■ Company Features

1. Growth Model

The revenue of Caster (9331) is decomposed into the product of the number of operating companies and ARPU (average revenue per user), so increasing both of them leads to revenue growth. Looking at the trend in recent years, both the increase in the number of operating companies and the increase in ARPU have driven the company's growth. So, what are the key points to increase both? To increase the number of operating companies, it is necessary to improve new customer acquisition and churn rate, needless to say. Effective advertising investment to improve awareness and expansion of segments tailored to customer needs have contributed to building a customer base for new customer acquisition. In addition, although the churn rate is stable at around 4%, there is room for further improvement because the longer the contract period, the more the company's services are integrated into normal business operations. On the other hand, the increase in ARPU is mainly due to the shift to higher-priced services and the use of multiple services. As mentioned earlier, the company has cut out segments from existing businesses to create more specialized (higher-priced) services that meet customer needs, which has led to an increase in both the number of operating companies and ARPU.

※ In the comparison between the end of August 2021 and the end of May 2024, the number of operating companies increased from 826 to 1,180, and ARPU increased from 248,000 yen to 312,000 yen, showing an increasing trend.

The company manages "number of operating companies", "ARPU", "churn rate", and "MRR" as four KPIs and follows the company's growth from the perspective of how to contribute to the growth of MRR (accumulation of revenue) through the increase in the number of operating companies, the increase in ARPU, and the improvement in churn rate.

2. Revenue Structure

The gross margin has been stable at a high level of around 40% in recent years due to the efficiency of front office operations through its unique system. However, the continuous operating losses since its founding are due to proactive investments in advance costs for strengthening the growth foundation. In particular, costs related to advertising investments for customer acquisition and segment expansion (such as system development and personnel investments) have put pressure on profits. However, the sales and administrative expense ratio has been decreasing in line with the increase in revenue, and the breakeven point can be seen at the current level. In the future, it is expected that there will be certain advance costs such as increased advertising investment to accelerate growth, expansion into BPaaS, and utilization of AI technology. However, the revenue structure has a large fixed cost component (small variable cost ratio), so there is a high possibility that profit growth (profit margin improvement) will accelerate along with the growth of revenue once the breakeven point is exceeded.

Regarding advertising investment, its effectiveness is measured by indicators such as CAC※1 and unit economics※2. The recent CAC is about 0.7 million yen, and the unit economics is at a proper level of 300% to 500%, confirming that high performance is achieved even with increased advertising expenses.

※1 The cost incurred per customer acquisition for each company.

※2 An indicator calculated by dividing the customer lifetime value (LTV) by the customer acquisition cost (CAC). It measures the revenue that customers will bring in the future in relation to the cost of acquiring customers.

3. Industry position

There are various forms of companies that provide human resources services, such as personnel introduction, dispatch, BPO, and matching-type crowdsourcing. However, the company has established a unique position that does not belong to any of these forms in terms of the scale, quality, and mechanism of the requested tasks. It is a significant point in judging the company's superiority and growth to understand this. In other words, the platform that can efficiently utilize human resources with certain skills and experience on a task basis (small lots) or on a monthly basis (regular prices) without much effort provides unprecedented value (options) to small and medium-sized enterprises suffering from labor shortages. It is believed that this is leading to an increase in the number of operating companies and high loyalty (an increasing proportion of long-term customers). Furthermore, being in a position to pioneer and develop new markets is itself the greatest advantage for future business expansion.

4. Points of differentiation

The points of differentiation for the company are 1) recruitment strength, 2) sourcing area, and 3) unique infrastructure and operation construction, each of which forms its strengths precisely because it is fully remote work.

1) High recruitment strength

Although it is said to be difficult to recruit in society as a whole, full remote work is attractive to employees and is resulting in high recruitment strength. For example, despite advertising very few job openings, there are more than 1,000 monthly applications (excluding repeats), making it an overwhelming presence in remote work recruitment. One background to this is that remote work has spread rapidly as a result of the COVID-19 pandemic, and even after the pandemic is over, there is a growing trend to continue remote work. It is also recognized as a major benefit that even if there are circumstances such as a spouse's transfer (domestic or overseas) or childcare and nursing care, individuals can continue their careers without the constraints of location or time. High recruitment strength is a significant factor that differentiates the company in the human resources services industry, where securing talent is the biggest bottleneck.

2) Size of the sourcing area

The ability to utilize talent from all 47 prefectures nationwide without geographical constraints is a major advantage. Furthermore, sourcing from a global perspective can help resolve supply-demand mismatches, as it becomes possible to acquire talent that is difficult to obtain within Japan, in other areas.

3) Construction of proprietary infrastructure and operation

Since its founding in 2014, the company has practiced full remote work for its own business management and provided various services remotely as a business. It has thus developed its own infrastructure and operational methods to realize this. Nearly 1,000 employees working remotely is unprecedented worldwide. The company's operations are enabled by a combination of recruitment media operations, security management flows, direction systems, worker management systems, and business matching platforms, providing value that other companies cannot easily replicate.

(Written by Fisco Guest Analyst Ikuo Shibata)