As its corporate philosophy, the Group has established its mission of “Turning encounters into innovation” and its vision to “Become business infrastructure.” To realize this mission and vision, the Group is developing services to change the way companies and business people facing various business challenges work and to promote DX, and it believes that the promotion of these business activities will contribute to solving social issues and eventually maximize shareholder value and corporate value of the Group.
As the medium-term targets from the fiscal year ended May 31, 2023 to the fiscal year ending May 31, 2025, the Company is aiming for growth in both net sales and profit. First of all, for consolidated net sales, which is the most important management indicator, we are aiming to continue the solid growth of mid-20% or higher. Previously, the target for consolidated net sales for the fiscal year ended May 31, 2023 to the fiscal year ending May 31, 2025 was set at 20% or more growth, however, due to the strong performance of the fiscal year ended May 31, 2023, the target value has been changed. Next, we have adopted adjusted operating profit*1, which excludes share-based payment expenses and expenses arising from business combinations as a profit indicator to be emphasized, and are aiming to improve adjusted operating profit margin in each fiscal year while making the investments required for growth of net sales in each business. In order to achieve an improved profit margin, we are aiming to record adjusted operating profit of ¥10.0 billion or more in total for the Sansan and Bill One services *2 in the fiscal year ending May 31, 2025, as well as to record stable adjusted operating profit over the full year in Eight Business.
*1 Operating Profit + Share-based Payment Expenses + Expenses Arising from Business Combinations (amortization of goodwill and amortization of intangible assets)
*2 Excluding “Others” such as new services in Sansan/Bill One Business segment
The Group’s businesses and business domains have the following characteristics, and medium- to long-term management strategies are formulated based on these characteristics.
The market related to the Company’s services continues to expand due to changes in work styles caused by the COVID-19 pandemic, a change in awareness of DX, and a growing interest in SaaS business, etc. The DX market is expected to reach ¥5,195.7 billion in 2030 (up ¥3,813.6 billion from 2020) *3, and the domestic SaaS market is expected to reach ¥1,668.1 billion in 2026 (up ¥579.0 billion from 2022) *4. The Company also believes that documents such as business cards, invoices, and contracts are still used on a daily basis in paper form and have not yet been digitized, leaving significant room for operational efficiency and effective utilization. Regarding the potential market for each service, Sansan has an 81.6% *5 share of the B2B business card management service market, but the number of Sansan users accounts for only about 3% *6 of the total working population in Japan, and the Company believes there is vast room for development. Next, Bill One has established an invoice network consisting of contracted companies, including free users, and companies that send invoices to each contracted company, but as of the end of May 2023, only about 90,000 companies, or 4% *6 of all companies in Japan, were participating in the network, and the Company believes there is vast room for development.
*3 Based on Market Edition and Vendor Strategy Edition of 2022 Outlook of the Digital Transformation Market by Fuji Chimera Research Institute
*4 Based on 2022 New Software Business Markets by Fuji Chimera Research Institute
*5 Based on Latest Trends in Business Card Management Services in Sales Support DX 2023 (December 2022, survey by Seed Planning, in Japanese)
*6 The denominator, the total number of companies and employees in Japan, is calculated based on the 2021 Economic Census for Business Activity by the Ministry of Internal Affairs and Communications.
The accuracy of data conversion of analog information in each of the services provided by the Group contributes to the essential quality and competitiveness of services provided, and the common strength of Group businesses is having the mechanisms and technology to achieve 99.9% accuracy. The Group’s services involve the digitization of analog information through a combination of technology, which is constantly evolving through machine learning and other means, - 15 - and manpower. Since its founding, the Group has converted vast amounts of business cards and other analog information into data mainly through human data entry, and it is now able to develop and operate proprietary systems that accurately and efficiently convert large amounts of analog information into data. This technological capability and proprietary mechanisms are the source of the Group’s competitiveness, and it is pursuing the development of new technologies and operational improvements in order to continuously improve the quality and competitiveness of its services. In addition, these mechanisms and technologies are characterized by their applicability to a wide variety of business fields.
The billing model for Sansan and Bill One is centered on a subscription (monthly billing) model that can be expected to generate ongoing revenue, and it is a model that can be expected to generate stable and continuous business growth. The monthly churn rate for services has averaged less than 1.0% over the last 12 months, and the Company views this as an attractive model because it is easy to promote the maximization of customer LTV (lifetime value) by working to increase sales per contract.
The specific management strategies of the Group are as follows.
i. Sales maximization of the Sansan/Bill One Business
Sansan and Bill One are services that target many companies regardless of industry or business category, and there is a large potential for customer development in Japan alone. From the beginning of the fiscal year ending May 2024, we established dedicated sales departments for each of Sansan and Bill One toward further sales growth in the future, and strengthened our sales structure mainly targeting medium and large enterprises. We will continue to actively hire personnel to further strengthen our sales structure, and for Sansan, we will continue to acquire new customers and promote the expansion of use by existing customers on the premise that all employees of user companies use the service (company-wide use), while for Bill One we will further expand net sales by acquiring new customers and enhancing optional functions. Also, in terms of services, both Sansan and Bill One will see further enhancement of functionality to improve the value of services for customers. For Sansan, we will work to add functions that promote DX in sales activities, such as the ability to automatically store and visualize customer e-mails on Sansan. For Bill One, we will work to improve the convenience of the corporate card service added as an optional service, and enhance various functions that will lead to more efficient accounting operations. In addition, we will work to create new services using the technology developed for Sansan and to strengthen the new services we have launched. In the Contract One contract DX solution, we will focus on developing services for company-wide use of contracts, such as the use of generative AI for summarizing contracts.
ii. Monetization of the Eight Business
By leveraging the Eight network, which has 3.3 million registered users, and strengthening monetization of B2B services such as business events, as well as shifting to a more profitability-oriented business operation, we aim to return the overall business to profitability on an adjusted operating profit basis for the full year.
iii. Utilization of M&A
We will promote measures to enhance the corporate value of CREATIVE SURVEY INC., which became a Group company in March 2023, and Institute of Language Understanding Inc., which became a Group company in June 2023, and work to create synergies with the Group’s existing services. In addition, we have positioned the use of M&A as one of our important growth strategies and will continue to actively consider this option.
In pursuing the management strategies outlined above, the following are the main issues that must be addressed by the Group.
Given that the Group handles substantial volumes of important information assets such as personal information, it is crucial that we continuously strengthen our system for managing information. We continue to take the utmost care with respect to implementing measures for safeguarding personal information, including strict management of information assets based on our Policy on Personal Information Protection and Information Security Policy, and we will persist in our efforts to strengthen and maintain our in-house systems and management approaches in that regard going forward.
For the Group to achieve sustainable growth, it is crucial that we hire many talented professionals with diverse career backgrounds, and then improve our sales, development and managerial structures. We are actively engaging in efforts geared to establishing work environments and arrangements that substantially fuel employee motivation for talented professionals who share an understanding of the Group’s corporate philosophy and business activities, and will furthermore persist with our efforts to ensure diversity of our people.
As technology to accurately digitize analog information is the wellspring of the Group’s competitive strengths and acts as a common platform underpinning growth of the various services the Group provides, we believe it is important to continuously improve and strengthen this technology. We accordingly engage in initiatives to improve our technological capabilities and become a leading group of technical experts in Japan, through efforts that involve hiring outstanding technical experts while also investing in and monitoring cutting-edge technologies.