Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

Fusion Partners, Co.
4845 Tokyo Stock ExchangeFirst Section

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato*	Service that supplies application
software functionality to customers
over a network

伪伪Acquires Softbrain as a Subsidiary and Planning
Collaboration Aimed at Creating Synergies
Fusion Partners, Co. <4845> is a leading provider of website search, FAQ service, and other services
for corporate websites and mainly delivers these services in an SaaS/ASP cloud computing*, abusiness model with recurring income. It leverages contacts with customers from direct sales toreflect their needs in development activities and has steadily expanded the service line-up. It also
actively uses M&A and purchased a 45.57% stake in Softbrain Co., Ltd. <4779>, a major supplier ofsales assistance software, in July 2016 and added this unit as a consolidated subsidiary under IFRS
accounting. Fusion Partners adopted IFRS accounting from FY6/16.
In FY6/16, Fusion Partners reported consolidated results of ¥2,693mn in sales revenue (+20.4%
YoY), ¥616mn in operating profit (+14.0%), and ¥1,196mn in pretax profit (+116.2%). Key sources ofsales and profit gains in FY6/16 were healthy momentum in mainstay website search, FAQ service,and other SaaS/ASP services and a steep rise in Web services business thanks to acquiring orders
for large development project at a non-life insurer. Additionally, Fusion Partners sold all of its sharesin Azia <2352>, which had been an equity-method affiliate, and booked ¥527mn in selling profit that
fueled a sharp increase in pretax profit.
Fusion Partners guides for steep sales and profit increases in FY6/17 at ¥10,200mn in sales revenue(+278.6% YoY), ¥3,700mn in operating profit (+499.8%), and ¥3,700mn in pretax profit (+209.3%).
This outlook factors in boosts of ¥7,000mn in sales revenue, ¥700mn in operating profit, and¥2,633mn in stock recalculation profit related to the subsidiary acquisition, owing to the purchase ofSoftbrain as a subsidiary. However, it still expects upbeat double-digit sales and profit increases forexisting businesses without the additions, including sales revenue by 18.8% and operating profit by
13.5%. Fusion Partners expects to make progress with SaaS/ASP services by adding new services
for existing customers and developing new customers and also projects acquisition of major orders
for Web services, just as in FY6/16.
Over the medium term, Fusion Partners intends to achieve stable growth in existing businesses,
which generate recurring income, and make further growth advances in IoT, AI, and other new
business areas, including contributions from M&A deals.
For shareholder returns, Fusion Partners adheres to a policy of paying steady dividends while
retaining funds needed to strengthen financial standing and drive future business initiatives. It plans
to increase the dividend per share in FY6/17 by ¥4 to ¥18, as the eighth straight period with a hike.

伪伪Check Point• Mainly supplies i-search site search and i-ask FAQ service• Aiming for further growth by pursuing new businesses, such as IoT, O2O, and AI• Plans to increase the dividend in FY6/17 by ¥4 to ¥18, as the eighth straight period with ahike

We encourage readers to review our complete legal statement on “Disclaimer” page.
1㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻾㼑㼟㼡㼘㼠㼟㻌(¥mn)
㻿㼍㼘㼑㼟㻌㼞㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻌㼟㼏㼍㼘㼑㻕㻝㻞㻘㻜㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼟㼏㼍㼘㼑㻕
㻟㻘㻣㻜㻜

(¥mn)
㻠㻘㻞㻜㻜

㻝㻜㻘㻜㻜㻜

㻟㻘㻡㻜㻜

Fusion Partners, Co.

㻤㻘㻜㻜㻜

㻞㻘㻤㻜㻜

4845 Tokyo Stock ExchangeFirst Section

㻢㻘㻜㻜㻜

㻞㻘㻝㻜㻜
㻝㻜㻘㻞㻜㻜

㻠㻘㻜㻜㻜

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

㻞㻘㻜㻜㻜
㻜

㻝㻘㻠㻜㻜
㻡㻢㻢

㻟㻣㻣
㻝㻘㻤㻤㻟

㻞㻘㻞㻠㻜

㻲㼅㻢㻛㻝㻠

㻲㼅㻢㻛㻝㻡
㻶㻙㻳㻭㻭㻼

㻢㻝㻢
㻣㻜㻜

㻞㻘㻢㻥㻟
㻜
㻲㼅㻢㻛㻝㻢

㻲㼅㻢㻛㻝㻣㻱
㻵㻲㻾㻿

伪伪Company Overview
Steadily acquiring information services companies as
subsidiaries through an M&A strategy(1) Company background*	DBMS from US-based Computer
Corporation of America and Sirius
Software (now, Rocket Software)and had Bank of Japan <8301>,
Tokyo Electric Power Company
Holdings, Incorporated <9501>,
and other major companies ascustomers in Japan.

Current Representative Director and Chairman Kenzo Tamura and Director Hideki Shimazu founded
the company in December 1991 with an initial start as a sales distributor for databases. It realized
significant growth in 1999 by inheriting support services, including customers, for the Model 204*
mainframe database management system license from Mitsui Knowledge Industry Co., Ltd. in 1999.
It listed shares on the Osaka Securities Exchange’s NASDAQ Japan market (now TSE’s JASDAQ)
in May 2001.
Fusion Partners determined that it needed to change the business structure in order to continue
growth amid migration by corporate information systems from mainframes to open servers and started
acquiring information service firms through M&A deals utilizing funds obtained from the IPO. It beganwith the purchase of PatentManager, a patent management software, business from Interscience in2003 and then acquired dbecs with the aim of entering the CRM field, Bodamedia with the goal ofentering the interactive voice response (IVR) field, news distribution service provider NewsWatch,
website developer TriAx Corp., and others as subsidiaries. Fusion Partners is steadily expanding
SaaS/ASP business as its core operation and bolstering system engineers to enhance its own
service development capabilities. More recently it acquired a 45.57% stake in Softbrain, a leading
supplier of sales assistance software, in July 2016 (it paid about ¥4,300mn) and is incorporating thiscompany as a consolidated subsidiary under IFRS.
Fusion Partners switched to a holding company organization in 2004 in order to conduct dynamic
operations, and its group currently has four main subsidiaries – Digi-Ana Communications Inc.,PAREL, Inc., TriAx Corp., and Softbrain Co., Ltd.

We encourage readers to review our complete legal statement on “Disclaimer” page.
2

■■Company Overview

Company History

Fusion Partners, Co.
4845 Tokyo Stock ExchangeFirst Section

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Date
Event
December 1991 Established Database Communications
January 1999 Formed sales distribution contracts for the Japanese market with US-based Computer
Corporation of America and Sirius (now, Rocket Software) and started Model 204 support
May 2001 Listed shares on the Osaka Securities Exchange’s NASDAQ Japan market (now, Tokyo Stock
Exchange JASDAQ (Standard))
April 2003 Acquired Interscience’s patent management system with the aim of entering the Intellectual
Property system field
October 2003 Acquired dbecs as a subsidiary to enter the CRM market
April 2004 Acquired Bodamedia as a subsidiary with the aim of entering the IVR (interactive voice
reception) field
September 2004 Renamed as Fusion Partners, Co. in the transition to a holding company and established
Database Communications as a new company and transferred its business
June 2006 Merged subsidiaries Bodamedia and dbecs and changed the company name to Digi-Ana
Communications Inc.
November 2010 Acquired NewsWatch as a subsidiary
April 2012 Merged subsidiaries Digi-Ana Communications and NewsWatch
May 2014 Changed the stock listing to the Second Section of the Tokyo Stock Exchange
December 2014 Shares elevated to the First Section of the Tokyo Stock Exchange
November 2015 Acquired TriAx Corp. as a subsidiary
January 2016 Renamed subsidiary Database Communications as PAREL, Inc.
July 2016 Acquired Softbrain Co., Ltd. as a subsidiary

Affiliates (business content, stakes)
Ownership
Consolidated subsidiaries
Main business(%)
Digi-Ana Communications
100.0 Corporate SaaS/ASP service
PAREL
100.0 Software development service, M 204 service
TriAx
100.0 Website planning, development, production, and maintenance/operation
Sales assistance software development, sales, deployment assistance
Softbrain
45.57
consulting, etc.

Operates i-search site search service, i-ask FAQ service, andother services for websites(2) Business overview
Fusion Partners provides SaaS/ASP services that aim to improve corporate Web site convenience as
its core business. The main services are i-search site search, i-ask FAQ, interactive voice response(IVR), and news distribution for websites.
Fusion Partners launched i-search service in 2007 and it currently holds a top presence at a roughly
15% market share with around 350 customers, particularly large firms. While the company has
over 10 competitors, i-search service improves visibility by displaying images in search results andprovides effective guidance to users. The average usage fee per month is ¥100,000-150,000.
The company started i-ask service from around 2008, and it is used at about 150 companies, mainly
in financial and insurance industries. This service lets users resolve issues on their own by listing
frequently asked questions and related answers on the corporate website. It helps to lower costs by
reducing accesses to call centers and can also improve customer satisfaction. Fusion Partners holds
a roughly 15% share and ranks second after OKWAVE <3808>. The average usage fee per monthis ¥200,000-300,000.
IVR is a system for voice-based automated responses at corporate phone contacts, and Fusion
Partners’ service stands out for its provision in a SaaS style. Companies previously incurred large
investment costs for IVR, including the need to install a PBX system. The SaaS style, meanwhile,
gives them access to the service inexpensively and allows for use during limited periods, such as
campaigns.
Besides SaaS/ASP services, Fusion Partners covers planning, development, production, andmaintenance and operation services for websites. It has an extensive line-up of services and does
not rely on a specific service area.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

■■Company Overview

Services Content
Type
Site assistance service

Fusion Partners, Co.
4845 Tokyo Stock ExchangeFirst Section

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Product namei-searchi-linkchecki-print
i-linkplus
i-pediaplus
CMS service
i-ask
i-catalog
i-learning
i-flow
LaCoon
CRM service
i-entrydbecs
Phone-related service
SaaS-type IVRNews distribution service
Corporate news
Intellectual property management solution PatentManager6
Site operation business
FreshEyeWeb services-

Description
Site internal search engine
Link-loss detection system
Site print system
Related link display service
Online encyclopedia provision service
FAQ system
Product site management systeme-learning service
Progress management and approval system
Web system building platform
Comprehensive questionnaire CRM service
High-performance web mailer
24-hour, 365-day automated voice response
Monitoring important business information
Latest patent management system
Search portal site
Tailored services

Pursues differentiation from rivals with proposals for multiple
services and developments that meet customer needs(3) Company strengths
An important strength is developing services from a customer perspective. Fusion Partners handles
a majority of its business as direct sales, and it improves service functions and develops newservices by listening closely to customer needs and feeding this information back to its development
team. It follows a development policy of trying to meet 100% of customer requests. Fusion Partners
developed core i-search and i-ask services thanks to its approach of meeting customer requests, andthis also enabled it to make smooth progress in rolling out sales to other customers.
Another strength is differentiation from rivals due to having an extensive line-up of services developedin this manner. While many rivals exist for SaaS/ASP services related to corporate websites, themajority of these companies only supply standalone services and few companies can provide
multiple services similar to Fusion Partners. The ability to propose multiple services together makes
it possible to meet diverse customer needs as a package, and this helps raise the average price per
customer and customer satisfaction. Fusion Partners also develops services tailored to individual
customers, and its horizontal rollout of services developed based on customer requirements as
general services foundation contributes to lower development costs.
Fusion Partners generates about 70% of its sales revenue in monthly income from SaaS/ASP
services and has built a stable income base of recurring income. It strives to provide these services
at fixed monthly rates and avoid usage-based billing as much as possible. It obtains other sales fromwebsite development and other individual development projects, and opportunities for orders onlarge development projects have been growing as awareness of the company’s robust development
and customer support capabilities rises.

㻽㼡㼍㼞㼠㼑㼞㼘㼥㻌㻿㼍㼘㼑㼟㻌㻮㼞㼑㼍㼗㼐㼛㼣㼚㻌㼍㼚㼐㻌㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㻹㼛㼚㼠㼔㼘㼥㻙㼎㼕㼘㼘㼑㼐㻌㼒㼑㼑㻌㼕㼚㼏㼛㼙㼑㻌㻔㼘㼑㼒㼠㻌㼟㼏㼍㼘㼑㻕㻻㼚㼑㻌㼠㼕㼙㼑㻌㼒㼑㼑㻌㼕㼚㼏㼛㼙㼑㻌㻔㼘㼑㼒㼠㻌㼟㼏㼍㼘㼑㻕

(¥mn)
㻝㻘㻜㻜㻜

㼁㼟㼍㼓㼑㻙㼎㼍㼟㼑㼐㻌㼒㼑㼑㻌㼕㼚㼏㼛㼙㼑㻌㻔㼘㼑㼒㼠㻌㼟㼏㼍㼘㼑㻕 (¥mn)
㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼟㼏㼍㼘㼑㻕
㻞㻡㻜

㻤㻜㻜

㻞㻜㻜

㻞㻜㻟

㻟㻞㻟

㻞㻣

㻞㻣

㻟㻜

㻞㻥

㻢㻜㻜
㻠㻜㻜
㻞㻜㻜

㻞㻜㻣

㻝㻡㻤

㻝㻤㻝

㻢㻤
㻟㻥

㻥㻞
㻟㻤

㻝㻝㻝
㻟㻣

㻣㻠
㻟㻠

㻝㻠㻢
㻟㻞

㻝㻞㻡
㻟㻜

㻟㻜

㻥㻤
㻞㻥

㻟㻟㻢

㻟㻠㻢

㻟㻠㻥

㻟㻡㻠

㻟㻢㻠

㻟㻤㻞

㻟㻥㻠

㻟㻥㻣

㻠㻝㻞

㻠㻝㻡

㻠㻠㻝

㻠㻠㻟

㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻜

㻝㻡㻜
㻝㻜㻜
㻡㻜
㻜

㻲㼅㻢㻛㻝㻠

㻲㼅㻢㻛㻝㻡

㻲㼅㻢㻛㻝㻢

㻖㻵㻲㻾㻿㻌㼒㼞㼛㼙㻌㻲㼅㻢㻛㻝㻢We encourage readers to review our complete legal statement on “Disclaimer” page.
4伪伪Business Performance
Highly profitable SaaS/ASP services contributed to sales andprofit gains in FY6/16

Fusion Partners, Co.
4845 Tokyo Stock ExchangeFirst Section(1) Review of FY6/16 results
Fusion Partners reported FY6/16 consolidated results on August 15 with ¥2,693mn in sales revenue(+20.4% YoY), ¥616mn in operating profit (+14.0%), ¥1,196mn in pretax profit (+116.2%), and¥830mn in net profit attributed to owners of the parent (+129.6%). This was an upbeat outcome
with sales revenue and profits reaching all-time highs. Fusion Partners adopted IFRS accounting in
FY6/16 and converted FY6/15 values to IFRS for the comparisons.

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

FY6/16 Consolidated Results
FY6/15Results
Ratio to sales
2,237
878
39.3%
752
33.6%
541
24.2%
553
24.7%

Sales revenue
Sales costs
SG&A expenses
Operating profit
Pretax profit
Net profit attributed toowners of the parent
Note: FY6/15 values adjusted to IFRS

361

16.2%

(Unit: ¥mn)

Results
2,693
1,198
875
616
1,196

FY6/16
Ratio to sales
44.5%
32.5%
22.9%
44.4%

YoY change
20.4%
36.4%
16.3%
14.0%
116.2%

830

30.8%

129.6%

Sales revenue benefited from upbeat momentum in core SaaS/ASP services, which primarily
consists of i-search website search service and i-ask FAQ services, and a steep 82.0% YoY rise in
Web services sales to ¥750mn thanks to contributions from major deals.
The COGS ratio climbed from FY6/15’s 39.3% to 44.5%, though this can be mainly attributed to theincrease in outsourcing costs related to the rise in major Web service deals. Fusion Partners also
lowered the SG&A expenses ratio, despite a rise in personnel costs, because of the offsetting effectof sales growth.
COGS
Main items

FY6/15(Unit: ¥mn)

Changerate

FY6/16Main change factors

Increase in work in progress related to the rise in
63.7% major deals (IFRS)
Increase in news article usage fees
Labor costs
425
518
21.8% Increase related to employee additions
Rents
122
148
21.4% Increase related to data-center floor space additions
Communications costs
4772
51.9% Increase related to data-center floor space additions
Others2130
43.7% Total
878
1,198
36.4% Note: Procurement, etc. (external consignment fees, news article usage fees, etc.)
Procurement, etc. (note)

261

428

SG&A expenses
Main items

FY6/15

FY6/16

Personnel costs
Fees paid
Rents
Depreciation costs
Others
Total

530
54
33
16
117
752

585
75
43
19
151
875

Change
rate
10.3%
37.4%
31.9%
18.5%
29.1%
16.3%

(Unit: ¥mn)
Main change factors
Increase related to employee additions
Increase related to adopting IFRS
Increase from relocation of headquarters
Increase from the rise in equipment and other assets-

Pretax profit increased sharply owing to healthy sales revenue for highly profitable SaaS/ASP
services and a ¥527mn profit from selling shares in equity-method affiliate Azia. Fusion Partners soldall of the shares that it held in Azia.

We encourage readers to review our complete legal statement on “Disclaimer” page.
5

■■Business Performance(2) Sales trends by services
A review of sales trends by major services shows steady advances in new customer acquisitions andsales growth for mainstay i-search, i-ask, and other SaaS/ASP services in a variety of industries,
including financial and insurance, information and communications, and manufacturing.

Fusion Partners, Co.
4845 Tokyo Stock ExchangeFirst Section

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

New Customer Installations for Major Services (FY6/16)
Service nameCompanies/associations
i-search
CEMEDINE CO., LTD., Seven Card Service Co., Ltd. website for “nanaco,”
NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, CAPCOM, CO., LTD.,
Mitsui Engineering & Shipbuilding Co., Ltd., Fuji Satellite Broadcasting, Inc.,
Hokkaido Electric Power Co., Inc., Nihon Eiga Broadcasting Corp.,
Nihon Jyutaku Ryutu Co., Ltd., Manulife Life Insurance Company, ELECOM CO., LTD., THE
SHIGA BANK, LTD., SBI SECURITIES Co., Ltd., Akebono Brake Industry Co., Ltd.,
Itabashi City Office, The Iyo Bank, Ltd., etc.
i-ask
The Tama Shinkin Bank, Nihon L’Oreal K.K., au Insurance Company, Limited,
Nihon Safety Co., Ltd., PacketVideo Japan Corporation, etc.
i-entry
Park24 Co., Ltd.
i-catalog
KYORITSU FOODS CO., INC.
i-flow
Nitto Denko Corporationi-learning
Administrative entity call centers
IVR
Non-life insurers, point program operators
Source: FISCO Ltd. from company materials

Furthermore, Web services posted a sharp increase of 82.0% to ¥750mn due to major deals. Key
additions to sales were orders from Sompo Japan Nipponkoa Insurance Inc. for development of a
big-data processing and management system for Smiling Road, a corporate (transport firm, etc.)
safe driving assistance service, and related service operation in FY6/15 and orders for continued
development of the similar project and development and operation of a system for Portable SmilingRoad service, a smartphone app designed for individuals in FY6/16.
Drivers who download the free Portable Smiling Road smartphone app are given access to “support
for unexpected accidents,” “safe driving diagnosis that uses Sompo Japan Nipponkoa’s proprietaryalgorithm to analyze driving data from the driver,” “real-time warnings while driving of weather, road,and driving information,” and other services. The Web system developed by Fusion Partners collects
driving data and other information in real time and provides safe driving assistance to drivers that it
manages.
Smiling Road service for corporate users (transport firms, etc) that started operations in March 2015
has paid off in a 20% decline in the accident occurrence rate at companies utilizing the system,and the same effect is anticipated for the personal service. Lowering the accident rate benefits theinsurance companies through reduction of insurance payments, and the service also lifts customer
satisfaction.
We believe sales to Sompo Japan Nipponkoa increased further in FY6/16. Fusion Partners receives
monthly revenue for operating the system, and the few million yen per month puts this business at
the company’s largest for a single customer. Fusion Partners hopes to supply big-data collection
and management and operation services to other insurers and other customers based on thedevelopment results from this project.

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

■■Business Performance㻿㼍㼘㼑㼟㻌㼎㼥㻌㻿㼑㼞㼢㼕㼏㼑㼟(¥mn)

㼕㻙㼟㼑㼍㼞㼏㼔

㼕㻙㼍㼟㼗㼕㻙㼑㼚㼠㼞㼥

㼃㼑㼎㻌㼟㼑㼞㼢㼕㼏㼑㼟㻺㼑㼣㼟㻌㼐㼕㼟㼠㼞㼕㼎㼡㼠㼕㼛㼚㻵㼂㻾㻻㼠㼔㼑㼞㼟

㻟㻘㻜㻜㻜

Fusion Partners, Co.
4845 Tokyo Stock ExchangeFirst Section

㻞㻘㻡㻜㻜

㻡㻜㻢

㻞㻘㻜㻜㻜
㻝㻘㻡㻜㻜

㻠㻝㻢

㻞㻠㻜

㻞㻡㻣

㻟㻢㻣

㻟㻟㻢
㻣㻡㻜

4-Oct.-16

㻠㻝㻞
㻝㻝㻞
㻟㻜㻠

㻝㻜㻠
㻟㻞㻟

㻠㻜㻜

㻠㻜㻟

㻲㼅㻢㻛㻝㻡

㻲㼅㻢㻛㻝㻢

㻝㻘㻜㻜㻜㻡㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻜伪伪Business Outlook
Opportunities for acquiring large project orders leveraging
Smiling Road development results(1) Review of the FY6/17 outlook
Fusion Partners expects FY6/17 consolidated results of ¥10,200mn in sales revenue (+278.6%
YoY), ¥3,700mn in operating profit (+499.8%), ¥3,700mn in pretax profit (+209.3%), and ¥2,950mn
in net profit attributed to owners of the parent (+255%). While these are sharply higher numbers, they
include growth by existing businesses plus the addition of Softbrain as a subsidiary from FY6/17 anda boost in operating profit from stock recalculation profit related to the acquisition of Softbrain as a
subsidiary. Fusion Partners also disclosed results and forecasts based non-GAAP indicators that
exclude non-recurring items and other adjustment account items because of large one-time profits,
including stock selling profit and stock recalculation profit, for FY6/16 and FY6/17.
On a non-GAAP basis, pretax profit totaled ¥668mn in FY6/16 (excluding profit from selling Azia
shares. The FY6/17 target works out to ¥1,400mn (+109.5% YoY) removing ¥2,633mn in Softbrain
stock recalculation profit and ¥43mn in intangible asset amortization costs and ¥370mn in othersubsidiary impairment losses and other charges budgeted under other adjustment account items.
The FY6/17 guidance includes additions from Softbrain’s FY12/16 outlook (¥7,000mn in sales,¥700mn in operating profit, ¥700mn in recurring profit, and ¥380mn in net profit attributed to ownersof the parent). Net profit attributed to owners of the parent receives an extra ¥170mn because of
the 45.57% equity ratio. Guidance excluding the Softbrain impact works out to ¥3,200mn in sales
revenue (+18.8%) and ¥700mn in operating profit (+13.5%), and these values indicate that Fusion
Partners expects continuation of robust results with double-digit sales and profit increases forexisting businesses too.
Fusion Partners aims to expand sales revenue in SaaS/ASP services, which provide recurringincome, by fostering needs through further enhancement of satisfaction and trust among existingcustomers and actively acquiring deals outside of existing services. Furthermore, interest in Web
services is rising from financial and insurance industries thanks to the development track record with
Smiling Road, and guidance envisions orders acquisition for major deals.

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

■■Business Outlook

FY6/17 Consolidated Results Forecast
FY6/16 results

2,693
616
1,196

2,693
616
668

10,2003,700
3,700

FY6/17 forecasts
YoY
Non-GAAP
change278.6%
10,200499.8%
1,400
209.3%
1,400

830

464

2,950

255.0%IFRS

Fusion Partners, Co.

Sales revenue
Operating profit
Pretax profit
Net profit attributed toowners of the parent

Non-GAAP

IFRS

650

YoY
change278.6%
126.9%
109.5%(Unit: ¥mn)
Softbrain
FY12/16
forecasts
7,000
700
700

40.0%

380

4845 Tokyo Stock ExchangeFirst Section

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Expecting creation of new services by integrating website
behavior record analysis and Softbrain’s sales assistancesoftware(2) Collaboration with Softbrain
A key motivation for acquiring Softbrain as a subsidiary is its provision of a corporate sales assistancetool as a cloud service and strong affinity with Fusion Partners’ business. Softbrain holds a topclass industry share for sales assistance tools, and it has a track record of use at just over 4,000
companies.
Fusion Partners intends to promote initiatives for collaboration aimed at the creation of synergies
between the two companies and has already launched a project team. It hopes to not only collaborate
on services, but also realize vibrant interactions among people for the various divisions. Cooperation
is likely to consist of cross-selling of respective products and services. While the companies caterto different customer segments with Softbrain approaching corporate sales divisions and Fusion
Partners dealing with public relations divisions, they can introduce customers and make proposals
and thereby boost sales. Another possibility is creation of new services, such as integrating website
behavior record analysis, where Fusion Partners excels, and Softbrain’s sales assistance software.
Fusion Partners aims to enhance corporate value by effectively leveraging customer bases, service
knowhow, and other business assets of the two firms to develop and supply high value-added
services.
Softbrain obtains about 44% of its consolidated sales in the e-Sales Manager related businessthat handles sales and deployment consulting services for the “e-Sales Manager” sales assistancesoftware and roughly 46% from the field marketing business run by subsidiary Softbrain Field Co.,
Ltd. The field marketing business utilizes registered staff (mainly housewives) to set up productsales space and create point-of-purchase ads at retail stores instead of the employees of consumer
goods manufacturers. While manufacturer employees previously handled these tasks, the industry
is shifting to outsourcing in order to improve sales promotion cost efficiency, and Softbrain’s field
marketing business has been growing sales at a double-digit annual pace in recent years. The
business provides services to over 350 accumulative customers, and recently had about 61,000
registered staff members. It covers more than 110,000 stores nationwide, including drugstores,
convenience stores, and specialty stores and has a top-class presence in the industry.
Softbrain’s FY12/16 consolidated targets are ¥7,000mn in sales (+18.7%) and ¥700mn in operating
profit (+3.2%). While it expects slower operating profit growth due to making upfront investments toreinforce personnel as part of broadening business scope, the outlook still projects stable growth led
by the two main businesses.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

■■Business Outlook㻮㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㻌㼎㼞㼑㼍㼗㼐㼛㼣㼚㻌㻔㼠㼔㼞㼛㼡㼓㼔㻌㻝㻴㻌㻲㼅㻝㻞㻛㻝㻢㻕㻌㼑㻙㻿㼍㼘㼑㼟㻌㻹㼍㼚㼍㼓㼑㼞㻌㼞㼑㼘㼍㼠㼑㼐㻝㻜㻜㻚㻜㻑

Fusion Partners, Co.

㻤㻜㻚㻜㻑4845 Tokyo Stock ExchangeFirst Section㻢㻜㻚㻜㻑㻲㼕㼑㼘㼐㻌㼙㼍㼞㼗㼑㼠㼕㼚㼓㻿㼥㼟㼠㼑㼙㻌㼐㼑㼢㼑㼘㼛㼜㼙㼑㼚㼠㻼㼡㼎㼘㼕㼟㼔㼕㼚㼓

㻟㻚㻟㻑
㻞㻚㻜㻑

㻟㻚㻥㻑
㻢㻚㻟㻑

㻠㻢㻚㻜㻑

㻡㻟㻚㻥㻑

㻠㻟㻚㻤㻑

㻠㻜㻚㻤㻑

㻿㼍㼘㼑㼟

㻿㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㼟㻠㻜㻚㻜㻑

4-Oct.-16
㻞㻜㻚㻜㻑

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻜㻚㻜㻑

Targeting further growth with new businesses in IoT, O2O, AI,
and other areas(3) Longer-term growth strategy*	O2O (Online to Offline): This term
refers to sales measures that utilizeInternet (online) behavior to attract
customers to real stores (offline)
and encourage purchases.

Fusion Partners has presented a longer-term growth strategy that seeks stable growth in existing
cloud (SaaS/ASP) services and targets further growth with business initiatives in new areas thatencourage communication among people and between companies and people (IoT, O2O*, andAI) delivered through cloud services. It also intends to aggressively utilize M&A deals, businessalliances, and other initiatives to enter new business fields.
Fusion Partners is targeting the following areas for M&A and business alliances – 1) companies
with knowhow and technology to develop new services, 2) companies with customer bases that
support expansion of market share for existing services, 3) companies with robust service line-ups,
knowhow and technology that it does not possesses, and an ability to improve and strengthen thecompetitiveness of existing services, and 4) companies with many talented engineers who canstrengthen development capabilities.
The addition of Softbrain as a subsidiary lifts consolidated sales revenue to over ¥10,000mn, andprogress in other M&A deals might also accelerate growth and should be closely monitored.

伪伪Financial Conditions and Shareholder Returns
Plans to raise the dividend for an eighth straight year with a¥4 YoY hike to ¥18 in FY6/17(1) Financial conditions
We review financial conditions at the end of June 2016. Total assets were up ¥6,104mn to ¥9,633mn,
with increases of ¥3,629mn in cash and deposits, ¥1,994mn in investments handled by equitymethod accounting, ¥296mn in goodwill, and ¥185mn in tangible fixed assets as the main changes.
Liabilities increased ¥4,186mn to ¥5,720mn, with gains of ¥2,950mn in interest-bearing debt,¥909mn in business liabilities and other liabilities, and ¥326mn in unpaid corporate taxes as themain changes. Net assets rose ¥1,918mn to ¥3,913mn, mainly on increases of ¥875mn from newshare issuance, ¥454mn from treasury share disposal, and ¥830mn from booking net profit attributed
to owners of the parent and a decrease of ¥181mn from dividend payments.

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

■■Financial Conditions and Shareholder Returns

For business indicators, although financial health appears to be modestly weaker owing to a decline
in the equity ratio and rise in the interest-bearing debt ratio accompanying larger interest-bearing
debt, we think the financial base expanded with the ¥679mn YoY increase in net cash (cash/deposits– interest-bearing debt) to ¥1,760mn.

Fusion Partners, Co.
4845 Tokyo Stock ExchangeFirst Section

The addition of Softbrain as a subsidiary will considerably alter consolidated financial conditions in
FY6/17. Softbrain’s main financial standing values at end-June 2016 were about ¥2.7bn in cash anddeposits, roughly ¥150mn in interest-bearing debt, and a 62.7% equity ratio, and its financial healthis better than at Fusion Partners. We thus expect improvements in financial conditions compared tothe end of FY6/16 after the consolidation.
Consolidated Balance Sheet

4-Oct.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Current assets(Cash and deposits)
Non-current assets
Total assets
Current liabilities
Non-current liabilities(Interest-bearing debt)
Liabilities total
Total equity
Business indicators
Equity ratio (equity ÷ total assets)
Interest-bearing debt ratio (interest-bearing debt ÷ equity)

End-FY6/15
1,843
1,430
1,686
3,529
1,513
20
350
1,534
1,994

End-FY6/16
5,470
5,060
4,163
9,633
5,684
36
3,300
5,720
3,913

56.5%
17.5%

40.6%
84.3%

(Unit: ¥mn)
Change
3,627
3,629
2,477
6,104
4,170
15
2,950
4,186
1,918

Balance sheet after consolidating Softbrain (Unit: ¥100mn)
Fusion Partners(Cash and deposits)(Softbrain shares)
Total assets(Interest-bearing debt)
Liabilities
Net assets
Softbrain balance sheet(Cash and deposits)
Total assets(Interest-bearing debt)
Liabilities
Net assets

End-July 2016
18
43
80
33
40
40
End-June 2016
27
47
1.5
16
31

Balance sheet after consolidation
End-July 2016
(Cash and deposits)
45
Total assets
113(Interest-bearing debt)
34
Liabilities
56
Net assets
40
Minority interest
17

Source: FISCO Ltd. from results briefing materials(2) Shareholder returns
Fusion Partners has a basic policy of paying a stable, continuous dividend while also strengthening
financial standing and retaining profits needed to develop the business. It plans to raise the dividend
for an eighth straight year with a ¥4 YoY hike to ¥18 in FY6/17 and to continue expanding profits andincreasing the dividend.

We encourage readers to review our complete legal statement on “Disclaimer” page.
10

■■Financial Conditions and Shareholder Returns

㼀㼞㼑㼚㼐㻌㼕㼚㻌㻰㼕㼢㼕㼐㼑㼚㼐㼟㻌㻼㼑㼞㻌㻿㼔㼍㼞㼑㼟(¥)

㻰㼕㼢㼕㼐㼑㼚㼐

㻯㼛㼙㼙㼑㼙㼛㼞㼍㼠㼕㼢㼑㻌㼐㼕㼢㼕㼐㼑㼚㼐㻞㻜㻚㻜

Fusion Partners, Co.

㻝㻤㻚㻜

㻝㻠㻚㻜

㻝㻡㻚㻜
㻝㻞㻚㻜

4845 Tokyo Stock ExchangeFirst Section㻝㻜㻚㻜

4-Oct.-16

㻡㻚㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻜㻚㻜

㻞㻚㻜㻌
㻤㻚㻜

㻣㻚㻜

㻲㼅㻢㻛㻝㻟

㻲㼅㻢㻛㻝㻠

㻲㼅㻢㻛㻝㻡

㻲㼅㻢㻛㻝㻢

㻲㼅㻢㻛㻝㻣㻱FISCO Ltd. Analyst
Yuzuru Sato

We encourage readers to review our complete legal statement on “Disclaimer” page.
11

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock
price and index information. The trademark and value of the “JASDAQ INDEX” are theintellectual properties of the Tokyo Stock Exchange, and therefore all rights to them belong
to the Tokyo Stock Exchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment
or any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content
of this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplicationsof the report, without the express written consent of FISCO, is strictly prohibited. Anytransmission, reproduction, distribution or transfer of the report or its duplications is also
strictly prohibited.
The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.