Company Overview

1. Company Overview

FCE<9564> is engaged in three businesses: DX promotion business that develops and provides RPA products, education and training business that provides training and consulting for companies and school programs, and other businesses. In the DX promotion business, they sell 'RPA Robo-Pat DX,' which allows people familiar with business to create software robots. In the education and training business, they offer licensed teaching programs such as '7 Habits' and Foresight notebooks for school corporations and cram schools, as well as 'Smart Boarding' to quickly enhance job readiness for companies. They feature 'accompanying type sales' that provide support until mastery. They provide three services: human resources development consulting, DX promotion consulting, and other services. The company's mission is to contribute to maximizing human capital with 'People' x 'Tech' for Japanese companies at risk of population decline.

Expand businesses with low cancellation rates and high-profit stock-type revenue.

2. Business content

The company operates in three main businesses: DX promotion business, education and training business (training business, education business), and other businesses. The education and training business, which can be considered the founding business, continues to grow steadily. However, the DX promotion business, started in 2015, has grown rapidly, surpassing the education and training business in revenue in the previous period. Additionally, the proportion of high-profit, low-cancellation stock-type revenue is high, with 100% in the DX promotion business, 60% in the education and training business, and around 80% overall. Therefore, as revenue increases, especially as the proportion of the DX promotion business increases, the company's overall profitability improves. In terms of industry environment, the DX promotion business continues to experience high growth due to strong demand for automation and productivity improvement. The training business is benefiting from the continued expansion of the e-learning market, and the education business is gradually progressing under the Ministry of Education, Culture, Sports, Science and Technology's 'GIGA School Concept' to enhance and strengthen the ICT environment in schools.

(1) DX Promotion Business The sales and loss in the DX promotion business were 2.629 billion yen (+46.1% YoY) and 101 million yen in loss (profit of 51 million yen in the previous year), respectively. Revenue grew significantly due to the introduction of the face recognition platform "FreeiD" to major developers and the acquisition of new orders for cloud integration system development. However, due to continued aggressive M&A, personnel recruitment, and other advance investments, it resulted in operating loss. In the M&A, the same business was consolidated as a subsidiary with a focus on the business area, and Resolver was consolidated in April 2023, and Omni Science was consolidated in March 2024. The cumulative number of users of the growth driver "FreeiD" at the end of March 2024 was about 3.5 times higher than that at the end of the previous year, with 19,004 people (5,468 people at the end of the previous year), and the cumulative number of solutions (number of installed devices) was about 1.5 times higher than that at the end of the previous year, with 2,422 units (1,620 units at the end of the previous year). In addition, the number of SI operating projects has been steadily increasing, with 202 projects (+15 projects YoY) in the March 2024 period. Although the affiliated subsidiaries have various leading companies as clients, they focus mainly on clients such as finance, life insurance, securities, and major banks rather than real estate business companies. In the future, the company aims to strengthen DX support services that can be provided to a wider range of industries. (2) DX Real Estate Business

In the DX promotion business, they develop and sell domestically-produced RPA software 'Robo-Pat DX' with consulting services. RPA is a mechanism to automate computer operations, where pre-programmed software robots automatically perform office tasks and administrative work done routinely on computers. It is considered an effective tool for achieving workstyle reform and productivity improvement in anticipation of a declining population society. Part of the technology that makes up 'Robo-Pat DX' is licensed from PKSHA Associates, a subsidiary of PKSHA Technology<3993> (formerly known as Asillerla Co., Ltd.). They provide licenses to customer companies directly and through sales partners nationwide.

(2) Mainland Education Business

The mainland education business is divided into an education business targeting schools and cram schools, and a training business targeting HR (Human Resources) in companies. In the education business, it supports the improvement of children's 'self-reliance' by providing classroom programs such as '7 Habits J(R)' which are an arrangement of the business book 'The 7 Habits of Highly Effective People' for Japanese students, and the sale of the business planner 'Foresight Planner' for middle and high school students boasting a total circulation of 2.24 million copies. In the training business, it offers online training systems such as 'Smart Boarding' to promote the 'immediate effectiveness' of job changers through e-learning, training and education consulting, and a meeting-type consulting service 'xDrive' to establish the PDCA cycle in organizations. Due to the expansion of the e-learning market, the training business is rapidly catching up, accounting for about 60% of the total revenue, which is close to the original education business.

The greatest strength lies in supporting users to fully utilize the 'companion sales' model.

3. The company's strengths

The company's strength lies in the design philosophy that focuses on enabling individuals proficient in business to fully utilize the 'Personal RPA' with 'RPA Robo-Pat DX' and the 'Smart Boarding' platform that targets the different growth rates of job changers. Furthermore, the strength lies in providing meticulous 'companion sales' support until users can master the products, starting with free trials. Enhanced sales personnel who practice the sale and support of these products are also a strength. For example, 1-2 years ago, selling RPAs was challenging for new graduates and required a certain period, but improvements and standardizations of the sales methods of the products have enabled even new graduates to sell RPAs. Continuous investment in human resources is ongoing, with 10 new graduates joining the group in April 2024, and new talent development progressing. Furthermore, it is expected that more than 20 new graduate employees will join in April 2025.

Mastering the systems leads to a decrease in turnover, with the company's cancellation rate in the range of 1% compared to the industry average of 3-4%. As a result, 'RPA Robo-Pat DX' has been awarded the No.1 customer satisfaction for an eighth consecutive period in the ITreview's 'RPA Tool Category Report 2024 Summer.' Additionally, 'Smart Boarding' has achieved the highest 'Leader' rank in the LMS/e-learning system category of the 'ITreview Grid Award 2024 Summer' organized by ITCloud Co., Ltd., indicating high customer popularity and industry recognition for the company's products. Moving away from the traditional pure holding company system where subsidiaries operated the business, the company dissolved the pure holding company system in August 2024 to further leverage these strengths. This shift aims to promote synergies between businesses, enhance growth strategies, optimize management resources, and boldly explore new lead channels. In practice, after the dissolution of the pure holding company system, the number of customers has rapidly increased.

(Author: FISCO guest analyst Nobumitsu Miyata)