■Dream Arts ＜4811＞ Performance Trends

2. Trends by business segment

(1) Cloud business

a) Horizontal SaaS

The number of companies that have introduced “SmartDB” and “InSuiteX” provided by horizontal SaaS increased steadily to 155 companies (up 36 companies compared to the same period last year). Additionally, upsells to existing customers were strong, and sales were 1,374 million yen (up 33.8% from the same period), driving growth in the cloud business. Awareness of “SmartDB” has increased due to the strengthening of marketing activities, and new projects have also become larger, from adoption by department units of client companies to increased adoption into systems used company-wide, such as ERP front systems. The average monthly usage fee (ARPA*), which is a KPI, was 1,579,000 yen as of 2024/6, and maintained a high level since the 2020/12 fiscal year, and the NRR was 117.9%. Furthermore, “SmartDB” accounts for 82.2% (fiscal period for the 2nd quarter of the fiscal year ending 2024/12) of horizontal SaaS sales, and is driving the growth of horizontal SaaS. Examples of implementation results include cases where Nikkei Inc. has revamped the ERP system, and is being used to digitize accounting operations related to operations related to financial accounting as an ERP front system; cases where Duskin ＜4665＞, which introduced “SmartDB” from 2022/11, began full-scale use as a front system for core accounting operations; and GREE ＜3632＞, an internet company, has crossed group companies with close to 20 companies It was introduced in earnest to contract management operations from 2024/4, and there are cases where verification of business digitalization is planned within a scope other than contract management work in the future. The track record of being evaluated by GREE, which has many system development personnel, will be highlighted.

※ ARPA: Abbreviation for Average Revenue Per Account. It is calculated by dividing the total monthly usage fee for the last month of the quarter by the number of companies using it at the same time.

b) Vertical SaaS

The number of companies that introduced “Shop Run” provided by vertical SaaS was 163 companies (down 11 companies from the same period last year), and although small-scale chain contracts were canceled, introduction at large-scale chain stores progressed, and sales remained steady at 389 million yen (8.1% increase from the same period). In 2024/8, the implementation record of “Shop Run” and “Store Matic” surpassed 60,000 stores. ARPA was slowing down due to the spread of the novel coronavirus infection, but it bottomed out at 301 yen in the 3rd quarter of the fiscal year ending 2021/12, and increased to 395,000 yen in the second quarter of the 2024/12 fiscal year due to a shift to a chain with a large number of stores. As an example of implementation, use at Yakushu Co., Ltd., which develops about 140 insurance pharmacies, mainly in the Tokyo metropolitan area, can be cited. Yakushu has been using “Shop Run” at all stores since 2022/12 to promote company-wide DX, but since there were effects such as improving response rates and work implementation rates, it was decided to utilize the “fresh manual function” (a function that allows stickies to methods and ideas unique to stores as store memos on the manual) from 2023/9. In a similar case, Trial Company Co., Ltd., which operates super centers with approximately 300 stores nationwide, has been using “Shop Run” at all stores since 2023/11, but it began using the “fresh manual function” from 2024/3. It seems that continuous updates in terms of functionality have been highly praised by chain stores that have multiple stores.

c) DCR

Sales of “DCR” were 89 million yen (up 1.4% from the same period last year). Systems developed based on individual requirements of specific customers were operated on a cloud platform, and the number of contract companies was 3 (no change). By promoting utilization of services that have already been provided, an increase in the number of users and the number of binders and stabilization of operation have been ensured.

(2) On-premise business

Sales in the on-premise business were 296 million yen (down 9.0% from the same period last year), and segment profit was 126 million yen (down 20.0% from the same period). Provision of packaged software licenses to new customers has been suspended, and there are only additional license orders due to an increase in the number of employees of existing customers, and sales were 19 million yen (down 55.7% from the same period). Cancellations of software maintenance progressed due to the transition to SaaS, etc., and sales were 276 million yen (down 1.7% from the same period). However, cancellations have fallen below the level expected by the company, and sales progress rates against the initial plan have exceeded 60.0% and 50.0%.

(3) Professional services business

Sales in the professional services business were 265 million yen (down 33.8% from the same period last year), and segment losses were 10 million yen (profit of 99 million yen for the same period last year). In addition to the reaction of receiving orders for large-scale ERP front system projects in the same period last year, since customers actively promoted migration proposals to the latest platforms, such as cloud migration, etc., free operation with only proposals and consultations increased, leading to a decrease in sales and profit.

3. financial status

In the second quarter of the fiscal year ending 2024/12, in addition to an interim net profit of 357 million yen before tax adjustments, contract liabilities increased by 879 million yen as the cloud business grew, and cash flow from operating activities amounted to 1,160 million yen. In the cloud business, usage fees for a fixed period of time are received in advance, and unfulfilled contracts are recorded as contract liabilities, and business growth is directly linked to an increase in free cash flow. Cash flow from investment activities due to acquisition of intangible fixed assets etc. was 98 million yen of expenditure, and cash flow from financial activities due to payment of dividends etc. was expenditure of 77 million yen, and as a result, cash and cash equivalents at the end of the second quarter of the fiscal year ending 2024/12 increased by 1,001 million yen compared to the end of the previous fiscal year to 3,817 million yen. Corporate bonds are issued for 300 million yen, but there are sufficient financial resources for repayment, and a financial structure has been created to secure plenty of liquid funds that can be transferred to growth investments without depending on borrowings. Total net assets increased 187 million yen compared to the end of the previous fiscal year, as 172 million yen after deducting dividends of 77 million yen from interim net profit attributable to parent company shareholders increased as retained earnings. Meanwhile, due to a significant increase in contract liabilities, the equity ratio was 40.8%, down 5.4 points from the end of the previous fiscal year, but financial security was guaranteed without any problems.

(Written by FISCO Visiting Analyst Matsumoto Akihiro)