Research Coverage Report by Shared Research Inc.

Transcription

1 esearch eport by Shared esearch Inc. This PDF document is an updated note on the company. A comprehensive version of the report on the company, including this latest update, is available on our website and various professional platforms. On September 7, 2018, Ateam Inc. announced earnings results for full-year. Quarterly earnings FY07/16 Source: Shared esearch based on company data Figures may differ from company data due to differences in rounding methods. FY07/17 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % of 1H 1H Est. evenues 4,611 5,421 6,179 6,757 7,136 8,147 9,907 9,413 8,904 9,165 10,270 9,336 YoY 44.0% 48.3% 40.2% 48.1% 54.8% 50.3% 60.3% 39.3% 24.8% 12.5% 3.7% -0.8% Gross profit 3,848 4,596 5,191 5,718 6,031 6,926 8,235 7,741 7,428 7,515 8,311 7,460 YoY 43.6% 47.2% 36.9% 48.7% 56.8% 50.7% 58.6% 35.4% 23.2% 8.5% 0.9% -3.6% GPM 83.4% 84.8% 84.0% 84.6% 84.5% 85.0% 83.1% 82.2% 83.4% 82.0% 80.9% 79.9% SG&A expenses 3,327 4,451 4,392 4,970 5,738 6,196 6,487 6,435 6,464 6,422 6,558 6,568 YoY 51.9% 72.0% 38.4% 46.2% 72.5% 39.2% 47.7% 29.5% 12.7% 3.6% 1.1% 2.1% SG&A ratio 72.1% 82.1% 71.1% 73.6% 80.4% 76.1% 65.5% 68.4% 72.6% 70.1% 63.9% 70.4% Operating profit ,748 1, ,093 1, YoY 6.3% -72.9% 29.2% 68.2% -43.7% 404.4% 118.9% 74.6% 228.4% 49.9% 0.2% -31.7% OPM 11.3% 2.7% 12.9% 11.1% 4.1% 9.0% 17.6% 13.9% 10.8% 11.9% 17.1% 9.6% ecurring profit ,738 1, ,096 1, YoY -0.4% -80.1% 15.6% 62.6% -40.8% 591.7% 131.2% 77.7% 235.3% 40.8% 2.1% -32.9% PM 10.7% 2.1% 12.2% 10.9% 4.1% 9.6% 17.5% 13.9% 11.0% 12.0% 17.3% 9.4% Net income , , YoY -11.3% -95.2% 19.6% 80.7% -52.6% % 142.2% 47.0% 390.9% 40.3% 4.8% -11.6% Net margin 6.3% 0.3% 7.8% 7.5% 1.9% 6.6% 11.7% 7.9% 7.6% 8.2% 11.9% 7.0% Cumulative Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % of FY FY Est. evenues 4,611 10,032 16,211 22,968 7,136 15,283 25,190 34,603 8,904 18,069 28,339 37, % 40,000 YoY 44.0% 46.3% 43.9% 45.1% 54.8% 52.4% 55.4% 50.7% 24.8% 18.2% 12.5% 8.9% 15.6% Gross profit 3,848 8,443 13,634 19,353 6,031 12,957 21,192 28,933 7,428 14,943 23,254 30,714 YoY 43.6% 45.5% 42.1% 44.0% 56.8% 53.7% 153.7% 253.7% 23.2% 53.7% 153.7% 253.7% GPM 83.4% 84.2% 84.1% 84.3% 84.5% 84.8% 84.1% 83.6% 83.4% 82.7% 82.1% 81.5% SG&A expenses 3,327 7,778 12,170 17,140 5,738 11,934 18,421 24,856 6,464 12,886 19,444 26,012 YoY 51.9% 62.8% 53.1% 51.0% 72.5% 53.4% 51.4% 45.0% 12.7% 8.0% 5.6% 4.7% SG&A ratio 72.1% 77.5% 75.1% 74.6% 80.4% 78.1% 73.1% 71.8% 72.6% 71.3% 68.6% 69.0% Operating profit ,464 2, ,023 2,771 4, ,057 3,809 4, % 4,700 YoY 6.3% -35.0% -10.9% 6.0% -43.7% 53.7% 89.2% 84.3% 228.4% 101.1% 37.5% 15.3% 15.3% OPM 11.3% 6.6% 9.0% 9.6% 4.1% 6.7% 11.0% 11.8% 10.8% 11.4% 13.4% 12.5% 11.8% ecurring profit ,358 2, ,071 2,810 4, ,077 3,853 4, % 4,700 YoY -0.4% -42.9% -20.6% -3.2% -40.8% 76.7% 106.9% 96.6% 235.3% 93.9% 37.1% 14.9% 14.1% PM 10.7% 6.0% 8.4% 9.1% 4.1% 7.0% 11.2% 11.9% 11.0% 11.5% 13.6% 12.6% 11.8% Net income , ,838 2, ,433 2,651 3, % 3,100 In order to improve business efficiency and allow for timely and appropriate decision making, Ateam restructured its segments on August 1, 2016, establishing a third segment from FY07/17 by spinning off the E-commerce Business from the Lifestyle Support Business. In addition, on November 8, 2016, it revamped Sugukon Navi (short-notice wedding hall search, reservation, and information website), changing the name to Hanayume. YoY -11.3% -54.8% -27.2% -5.1% -52.6% 119.1% 133.2% 99.6% 390.9% 112.0% 44.2% 28.2% 20.2% Net margin 6.3% 3.1% 4.9% 5.6% 1.9% 4.4% 7.3% 7.5% 7.6% 7.9% 9.4% 8.8% 7.8% In line with these changes, in this report when referring to earnings in the current year and earnings forecasts we use the new segmentation comprising the Entertainment Business, the Lifestyle Support Business, and the E-commerce Business, and in all other sections we refer to the old segmentation comprising the Entertainment Business and the Lifestyle Support Business. 1/6

2 esearch eport by Shared esearch Inc. Quarterly, by segment FY07/16 FY07/17 (JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 evenues 4,610 5,420 6,178 6,757 7,136 8,147 9,906 9,412 8,904 9,165 10,270 9,336 Entertainment 2,331 3,173 3,196 3,857 4,089 4,886 5,200 5,082 4,316 4,320 3,877 3,657 Lifestyle Support 2,065 2,064 2,551 2,513 2,653 2,953 3,990 3,746 3,954 4,313 5,581 5,108 E-commerce Operating profit ,748 1, ,093 1, Entertainment ,440 1, , Lifestyle Support , E-commerce Main expenses Advertising 1,817 2,326 2,433 2,758 3,432 3,551 3,623 3,410 3,600 3,866 3,730 Entertainment 493 1, ,276 1,746 1,700 1,220 1,228 1,150 1, Lifestyle Support 1,219 1,184 1,369 1,338 1,547 1,728 2,230 2,040 2,302 2,472 2,973 E-commerce Personnel and hiring expenses ,066 1,025 1,089 1,195 Payment platfom fees 841 1,171 1,177 1,401 1,468 1,779 2,051 2,108 1,588 1,572 1,561 Outsourcing costs and server fees Office rents Other , ,123 No. of employees (quarter end) Entertainment Lifestyle Support E-commerce Other Source: Shared esearch based on company data Figures may differ from company data due to differences in rounding methods Outsourcing costs for services such as installation and removal of air-conditioners provided by the moving-related business in the Lifestyle Support Business segment had been booked under fees and commissions paid up to FY07/17. These costs have been booked as outsourcing costs from, because the company decided on a reclassification in light of the change in roles of the company and contractors in the transaction. The amount subject to this change was JPY185mn in Q1. 2/6

3 esearch eport by Shared esearch Inc. Full-year results (out September 7, 2018) Overview Consolidated results for full-year were revenues of JPY37.7bn (+8.9% YoY), operating profit of JPY4.7bn (+15.3% YoY), recurring profit of JPY4.7bn (+14.9% YoY), and net income attributable to parent company shareholders of JPY3.3bn (+28.2% YoY). Compared to the company s full-year forecast, revenues reached 94.2% of forecasts, operating profit 100.0%, recurring profit 100.6%, and net income 106.6%. While sales slightly missed targets, profits were in line with forecasts. While revenues and profits fell in the Entertainment Business, the Lifestyle Support Business saw significant growth, leading to higher revenues and profits overall. Entertainment Business Segment revenues were JPY16.2bn (-16.0% YoY) and segment profits were JPY3.6bn (-6.1% YoY). The segment provides original smart devices game apps developed by Ateam via dedicated platforms for distributing apps such as App Store (Apple Inc.) and Google Play (Google Inc.). The game apps themselves are available for free download, and so the company derives its main source of revenue from in-app purchases by users seeking to advance more efficiently in the game. In, while the company continued to efficiently operate existing game apps, it released the new game app BASSA WAIOS in May The existing game apps Valkyrie Connect (released June 2016) and Unison League (released December 2014) continued to contribute to results as mainstay titles. However, as overall revenue slowly declined, revenue from BASSA WAIOS was unable to compensate for lower revenue for existing titles and both revenues and profits fell in the Entertainment Business. Lifestyle Support Business Segment revenues were JPY19.0bn (+42.1% YoY) and segment profits were JPY3.1bn (+59.5% YoY). In this segment the company works with businesses that operate services for the individual users in various business areas, including moving-related, automobile-related, bridal-related, and finance media. Based on the mindset of benefiting the seller, buyer, and the community, the company operates various websites, including comparison, information, and e-commerce sites linked to various events and aspects of customers lives. Individual users generally use these sites for free. The main source of income is commissions for referring potential customers to partner companies and commissions if those customers enter a contract. Subsegments are moving-related, automobile-related, and bridal-related businesses, a financial media business, and others. In, each subsegment performed well overall. In each subsegment, the company developed existing businesses, expanded peripheral services, launched multiple new services in new business areas, and made investments for medium to long term growth. Note: The results of Increments Inc., which was made a subsidiary in December 2017, were included in the Lifestyle Support business from Q3. The Other subsegment includes the results of several Increments services, including Qiita, a technological information sharing service for programmers, Qiita: Team, an easy-to-use information sharing tool for work teams, Lalune, a women s health management and menstrual cycle predicting app, and other new services. E-commerce Business Segment revenues were JPY2.6bn (+27.4% YoY) and segment loss was JPY212mn (loss of JPY179mn in FY07/17). 3/6

4 esearch eport by Shared esearch Inc. The business owns logistics warehouses in the Tokai, Kanto, and Kansai regions, and at these warehouses the company has stockpiled more than 200 models of fully assembled bicycles that were purchased from both overseas and domestic manufacturers. The warehouses employ certified mechanics, and this allows Ateam to sell fully assembled bicycles online, making it the only e-commerce bicycle website in Japan that delivers fully assembled bicycles to consumers homes. The main source of segment revenue is bicycle sales. The company has been investing in online bicycle store cyma in phases since its opening in December 2013 to strengthen fulfillment*. Once again, the company saw growth in units sold as a result of strengthening promotions aimed at branding to make cyma a first go-to place to buy bicycles. *Fulfillment refers to the core process in the mail-order business, including the management of order receipts and inventories, picking, sorting and packaging, shipping, charging, and payment processing. It also includes peripheral work, such as customer support handling complaints, questions, and returns and exchanges of goods, as well as the management of customer data. FY07/19 full-year company forecasts Consolidated earnings FY07/17 FY07/19 (JPYmn) 1H 2H FY 1H Act. 2H Act. FY Act. FY Est. evenues 15,283 19,320 34,603 18,069 19,605 37,674 40,000 YoY 52.3% 49.4% 50.7% 18.2% 1.5% 8.9% 6.2% Entertainment 8,976 10,283 19,259 8,635 7,533 16,168 YoY 63.1% 45.8% 53.3% -3.8% -26.7% -16.0% % of total revenues 58.7% 53.2% 55.7% 47.8% 38.4% 42.9% Lifestyle Support 5,605 7,737 13,343 8,268 10,688 18,956 YoY 35.7% 52.8% 45.1% 47.5% 38.1% 42.1% % of total revenues 36.7% 40.0% 38.6% 45.8% 54.5% 50.3% E-commerce 702 1,299 2,001 1,167 1,384 2,550 YoY 76.7% 59.0% 64.7% 66.2% 6.5% 27.4% % of total revenues 4.6% 6.7% 5.8% 6.5% 7.1% 6.8% Cost of revenues 2,327 3,343 5,670 3,126 3,835 6,961 Gross profit 12,957 15,976 28,933 14,943 15,770 30,714 YoY 53.5% 46.4% 49.5% 15.3% -1.3% 6.2% GPM 84.8% 82.7% 83.6% 82.7% 80.4% 81.5% SG&A expenses 11,934 12,921 24,856 12,886 13,126 26,012 SG&A ratio 78.1% 66.9% 71.8% 71.3% 67.0% 69.0% Operating profit 1,023 3,055 4,078 2,057 2,645 4,701 4,000 YoY 53.7% 97.5% 84.3% 101.1% -13.4% 15.3% -14.9% OPM 6.7% 15.8% 11.8% 11.4% 13.5% 12.5% 10.0% ecurring profit 1,071 3,047 4,118 2,077 2,653 4,730 4,000 YoY 76.7% 104.7% 96.6% 93.9% -12.9% 14.9% -15.4% PM 7.0% 15.8% 11.9% 11.5% 13.5% 12.6% 10.0% Net income 676 1,904 2,580 1,433 1,873 3,306 2,600 YoY 119.1% 93.5% 99.6% 112.0% -1.6% 28.2% -21.4% Source: Shared esearch based on company data Figures may differ from company data due to differences in rounding methods Company forecasts are the most recent figures Overview For FY07/19, the company forecasts full-year revenues of JPY40.0bn (+6.2% YoY), operating profit of JPY4.0bn (-14.9% YoY), recurring profit of JPY4.0bn (-15.4% YoY), and net income attributable to parent company shareholders of JPY2.6bn (-21.4% YoY). Aiming for sustainable growth and medium to long term improvement of corporate value, the company will continue to strive to strengthen and expand each business segment in FY07/19. In addition, the company will make upfront investments to create new businesses and strengthen its business portfolio. The company will focus on acquiring and training personnel, and strengthening its business foundation and organizational structure. The company is aiming for further growth from the next fiscal year by making upfront investments in new services and strengthening its personnel and organizational structures. As such, it has designated FY07/19 as a year to strengthen the foundation of its overall business and business portfolio. 4/6

5 esearch eport by Shared esearch Inc. Due to their characteristics, Q3 tends to be a peak quarter in the Lifestyle Support Business and E-Commerce Business. Therefore, the company forecasts that both revenues and profits will be concentrated in 2H. The company also forecasts that 2H will make up a high percentage of overall profits as its segments, primarily the Lifestyle Support Business, will be concentrating investments in multiple new services in 1H. Entertainment Business The company will focus on efficient operation of mainstay titles Valkyrie Connect and Unison League and expand revenues in overseas markets with growth potential. It will also collaborate with other companies on the development of new game apps. Specifically, in collaboration with Tokyo Broadcasting System Television, Inc. and Bushiroad Inc., the company plans to release a new smartphone game app evue Starlight -e LIVE-, based on the media franchise Shojo Kageki evue Starlight, which began as a musical and was made into an animated series which aired as on TBS channels from July The company has made revenue and profits forecasts for this segment based on expenses which can be expected from existing titles as of the results announcement and recent KPI trends. These forecasts include expected contributions from new game apps developed in collaboration and promotional expenses required upon their release. Forecasts for profits and costs from sales of new game apps developed in collaboration with other companies incorporate only the portion of revenues and profits allocated to the company and exclude the portion which will be distributed to its collaborators. Lifestyle Support Business In this segment, the company plans to increase the user base, average revenue per user (APU), and profit margins of the moving-related, automobile-related, bridal-related, and financial media businesses, while continuing to increase referrals between businesses and encouraging repeat users. The company also plans to make proactive investments in order to develop new services aimed at medium to long term growth. The earnings forecasts take into account all conceivable factors (including seasonal factors and internal/external environmental factors) that may affect earnings performance as well as the earnings capability and KPI trends for each business. Forecasts for new businesses are made conservatively and incorporate expenses to the extent possible as of the results announcement. Because the company intends to make upfront investments to strengthen its competitiveness in existing services, OPM is forecasted to decline overall despite revenues and profits expected to grow at the same rate as. E-commerce Business The company will continue to take efforts to strengthen order fulfillment as it aims for profitability in this segment. The earnings forecasts take into account various KPI trends and seasonal factors to the extent possible. It is possible that the company will execute a large scale promotion in the Entertainment Business during 1H FY07/19 for evue Starlight -e LIVE-, a new game app described above. This note is the most recent addition to the full report. 5/6

6 About Shared esearch Inc. esearch eport by Shared esearch Inc. We offer corporate clients comprehensive report coverage, a service that allows them to better inform investors and other stakeholders by presenting a continuously updated third-party view of business fundamentals, independent of investment biases. Shared esearch can be found on the web at Disclaimer This document is provided for informational purposes only. No investment opinion or advice is provided, intended, or solicited. Shared esearch Inc. offers no warranty, either expressed or implied, regarding the veracity of data or interpretations of data included in this report. We shall not be held responsible for any damage caused by the use of this report. The copyright of this report and the rights regarding the creation and exploitation of the derivative work of this and other Shared esearch eports belong to Shared esearch. This report may be reproduced or modified for personal use; distribution, transfer, or other uses of this report are strictly prohibited and a violation of the copyright of this report. Our officers and employees may currently, or in the future, have a position in securities of the companies mentioned in this report, which may affect this report s objectivity. Japanese Financial Instruments and Exchange Law (FIEL) Disclaimer The report has been prepared by Shared esearch under a contract with the company described in this report ( the company ). Opinions and views presented are ours where so stated. Such opinions and views attributed to the company are interpretations made by Shared esearch. We represent that if this report is deemed to include an opinion by us that could influence investment decisions in the company, such opinion may be in exchange for consideration or promise of consideration from the company to Shared esearch. Contact Details Shared esearch Inc Sendagi Bunkyo-ku Tokyo, Japan Phone: +81 (0) info@sharedresearch.jp 6/6