■reed's inc <4372> company overview

1. Company Overview

The company was founded in 1999 under the corporate philosophy of "contributing to society through the creation and provision of high-value information services and aiming to be a company that is always expected." Its business domain is the rapidly growing digital marketing market due to the emergence of smartphones, supporting customer digital marketing and DX with messaging solutions. Performance has steadily expanded by accurately capturing customer needs, and in September 2021, it was listed on the Tokyo Stock Exchange (hereinafter referred to as TSE) Mothers market (transferred to the TSE Growth Market in April 2022).

Customers range widely from local governments, EC companies, infrastructure companies such as electricity and gas, newspaper and publishing industry, tourism industry, financial industry, distribution and retail trade, etc. It is utilized for various purposes beyond promotional use, such as disaster prevention, crime prevention, fee notifications, and safety confirmation. The number of contracts for the "Cuenote (R)" series has exceeded 2,400, and it is adopted by major companies listed on the TSE Prime Market and Standard Market.

One of the company's strengths, "fast, accurate, and efficient large-scale email delivery," became possible when it became a subsidiary of CyberAgent <4751> in 2002*. This was largely due to the company's response to CyberAgent, which operates internet advertising and media business, when there was demand for email magazine distribution for news sites. The company's unique transmission program design using design philosophy and parallel processing language was the trigger to make it possible.

* The company's largest shareholder has been AITEC Hankyu Hanshin Co., Ltd. since 2011.

In June 2024, it was resolved to acquire ROC, which handles SNS operation outsourcing for corporations. This marks the company's first M&A in its 25th year since foundation. It aims to advance the current growth strategy, aiming for business expansion and increased corporate value.

2. Business environment surrounding the company

The spread of the Internet and smart phones, the promotion of corporate DX, and other factors have increased the importance of digital marketing, and it is expected that the market in which the company operates will continue to expand. The expansion of D2C* was first indicated in the "2021 Information and Communications White Paper" by the Ministry of Internal Affairs and Communications. The document mentions as a specific example that the cumulative number of shop openings in the net shop creation service provided by BASE <4477> expanded from 0.9 million shops in February 2020 to 1.4 million shops in March 2021. According to our research, the cumulative number of shop openings using the BASE service as of December 2023 has further increased, reaching 2.1 million shops.

* Direct to Consumer: A method of selling products or services directly to consumers through a self-established website, etc.

The "2021 Information and Communications White Paper" mainly focuses on how consumer behaviors have changed amidst the spread of the novel coronavirus infection (hereinafter referred to as the COVID-19 pandemic), but it seems that the trend of digitization will not recede even after the pandemic ends. According to the same document, 28.4% of respondents answered that they would like to continue using internet shopping even after the end of the pandemic. In fact, the "2023 Information and Communications White Paper" conducted a survey on "digital services usually used," in which internet shopping accounted for over 70%. Furthermore, the household ownership rate of smart phones is over 90%, and that of personal computers is just under 70%, indicating that online shopping using smart phones and PCs is expected to continue to grow in the future.

In this context, we believe that customer demand for email marketing and SMS marketing will remain solid as part of this trend. The outlook for the business environment surrounding the company can be described as optimistic.

(Written by FISCO Guest Analyst Yoichiro Shimizu)