Renowned investor Mr. Hasshan questions President Sasaki based on the theoretical stock price development! Continuation of Vol.2

IQube Systems - Sasaki

Next, let me talk about two initiatives in the current market environment. First and foremost, what we consider important as our business is the "expansion of the customer base". And secondly, it is the improvement of "ARPU".

The first point about the "expansion of the customer base" is that the main reason for the current steady increase in the number of adopting corporations is the start of OEM supply to NTT DoCoMo Group. (As NTT DoCoMo Group has started providing MDM services as part of the renewal of the service called "Anshin Manager NEXT," CLOMO has been adopted and OEM supply has started. For the time being, the contract customers of the old service are expected to continue transitioning to the new service, leading to an expansion of our customer base.)

Customers who have been using the previous services are gradually transitioning. The provision of the old service is scheduled to continue until March 2026, so there is a situation where customers using the old service can gradually transition to the new service. Of course, we are also actively engaged in developing new customers, so we believe there is further room for the expansion of the customer base in the CLOMO business. OEM has been positioned as one of the growth engines, and we are progressing further expansion through support activities for active sales partners via sales offices.

Another initiative for improving ARPU is to propose cross-selling to both new and existing customers in order to increase ARPU. We have been working on this initiative from before and have newly started providing 5 services marked with the NEW symbol of Orange since the June 2023 fiscal year, aiming for ARPU improvement.

In particular, we are focusing on enhancing security measures and enriching the menu of operation support. Regarding security measures, customers are feeling various security concerns such as ransomware issues, so to ensure even greater safety, we are deepening collaboration by combining our security products with those of other companies. As for operation support, due to various factors such as aging population, the workload of the information system-related departments has become very high. By taking on some of these tasks, we intend to reduce the workload of the information system departments and are expanding various service menus to support their operations. We plan to continuously develop and provide optional services tailored to customer needs, aiming to increase opportunities for cross-selling and enhance ARPU.

The other focus is on operation support. Given the high workload on information system departments due to factors like aging population, we are expanding various services to support their operations with the intention of reducing their workload. We aim to continually develop and offer optional services tailored to customer needs to increase opportunities for cross-selling and enhance ARPU.

IQube Systems - Sasaki

Lastly, I would like to touch on the mid-term plan and this fiscal year's objectives, etc. Stem Inc. is currently working on expanding its business with a target consolidated revenue of 5 billion yen for the fiscal year ending June 2026. To achieve the 5 billion yen goal, the first essential step is the expansion of the CLOMO business, which we are focusing on. Additionally, another key point is the creation of new businesses, as we aim to fill the gaps not covered by the growth of the CLOMO business with new ventures. We have established specialized departments to ensure steady progress in this area.

Concerning investment activities, we continue to invest in startups, aiming not only to gain capital gains but also to create business synergies with our investee companies. We are working towards achieving our mid-term goals by generating synergy with our investee companies.

Based on these mid-term goals, the performance forecast for the fiscal year ending June 2025 is a revenue of 3.5 billion yen, operating profit of 0.89 billion yen, and an operating profit margin of 23.1%. The trend over the past five periods has shown continuous revenue growth, with an average annual growth rate of 14.6% planned from the fiscal year ending June 2021. While continuing to make growth investments, we are aiming for increased profits this fiscal year.

For shareholder returns, we aim to actively implement shareholder returns as much as possible for shareholders who have expectations for the company's medium to long-term growth. While prioritizing investments necessary for business growth and internal reserves, we have implemented dividends every period since our listing. Considering recent performance and business environment, we plan to maintain the year-end dividend for this fiscal year at the same level as the previous year, at 32 yen.

Above, we have explained the performance trends and outlook.

Thank you for your comments.

May I ask a question regarding the last part about dividends? It mentions a dividend payout ratio of 30.2%, which is roughly around 30% as a guideline for shareholder returns by your company. Can we understand that if profits increase, dividends will be increased in line with the dividend payout ratio?

IQube Systems - Sasaki

As a company, we do not specifically set a target indicator at around 30%, and we would like to increase the dividend payout ratio as much as possible in line with social conditions. Currently, the dividend payout ratio is only 30% if it is 32 yen, and we aim to make efforts to increase dividends within a reasonable range.

Thank you for your comments.

Understood. Thank you.

IQube Systems - Sasaki

Finally, our brand slogan is "Let's enjoy the challenge." We are moving forward with the expansion of our business while enjoying the challenges together with all employees. We are actively working towards achieving our mid-to-long-term sales goals while implementing our growth strategy. We hope that through opportunities like this, you can understand and support our efforts. Thank you very much.

Thank you for your comments.

It was clear. Thank you.

Renowned investor Mr. Hasshan questions President Sasaki based on theoretical stock prices! To be continued in Vol.4.