■ Long-term Growth Strategy

1. Future Growth Strategy

Smart Support Co., Ltd. (9342) aims for medium- to long-term revenue growth by focusing on the expansion of its core service "Smart Support Thank You Call" customer base while nurturing the "totono" business after the fiscal year ending September 2025. The main growth strategies are: strengthening stable revenue through the expansion of "Smart Support Thank You Call", expanding the revenue base by increasing the number of households managed by "totono", and expanding revenue opportunities through partnerships of "totono" with other companies.

(1) Strengthening stable revenue through the expansion of "Smart Support Thank You Call".

For "Smart Support Thank You Call", the introduction to major property management companies and integration with electronic application systems aim to expand revenue. From August 2023, implementation is progressing with Daiwa House Group Partners, which has approximately 1.26 million rental management units. While focusing on stable operation of large projects, further large orders are also being targeted. In December 2023, collaboration with Recruit's electronic application system "Application Support by SUUMO" began. By attracting customers from the portal site "SUUMO", which has the largest number of listed properties in Japan, further expansion of business partners and strengthening of stable revenue are being pursued.

(2) Expansion of the revenue base by increasing the number of households managed by "totono".

To promote "totono", aggressive publicity through participation in various exhibitions and holding seminars, as well as strengthening the aftercare system by increasing the sales staff will be implemented, resulting in 89 companies having introduced the service as of the end of September 2024. Additionally, continued development of comprehensive features due to reinforcement of the development staff will be pursued. By constructing a system that facilitates communication between property management companies and tenants, and developing services that can further streamline operations, the aim is to increase the number of managed households and secure stable revenue.

(3) Expansion of revenue opportunities through partnerships of "totono" with other companies.

To provide timely information and products necessary for residents who use "totono", partnerships with other industries will be strengthened. For example, by offering services closely related to daily life, such as a subscription service for Furniture or joining Bicycle Insurance when purchasing a bicycle, we aim to expand the revenue structure derived from service providers. Furthermore, regarding inquiries from residents who use "totono" to Property Service companies through chat, we will build additional revenue opportunities by undertaking this response work under commission contracts with Property Service companies.

2. Transformation of the business model of "totono"

"totono" has been provided since its release as a SaaS model that collects monthly service usage fees from Property Service companies, allowing residents to download the app for free and use functions such as bulletin boards, chats, complaint handling, and contract renewals. The company refers to this as "totono" Phase 1.0 (hereinafter Phase 1.0).

SaaS stands for Software as a Service, which allows software to be used via the internet as a cloud play.

The company is planning to transform its business model to "totono" Phase 2.0. Since acquiring properties directly correlates to revenue for Property Service companies, they need to acquire properties with fewer resources, but with the increase in managed properties, and as properties gradually deteriorate, the volume of inquiries, troubles, and complaint handling from residents will increase. In Phase 2.0, "totono" will not only serve as an IT service for communication between Property Service companies and residents but will also add services that outsource all operations concerning residents for Property Service companies, aiming to provide services as "Outsourcing x SaaS model" = "BPaaS". The company will take on tasks such as responding to chats with residents, acting as resident support, and analyzing inquiry data, thereby providing an environment where Property Service companies can concentrate on their core business.

BPaaS stands for Business Process as a Service, which is an outsourcing service that provides business processes on the cloud.

Regarding fees, the flow of collecting monthly service usage fees from Property Service companies will remain unchanged, but the billing structure will change. In Phase 1.0, fixed amounts calculated for each company based on the number of managed units were collected, whereas in Phase 2.0, fees will be paid according to the number of app downloads (hereinafter, DL) by residents. Thus, the revenue of "totono" will be recorded as DL x unit price (the monthly unit price per DL as of November 2024 is 120 yen).

The cost of sales will be calculated based on chat interactions, as these will initially require manual labor by the company, thus the cost of sales will be calculated as the number of chats x unit price. In the future, we will analyze frequent chat inquiries on the app, providing solutions in advance via videos or FAQs for items that frequently receive inquiries, thereby reducing the overall number of inquiries to cut costs and enhance profitability. Furthermore, in responding to chats, we aim to improve operational efficiency by developing attributes data of residents and operational data of Property Service companies using AI.

In Phase 2.0, revenue is recorded based on the number of app downloads by residents, so during the initial implementation, the ratio of downloads to the number of units managed by the Property Service companies is low, resulting in temporarily lower collection amounts per company compared to Phase 1.0. However, if measures to promote downloads of "totono" increase this ratio, higher collection amounts than in Phase 1.0 can be expected. Moreover, since "totono" is closely connected to residents' daily lives and plays an important role in improving the operational efficiency of Property Service companies, high customer engagement is anticipated, which will likely keep the cancellation rate low. As of the end of September 2024, the number of downloads has steadily expanded to 0.28 million downloads, 1.8 times higher than the end of the previous term, and mid to long-term revenue growth is expected with the penetration of Phase 2.0.

(Written by: Fisco Guest Analyst Takuma Jilin)