■The performance trends of unerry <5034>

1. Performance for the fiscal year ending June 2024

For the fiscal year ending June 2024, revenue reached 2,834 million yen (up 36.5% year-on-year), operating profit was 179 million yen (up 409.3% year-on-year), ordinary profit stood at 134 million yen (up 286.5% year-on-year), and net income was 68 million yen (up 629.5% year-on-year), resulting in increased revenue and profit. Although revenue was slightly below the initial plan at 97.8%, the gross profit reached 103.6%, operating profit was at 153.0%, and net income was at 104.6%, all exceeding their respective plans. The number of recurring customers, which accounts for 90% of revenue, steadily increased by 31 companies from the previous term to 109. Through consistent cross-selling initiatives to recurring customers, the annual customer unit price was maintained at a high level of 23 million yen, with a NRR of 124%, contributing to revenue growth. By business segment, the retail DX business for the retail and food service industries gained customers steadily, recording 2,025 million yen, a 15% increase compared to the previous term. The Smart City business for real estate, municipalities, and government offices achieved 519 million yen, a 129% increase from the previous term. By proactively proposing services in response to projects related to community development by municipalities nationwide, the acquisition of public projects progressed significantly, greatly contributing to revenue. Additionally, the retail media business for consumer goods manufacturers saw steady growth in orders from business partners and direct sales, amounting to 283 million yen, a 288% increase compared to the previous term. By service type, the analysis and visualization services experienced significant growth with revenue reaching 870 million yen (up 45.5% year-on-year), while the revenue from behavior change services grew to 1,191 million yen (up 36.4% year-on-year). The revenue from One to One services also increased by 27.8% year-on-year, reaching 773 million yen.

The company defines recurring customers as those companies that have engaged in trade for four consecutive quarters or those new customer companies that have had continuous transactions for more than three months. KPIs are set for recurring revenue, revenue per recurring customer, and the number of recurring customers. Most new customers become recurring customers in the following business year. Therefore, regarding new customers acquired through contracts for analysis and visualization services, which are usually one-year contracts, the company is developing a revenue model that generates recurring revenue by cross-selling behavior change services and One to One services, as well as upselling behavior change services. The main routes for acquiring new customers are direct sales, referrals from partners, and transactions through top relationships. Traditionally, customer development relied heavily on direct sales through various events and marketing activities, but for the fiscal year ending June 2024, customer acquisition through referrals and collaboration with partners yielded positive results. Partner companies are well-acquainted with the company’s service offerings, allowing for efficient development of prospective customers, creating significant expectations for future revenue growth.

Regarding profits, the gross margin (gross profit) was 37.6% (an increase of 3.8 points year-on-year), along with significant growth in analysis and visualization services with high gross margins, and improvements in the gross margin of behavior change services, which has a relatively high cost ratio. In the advertising distribution service sector under behavior change services, advertising costs paid to media are included, and it is said that even major Advertising Agencies have a gross margin of about 20%. However, the company's gross margin has maintained a level in the mid-30s over the past three terms. To further improve the gross margin, the ratio of utilization of highly unique and high gross margin media has increased, and steady improvements through business process reviews have yielded results. Operating expenses have risen due to hiring costs for employees and increased server usage fees for handling expanded data as sales have increased, along with ad expenses for activities aimed at enhancing recognition through events, resulting in operating expenses of 886 million yen, a 32.8% increase year-on-year. However, the effect of increased revenue exceeded this increase, leading to a 0.8 point reduction in the operating expense ratio compared to the previous term, which contributed to an increase in operating profit. Notably, operating profit significantly exceeded performance estimates due to improvements in gross margins, alongside the reduction in server costs (37 million yen) and reductions in indirect labor costs and outsourcing costs (25 million yen). Regarding server cost reductions, the data usage methods were reviewed during data analysis, and frequently analyzed data were pre-aggregated for efficiency, along with internal sharing of efficient analysis methods to control cost increases. For labor and outsourcing costs, improvements in productivity at the frontline were also reflected as positive results.

The equity capital ratio is at a high level of 77.4%, indicating progress in financial soundness.

2. Financial condition and performance indicators.

As of the end of June 2024, total Assets increased by 592 million yen compared to the end of the previous period, reaching 2,103 million yen. Of this, current assets increased by 656 million yen to 2,072 million yen. The main factors were an increase in cash and deposits by 531 million yen and an increase in accounts receivable and contract assets by 120 million yen. Fixed assets decreased by 64 million yen to 30 million yen. The factors include the recognition of a bad debt allowance of 48 million yen relating to investments in the North American business during the same period and a decrease in deferred tax assets (27 million yen).

Total liabilities increased by 60 million yen compared to the end of the previous period, totaling 474 million yen. The main factors were an increase in accounts payable by 21 million yen and a decrease in long-term borrowings scheduled for repayment within one year by 104 million yen, resulting in outstanding borrowings becoming zero.

Net income increased by 531 million yen compared to the end of the previous period, reaching 1,629 million yen. The main factors were an increase in capital reserves by 230 million yen due to the issuance of new shares, an increase in other capital surplus by 238 million yen due to transfers from capital stock related to the issuance of new shares and the disposal of treasury stock, and the recognition of net income of 68 million yen for the current period.

In terms of management Indicators, the current ratio rose by 94.6 points compared to the previous period to 437.1%, while the fixed ratio improved by 6.7 points to 1.9%. With increased revenue, liquidity is high, and the equity ratio is also at a high level of 77.4%, indicating healthy finances.

(Writer: FISCO analyst Tomoichi Murase)