■Future Outlook LeTech <3497> expects an increase in sales and ordinary income of more than 20%, with sales of 2.14 billion yen (+33.8% YoY), operating income of 150 million yen (+7.7% YoY), ordinary income of 100 million yen (+21.7% YoY), and net income of 1.03 billion yen (-11.4% YoY) for the July 2024 term, and has maintained its initial forecast (announced in September 2023).

2. The growth strategy in key areas.

Aoba-BBT＜2464＞ positions themselves to prioritize and focus on the intensive courses for corporate personnel development and University business as future growth drivers, as well as the platform services business as key areas.

(1) Corporate personnel development business

The characteristic of the corporate personnel development business at the company lies in being able to provide standardized package services in the presence of many competitors, incorporating customer demands, identifying requirements for personnel development from a strategic and business strategy perspective, combining optimal programs from a wealth of past content, confirming how participants have grown during the program, engaging in discussions, and providing customized services that lead to the final goal.

In particular, the company has focused on developing talents who can excel globally for many years in the development of next-generation executive programs, recognizing it as a field where they can leverage their strengths. This field requires the cultivation of conceptual thinking, inquiry skills, leadership, and communication skills that cannot be replaced by AI. Therefore, in addition to simply attending programs, it is important to develop qualities by interacting with instructors and other participants through discussions. The accumulated knowledge in education is also crucial. Additionally, the company provides "Ko-Rensai," a service for executives, and regularly exchanges information with executives, considering the ability to make proposals from the perspective of the executives as one of their strengths. The company intends to increase the revenue share of the next-generation executive development program from about 38% to 50-60% in the future. As for competitors often compared to the company, Globis Corporation and Stem Inc＜7367＞ are mentioned, but there seems to be few direct competitors.

Furthermore, the company has started initiatives for new services. One of them is the initiative based on partner strategies. The company has listed 30 companies as potential partners, made contact with 17 of them, and signed sales contracts with nearly 10 companies. These include LMS companies, talent management system companies, and personnel development service companies. The company's revenue comes from fees deducted from educational content sold through these companies. Some partners have already started contributing to revenue, and it is expected that expanding sales through partners with high profit margins will contribute to profit growth in the future.

The sales target for the corporate personnel development business aims to reach 1.78 billion yen, a 19% increase from the previous year, for the fiscal year ending March 2025, with the plan to expand to a scale of 20-22 billion yen in 2-3 years. To achieve the sales target, the company will strengthen inside sales to acquire new customers, as well as work on deepening transactions with existing customers and improving retention rates. The current retention rate is around 70%, but the company aims to increase it to about 80% by enhancing customer success efforts. As a new initiative, from the fiscal year ending March 2024, customer satisfaction surveys will not only be conducted on participants but also on the HR department as the contact point to hear feedback and improve service quality.

In the fiscal year ending March 2024, the number of new customers was approximately 130 companies, with revenue exceeding 0.15 billion yen, and aiming for 200 companies and 0.2 billion yen in revenue in the fiscal year ending March 2025. In the process of acquiring new customers, leads (prospective customers) are obtained through online seminars (5-10 times a month) and seminars at the Recurrent Summit held twice a year (3 times), followed by inside sales to the leads, securing appointments, conducting specific business negotiations, and leading to orders. Also, by September 2025, the company plans to renovate its website and strengthen digital marketing with a focus on "developing the next generation of management talent," including SEO measures.

As part of upselling strategies for existing customers, the company plans to work on an "Account Plan" from the fiscal year ending March 2025 to strengthen sales by listing potential companies. While the development of VIP companies with annual transactions of over 10 million yen has been progressing smoothly, expanding the customer base below that level has been a challenge over the past 1-2 years.

Regarding the target operating margin, the overall Recurrent Education Business achieved 3.7% in the fiscal year ending March 2024, with a goal to raise this to around 10% in the medium term. In the case of corporate human resources development business, a combination of online training, group training, and hybrid training is provided in various forms. Profit margins tend to fluctuate due to the differences in composition, especially with a lower margin for group training, but the direction remains to increase the margin. By improving sales productivity, deepening transactions with existing customers, and promoting order activities to ensure a certain profit margin by carefully examining cost estimates for each project, the company aims to improve profitability. The sales department has strengthened its structure over the past few years with 29 employees and plans to continue to increase staff in the future.

(Written by FISCO guest analyst, Jo Sato)