Smaregi, Inc.
Mid-Term Management Plan Announcement
March 19, 2021

Event Summary[Company Name]

Smaregi, Inc.

[Company ID]

4431-QCODE[Event Language]

JPN[Event Type]

Medium-Term Management Plan Announcement[Event Name]

Mid-Term Management Plan Announcement[Fiscal Period][Date]March 19, 2021

[Number of Pages]

15[Time]

13:00 – 13:17(Total: 17 minutes, Presentation: 10 minutes, Q&A: 7 minutes)[Venue]Webcast[Venue Size][Participants]

1[Number of Speakers]

1
Hiroshi YamamotoSupport
Japan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

Representative Director

1.800.674.8375
support@scriptsasia.com
1

Presentation
Yamamoto: I’m Yamamoto from Smaregi, Inc. We are pleased to inform you that we have formulated along-term vision and medium-term management plan for Smaregi.

As TO BE THE NEW STANDARD, 2021 is the 10th anniversary of Smaregi. I feel that in the last 10 years from2011, Smaregi has grown into a company offering overwhelming services with expandability through very
flexible basic functions that can be used for stores of various formats, niche functions that enable uniquestore management, and the Smaregi app market.
It’s sort of embarrassing to say this, but our services are awesome, so we want more and more stores to use
our wonderful services or these excellent functions. In addition, we strongly support Japanese stores andthe Japanese economy. We would like to contribute to the development.
For that reason, for the next 10 years of Smaregi, we would like to go beyond the framework of tablet POS
and aim to gain the top share of Japanese POS cash registers.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
2We established VISION 2031 as a long-term vision. We aim to win the top share in the POS market in Japan.

SupportJapanTollfree

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
3

We have included the number of active stores in our KPIs. The number of active stores is an index indicatingthat regardless of a paid plan or a free plan, our services are actually used, and our goal is 300,000 stores.
Our aim is to achieve a 14% share of the overall domestic market.
Here are two graphs. In terms of the number of active stores, as of Q3 of the fiscal year ending April 2021,
the number of active stores is 23,000. We will aim for more than 10 times in 10 years to achieve 300,000
stores.
In terms of market share, there seems to be about 2 million stores in Japan, including retail stores andrestaurants, which are the main targets of Smaregi. Of those, 770,000 stores are small- and medium-sized
stores with 2 to 40 branch stores. This means that we should aim at gaining a little less than 40% of the main
targets to hit 300,000.
We would like to aim to gain market share while gradually expanding the main target in the verticaldirection.

SupportJapanTollfree

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
4Here, I will introduce the medium-term management plan for the fiscal year ending April 2022 and the next
two years, which will the first step in the long-term plan.
The title, ARR Doubling Plan, sounds a little exciting. We named it so as keywords for investors.

SupportJapanTollfree

03.4405.3160
0120.966.744

North AmericaEmail Support

1.800.674.8375
support@scriptsasia.com
5

I’ll go to page seven of the material. In order to continue high growth in the future, we made up our minds
to strengthen our business investment, preparing for profit declines for the next three years.
One is to increase the number of active stores through advertising. It means increasing the number ofcustomers.
The other is the improvement of customer unit price through the app market. This improves ARPU.
By increasing both the number of customers and the unit price of customers, we are planning to double theARR by the fiscal year ending April 2024.
In the graph on the right, the ARR is JPY1.92 billion as of Q3 of the fiscal year ending April 2021, so we plan
to more than double to achieve the target value.
We would like to make these happen.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
6

Let’s move on to specific measures.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
7

The first is a concentrated investment in advertising.
Mass media, such as TV commercials, traffic advertisements, taxi commercials, et cetera, are a little popular
now, and I would like to run advertisements on the Internet, et cetera, and promote PR activities in variousplaces.
Up until now, we have been spending almost no advertising costs, so I think this is a big challenge.
We haven’t accumulated much in-house know-how yet, so we had to feel our way through trial and error,
but we intend to advance our business by spending a lot of advertising expense.
In particular, we did an IPO in the fiscal year ending February 2019. At that time, we raised about JPY1.5
billion to JPY2 billion. We haven’t spent this money we raised two years ago.
The reason why we haven’t spent it is that in the first year after listing, we received a large number ofinquiries without spending advertising expenses due to the special demand for the reduced tax rate. We
didn’t use the money in the first year, and in the second year, which is this fiscal year, we encountered theCOVID-19 crisis. We put a brake on it because this is not time to spend on advertising.
We have decided that we should use it from now on, as economic activity has begun to be a little more
active, so we would like to carry out advertising activities at a rapid pace with the funds we acquired twoyears ago.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
8

The second is a measure using the app market.
We are aiming to improve the unit price of customers, but basically, we receive many requests fromcustomers.
In addition, apps are used in various ways in various industries and business formats, and we would like torevitalize the app market so that we can handle such demand.
Smaregi Ventures, a CVC Business of Smaregi, has also started, and we would like to revitalize the appmarket by investing in those who develop this app, as well as business support and sales support.
In the future, we are planning to significantly improve the application development environment with thetheme of no code or low code so that it will be easier to create applications.

SupportJapanTollfree

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
9The third is the Smaregi Time Card.
The HR Business that we now call it, started with an attendance management system called Smaregi Time
Card, and we would like to further flesh it out and grow it into an HR service.
Originally, it was developed as one department within our company, but since it was decided to develop thebusiness within the Smaregi Business, we separated it from the Smaregi team and created a dedicated team.
We would like to grow the Smaregi’s HR service in an independently established team in the future.
Now, Smaregi customers and Smaregi Time Card customers look the same, but their customers are slightly
different.
First of all, we would like to start by making a little more affinity with Smaregi for cross selling so that
Smaregi customers can use it more.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
10

Lastly, the fourth is the development of creative human resources.
We wrote that we will be one of the companies that produce the most IT creative human resources in Japan.
We are thinking of actively discovering or educating creative human resources for IT, especially IT engineers,designers, data scientists, et cetera, by greatly expanding not only advertising expenses, but also
recruitment-related expenses.
Until now, we have operated with a relatively small number of people, and in reality could not afford to try
new things.
To prepare for the next 10 years, we would like to secure a little more IT creative human resources to takeon new challenges and improve the product even more.
There is a considerable shortage of IT engineers throughout Japan. There is a shortage of IT humanresources not only in our company, but also in society as a whole. We will take the initiative in discoveringand educating IT human resources. We would like to create a culture that produces more IT humanresources in Japan.
The above four points are concrete measures. Even though there are still abstract parts, we announced
them at the timing of Q3. We will make them more concrete and make an announcement at the full-year
financial report of Q4. Next time, we would like to inform you of the progress of this medium-term
management plan or the more concrete contents. Please continue to pay attention to our advancement.
This is all. Thank you very much.

SupportJapanTollfree

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
11Question & Answer

Yamamoto: We have received questions regarding the medium-term management plan. I would like toanswer three questions.
First, please tell us the background behind your decision to change your stance and make business
investments centered on active advertising activities.
As I mentioned a little in the presentation part, we did an IPO in February 2019. It was exactly two years ago,and at that time, we secured about JPY1.5 billion to JPY2 billion in cash.
In the first year, which is the year before last, a reduced tax rate was introduced and a consumption tax wasraised. This helped to generate a special demand and we were almost flooded with inquiries with almost no
advertising expenses.
In the second year, which is this fiscal year, we were supposed to spend the advertising expenses by starting
TV commercials, et cetera, but a state of emergency was declared, and then the COVID-19 crisis started. This
resulted in us taking defensive actions again. Over the past year, we had to wait and watch how thesituation developed.
For these reasons, we have been unable to use the money we raised for the past two years.
It’s been three years since the Company went public. Looking back on the past year, the influence of theCOVID-19 disaster has gradually weakened, and we have judged that it’s the right time to step on theaccelerator.
When it comes to the management indicators, we have originally set the goal of keeping the sales growthrate and the operating profit margin at 20% since the beginning of the listing. However, the sales growthrate has stagnated, and even during the crisis, we must maintain a high growth rate in the future.
We will focus on aiming for a high sales growth rate, as well as ARR because this is the SaaS Business. We
will focus on increase the number of customers, and also on increasing the subscription, which is a stablerevenue stream. We made the decision to put the 20% operating profit margin on hold for now and havetaken on challenges, not caring about profit declines.
Secondly, why did you decide to announce the medium-term management plan at this time?
We often issue a medium-term management plan at the timing of the announcement of full-year financial
results, but this time we announced the medium-term management plan at the timing of Q3.
We announced the financial results for Q3, but in reality, we are already in the middle or the second half of
Q4, and the results are gradually becoming visible.
It is time for the entire company, including internal members, directors and employees, to become more
active toward the next fiscal year.
Under such circumstances, we have decided to announce new target values both inside and outside theCompany in Q3 so that we can get off to a quick start next year.

SupportJapanTollfree

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
12This is the last question. It seems difficult to secure excellent human resources due to the normal shortageof engineers in many companies. How do you differentiate yourself to have an advantage over other peers?
As you say, there are not enough IT engineers, so I think it is certain that we are in a situation where it isdifficult to hire programmers and other IT engineers.
There is no point in becoming negative about these things, so we thought that we should be the leader toincrease the number of people who want to become IT engineers in order to take the initiative in solving theshortage of human resources.
Last year, the Company joined the Computer Software Association of Japan. For example, we are serving as
the member of the executive committee of the U-22 programming contest under the age of 22, and alsosponsoring the association.
Additionally, we have been working on grassroots activities, by sponsoring a programming class for students
and the like.
By the way, I am originally an IT engineer, and would like to create something that makes IT engineers
become interested in the Internet and computers, as well as a curriculum that allows them to engage inlearning with such interests. I would like to create a culture that makes computer software work interesting.
I think it’s okay if not only our company, but the entire industry becomes interesting or profitable. By
carrying out activities that lead to revitalization inside and outside the Company, we can differentiate
ourselves from other companies. It may not be necessary to differentiate, but we are determined to takethe initiative in such activities.
I answered three questions. That’s all. Thank you very much.
[END]______________
Document Notes
1.
2.
3.

SupportJapanTollfree

Portions of the document where the audio is unclear are marked with [Inaudible].
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
This document has been translated by SCRIPTS Asia.

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
13

Disclaimer
SCRIPTS Asia reserves the right to edit or modify, at its sole discretion and at any time, the contents of thisdocument and any related materials, and in such case SCRIPTS Asia shall have no obligation to provide
notification of such edits or modifications to any party. This event transcript is based on sources SCRIPTS
Asia believes to be reliable, but the accuracy of this transcript is not guaranteed by us and this transcript
does not purport to be a complete or error-free statement or summary of the available data. Accordingly,
SCRIPTS Asia does not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of
the information contained in this event transcript. This event transcript is published solely for information
purposes, and is not to be construed as financial or other advice or as an offer to sell or the solicitation of anoffer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.
In the public meetings and conference calls upon which SCRIPTS Asia’s event transcripts are based,companies may make projections or other forward-looking statements regarding a variety of matters. Suchforward-looking statements are based upon current expectations and involve risks and uncertainties. Actual
results may differ materially from those stated in any forward-looking statement based on a number ofimportant factors and risks, which are more specifically identified in the applicable company’s most recentpublic securities filings. Although the companies may indicate and believe that the assumptions underlying
the forward-looking statements are accurate and reasonable, any of the assumptions could prove inaccurate
or incorrect and, therefore, there can be no assurance that the anticipated outcome described in any
forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE
PUBLIC MEETING OR CONFERENCE CALL. ALTHOUGH SCRIPTS ASIA ENDEAVORS TO PROVIDE ACCURATE
TRANSCRIPTIONS, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THETRANSCRIPTIONS. IN NO WAY DOES SCRIPTS ASIA OR THE APPLICABLE COMPANY ASSUME ANYRESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BY ANY PARTY BASED UPON ANYEVENT TRANSCRIPT OR OTHER CONTENT PROVIDED BY SCRIPTS ASIA. USERS ARE ADVISED TO REVIEW THEAPPLICABLE COMPANY'S PUBLIC SECURITIES FILINGS BEFORE MAKING ANY INVESTMENT OR OTHERDECISIONS. THIS EVENT TRANSCRIPT IS PROVIDED ON AN "AS IS" BASIS. SCRIPTS ASIA DISCLAIMS ANY ANDALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OFMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWAREERRORS OR DEFECTS, AND ACCURACY, COMPLETENESS, AND NON-INFRINGEMENT.
None of SCRIPTS Asia’s content (including event transcript content) or any part thereof may be modified,
reproduced or distributed in any form by any means, or stored in a database or retrieval system, without theprior written permission of SCRIPTS Asia. SCRIPTS Asia’s content may not be used for any unlawful orunauthorized purposes.
The content of this document may be edited or revised by SCRIPTS Asia at any time without notice.
Copyright © 2020 SCRIPTS Asia Inc. (“SCRIPTS Asia”), except where explicitly indicated otherwise. All rights
reserved.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
14