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PiPEDO HD, Inc. (JP-3919) Tokyo Stock Exchange First Section ( I )

2018-11-22  提供機構:FISCO  作者:FISCO  點閱次數:7

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◆Summary

Medium-term plan targets ¥7,300mn in net sales and ¥1,700mn in operating profit in FY2/20

PiPEDO HD, Inc. <3919> (hereafter, also “the Company”) is a pure holding company, and PIPED BITS Co., Ltd., its main consolidated subsidiary, is a unique IT company that supplies its proprietary SPIRAL® platform (middleware) in a cloud format. The Company provides a platform for national clients and other large companies, mid-sized companies, and smaller system integrators and also sells proprietary applications for specific industries (such as beauty and construction industries) and engages in businesses that utilize these applications.

1. Operating profit down 59.4% YoY in 1H FY2/19 due to upfront investments, but within expected range

In 1H FY2/19, the Company reported ¥2,623mn in net sales (up 4.2% YoY), ¥176mn in operating profit (down 59.4%), ¥173mn in recurring profit (down 59.8%) and ¥75mn in profit attributable to owners of parent (down 74.1%). These results slightly undershot the forecasts from the start of the fiscal year, but are not a cause for concern. The primary reason for the drop in profit was aggressive investment (hiring of personnel), but this had been planned since the start of the fiscal year and is targeting FY2/20 and beyond. Starting from FY2/19, the Company has reorganized its business segments into the “Function-based Segment,” which targets many companies and organizations overall, and the “Field-based Segment,” which targets specific sectors.

2. Expectations remain unchanged in terms of a 33.4% YoY decline in FY2/19 operating profit due to investing in personnel ahead of the following fiscal year

The Company’s FY2/19 forecast targets ¥5,800mn in net sales (up 12.8% YoY), ¥500mn in operating profit (down 33.4%), ¥490mn in recurring profit (down 34.6%), and ¥300mn in profit attributable to owners of parent (down 34.5%). While this forecast envisions healthy expansion of net sales, the Company expects significant decline in earnings because of proactive investments, mainly in personnel, toward the final year of the three-year plan. However, these are constructive outlays aimed at realizing robust gains in the final fiscal year of the medium-term plan, and it is not a reason for concern.

3. Medium-term plan goals unchanged at ¥7,300mn in net sales and ¥1,700mn in operating profit in FY2/20

The Company’s three-year medium-term business plan targets ¥7,300mn in net sales and ¥1,700mn in operating profit in FY2/20. It maintains the initial plan goals because personnel hired in the first two years of the plan period (FY2/18 and FY2/19) should contribute significantly to the final fiscal year. We expect larger profit change rates if the medium-term business plan proceeds as envisioned, thus we will be closely monitoring these trends going forward.

◆Company profile

Conducts businesses that primarily leverage the proprietary SPIRAL® platform

1. Company profile

The Company is a pure holding company established through a transfer of shares from PIPED BITS on September 1, 2015. It has 14 consolidated subsidiaries and one equity-method affiliate as of September 30, 2018.

2. History

PIPED BITS was established in April 2000 by Nobuaki Satani, the current President of PiPEDO HD. For most com­panies, data acquired in the course of business including customer attributes and email addresses form important “information assets,” so PIPED BITS commenced operations with services to effectively use them at the same time as managing them securely. What was developed in-house in order to carry out this business was the proprietary SPIRAL® platform for data management. (Details to follow.) Subsequently, the company developed a range of applications based around SPIRAL® and has been engaged in rolling out these business applications.

3. Business overview

(1) Product overview

The Group’s flagship business is its proprietary platform SPIRAL®, and the provision to users of related appli­cations, not by way of outright sales but rather in a rental format (a monthly fee method). Within the layers of software, SPIRAL®’s position may be referred to as a cloud-based middleware.

Generally, when developing operational and other systems, the majority of companies need to purchase the hardware required to develop and run the system, the operating system (OS), development environment (tools), database(s), middleware and other elements themselves (or outsource development), and by combining them, develop the base (platform) in order to run the system. Additionally, they must also bear the burden (cost) of maintaining its post-development. As SPIRAL® developed by PIPED BITS is already equipped with development tools. Not only does this enable easier development of different kinds of applications, but also customer data and other data stored in SPIRAL® can be shared and used with other applications due to the platform’s built-in database. Furthermore, these applications and data may be easily reproduced and delivered. This provides a significant advantage over package software.

As a result, corporate customers may easily and holistically operate with (use) and manage data, and at the same time greatly reduce application development costs by using SPIRAL®. Additionally, given that it is a pay-for-use monthly fee format platform, it further helps to reduce costs. Starting with major financial institutions, the companies that have introduced SPIRAL® include many preeminent corporations.

Recently in the IT industry, the majority of services are provided in a cloud format, with them being described in a variety of ways depending on the content of the particular cloud format service. SPIRAL® belongs to the area generally called PaaS (Platform as a Service), in other words, not only applications used in various business operations, but it is also the field of providing the platforms that run these applications on a cloud format.

(2) Main product content and prices

The Company’s flagship product SPIRAL® is a platform environment. Accordingly, the main customers using it range from large companies which internally develop operating systems and other software to SME-sized system integrators that undertake development of systems for SMEs, and also web production and web development companies. By using SPIRAL®, the Company is also able to internally develop applications aimed at specific industries and users, and then also sell these applications. These types of core products are not sold as a package (outright sales) but are sold entirely in an ASP format. Below are the major products and their monthly pricing (minimum fees).

It goes without saying that in the Company’s business model, increases in active (fee-based) accounts is linked to sales growth. However, the fees mentioned below are only basic or minimum fees and the actual fees change depending on data volumes (pay-for-use). Therefore, sales do not simply equal the number of accounts multiplied by the basic fee. But in order to view sales trends, the number of active accounts is an important indicator.

a) SPIRAL®

This is the Company’s main product. The core platform is equipped with a database, development environment, execution environment, and other features. While it is often utilized in email distribution, seminar management, and questionnaire form creation applications, this product offers many other functions as well. Furthermore, it flexibly coordinates with services from other companies and customization can substantially broaden the scope of applications. The monthly fee starts at ¥25,000.

b) SPIRAL PLACE®

Cloud format groupware possessing website creation and updating functions, and at the same time linked to SNS. As groupware, SPIRAL PLACE® enables calendar and file-sharing while using simple (manual) operations to enhance and update web content, as well as traffic analysis. It can also be linked to Facebook and Twitter. It is highly regarded by retail chain stores and others that employ large numbers of staff. Basic fees start at ¥6,000/ month.

c) SPIRAL EC®

An e-commerce (EC) platform focused on apparel. It is highly received by the industry for resolving a number of issues, such as simplifying update procedures and maintaining a low budget, while also pursuing a sophisticated brand image for EC sites for apparel. Fees are pay-for-use up to 5% of the transaction amount.

d) SPIRAL Affiliate®

A holistic ASP affiliate management service that reduces the issues and costs associated with introducing and operating affiliate marketing for advertisers. It includes special offers for SPIRAL® users, such as no upfront costs.

e) Other

There are also applications aimed at specialist fields and industry sectors. Further, through alliances with various specialist companies, the Company aims to expand the use and applications of SPIRAL®.

(3) Business segments

Up until FY2/18, the Company had four business segments – the information asset platform business, the advertising business, the solutions business, and the social innovation business. From FY2/19 the Company has established three main segments: the “Function-based Segment,” the “Field-based Segment,” and “Group Common Segment.” The Company’s businesses have been sorted into these three main segments.

The main segments are divided according to target client. The Function-based Segment comprises businesses utilizing the cloud and other IT platforms to target companies and organizations expected to have room for improvements in operating efficiency in CRM, sales promotions, and EC. These are businesses in which sales activities can be carried out horizontally. The Field-based Segment includes businesses that target specific industries and fields for which innovation through new information-sharing models utilizing the cloud and other IT platforms can be expected. These businesses involve vertical sales. The Group Common Segment includes the management costs of the pure holding company, which were previously allocated to business areas, and costs related to Group hiring and development.

(4) Other consolidated subsidiaries and their business overview

In addition to the mainstay businesses (PIPED BITS’ SPIRAL®), the Company also operates various related businesses via the following subsidiaries.

a) PaperlessStudio co., ltd.

PaperlessStudio is involved in the construction project planning and management and BIM (Building Information Modeling) consultant businesses. The company also runs BIM and CIM (Construction Information Modeling) personnel workshops for people working in design and construction. In May 2012, the company started providing the BIM construction information platform ArchiSymphony®. It also released ArchiSymphonyVBP, the first cloud service exclusively for BIM/CIM collaboration in Japan, in September 2017.

b) Publica Co., Ltd.

A specialist company for providing services using open data from local governments and government agencies. Publica promotes the availability of data held by government agencies, local governments, and private-sector businesses and develops services that make use of the data to enable it to be managed autonomously. The company has developed a system for Internet distribution of local government public relations bulletins–the “My Public Relations Bulletin” system.

c) GONDOLA CO., LTD

GONDOLA was formed by the corporate split of the Media Strategy Company on March 1, 2016. The company is active in the three service domains of advertising solutions, web solutions, and social management. By combining an original service line-up in planning, production, system development, and operation, with IT utilizing information management platforms such as SPIRAL Affiliate®, SPIRAL® and Sprinklr, the company enables one-stop solutions for corporate management issues and business activity optimization.

d) FRIENDIT Inc.

FRIENDIT provides comprehensive support for e-commerce-related system implementation, online shop man­agement, and omni-channels at the strategic level. Assisting customers with the common issues of personnel shortages and experience gaps, the company produces marketing activities that directly boost sales volume and value, from IT-based administration optimization through to promoting use of data on products, members, and purchasing. The company was formed on March l, 2016 by a corporate split-off from the in-house Apparel and Fashion Company.

In April 2018, FRIENDIT took over SPIRAL EC® and SPIRAL PLACE®, which were owned by PIPED BITS, and also carried out an absorption merger of AsBase Inc., which had been providing the ASP/SaaS type call center platform service BizBase®. With these moves, the company will develop new services integrating SPIRAL EC®, SPIRAL PLACE®, and cloud computer-telephony integration (CTI).

e) BIREKI Co., Ltd.

BIREKI provides IT services centered on the digital record app “BIREKI®” for beauty salons. The company’s business activities aim to enrich the lives of people by helping to increase the value of as many people working in the beauty industry as possible and making beauty treatments more accessible and enjoyable. The company was newly established on March 1, 2016 through a corporate spin-off from the previous Bireki Company.

f) Current, Inc.

Current’s core businesses involve web access improvement and digital CRM for developing loyal users (imple­mentation services such as communication and data management design, message creation and construction, message delivery, and effect verification) while integrating information assets and implementing optimal messaging to users. Aiming to generate business synergies between PIPED BITS, which has expertise in information asset utilization and IT solutions, and Current, with its strengths in stationed marketing support, the Company increased its equity stake in Current in December 2015 and converted it into a subsidiary.

g) BLOOM NOTES, INC.

The Company spun off its division in charge of in-house human resource development and education as a subsidiary on October 3, 2016 in order to provide similar education services to external customers. It organized knowhow into a structured program to resolve issues related to human resource development at SMEs and also operates a human resource development agent business to support implementation.

h) VOTE FOR, INC.

The Company established this entity in Mach 2017 to facilitate Internet-based voting. It aims to build voting systems that utilize blockchain and other new technologies. It also continues to operate the Seijiyama® political and election information website that existed internally.

i) I LOVE, INC.

The Company created this entity in Mach 2017 to make further progress in the “I LOVE ShimoKitazawa” local revitalization project and pursue development of a new transaction format for single-coin donations, tips, and other small-sum transactions employing electronic regional currency.

j) L Coin, Inc.

The Company invested 70% in L Coin, which was established in December 2017, as a consolidated subsidiary. L Coin builds payment systems for local governments, companies, and local financial institutions using an electronic regional currency platform that applies blockchain technology and thereby promotes cashless transactions in local communities. It can also issue unique electronic regional currencies at low cost through the platform and supports smooth development of payment systems and store point systems.

k) Shimokita Coin, Inc.

This company was established in March 2018 as a subsidiary of L Coin. Using an electronic regional currency platform provided by L Coin, the company issues electronic regional currency limited to the Shimokitazawa area. Also, the company is working with I LOVE to attract investment and member stores among local shops, and aims to energize the local economy.

SPIRAL®’s primary feature is flexible customization

(5) Special characteristics and strengths

a) Ease of system construction

SPIRAL®’s greatest distinguishing feature is its ability to be freely customized. As explained above, the Company itself combines SPIRAL®’s functions to develop applications for its own operational systems and specific cus­tomers (areas). Apart from areas such as financial institutions, which require extremely high reliability, almost any operational system could be created by combining SPIRAL®’s functions. These operational systems have been generally developed by operators known as system integrators. However, it is possible to replace the majority of the work traditionally done by system integrators through a combination of SPIRAL® functions, with corporate customers able to easily undertake a range of development and system creation themselves. For this reason, SPIRAL® is attractive not only to large corporations, but also SMEs that are unable to bear the high cost of systems development, as the platform is affordable and easy to use.

b) Every type of application can be linked

SPIRAL® possesses a broad range of functions. However, the most basic function is that it enables, for example, a corporate customer managing databases over the Internet to easily engage in various tasks, from database creation through to data manipulation (such as registration, updating and deletion), batch data registration, and downloading. Specifically, in cases in which companies undertake online surveys, market research or new product evaluations, by using SPIRAL® the company can very easily create a survey, deliver it to targeted and prospective customers, have them complete the surveys, and then collect them. If a customer satisfaction questionnaire is linked to the customer database, it becomes possible to analyze them according to customer attributes, and conduct follow-up in order to enhance satisfaction levels. Survey results may be aggregated in real time, and compiled into a report. Via SPIRAL®, this series of actions between different applications may all be easily undertaken with simple operations.

In the same way, with regard to creating forms, such as for gift promotions/affinity marketing campaigns, recruit­ment application forms, inquiry forms, seminar applications, account openings, and information requests, it is possible via SPIRAL® to expeditiously undertake actions such as form creation; the recording, updating, and deletion of member attributes; and login verification. For example, in a case such as holding seminars, even if hypothetically multiple seminars are proceeding simultaneously, the taking of multiple applications and manage­ment of cancellations can be carried out instantaneously, making the holding of the seminar more efficient. It is also easy to develop this data in a search form tabulating it, having a yes or no Q&A questionnaire, or creating a summary chart or graph. Also, given the addition of services from AsBase (now FRIENDIT) that possesses voice (telephone) solutions, and an alliance with Sprinklr Japan KK, whose strength is systems for SNS, it is expected that customer convenience will be enhanced further.

One of the Company’s competitors is salesforce.com, Inc. <CRM> of the United States, but this company has grown through repeated acquisitions of other companies. Therefore, its various applications were developed by the different companies it acquired, so each application was not created on the same platform. Consequently, when a client needs to link multiple applications, in many cases this requires additional development costs and time. On this point, SPIRAL® is considerably superior to salesforce.com’s product, as its applications are on the same platform and as a result, each of the applications can be easily (inexpensively and quickly) linked.

c) Superiority in installation costs and security

Further, because SPIRAL® is not sold as package software, but provided as a pay-as-you-go cloud service, a distinctive feature is that client companies may themselves build requisite systems rapidly and at low cost, without taking and incurring unnecessary time and expenses. That is, even in the initial period when the system is installed, it can be developed from just a small investment without incurring major costs.

In addition to its superiority in terms of costs, the Company also provides guarantees, maintenance and monitoring functions on the security front, which is extremely convenient, particularly for SME-sized system integrators. For example, in the event that vulnerability is identified in the SSL (Security Sockets Layer), which is the most widely used communication cryptographic technology on the Internet, normally it is necessary for each system integrator to individually deal with this vulnerability. But if SPIRAL® is used, the Company is able to take all necessary actions and the issue is resolved on SPIRAL®, eliminating the need for the system integrators to deal with it individually. Use of SPIRAL®, meanwhile, reassures end customers about security.

Many SMEs cannot afford the expenses required for system development and security. The Company's products solve these issues in a one-stop manner, thus the Company's products are attractive not only to large corporations but to SMEs in particular.

d) Installation case studies

One example of a successful installation of the Company’s SPIRAL® was the case of Asahi Fire and Marine Insurance Co., Ltd. The company introduced SPIRAL® as a customer service system. By linking client attributes with various types of data, the number of requests for information materials increased by 130 times, and the work time needed from receiving to answering a customer request was reduced from the usual time of around 30 minutes to just 2 or 3 minutes, thereby realizing a 10-fold increase in efficiency. Moreover, when introducing the system, the Company competed with other system integrators to win the account and the Company’s quote was only about 1/10th the cost of its competitors. Although every case is different, this example clearly demonstrates the competitive advantages of SPIRAL®.

 

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