrowed down its focus to the HR businesses in the beauty/healthcare and nursing care/childcare industries. The name of this segment reflects the vertical/specialized nature of these media.

Living Tech retains the categories from the former Real Estate business segment. In recognition that rental real estate companies have yet to digitalize their operations, ZIGExN renamed the business segment to reflect its position that the sector has substantial room to boost earnings and improve profitability through technology.

The former Human Resources segment contained job information sites (Tenshoku EX and Arubaito EX). These sites, plus a company that develops systems for recruitment agencies (Brainlab) were transferred from vertical services to Life Service (media related to other life events). Life Service was positioned as a field to accumulate data and cultivate matching technology while recording stable revenue.

Reorganization of key media under the second medium-term management plan

Before change		After change
Category	Service name (main services)	Category	Service name (main services)
Human Resources	REJOB	Vertical HR	REJOB
	MIRAxS Kaigo		MIRAxS Kaigo
	MIRAxS Hoiku		MIRAxS Hoiku
	Job Information Bis	Living Tech	SMOCCA
	Arubaito EX		RESHOP-NAVI
	Franchise Hikaku.net (site for comparing franchises)		enepi
	Brainlab	Life Service	Job Information Bis
	MatchinGood		Arubaito EX
Real Estate	SMOCCA		Franchise Hikaku.net (site for comparing franchises)
	RESHOP-NAVI		Brainlab
	enepi		MatchinGood
Lifestyle	Apple World		Apple World
	Chukosha EX		Chukosha EX
	TCV		TCV
	Ryugaku Kuraberu		Ryugaku Kuraberu

Source: Shared Research based on company data

Three businesses under ZPM

Under ZIGExN Portfolio Management (ZPM), all businesses are plotted along two axes: sales growth and profitability. Businesses with high revenue growth (or growth potential) are dubbed “potential” businesses. The company earmarks these businesses for further investment, to increase their revenues and profits. Businesses with high profitability are called “fundamental” businesses. For these businesses, the company concentrates on maintaining profitability while achieving further revenue growth. Businesses with low revenue growth and low profitability are called “turnaround” businesses. These are targeted for business policy reviews.

As of FY03/22, the company positions Living Tech as a “potential” business category. By leveraging its matching technologies, the company plans to achieve revenue CAGR of 35% through FY03/26,

The company considers Vertical HR a “fundamental” business category. Alongside Living Tech, the company considers Vertical HR a core business, targeting revenue CAGR of 25% through FY03/26.

The company expects these two service categories to drive business expansion through FY03/26. The company expects these two to become “Z CORE” businesses (generating annual revenue in excess of JPY10.0bn).

Expanding matching technologies

About matching technologies

In general, “matching” refers to the intermediation of transactions and sales between the demand side and the supply side. Examples of matching services are those provided by job placement agencies (job seekers and recruiters), real estate brokers, and comparison sites. “Matching technology” provides a method of ensuring stable matches (of corresponding needs), which affects matching success or failure.

As an example of matching technology, for its job search sites the company creates algorithms (combination methods and procedures) to reliably combine job seekers’ attributes (resume content, work experience, skills, past job search history) with employers’ criteria (skills and background).

Purpose of matching technologies

The company uses matching technologies for two purposes: gathering users (directing traffic to a website, attracting users) and motivating user action (such as making an inquiry or purchasing a service).

Core technology

At the core of matching technologies is a highly accurate algorithm developed by repeating the process of analysis, learning, and distribution of matching results.

Analysis: The company’s database contains user data related to decision-making about life opportunities and data on companies (clients). At the analysis stage, the company uses its extensive database to determine whether users have found the most suitable information for themselves and whether they have taken action as a result (conversion). The company accumulates algorithms based on analyses of user behavior histories and the details of optimal corporate information.

Learning and distribution: Learning is the process of constructing a distribution logic to provide more optimal information based on the algorithms accumulated through analysis. The company works to improve the accuracy of its matching technology by sending out information based on a new distribution logic. When a match occurs, the data is accumulated and analyzed as matching data.

For example, the company analyzes the information and structures that lead (or do not lead) from a website page view to entry (promote behavior: conversion). The company has its own scoring system to rank information that leads to conversions. It uses this system to distribute information from the top of the rankings (distribution logic). Scoring elements from the rental property search site SMOCCA include the market price of properties, new arrivals, and such conditions as distance from the train station, living environment, and surroundings. Another element is information about the property itself (drawings, photos). The company organizes these elements and delivers to the top the information that best matches the user’s search criteria. In either case (whether or not the results lead to a successful match), the information is analyzed and a new distribution logic is formulated.

The company operates some 30 media. Operating numerous media is advantageous for accumulating data on users and companies. It also facilitates the rapid, multifaceted (across many business areas), and continuous updating of matching technology through the accumulation of matching results. The company believes managing multiple media has the following benefits.

High spending on search-linked advertising, even compared with the similar online media industry

Ability to respond swiftly to constantly changing SEO updates

Potential for storing a wide variety of user and corporate information

Potential for accumulating analysis data and algorithms

Broad scope for delivering information based on analysis results

Investment to accelerate expansion of the customer base

Other than M&A, the main areas of investment that accelerate expansion of the customer base are advertising and sales promotion. The company considers customer acquisition costs (CAC) to be the advertising and sales promotion expenses required to acquire one customer. The company uses LTV/CAC as its investment criterion. (LTV is the lifetime value produced over the contract period for a single customer.) The company does not disclose specific LTV figures. In FY03/21, CAC was JPY3.1bn (advertising expenses plus sales promotion expenses, per the annual securities report).

The company generally considers LTV/CAC of 3x or more to be appropriate.

Although it does not disclose LTV/CAC, the company does estimate this ratio for each core business. For core businesses with low LTV, the ratio is generally 4x, while businesses with high LTV have a ratio of 10x or more.

The company plans to frontload investments (mainly an increase in advertising expenses) during the first three years of its five-year medium-term management plan. The company is willing to accept a temporary slowdown in profit growth and a lower profit margin as a result.

Upfront investments

Since listing on the Mothers market in 2013, the company has grown its customer base mainly through M&A. At the same time, the customer recognizes that to grow earnings organically, it needs to cultivate customers itself. To do so, the company is enhancing its matching technology, working to better understand customer needs by defining the product market fit (PMF, how well a provided service fits and its accepted by the market), and frontloading investment.

Upfront investments include expenses to improve the quality of the company’s services. The company also plans to spend money on advertising and sales promotion to raise corporate awareness, as well as to incur HR and other expenses to expenses to boost sales.

Service enhancement (attracting new customers and business support)

The company’s measures for enhancing services fall under two policies.

Reinforcing the user attraction function (supporting user attraction)

Strengthening business support services for customers

Supporting user attraction means taking measures to minimize leaks that occur in customers’ existing business operations. Efforts seek to expand the area and industry of user attraction, subdivide user attraction areas and set user attraction targets. Supporting operations mainly involves shoring up digitalization initiatives. The company believes the real estate industry has ample room for business support through digitalization, as most sales are still conducted face-to-face.

DX support services launched in FY03/22: In July 2021, the company introduced SMOCCA CRM (a customer management tool) and LeadCloud (an automated telephone response service)

In December 2021, the company plans to launch RESHOP-NAVI CRM.

Enhancing awareness and sales

To cultivate new customers, in addition to boosting advertising expenditure in existing channels for attracting users, the company intends to use mass advertising to boost exposure and increase awareness of the company. At the same time, the company plans to expand its sales force, establish regional offices, and otherwise strengthen its sales activities to develop new customers.

Mass advertising includes television commercials, taxi ads, and ads on the straps train passengers hold onto. In western Japan, the company saw a 9% increase in the number of website sessions (visits) after running TV commercials and taxi advertising in the region.

Establishment of a corporate “purpose” in addition to management philosophy to mark 15th anniversary of establishment

June 2021 marked the company’s 15th anniversary of establishment. The company took this occasion as an opportunity to newly define its corporate “purpose,” which supplements its existing basic principle and management principle. The company also updated its corporate logo. The purpose, “Update your Story for a Better Future,” encompasses the idea that “You are the main star of your life, and we hope you will use ZIGExN’s services to advance your life.”

Basic principle, management principle, purpose

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 through the Internet.”
Management principle	“OVER the DIMENSION!”
Purpose	“Update Your Story for a Better Future”

Source: Shared Research based on company data

Updating the corporate logo

The new logo aims to reflect the corporate purpose.

The new logo is based on a combination of the first character of the company’s name in Japanese and the letter Z of ZIGExN. The positioning of the pattern expresses growth.

The company went from a multicolored logo to black and white, evoking a zebra. This is because startups that emphasize sustainability (social sustainability, or resolving the problems society faces) and coexistence (balancing social contribution and corporate profit) are called “zebra companies.”

The shape of the logo indicates growth, reflecting the company’s goals of growing like a unicorn (unlisted startup with a total value of more than USD1bn). This mixture of growth and coexistence indicates the company’s blending of zebra and unicorn characteristics.

Corporate logo (old logo at left, new logo at right)

Source: Shared Research based on company data

[Reference] First medium-term management plan

The first medium-term management plan, called “Protostar,” ran from the five years from FY03/17 to FY03/21. Numerical targets under this plan were OPM of 25% or more, annual growth of 25% or more in operating profit, and ROE of 25% or more. (The company nicknamed this plan “Triple 25.”) The company was targeting consolidated operating profit (Japanese GAAP) of JPY5.0bn for FY03/21.

The qualitative goal, which is outlined below, was to diversify the business model so it would not rely exclusively on aggregation media.

Vertical integration of the supply chain: In addition to aggregation media, internalize content creation and create new value.

Diversification of the business model in existing domains: Diversify the business model by expanding aggressively into peripheral fields in existing areas of business, such as recruiting and real estate.

Utilization of management resources to develop new businesses: Utilize the resources the company has accumulated since establishment (information database, user database, track record of transactions, and customer base) to develop new businesses.

Business

Overview of the business model

Company overview

FY03/21 results:

Revenue: JPY12.6bn (-4.8% YoY)
Operating loss: JPY1.1bn (booked an impairment loss of JPY4.0bn in Q2 on goodwill related to the travel and job ads businesses)
EBITDA: JPY3.8bn (-17.6%YoY; EBITDA = operating profit (loss) + depreciation and amortization + impairment loss + loss on retirement of fixed assets and valuation loss - negative goodwill)

The company's corporate philosophy focuses on eliminating the "information asymmetry" between companies and individuals (users) (i.e., the disparity in information held by different economic entities such as buyers and sellers of goods and services, companies and individuals).

Service categories

The company has three service categories, focusing on information surrounding major life events.

Vertical HR (38.2% of total revenue in FY03/21): Mainly handles media related to HR, worker dispatch, and recruitment, with a focus on the fields of beauty/healthcare and nursing care/childcare.

Living Tech (27.0%): Focused mainly on housing. Handles information related to rental property, renovations, exterior painting, and home energy.

Life Service (34.8%): Operates specialized sites that focus on life events other than those outlined above. As of FY03/21, major categories were travel, vehicles, study abroad, and marriage. In this business segment, the company also develops and operates HR cloud management systems for temporary employment agencies.

The company began conducting medium-term management reforms in FY03/22, which included the realignment of business categories. (For details, see the “Medium-term management plan” section.) To carry on its business strategy of achieving thorough business focus, the company narrowed down its core businesses (services) into Vertical HR and Living Tech.

Reorganization of key media under the second medium-term management plan

Before change		After change
Category	Service name (main services)	Category	Service name (main services)
Human Resources	REJOB	Vertical HR	REJOB
	MIRAxS Kaigo		MIRAxS Kaigo
	MIRAxS Hoiku		MIRAxS Hoiku
	Job Information Bis	Living Tech	SMOCCA
	Arubaito EX		RESHOP-NAVI
	Franchise Hikaku.net (site for comparing franchises)		enepi
	Brainlab	Life Service	Job Information Bis
	MatchinGood		Arubaito EX
Real Estate	SMOCCA		Franchise Hikaku.net (site for comparing franchises)
	RESHOP-NAVI		Brainlab
	enepi		MatchinGood
Lifestyle	Apple World		Apple World
	Chukosha EX		Chukosha EX
	TCV		TCV
	Ryugaku Kuraberu		Ryugaku Kuraberu

Source: Shared Research based on company data

History

The company was founded in 2006 as Drecom Generated Media, a joint venture between Drecom Co., Ltd. and the Recruit group. Joe Hirao was appointed CEO in 2008. Since that time, the company has launched a series of search services focused on individuals’ life events (such as job changes, part-time jobs, real estate rentals, or car purchases).

ZIGExN was one of the first companies to launch aggregation media, which aggregate information in a specific category from multiple major search sites into a single location (the company's platform). For example, ZIGExN’s services allow users to search information posted on multiple job sites at once on the company's website. The convenience of being able to search for information dispersed across multiple sites all at once boosts the user-attraction impact. This benefits companies that wish to attract users, as well as users that seek information.

Change in business strategy: Move away from aggregation media

The company listed its shares on the Mothers market in 2013, moving to the First Section of the Tokyo Stock Exchange in 2018. Since the Mothers listing, the company has been developing its own media (platforms) in addition to operating aggregation media, which aggregate major search sites. Aggregation media can reduce the cost of collecting information about website postings. At the same time, these media are efficient at attracting users (unlike niche, specialized websites), because of the large volume of information posted. However, due to its business structure the company relies on the operators of major search sites to collect and amass information, and no success fees generated during the matching process trickle down as revenue for the company.

To move away from a structure in which revenue was dependent on the strategies of major sites, the company transitioned to a business model in which its own salespeople attract customers (companies) and earn success fees. In addition to partnering with major sites, the company is expanding its business domain through M&A, simultaneously acquiring a customer base and boosting revenue.

Specifically, the company is focused on the development of specialized (vertical) media that matches users and customers (startups) with high accuracy in specific industries and regions by utilizing the know-how (matching technology) cultivated through the operation of aggregation media. The company’s ongoing policy is to focus on fields involving major life events, such as human resources, real estate, automobiles, and travel.

Specialized media

Specialized (vertical) media refers to media (websites) that post content specializing in a certain field.

With specialized media, information is narrowed down to specific fields, and the attributes and preferences of the user base (site viewers) become clearer, making it easier to deliver content that matches user preferences. Specialized media facilitates advertising placement, helping advertisers to select the most suitable media and to create advertisements that resonate with the target audience.

The company intends to continue creating and operating specialized media that focus on life events (lifestyle), such as human resources, real estate, automobiles, and travel (see below).

Aggregation media

The term "aggregation media" refers to media that aggregate services provided by multiple companies and information distributed across the internet so they can be used as a single service.

With aggregation media, the company receives a fee from its partner companies (information providers) based on the number of visitors it refers. The number of referrals is based on user conversions (the number of people who request materials or take other action, apply for jobs, request a quote on a used car, etc.),

The company adds “EX” at the end of service names to identify aggregation media.

For people who use aggregation media, value lies in the aggregation of information that is dispersed across the internet, allowing for efficient, bulk searches. The advantage to information providers is that they can attract users without any outlay. Aggregation media refer customers to them. One disadvantage for ZIGExN and other operators of aggregation media is that that they cannot control the quality and quantity of posted information.

Business categories

The company has chosen its business domain as markets related to people's life events. The target market is worth several trillion yen, and the company believes this market has relatively low internet penetration (i.e., services are still centered on face-to-face interaction). The company believes that it can gain first-mover advantage and erect barriers to entry by developing internet-based matching services ahead of other companies in an industry that has yet to go online. Below are estimates of market sizes and internet adoption rates presented in the company's 1H FY03/20 results presentation.

HR services industry: JPY9.0tn; internet penetration rate: 9%

Total transaction volume among major real estate companies: JPY8.5tn; internet penetration rate: 10%

Total used car purchases: JPY3.7tn; internet penetration rate: 3%

Total travel agency transactions: JPY4.0tn; internet penetration rate: 45% (Globally, the travel industry is going online.)

Room for future expansion in business categories

ZIGExN plans to focus its investments on businesses with high growth potential and high profitability that could become core businesses. In its Q4 FY03/21 results presentation, the company lists the following existing areas of business and areas of business with room for expansion.

Room for expansion in HR services

Existing areas of business: Beauty, nursing care/childcare, part-time work (all occupations), job change (all occupations)

Areas of business with room for expansion: Freelancers, gig workers (market for people who sell or share their skills), information systems, logistics, manufacturing, and HR services in other industries the company has not yet entered

Room for expansion in real estate and renovation

Existing areas of business: Real estate rental, real estate sales, relocation, renovation, exterior painting, energy (propane gas, companies that install clean energy equipment)

Areas of business with room for expansion: Real estate investment media, property management, property sales, rent guarantees, house cleaning

Room for expansion in lifestyle category

Existing areas of business: Travel, automobiles, used cars, study abroad, private tutoring, marriage

Areas of business with room for expansion: Healthcare, reuse, end-of-life services, e-commerce, pets, sports, asset formation, accidents/incidents, gifts, childbirth, others

M&A

Fundamental policy

The company made 19 acquisitions between its listing on the TSE Mothers market in 2013 and end-FY03/21. The company cites three criteria for the companies it acquires. First, their businesses must have growth potential. The second question is whether it is possible to utilize the existing customer base, technology, and commercial products of the target company/business. The third consideration is synergy and affinity with the company’s existing businesses.

The reason the company emphasizes acquisition targets’ customer bases is that developing corporate customers is labor-intensive and time-consuming. Acquiring companies with existing customer bases shortcuts this process.

After making an acquisition, ZIGExN then applies its own expertise in attracting users, matching the acquired company's customer base with new users that the acquired company was previously unable to reach.

Major acquisitions

Acquisition date	Acquisitions (excerpted)	Acquisition method	Acquisition cost (JPYmn)
Mar 2014	Acquired all shares of Intercapital Securities Corporation with the aim of entering the securities business.	Cash	58
Jul 2014	Made Brainlab, Inc. a wholly owned subsidiary.	Not disclosed	1,170
Sep 2014	Made REJOB Co., Ltd. a wholly owned subsidiary.	Borrowings	1,980
Apr 2016	Made Area Business Marketing Co., Ltd. a wholly owned subsidiary.	Cash on hand	300
Jan 2017	Made Sanko Ad Co., Ltd. a wholly owned subsidiary.	Borrowings	3,026
Feb 2018	Made Apple World Holdings Co., Ltd. a wholly owned subsidiary.	Cash and deposits	1,434
Dec 2018	Made Trade Car View Co., Ltd. a wholly owned subsidiary.	Cash and deposits	Not disclosed
Jan 2019	Made MatchinGood Co., Ltd. a wholly owned subsidiary.	Cash and deposits	Not disclosed

Feb 2020	Made I AND C-Cruise Co., Ltd. a wholly owned subsidiary.	Borrowings and cash on hand	Not disclosed
Sep 2020	Made PCH Holdings Co., Ltd. a wholly owned subsidiary. HITOWA Career Support Co. Ltd. (a subsidiary of PCH Holdings that conducted HR and babysitting services) also became a wholly owned subsidiary (now a sub-subsidiary named MIRAxS).	Cash and deposits	180
Nov 2020	Acquired the Exterior Painting Concierge business from Branding Technology Inc.	All from cash on hand	100
Dec 2020	Acquired comparison media from Basic Inc.: “Franchise Hikaku.net (media for comparing franchises) and “Kekkon Sodansho Hikaku.net” (media for comparing marriage agencies).	Borrowings and cash on hand	1,250
Feb 2022	Acquired the Exteriors business from Crassone Co., Ltd.	Borrowings and cash on hand	Not disclosed

Source: Shared Research based on company data

Acquisition policy

To date, most acquisitions have been self-funded (cash and deposits) or used borrowings. The company notes that it considers taking out loans for acquisitions involving share purchases of JPY1bn or more.

Goodwill-to-equity ratio

The company aims to keep its goodwill-to-equity ratio below 1x. At end- FY03/21, this ratio was 0.5x.

Post-merger integration (PMI)

Unique PMI methodology

PMI refers to the process of integrating companies that have been acquired. The company has built up expertise in this area, through its 19 acquisitions to date. The company has encapsulated its system for successful PMI into a system it calls ZIGExN Value Integration (ZVI).

During the M&A process, ZIGExN conducts thorough due diligence and selects companies that have a solid customer base. These potential acquisition targets are then narrowed down into those whose earnings are likely to increase if the company can leverage its own business strategy.

Many of the company’s acquisitions have room to improve their user attraction channels. The company introduces its own expertise in this area, taking into account the acquired company’s strengths, After acquisition, the company also seeks to make use of its highly accurate matching to promote management improvement and business expansion.

In addition, ZIGExN seeks to respect the corporate culture of acquired companies and strives to win the hearts and minds of their people immediately after the integration. The company notes that its own corporate culture differed from that of Apple World Holdings Co., Ltd. (now Apple World Inc., became a wholly owned subsidiary in 2018.), so ZIGExN exercised caution in introducing its own business management methods immediately. The company's seconded employees took the time to talk with Apple World's full-time employees and develop the business in a way that combined the two companies’ corporate cultures.

PMI results

When the company acquired REJOB Co., Ltd. (operates a portal for beauty-related jobs) in September 2014, REJOB had annual revenues of around JPY900mn and a market share of 3% to 4%. By FY03/20, revenue had grown to JPY4.5bn and market share was 15%.

In February 2020 the company acquired I AND C-Cruise Co., Ltd. (operates search media for remodeling contractors and merged with the company in July 2020).

According to the company, EBITDA generated by the companies acquired between FY03/15 and FY03/21 was 155% of the cumulative value (EV) of those acquisitions (cumulative EBITDA / cumulative EV). Shared Research understands that having a cumulative EBITDA / cumulative EV ratio of more than 100% four years after an acquisition means the company is recovering its investment at about twice the typical speed.

Main services

Vertical HR

Service details

Structure

Vertical HR includes REJOB Co., Ltd. (an unlisted, wholly owned subsidiary that operates the REJOB and REJOB Care sits) and MIRAxS Co., Ltd. (also an unlisted, wholly owned subsidiary, which operates MIRAxS Kaigo and MIRAxS Hoiku and MIRAxS Sitter).

Within Vertical HR, the company narrowed down its focus to the human resources business in the beauty/healthcare and nursing care/childcare industries. The name of this segment reflects the vertical/specialized nature of these media.

REJOB became a subsidiary in 2014, followed by MIRAxS in 2020.

Providers of main services

Service name	Provider	Overview	Year of service launch or acquisition	Date acquired company was established or service launched
REJOB	REJOB Co., Ltd.	Job portal specifically for the beauty and healthcare industries	2014	REJOB Co., Ltd./Established in 2009
REJOB Care	“	Job information service specializing in the nursing and rehabilitation industry (nursing and home helpers)	2015	“
MIRAxS Kaigo	MIRAxS Co., Ltd.	Recruitment/consulting services specifically for the nursing care industry	2020	MIRAxS Co., Ltd./ Established in 2008
MIRAxS Hoiku	“	Recruitment/consulting services specifically for the childcare industry	“	“
MIRAxS Sitter	“	Babysitter introduction service, centered on the Tokyo metro area	“	“

Source: Shared Research based on company data

About REJOB

REJOB operates a job portal (also named REJOB) specializing in the beauty industry. The service delivers value by matching users who are looking for information about beauty-related jobs with companies that are hiring. As of November 2021, REJOB had more than 14,000 job postings. The site lists 18 job categories, including hairdressers, lash artists (specialists in eyebrows/eyelashes), nail stylists, beauticians, and therapists. The company says REJOB is one of Japan’s largest job portals specializing in beauty and healthcare. (See the section titled “Competitors’ services.”)

Number of REJOB job postings

Job type	Number job postings
Hairdressers	5,173
Nail stylists	1,269
Beauticians	1,654
Lash artists	1,536
Therapists	1,172
Other	3,790

Note: As of November 3, 2021
Source: Shared Research based on REJOB’s website

REJOB moving into the nursing care field

Since 2015, REJOB has been expanding into job-search services in the nursing care field. In July 2021, the company changed the name of its REJOB Nursing Care site to REJOB Care. The company also expanded the site’s remit from the narrow category of nursing care (HR market for people certified as nursing care providers) to include job searches in such areas as rehabilitation (including physical therapists and speech therapists), nurses and nursing assistants, social workers, and other categories (medical office workers, cooks, nutritionists, lifestyle support personnel, nursing care taxi drivers). As of November 2021, job postings exceeded 15,000.

About MIRAxS Kaigo and MIRAxS Hoiku

MIRAxS operates job-search sites (MIRAxS Kaigo, MIRAxS Hoiku, and MIRAxS Kango) focused on recruitment and worker dispatch in the nursing care and childcare industries. Like REJOB, MIRAxS generates revenue by connecting job seekers with companies that are hiring.

MIRAxS also operates the MIRAxS Sitter business, for dispatching babysitters.

Job postings for MIRAxS’s services

Service name	Number job postings
MIRAxS Kaigo	31,529
MIRAxS Hoiku	7,924
MIRAxS Sitter	3,953

Note: As of November 3, 2021
Source: Shared Research based on MIRAxS’s website

Business model

REJOB

Value proposition

The value proposition of this service category is to match (on the company’s platform) individuals seeking information about jobs in the beauty and healthcare fields with companies that are hiring. The REJOB site is operated by REJOB Co., Ltd., which became a subsidiary in 2014.

Prices (posting and success fees)

The company generates revenue for these services from companies (corporate clients). Revenue comes from listing fees (when a job offer is posted) and success fees (when an applicant is hired). Listing fees are typically around JPY40,000 per month, while success fees are approximately JPY100,000 per hire. Job postings come down once a job application is received and a job offer is made.

Users register their profiles and search for jobs. The service is free for people who are searching for jobs.

The company has developed and uses its own algorithm for matching job details with job-seekers’ attributes.

MIRAxS Kaigo and MIRAxS Hoiku

Value proposition

As with REJOB, the value proposition in this service categories is to match the needs of job seekers and employers. MIRAxS Kaigo and MIRAxS Hoiku provide dispatch and recruitment of nursing care and childcare practitioners. These services are handled by MIRAxS Co., Ltd., which became a subsidiary in 2020.

Prices (dispatching and referral fees)

In the dispatch business, dispatching fees are charged when a worker is placed with an employer. The company receives JPY250,000 to JPY300,000 per month on an ongoing basis from clients where nursing care workers and childcare workers have been placed. In recruitment, the company receives an introduction fee (20% to 30% of annual salary) once a hiring decision is made. The company does not receive job posting fees.

Comparison of competitors’ services

Job portals in the beauty industry

REJOB (the site operated by ZIGExN subsidiary REJOB Co., Ltd.) has nearly the same number of job listings as Hot Pepper Beauty, which is run by Recruit Co., Ltd. (an unlisted subsidiary of Recruit Holdings Co., Ltd. [TSE1: 6098]). According to ZIGExN, several other companies are entering this business domain.

Competitors’ services

Service name	Postings	Provider	Ticker
REJOB	14,534	ZIGExN	TSE1: 3679
Hot Pepper Beauty	14,408	Recruit Holdings Co., Ltd.	TSE1: 6098
Biyoshi Kyujin.com	5,683	Staff Creation Co., Ltd.	Unlisted
Travail (hairdressers, beauty salons, hair salons)	2,382	Recruit Holdings Co., Ltd.	TSE1: 6098
Request QJ	2,015	Seyfert Ltd.	Unlisted
Biyoshishokai Navi	1,986	Nikkei Daiichi Co., Ltd.	Unlisted

Note: Data is as of October 8, 2021
Source: Shared Research based on individual companies’ websites

Job portals related to nursing care

MIRAxS Co., Ltd. (an unlisted subsidiary) has more than 30,000 job postings. Most companies in this field are unlisted.

Competitors’ services

Service name	Postings	Provider	Ticker
MIRAxS Kaigo	31,529	ZIGExN	TSE1: 3679
Kiracare	-	Leverages MedicalCare Co., Ltd.	Unlisted
Job Medley	170,420	Medley, Inc.	Mothers: 4480
Mynavi Kaigoshoku	-	Mynavi Corporation	Unlisted
Kaigo Agent	-	SMS Co., Ltd.	TSE1: 2175
Kaigo Worker	-	TRYT Career, Inc.	Unlisted

Note] Data is as of November 2021. Job Medley caters to the nursing care field in a broad sense, with listings including cooks and nursing care taxi drivers.
Source: Shared Research based on individual companies’ websites

Living Tech

Service details

Structure

In Living Tech, the company operates the SMOCCA platform and other real-estate sites. This business category also includes sites the company has acquired, such as RESHOP-NAVI (portal to search for renovation companies), Pro Nuri and Exterior Painting Concierge (portals to search for companies handling exterior painting), enepi (sites to provide information and compare quotes from propane gas providers). The company provides a total of six services. (See table below.)

Overview of major services provided

Service name	Provider	Overview	Year of service launch or acquisition	Date acquired company was established or service launched
SMOCCA	ZIGExN (non-consolidated)	One of Japan’s most extensive rental housing information services	2010	(Launched by ZIGExN)
RESHOP-NAVI	“	Information on renovation companies and service for comparing quotes	2020	I AND C-Cruise Co., Ltd./established in 2008
enepi	“	Information on propane gas suppliers and service for comparing quotes	2020	“
Pro Nuri	“	Information on exterior painting companies and service for comparing quotes	2020	I AND C-Cruise Co., Ltd./established in 2008
Exterior Painting Concierge	“	Free service that matches customers and companies that handle interior and exterior repairs	2020	Acquired from Branding Technology Inc./established in 2001
Gree Ene	“	Information about and comparison of quotes by companies generating solar power and providing batteries and conversion to all-electric premises	2020	I AND C-Cruise Co., Ltd./established in 2008

Source: Shared Research based on company data

Business model

SMOCCA's revenue comes from application fees (response fees), which are generated every time a user (generally an individual) contacts a service provider (the company's customer). Fees for SMOCCA are approximately JPY4,000 (as of FY03/21). For other services, such as RESHOP-NAVI and enepi, users ask for quotes on the company’s platform. The company introduces its users to these service providers (the company’s clients), from which it earns referral fees.

SMOCCA

Value proposition

SMOCCA is a portal for rental property searches. With SMOCCA, the company aims to bring into its customer base small and medium-sized real estate agents that are not covered by the major media. The company’s value proposition is to help small and medium-sized real estate companies attract users by posting their property information on the SMOCCA site.

Pricing (fees for inquiries or responses)

The company charges a fee when a user visits the site and makes an inquiry about a property to a real estate agent (success fee model). Such inquiries may be by phone or online. Fees are around JPY4,000 per inquiry.

For companies, the service’s advantages are that it requires no upfront investment from them, while they benefit from ZIGExN’s expertise in attracting users and its matching technology.

SMOCCA partners with SUUMO, which is operated by Recruit Co., Ltd. (unlisted), and Apaman Shop, which is operated by Apaman Co., Ltd. (JASDAQ Standard: 8889). As SMOCCA is an aggregation media, the company earns revenue in a success-fee-like arrangement when a user makes an inquiry about a property to one of the company’s partners.

RESHOP-NAVI, Pro Nuri, and Exterior Painting Concierge

Value proposition and pricing

RESHOP-NAVI is a search site for residential renovation companies, and Pro Nuri and Exterior Painting Concierge are search sites for exterior painting businesses. RESHOP-NAVI and Pro Nuri are operated by I AND C-Cruise, which became a subsidiary in 2020 (and was merged into the company the same year). The company acquired Exterior Painting Concierge in 2020 from Branding Technology Inc. (Mothers: 7067). In both cases, the company receives referral fees and closing fees, which are recorded as revenue when users are referred to the service provider.

Competitors’ services

Rental property search site

SUUMO, a service by Recruit Co., Ltd. (unlisted) leads the market for number of listings.

Competitors’ services

Service name	Postings	Provider	Ticker
SMOCCA	3,959,170	ZIGExN	TSE1: 3679
SUUMO	7,478,783	Recruit Holdings Co., Ltd.	TSE1: 6098
Sumaity	5,572,948	Kakaku.com, Inc.	TSE1: 2371
HOME’S	4,775,078	LIFULL Co., Ltd.	TSE1: 2120
Apaman Shop	2,118,020	Apaman Co., Ltd.	TSE JASDAQ Standard: 8889
At Home	1,794,070	At Home Co., Ltd.	Unlisted

Note: As of October 31, 2021
Source: Shared Research based on individual companies’ websites

Media for matching renovation customers and providers

RESHOP-NAVI is the industry leader in terms of average number of quotes provided per month.

Competitors’ services

Service name	Number of quotes (monthly average)	Provider	Ticker
RESHOP-NAVI	7,509	ZIGExN	TSE1: 3679
Home Pro	5,481	Homepro Co., Ltd. (wholly owned subsidiary of Recruit Co., Ltd.)	Unlisted
Ienakama.com	4,274	MatchingJapan Inc.	Unlisted
Meetsmore	3,000	MeetsMore Inc.	Unlisted
Zehitomo	3,000	Zehitomo Co., Ltd.	Unlisted

Note: As of end-December 2020
Source: Shared research based on corporate websites and a renovation industry newspaper

Life Service

Service details

Structure

In the Life Service category, the company divides its matching platforms and services broadly into “travel” and “non-travel” (such as job search and vehicles). In the travel category, the company provides information on hotels and airline tickets. In the non-travel category, the company operates aggregation media (aggregating major sites providing information on part-time jobs and used cars) and comparison media (sites comparing franchises and marriage agencies). The company also provides systems for recruitment agencies and temporary employment agencies.

Life Service businesses differ from Vertical HR and Living Tech in that they do not deliver earnings growth as a result of a focused increase in investment. Like the core businesses, however, Life Service businesses accumulate data that enhances the company’s matching technology.

Comparison media provide information that helps users narrow down their choices. They do so by comparing a large number of options in the same genre based on such factors as price, performance, and service content. These sites do not match users with service providers. In 2020, the company acquired from Basic Inc.: Franchise Hikaku.net (a site for comparing franchises), Kekkon Sodansho Hikaku.net (site for comparing marriage agencies), Katei Kyoshi Hikaku Kuraberu (a site for comparing tutors), and Ryugaku Kuraberu (a site for comparing study abroad offerings).

In the system business, the company operates MatchinGood, providing systems for recruitment agencies and temporary employment agencies.

Overview of major services provided

Service name	Provider	Overview	Year of service launch or acquisition	Date acquired company was established or service launched
Travel
Apple World	Apple World Inc.	Hotel information service covering some 100,000 properties around the world (site specifically for travel agencies)	2018	Apple World Inc./established in 1991
Hotelista	“	Information service covering some 100,000 properties around the world (site targeting individuals)	2018	“
TRAVELIST	“	Service for simple comparison and booking of inexpensive airline tickets and LCCs	2020	“
Travery	“	Media for searching and comparing domestic and international hotel and accommodation plans	2018	“
Job search
Arubaito EX	ZIGExN (Parent)	One of Japan’s most extensive services containing part-time job information	2008	(Launched by ZIGExN)
Job Information Bis	Sanko Ad Co., Ltd.	Print media focused on jobs in the Tokai region	2017	Sanko Ad Co., Ltd./established in 1998
Automotive
Chukosha EX	ZIGExN (Parent)	Service providing information on around 400,000 used cars throughout Japan	2008	(Launched by ZIGExN)
TCV	TCV Co., Ltd.	One of the largest Japanese sites for exporting used cars from Japan to buyers around the world	2018	TCV Co., Ltd./established in 2018
Comparison media
Franchise Hikaku.net (site for comparing franchises)	ZIGExN (Parent)	One of Japan’s most extensive services for comparing information on franchises	2020	Acquired from Basic Inc./established in 2004
Kekkon Sodansho Hikaku.net	ZIGExN (Parent)	Service for comparing information on marriage agencies	2020	Acquired from Basic Inc./established in 2004
Katei Kyoshi Hikaku Kuraberu	“	Service for comparing information about in-home tutors and tutoring centers	2020	Acquired from Basic Inc./established in 2004
Ryugaku Kuraberu	“	Service comparing agents handling study abroad programs (for university, language study, working holiday)	2020	Acquired from Basic Inc./established in 2004
System development and provision
MatchinGood Jinzai Haken	Brainlab, Inc.	Cloud management system for staffing companies (temporary staffing)	2019	MatchinGood Co., Ltd./established in 2002
MatchinGood Jinzai Shokai	“	HR cloud management system for recruitment agencies	2019	“
CareerPlus	“	Operational management system for recruitment agencies	2014	Brainlab, Inc./established in 2002

Source: Shared Research based on company data

Business model

In the travel category, the company generates revenue from service fees (the difference between the amount received from the travel agency or traveler and the cost of accommodation or air tickets). In the non-travel category, the company’s customers are the media companies that operate sites. The company earns fees when users apply for jobs or make inquiries.

Travel

Value proposition

In the travel category, the company has both BtoB and BtoC businesses.

In BtoB businesses, a subsidiary (Apple World Inc.) operates Apple World, a site for travel agency-specific site for searching and making hotel reservations. The company provides hotel information to its clients (travel agencies). The company receives the difference between the amount paid by the consumer and the cost of the hotel. The company pays fees to the hotel and receives service fees as its revenue.

In the BtoC category, Apple World operates Hotelista, TRAVELIST, and Travery.

Hotelista: A site to search hotel information and make reservations

TRAVELIST: A site to discount air tickets with regular airlines and LCCs

Travery: A search and comparison site (aggregation media) for hotels and accommodation plans in Japan and overseas. The site contains postings on hotel accommodation plans from travel booking sites such as Rakuten Travel, Expedia, and JTB.

Pricing

With TRAVELIST, the company collects the cost of airline tickets and service fees from individuals. The company then pays the cost of the ticket to the provider and books the service fee as revenue. Similarly, for Hotelista the company collects hotel costs and service fees from individuals, pays the costs to hotel operators, and retains the service fees. With Travery, the company records revenue from the booking fees (success fees) it receives from the travel agencies it partners with.

Non-travel

Within the Life Service non-travel category, the company operates Arubaito EX and Chukosha EX (aggregation media). For these sites, the company receives payments from media customers (for the development of original sites) based on user applications and inquiries. The company also operates specialized media in the non-travel category, such as Franchise Hikaku.net (a site for comparing franchises), Job Information Bis, and TCV.

Franchise Hikaku.net (site for comparing franchises): A comparison site targeting individuals who want to start their own franchise business

Job Information Bis: Newspaper insertions (print media) containing job ads in the Tokai region

TCV: Formerly called Trade Car View, a site for matching used car owners in Japan with overseas buyers

With Franchise Hikaku.net (site for comparing franchises), the company treats each franchisor as a customer and recognizes revenue through monthly posting fees or success fees based on the number of inquiries. Job Information Bis is operated by Sanko Ad Co., Ltd., an unlisted subsidiary. Sanko Ad’s clients are the companies that post jobs on its website. TCV is run by another unlisted subsidiary, TCV Co., Ltd. Here, revenue comes from closing fees (5.8% of unit transaction costs plus USD50).

Competitors’ services

Job sites (part-time work)

Service name	Postings	Provider	Ticker
Arubaito EX	1,098,613	ZIGExN	TSE1: 3679
Baitoru	1,991,821	DIP Corporation	TSE1: 2379
Indeed	900,000	Recruit Holdings Co., Ltd.	TSE1: 6098
Town Work	654,193	Recruit Holdings Co., Ltd.	TSE1: 6098
Mynavi Baito	218,480	Mynavi Corporation	Unlisted

Note: As of October 31, 2021
Source: Shared Research based on individual companies’ websites

Job sites (changing jobs)

Service name	Postings	Provider	Ticker
Tenshoku EX	422,516	ZIGExN	TSE1: 3679
doda	141,730	Persol Career Co., Ltd.	Unlisted
BizReach	64,891	BizReach, Inc.	Unlisted
Rikunabi NEXT	52,213	Recruit Holdings Co., Ltd.	TSE1: 6098
En Tenshoku	7,244	En Japan Inc.	TSE1: 4849
type	2,749	Career Design Center Co., Ltd.	TSE1: 2410

Note: As of October 31, 2021
Source: Shared Research based on company data

Revenue structure

Revenue can be categorized broadly as posting or success fees (closing fees/success fees) and other fees (such as system business fees). In FY03/21, 34% of revenue came from posting fees, 49% was from success fees, and 14% was from other sources. Success fees have grown proportionally since FY03/20.

Correlation with business sentiment

According to the company, media that relies on posting fees is highly correlated with business sentiment because postings directly reflect demand from corporate clients (job ads, number of listings, and duration of listings). However, revenue based on success fees comes from media based on matching corporate clients and users. Accordingly, revenue in this media category is less susceptible to business sentiment.

Posting fees: Revenue is the product of ad postings times the price per post.

Success fees: Revenue is the product of the number of matches (of companies and users) times the unit charge for successes.

Revenue structure by fee structure

	FY03/20	FY03/21
Posting fees	36%	34%
Success fees	49%	47%
Other	14%	19%

Source: Shared Research based on company data

Recurring revenue

The company divides revenue into recurring revenue and non-recurring revenue. The company defines recurring revenue as businesses/services that are highly scalable, controllable, and sustainable, and are embedded in the commercial flow of mainly small and medium-sized corporate clients. In other words, the company generates recurring revenue through charges to customers (mostly small and medium-sized companies) with whom it has long-term business relationships. By contrast, ZIGExN refers to revenue from media customers situated between business operators and itself as non-recurring revenue.

Recurring revenue includes all revenue from REJOB (posting fees, hiring/success fees), revenue from MIRAxS’s dispatch business (work-based charges), SMOCCA’s application fees (success fees) from real estate companies, all revenue from RESHOP-NAVI (application fees/success fees), and the reservation fees (= success fees) generated monthly for Apple World. Brainlab, which is involved in IT system development, initial system development charges and monthly system charges are recurring revenue.

In FY03/21, recurring revenue made up 67.2% of total revenue, compared with 64.2% in FY03/20 (+2.8pp YoY). According to the company, the percentage of recurring revenue first exceeded 50% in FY03/19. The company aims to keep increasing its recurring revenue.

Market and value chain

Competitors

Medley, Inc. (TSE Mothers: 4480) competes with the company’s Vertical HR business. Competitors in Living Tech include Kakaku.com, Inc. (TSE1: 2371) and LIFULL Co., Ltd. (TSE1: 2120).

Comparison of financial indictors (Vertical HR)

		ZIGExN
Earnings (JPYmn)		FY03/19 IFRS	FY03/20 IFRS	FY03/21 IFRS
Revenue		12,854	13,199	12,564
	YoY	25.2%	2.7%	-4.8%
Cost of revenue		1,829	2,069	2,081
Gross profit		11,025	11,130	10,484
	Gross profit margin	85.8%	84.3%	83.4%
SG&A expenses		6,985	7,393	7,661
	SG&A ratio	54.3%	56.0%	61.0%
Other income		66	76	131
Other expenses (incl. impairment losses)		30	7	4,016
Operating profit		4,077	3,806	-1,062
	YoY	22.7%	-6.6%	-127.9%
	Operating profit margin	31.7%	28.8%	-8.5%
Profit attributable to owners of the parent		2,811	2,669	-1,964
	Profit margin	21.9%	20.2%	-15.6%
Total assets		20,047	22,406	20,101
ROE		22.3%	17.8%	-13.4%
	Equity ratio	68.8%	72.6%	64.6%
	Total asset turnover	66.9%	62.2%	59.1%
	Profit margin	21.9%	20.2%	-15.6%
Number of employees (cons.)		398	465	772
	Revenue per employee	32	28	16

		Medley
Earnings (JPYmn)		FY12/18 (Parent)	FY12/19	FY12/20
Revenue		2,933	4,765	6,831
	YoY	-	-	43.3%
Cost of revenue		1,074	1,551	2,160
Gross profit		1,859	3,214	4,671
	Gross profit margin	63.4%	67.4%	68.4%
SG&A expenses		1,959	3,061	4,275
	SG&A ratio	66.8%	64.2%	62.6%
Operating profit		-100	153	396
	YoY	-	-	158.6%
	Operating profit margin	-3.4%	3.2%	5.8%
Net income attributable to owners of the parent		-154	-381	456
	Net margin	-5.2%	-8.0%	6.7%
Total assets		2,311	5,400	15,520
ROE		-	-	7.0%
	Equity ratio	46.6%	62.0%	62.6%
	Total asset turnover	-	-	65.3%
	Net margin	-5.2%	-8.0%	6.7%
Number of employees (cons.)		246	379	494
	Revenue per employee	12	13	14

Source: Shared Research based on company data

Comparison of financial indictors (Living Tech)

		Kakaku.com			LIFULL
Earnings (JPYmn)		FY03/19 IFRS	FY03/20 IFRS	FY03/21 IFRS	FY09/18 IFRS	FY09/19 IFRS	FY09/20 IFRS
Revenue		54,832	60,978	51,077	34,565	39,297	35,403
	YoY	17.2%	11.2%	-16.2%	116.7%	13.7%	-9.9%
Cost of revenue		29,789	33,698	32,668	3,879	4,560	4,097
Gross profit		25,043	27,280	18,409	30,686	34,737	31,306
	Gross profit margin	45.7%	44.7%	36.0%	88.8%	88.4%	88.4%
SG&A expenses		-	-	-	26,422	30,714	27,003
	SG&A ratio	-	-	-	76.4%	78.2%	76.3%
Other income		26	32	119	257	746	114
Other expenses (incl. impairment losses)		0	94	233	206	585	1,919
Operating profit		25,070	27,217	18,295	4,315	4,185	2,498
	YoY	9.6%	8.6%	-32.8%	324.5%	-3.0%	-40.3%
	Operating profit margin	45.7%	44.6%	35.8%	12.5%	10.6%	7.1%
Profit attributable to owners of the parent		16,697	18,348	11,763	2,860	2,407	1,171
	Profit margin	30.5%	30.1%	23.0%	8.3%	6.1%	3.3%
Total assets		51,242	63,317	70,958	29,182	43,673	55,320
ROE		45.1%	44.0%	26.2%	13.9%	8.8%	3.5%
	Equity ratio	79.1%	67.8%	66.1%	75.0%	74.5%	60.5%
	Total asset turnover	116.6%	106.5%	76.1%	124.5%	107.9%	71.5%
	Profit margin	30.5%	30.1%	23.0%	8.3%	6.1%	3.3%
Number of employees (cons.)		977	1,082	1,172	1,064	1,297	1,268
	Revenue per employee	56	56	44	32	30	28

Source: Shared Research based on company data

In HR aggregation media (Life Service), competitors are Persol Holdings Co., Ltd. (TSE1: 2181), DIP Corporation (TSE1: 2379), Career Design Center Co., Ltd. (TSE1: 2410), and En Japan Inc. (TSE1: 4849).

Comparison of financial indictors (Life Service)

		Persol Holdings			DIP
Earnings (JPYmn)		FY03/19	FY03/20	FY03/21	FY02/19	FY02/20 (Parent)	FY02/21
Revenue		925,818	970,572	950,722	42,176	46,415	32,495
	YoY	28.2%	4.8%	-2.0%	10.8%	-	-
Cost of revenue		719,301	756,580	749,309	2,708	3,036	3,304
Gross profit		208,517	213,991	201,413	39,468	43,379	29,191
	Gross profit margin	22.5%	22.0%	21.2%	93.6%	93.5%	89.8%
SG&A expenses		162,406	174,905	174,973	26,723	29,023	21,879
	SG&A ratio	17.5%	18.0%	18.4%	63.4%	62.5%	67.3%
Operating profit		44,111	39,085	26,439	12,745	14,356	7,312
	YoY	22.3%	-11.4%	-32.4%	18.0%	-	-
	Operating profit margin	4.8%	4.0%	2.8%	30.2%	30.9%	22.5%
Net income attributable to owners of the parent		24,361	7,612	15,834	8,910	10,012	608
	Net margin	2.6%	0.8%	1.7%	21.1%	21.6%	1.9%
Total assets		370,839	370,993	383,416	33,510	41,114	35,869
ROE		16.2%	5.0%	10.4%	39.6%	36.0%	2.0%
	Equity ratio	42.0%	39.9%	41.0%	74.0%	74.3%	84.4%
	Total asset turnover	239.5%	261.7%	252.0%	137.1%	124.4%	84.4%
	Net margin	2.6%	0.8%	1.7%	21.1%	21.6%	1.9%
Number of employees (cons.)		38,954	45,179	49,434	1,635	1,873	2,110
	Revenue per employee	24	21	19	26	25	15

(Continues below)

		en-japan			Career Design Center
Earnings (JPYmn)		FY03/19	FY03/20	FY03/21	FY09/18	FY09/19	FY09/20
Revenue		48,733	56,848	42,725	10,976	12,155	11,021
	YoY	19.7%	16.7%	-24.8%	10.9%	10.7%	-9.3%
Cost of revenue		4,682	10,451	8,566	3,857	4,615	5,002
Gross profit		44,051	46,397	34,159	7,119	7,540	6,020
	Gross profit margin	90.4%	81.6%	80.0%	64.9%	62.0%	54.6%
SG&A expenses		32,389