・Broadleaf ("the Company") promoted transition of current software sale to monthly subscriptioncontracts in order to prepare for the early and smooth transition to the cloud-based next-generationsoftware.
・For the 3Q cumulative period, transition to monthly subscription models has progressed as planned.
At the initial stage of transition, transition to monthly subscription models becomes a factor of decrease inrevenue.
・It became a decrease factor of 1.1 billion yen compared to the conventional method of sale for the 3Qcumulative period.
・The Company promoted transition to stock revenue by increasing the number of users of various monthlyservices and changing the software to monthly subscription contracts, which the Company has beenworking on from the past.
・The monthly sales ratio at the end of 3Q rose by 4.2 points year on year to 40.5%,and transition to stock revenue has progressed as planned.
・These initiatives not only stabilize the Company’s revenue in the medium to long term, but also areimportant measures to realize growth in revenue and enhance the quality of profits.・Revenue decrease by 363 million yen year on year to 15,181 million yen.
・Operating profit decreased by 522 million yen to 2,342 million yen.
・Profit attributable to owners of the parent decreased by 367 million yen to 1.5 billion yen.・Sale of devices including PCs decreased by 253 million yen.
・Among the above, 243 million yen was a decrease in reaction to the large-scale orders from mobile phoneshops in 1Q FY2020.
・Sale of supplies increased by 54 million yen partly due to the favorable business conditions for clients inautomotive sector.
・Monthly sales increased by 506 million yen in total.
・Sales of SaaS increased. Sales of additional services related to software increased as well due toacquisition of new clients.
・Sales of current software in the conventional form (lump-sum) also increased by 431 million yen.
・Regarding non-automotive software for travel agencies and other industries, harsh conditions continued.
Regarding automotive software, acquisition of new clients and additional purchase by clients remainedstrong.
・Regarding sale of automotive software, sales fell by 1.1 billion yen due to the transition to monthlysubscription models.
・If the transition to monthly subscription models had not been conducted and the Company continuedselling the software in the conventional form, revenue in the 3Q cumulative period would have increasedby 737 million yen.
・The Company promoted the transition to monthly subscription models in order to stabilize and enhancethe revenue in the future.・ 1.1 billion yen, which is the impact of the transition of software to monthly subscription models, isincluded in "PaaS/IaaS (basic)" of Platform and "By industry" of Application.
・"PaaS/IaaS(basic)" includes the basic functions of the software, which is included in the software fee.
・If a client buys software in a lump-sum, sales will be allocated to both "By industry" of Applicationand "PaaS/IaaS (basic)" of Platform.
・Therefore, if the software fee is not paid in a lump-sum due to the transition to monthly subscriptionmodels, the impact will appear on both sides.
・"Others" of Platform includes monthly sales of DX solutions, such as website creation tools andgroupware including Google Workspace, and the number of users is steadily increasing.
・In particular, sales of website creation tools have been growing significantly. They are currently beinginstalled at 690 companies.・Among revenue categories recognized on a monthly basis, "SaaS" of Platform continued to increasesteadily due to the progress in the transition to monthly subscription models.
・"PaaS/IaaS (basic)" consists of IT infrastructure service necessary for running the software andmonthly usage fee of database.
・This is charged to all clients apart from software fee, so the sales are proportional to the total number oflicense.
・The acquisition of new clients mainly from large-sized companies which increased the total number oflicense is a factor behind the increase in sales of "PaaS/IaaS (basic)."・"Support services and Others" includes monthly sales of DX solutions, such as website creation tools andgroupware.
・"EDI and Settlement" include measured-rate elements based on the number and the amount oftransactions, so the number of users tends to increase, although sales fluctuate depending the period.・Amortization expense of cloud services which includes the next-generation software increased by78 million yen.
・On the other hand, purchase cost decreased due to a decline in reaction to the large-scale orders of devices.
As a result, cost of sales decreased by 240 million yen in total.
・Regarding SG&A expenses, the Company extended and strengthened the operating infrastructure of thesoftware and various cloud services in preparation for the diversification of cloud services.
・The increase in personnel expenses is due to a temporal increase in legal welfare expenses related tostock compensation.
・Regarding advertising expenses, the Company strengthened its promotion activities through activecreation of content for online sales activities and holding of webinars, etc.
・SG&A expenses, etc. increased by 399 million yen as a result of upfront costs and temporal costs.
・Operating profit decrease by 522 million yen.・Regarding assets, intangible assets increased due to investment in the development of cloud servicesincluding ".c Series," which are the next-generation software.
・Regarding liabilities, short-term interest-bearing debts increased due to borrowings.
・Regarding total equity, retained earning increased due to recognition of profit which offset dividendpayout.・Cash flow from operating activities decreased year-on-year due to a decrease in profit before tax and anincrease in operating receivables and inventories.
・Cash used in investing activities increased since the Company invested in the development of cloudservices including ".c Series," which are the next-generation software.
・As a result, free cash flow decreased by 1,092 million yen to -916 million yen.
・Cash balance as of the end of the 3Q increased by 260 million yen due to short-term loans, etc.・From November, the Company will start offering the next-generation software to a broad range of clients.
However, since there are also back-orders of current software in the form of multi-year lump-sumcontract, the transition to monthly subscription models will gradually progress similarly to the 3Qcumulative period.
・Therefore, the impact of the transition to monthly subscription models is expected to be a decrease of600 million yen in 4Q and a decrease of 1.7 billion yen in the full-year.
・In 4Q, expenses for strengthening service quality are expected to rise.
・Specifically, in addition to preparing for the launch of a various cloud services, the Company will extendand strengthen its IT infrastructure in order to improve the availability, etc. of current and new-generationsoftware.
・Regarding uncertain factor for the results forecasts, there is a risk of delay in sale of software due to theshortage of PCs.
・Sale of industry-specific software is provided in bundles with PCs and recorded as sales at the timing ofacceptance inspection. Therefore, if it becomes difficult to purchase the scheduled number of PCs withinthe year, it will have an impact on software sales.
・This impact is expected to add up to 250 million yen in maximum during the three months of 4Q.・There is no change to results forecasts.
・Revenue will decrease by 812 million yen year on year to 20,350 million yen.
・Operating profit will decreased by 1,535 million yen to 2.6 billion yen.
・Profit attributable to owners of the parent will decrease by 825 million yen to 1,640 million yen.・Sale of devices including PCs are expected to decrease by 148 million yen.
・Among the above, 243 million yen is a decline in reaction to a large-scale orders for mobile phoneshops in 1Q FY2020.
・Increase in the number of software users and additional sale to clients are proceeding steadilythroughout the fiscal year.
・As a result, monthly sales linked to the total number of software license is expected to increase by661 million yen. Furthermore, revenue is expected to increase by 363 million due to new and additionalsale of software.
・On the other hand, regarding sale of automotive software, revenue is expected to decline by 1.7 billionyen due to a rise in the ratio of monthly subscription models.
・If the Company had not promoted the transition to monthly subscription models and continued to sell thesoftware in a conventional method, revenue for the current fiscal year would have increased.
Still, the Company will promote the transition to monthly subscription models in order to stabilize andenhance revenue in the future.・Reflecting the progress until 3Q, SaaS has been revised upward by 20 million yen.
In "PaaS/IaaS (basic)" category, Lump-sum has been revised upward by 100 million yen and Monthlyamount has been revised downward by 20 million yen.
"Devices" of Application has been revised downward by 100 million yen.
・Platform sales exceeded Application sales in FY2020, and the percentage of Platform sales isexpected to rise further in FY2021.
・In addition to SaaS, which are software sales in monthly subscription models, an increase in the numberof software users and support services contract ratio will drive the increase in Platform sales.
・Although the amount is still small, strong sales of various DX solutions are also expected to contribute tothe growth in Platform sales・On the other hand, Application sales are expected to be decrease.
・"By industry" is expected to decrease due to progress in the transition to monthly subscription models.
In addition, "Devices" is expected to decrease due to the remaining impact of the reactionary decline.
・Risk factor of PC shortage that adds up to 250 million yen in maximum may affect"PaaS/IaaS (basic)" Lump-sum of Platform and "By industry" and "Devices" of Application.・For FY2021, sales of "SaaS" will gradually increase due to the back-order of current software in the formof multi-year lump-sum sale.
・"EDI and settlement" are expected to remain flat due to the measured-rate elements.
Other items are expected to continue steady growth since they are stock revenue which are proportional tothe number of users and license.・Regarding cost of sales, the decrease is expected to be limited to 38 million yen due to further promotionof the strengthening of the backyard system, etc. in 4Q.
・Regarding SG&A expenses, the Company will continue the extension and strengthening of its ITinfrastructure in 4Q to prepare for the launch of various cloud services.
・These costs are positioned as upfront costs that will lead to revenue growth in the future.・Dividend forecast has not changed from the previous forecast.
・Divided is expected to be 4 yen per share for year-end dividend and 8 yen for annual dividend.
・Consolidated dividend payout ratio is expected to be 42.8%.・Broadleaf ("the Company") announced the detail of shareholder benefits for FY12/2021.
・The Company has entered into a business alliance with Toyota Finance Corporation.
It is planning to begin distribution of various financial service of the Toyota Group.
・As a first step, the Company plans to present electronic money on smartphone payment appTOYOTA Wallet as the shareholder benefits.・Until now, the next-generation software ".c Series" had been provided in advance to specific major clients.
・With the full-scale release of the product, the Company has begun sales activities to broad range of automaintenance shops and auto body shops.
・The next-generation software is a SaaS that operates on "Broadleaf Cloud Platform," which is theCompany’s unique cloud infrastructure.
・With the various competitive advantages described in the material, the Company plans to increase thenumber of user companies and user IDs.
・Currently, the Company has already received applications for the next-generation software from clients.
・However, since there are also back-orders for current software in the form of multi-year lump-sum salewithin the current fiscal year, the installation of the next-generation software to clients will begin inearnest from the next fiscal year onwards.・The Company will start in earnest the deployment of the auto finance business by using the collaborationwith Toyota Finance as an opportunity.
・Firstly, the Company will provide Toyota Finance‘s financial services to its clients such as car dealers,auto maintenance shops, and auto body shops.
・Toyota‘s automobile-related financial services, which used to be available only in Toyota’s affiliatedstores, will become available in its clients’ non-affiliated stores.
・Through the next-generation software provided by the Company, the Company will realize applicationsfor loans etc. that can be used when car owners are purchasing cars or undergoing vehicle inspections.
・Its clients will be provided with various services, from the preparation of estimation to settlement, as anone-stop service.
・For car owners, not only the number of available options for automobile-related loans increases, but alsoservices become more convenient because procedures can be carried out promptly.
・The Company is preparing to launch the service in next spring.