COMPANY RESEARCH AND ANALYSIS REPORTI’LL Inc.
3854
Tokyo Stock Exchange First Section

6-Nov.-2020
FISCO Ltd. Analyst

Masanobu Mizuta

FISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Business overview................................. ......................................................................................................
2. Overview of FY7/20 results.................... ......................................................................................................
3. FY7/21 outlook...................................... ......................................................................................................
4. Medium-term business plan.. .......................................................................................................................

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02
02
02

■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company overview......................................................................................................................................
2. History................................................... ......................................................................................................

03
04■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Overview of services.............................. ......................................................................................................
2. Main products........................................ ......................................................................................................
3. CROSS-OVER Synergy strategy..................................................................................................................
4. Characteristics and strengths......................................................................................................................
5. Measures to increase sales and expand profits. ..........................................................................................
6. Policy change..............................................................................................................................................
7. Risks, income characteristics, and measures. .............................................................................................

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07
08
08
11
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■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 13
1. Overview of FY7/20 results..........................................................................................................................
2. Trends by business segments................ ......................................................................................................
3. Financial conditions and management indicators. .......................................................................................

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15
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■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 18
1. FY7/21 outlook...................................... ......................................................................................................
2. Priority measures.........................................................................................................................................

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18■Medium-term growth strategy---------------------------------------------------------------------------------------------------------------------- 19
1. New three-year medium-term management plan. ........................................................................................
2. Growth strategies. . ................................. ......................................................................................................
3. Aims to be a leading company in DX assistance..........................................................................................
4. Medium-term growth momentum unchanged as a trend. ............................................................................

19
19
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■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 21■Information security------------------------------------------------------------------------------------------------------------------------------------------------ 22

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

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/█ Summary
Steep sales and profit increases in FY7/20, medium-term growth
momentum aimed at being a leading company in DX assistanceunchanged
I’LL Inc. <3854> (hereinafter, the Company) is a total system solutions company that supports improvement incorporate management capabilities with mid-tier and small/medium-size companies as its main customers. It
provides total system solutions using IT through a CROSS-OVER Synergy strategy of hybrid proposals from realworld and web perspectives of business resources to resolve the full range of management issues at mid-tier andsmall/medium-size companies that require effective IT utilization. It does so in such ways as mission-critical systemconstruction, system support maintenance, network construction, human resource education, web consulting, EC
site construction, mission-critical operation package software, multiple EC site integrated management software, andreal-world store and EC customer and loyalty point integrated management software. As a medium-term strategy,
it aims to be a leading company in Digital Transformation (DX)* assistance.
*	This is a concept that “wider IT usage changes people’s lives in a more positive direction in all aspects” and conversion ofexisting business models and business methods to digital technology creates new value.

1. Business overview
The Company’s business segments are the System Solutions Business with Aladdin Office Series, a mission-criticaloperation package software series, as the primary product and the Web Solutions Business which has the mainstaysof CROSS MALL, a software product for integrated management of multiple EC sites, and CROSS POINT, asoftware product for integrated management of real-world store and EC customers and loyalty points available
as cloud services. Main characteristics and strengths are (1) strong sales and inventory management know-how,(2) specialization in mid-tier and small/medium-size company markets, (3) ability to accommodate real-world andweb environments and high market share, (4) designated industry emphasis strategy and partner strategy, (5) highproprietary product and service ratios, (6) product ecosystem strategy that realizes total solutions, (7) operations
with engineers making up about 70% of employees, (8) omni-channel strategy in retail business, and (9) ability toaccommodate individual customization. The Company possesses robust offensive and defensive capabilities thanks
to its strength in hybrid proposals from real-world and web perspectives and is steadily increasing the number ofcustomer companies.
The Company changed its policy toward a profit-oriented strategy and is promoting better quality control andimproved productivity in development and customization, and expanding sales in recurring-type business as apriority measure. As a result, its gross profit margin on a companywide basis has trended upward from the recent
bottom of 38.0% in FY7/16 to reach 44.7% in FY7/20.

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01 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Summary

2. Overview of FY7/20 results
The Company reported FY7/20 consolidated results with ¥12,679mn in net sales (up 20.5% YoY), ¥1,700mn inoperating profit (up 78.8%), ¥1,715mn in ordinary profit (up 76.3%), and ¥1,189mn in profit attributable to ownersof parent (up 91.5%). Sales and each profit item posted all-time highs on steep gains beyond even upward-revised
targets. Recurring-type business steadily expanded due to rising customer DX needs. Additionally, the System
Solutions Business benefited from one-time special demand related to the consumption tax hike, introduction of areduced tax rate and completion of Windows 7 support. Key contributions in earnings were higher sales, expansionof recurring-type business, improved deal accuracy through integrated sales and development SE structure, andincreased quality and productivity.
3. FY7/21 outlook
In FY7/21 consolidated results forecasts, the Company targets ¥12,350mn in net sales (down 2.6% YoY), ¥1,200mn
in operating profit (down 29.4%), ¥1,226mn in ordinary profit (down 28.5%), and ¥784mn in profit attributable toowners of parent (down 34.0%). It expects lower sales and profits on non-recurrence of special demand seen in theprevious fiscal year. While it should still achieve sales growth on a basis excluding one-time demand considering
heightened customer DX needs, it seems that the Company sees this as a period of building up orders for FY7/22
due to temporary irregularity from the removal of such special demand. In expenses, the Company is factoring in
an increase in personnel costs driven by employee additions in 2H (new graduates being hired in spring 2021) andan increase in headquarter rent accompanying contract renewal. Nevertheless, FISCO thinks the Company hasmodest earnings upside room because of possible declines in business trip costs and socializing costs dependingon the COVID-19 situation.
4. Medium-term business plan
The Company delayed disclosure of new three-year medium-term management plan goals (FY7/21-23, rolling format
updated each year) because of higher uncertainty due to the COVID-19 outbreak. Meanwhile, as medium-term
growth strategies, it calls for (1) building a robust income foundation through stable growth in the System Solutions
Business (2) cultivating the Web Solutions Business as a second major income source, and (3) entering the field of
new business operation systems that incorporate new technologies. The Company promotes a unique CROSSOVER Synergy strategy and aims to build highly profitable operations through organic coupling of proprietarily
developed services and products that incorporate new technologies and provision of total solution packages withhigh added value to the market.
The Company also wants to be a leading company in DX assistance. FISCO thinks medium-term growth momentum
targeting a position as a DX assistance leader is unchanged due to healthy market conditions and an upward trend
in customer volume and rising profit margins resulting from improved quality and productivity and expansion ofrecurring-type business.
Key Points
Provides total system solutions through a CROSS-OVER Synergy strategy of hybrid proposals from real-world
and web perspectives• Projects temporary declines in sales and profit due to the end of special demand seen in FY7/21, though there
is upside room
• Medium-term growth momentum targeting a position as a DX assistance leader is unchanged•

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02 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Summary

Results trends
Net sales (left)(¥mn)

Operating profit (right)

(¥mn)

1,700

15,0001,800
12,35012,50010,522
10,000
7,896

8,621

12,679

1,500

1,200

9,412

1,200

951

7,500

900

5,000

376

432

526

600

2,500

300

0

0
FY7/16

FY7/17

FY7/18

FY7/19FY7/20FY7/21 (E)Source: Prepared by FISCO from the Company’s financial results█ Company overview
Delivers total system solutions to mid-tier and small/medium-size
companies
1. Company overview
The Company is a total system solutions company that supports improvement in corporate management capabilities
with mid-tier and small/medium-size companies as its main customers. It provides total system solutions using IT
through a CROSS-OVER Synergy strategy of hybrid proposals from real-world and web perspectives of businessresources to resolve the full range of management issues including personnel educational assistance at mid-tier andsmall/medium-size companies that require effective IT utilization, such as mission-critical system construction, system support maintenance, network construction, human resource education, web consulting, EC site construction,
mission-critical operation package software, multiple EC site integrated management software, and customer andloyalty point integrated management software for real-world stores and EC. It operates I’LL Career Colleges (ICCs)
in Osaka and Tokyo as educational entities that offer personal and corporate training.
At the end of FY7/20, the Company had ¥354mn in share capital and 25,042,528 shares (including 5,094 treasury
shares) in outstanding share volume (following the 2-for-1 stock split on November 1, 2019). Its main locations are
the Osaka Headquarters, Tokyo Headquarters, Nagoya Branch, Fukuoka Branch, Sendai Branch, and I’LL Matsue
Laboratory opened in Matsue (Shimane Prefecture) as a next-generation cloud R&D office in October 2017. Web
Base Co. has been a consolidated subsidiary since August 2011.

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03 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Company overview

2. History
The Company started as a sales company for office computers and subsequently moved into proprietary softwaredevelopment and sales, PC school operation, and other areas. It currently has the System Solutions Businessand Web Solutions Business (CROSS Business and Other Web Business) as segments and provides total systemsolutions to mid-tier and small/medium-size companies.
The Company was established in February 1991. It began its digital business design (DBD) business in January
2003 and established a unique strategy and entered the web business in November 2003. It released Aladdin Office,a proprietary sales management software, in October 2004 and started the web doctor business in August 2005.
The Company went public with a listing on the Osaka Stock Exchange (OSE) Hercules Market in June 2007
(subsequently listing on the OSE JASDAQ Market accompanying a merger of OSE markets in October 2010 andthen on the Tokyo Stock Exchange (TSE) JASDAQ Growth Market accompanying a merger of OSE and TSE markets
in July 2013). It changed to the TSE Second Section in June 2018 and moved to the TSE First Section in July 2019.
In March 2009, the Company released CROSS MALL, a cloud-based software product for integrated managementof multiple EC sites. In April 2013, it released CROSS POINT, a software product for integrated management of
real-world store and EC customers and loyalty points. In June 2017, it invested in Sivira Inc. and concluded a capitaland business alliance. In October 2017, it opened I’LL Matsue Laboratory in Matsue (Shimane Prefecture) as an
R&D office. The Company obtained ISO 27001 (ISMS) certification in September 2016.
Company history
Dates
February 1991
September 1993
April 1996
September 2000

Main items
Founded with the aim of selling office computers and developing computer software (Fukushima-ku, Osaka)
Moved the headquarters to Noda (Fukushima-ku, Osaka)
Started the PC school businessStarted the @VAL job openings and job seeker information site

July 2001

Opened the Tokyo Headquarters in Shimbashi (Minato-ku, Tokyo)

April 2002

Moved the headquarters to Kita-ku (Osaka)

January 2003

Started the digital business design (DBD) business

November 2003

Entered the web business

September 2004

Acquired privacy mark certification

October 2004

Released proprietary sales management software Aladdin Office

August 2005

Started the web doctor business

June 2007

Listed shares on the Osaka Stock Exchange’s Hercules Market

August 2008

Opened the Nagoya Branch in Sakae (Naka-ku, Nagoya)March 2009

Released CROSS MALL, an ASP service for integrated management of multiple EC sites

October 2009

Opened the East Osaka Branch in Higashi-Osaka (Osaka)

October 2010

Listed shares on the Osaka Stock Exchange’s JASDAQ Market accompanying a market merger by the Osaka Stock Exchange

December 2010

Moved the Tokyo Headquarters to Shibakoen (Minato-ku, Tokyo)

August 2011

Moved the Nagoya Branch to Nishiki (Naka-ku, Nagoya)August 2011

Acquired Web Base as a subsidiary with the purchase of all shares

September 2012

Opened the Fukuoka Branch in Hakata-ku (Fukuoka) and the Sendai Branch in Aoba-ku (Sendai)

April 2013

Released CROSS POINT, a software product for integrated management of real-world stores and EC customers and loyalty points

July 2013

Listed shares on the Tokyo Stock Exchange’s JASDAQ Growth Market accompanying the Osaka Stock Exchange and Tokyo
Stock Exchange merger

August 2015
November 2015
March 2016

Moved the Nagoya Branch to the Urban net Fushimi Building in Nishiki (Naka-ku, Nagoya)
Mission-critical system Aladdin Office for Foods won the 45th Food Industrial Technical Award
Moved the Osaka Headquarters to Grand Front Osaka Tower B in Kita-ku (Osaka)

September 2016

Mission-critical system Aladdin Office for Foods won the 19th Excellent Food Machine and Materials Prize

September 2016

Obtained ISO 27001 (ISMS) certification

May 2017

Ranked No.1 in Toyo Keizai Online’s White 500 Companies Best for Female Recruits

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04 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Company overview

Dates
June 2017
October 2017

Main items
Invested in Sivira and concluded a capital and business alliance
Opened I’LL Matsue Laboratory in Matsue (Shimane Prefecture) as a next-generation cloud R&D development office

June 2018

Changed the stock listing to the Tokyo Stock Exchange’s Second Section

July 2019

Changed the stock listing to the Tokyo Stock Exchange’s First Section

November 2019
March 2020
July 2020

Ended service by the @VAL job openings and job seeker information site
Introduced in the METI Kansai Bureau of Economy, Trade and Industry’s Interesting Kansai Company Examples – New Signs from
Company Visits – KIZASHII’LL services approved as tools covered by METI’s IT deployment subsidies 2020

Source: Prepared by FISCO from the Company’s website and releases█ Business overview
CROSS-OVER Synergy strategy of hybrid proposals from real-world
and web perspectives stands out
1. Overview of services
With mid-tier and small/medium-size companies as its main customers, the Company provides total system solutions
using IT through a CROSS-OVER Synergy strategy of hybrid proposals from real-world and web perspectives ofbusiness resources to resolve the full range of management issues including personnel recruitment and educational
assistance at mid-tier and small/medium-size companies that require effective IT utilization, such as mission-criticalsystem construction, system support maintenance, network construction, human resource education, web consulting, EC site construction, mission-critical operation package software, multiple EC site integrated management
software, and customer and loyalty point integrated management software for real-world stores and EC. It also
operates I’LL Career Colleges (ICCs) in Osaka and Tokyo.
The Company’s business segments are the System Solutions Business with Aladdin Office Series, a mission-criticaloperation package software series, as the primary product and the Web Solutions Business (CROSS Business andOther Web Business) with CROSS MALL, a software product for integrated management of multiple EC sites, andCROSS POINT, a software product for integrated management of real-world store and EC customers and loyalty
points, available as cloud services. Sales breakdown by segment in FY7/20 was the System Solutions Business at
88% and the Web Solutions Business at 12% (CROSS Business at 8%, Other Web Business at 4%). The mainstay
System Solutions Business and CROSS Business (under the Web Solutions Business) are expanding.

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05 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.

6-Nov.-2020

3854 Tokyo Stock Exchange First Section

https://www.ill.co.jp/ir/

Business overview

Business activities

Source: From the Company’s results overview

Sales trend by business(¥mn)
FY7/16

FY7/17

FY7/18

FY7/19FY7/20

System Solutions Business

6,890

7,496

8,111

9,094

11,111Web Solutions Business

1,005

1,124

1,301

1,427

1,568

(CROSS Business)

476

611

749

894

1,040

(Other Web Business)

529

513

551

533

527

7,896

8,621

9,412

10,522

12,679Total

Source: Prepared by FISCO from the Company’s results overview(1) System Solutions Business
The System Solutions Business designs and develops mission-critical systems and handles hardware maintenance, system operation support, network construction, and security management for customer companies
almost entirely on its own. It primarily supplies the Aladdin Office Series, a proprietary mission-critical operation
package software, with deployments at more than 5,000 companies and offers Aladdin Shop, a store management
system for the fashion industry, and Aladdin EC, a BtoB EC and web orders reception and placement systemthat accommodates web usage.
The Company aims to strengthen product capabilities and differentiate itself from rivals by developing systems
suited to the industries and business formats of customer companies and conducts flexible customization. Alongwith reinforcement of product variations designed for individual industries, it emphasizes recurring-style businessthat obtains revenue from maintenance and operational support after sales.
At the industry level, the Company is an approved supporting member of multiple cooperatives, including the
Kansainejikyoudoukumiai (Kansai Screw Cooperative) that approved it as the first supporting member from the IT
industry in 2006, and leverages industry connections in sales activities. It also enhances product value incorporating the industry’s latest information into its systems. Additionally, it operates I’LL Career Colleges that provide
educational services for human resource training at customer companies, such as IT and OA literacy education,engineer cultivation, credential acquisition assistance, and business skills.

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06 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Business overview(2) Web Solutions Business
The Web Solutions Business mainly consists of the CROSS Business (CROSS MALL, a software product for
integrated management of multiple EC sites, and CROSS POINT, a software product for integrated managementof real-world store and EC customers and loyalty points, available as cloud services).
The Other Web Business consists of BtoB EC assistance and web marketing assistance (corporate webpage
production and operation assistance, EC site construction assistance, customer business analysis and strategy
consulting, promotions, and updates and revisions based on log analysis results after webpage production). While
the Company halted services offered by the @VAL job openings and job seeker information site at the end of
November 2019, it has been providing CROSS STAFF, a cloud system that has been managing staff for staffing
firms since 2016. CROSS STAFF is a service that delivers a mix of customer website planning and development,
search engine marketing (SEM), and advertising as assistance for front-side “development of new customers atclients” and back-side operation to mid-tier and small/medium-size companies that need to effectively utilize theweb more than large companies. Profitability is high as a recurring-type service.
2. Main products
Below is a list of the Company’s main products and leading customer deployment examples.
(1) Mission-critical operation management system for small/medium-size companies Aladdin Office andstore management system Aladdin Shop (real-world)
These products support digitalization of operation management, including sales, inventory, production, and store
activities, and improved management capabilities by promoting workstyle reforms with better operational efficiency
and strengthening internal compliance. Leading deployment examples are shirt and necktie firm Maker’s Shirt
Kamakura, stocking and socks firm Fukusuke Corporation, ladies’ fashion firm ANAP <3189>, high-end leather
shoes firm Madras Inc., eco-friendly product importer and wholesale firm e.oct Inc., Nagoya specialty Tenmusu
firm Jiraiya, apparel and restaurant business operator under the DOG DEPT brand Net Work Co., Ltd., salt androck salt wholesale firm Japan Seasoning, Co., Ltd., and screw specialty trading firm Touyo Screw Co., Ltd.
(2) BtoB EC and web orders reception and placement system Aladdin EC (web)This product supports digitalization of orders reception and placement operation management between companies
and internally and stronger sales through workstyle reforms with better operational efficiency and differentiationfrom other companies. Leading deployment examples are food trading firm PRECO GROUP (group led by Preco
Foods Corporation), alcohol and alcohol-related product sales firms Suntory Marketing & Commerce Limited,
cosmetics and beauty and health devices and goods firm Comfort Japan Inc., babies and kids clothing firm
Kimuratan Corporation <8107>, commercial alcohol wholesale firm Shibata-ya Co., Ltd., dairy product andWestern confectionery firm Kurokawa Co., Ltd., bicycle firm RITEWAY (Riteway Products Japan), and restaurant,
home-delivered sushi, and catering firm Dream Dining Co., Ltd.
(3) Multiple EC site integrated management software CROSS MALL (web)This product handles integrated management of multiple internet shops, including EC mall sites and EC carts, andboosts sales through workstyle reforms with better operational efficiency and reinforced EC initiatives. Leading
deployment examples are craft beer production and sales firm YO-HO Brewing Co., Ltd., sporting goods sales
firm Murasaki Sports Co., Ltd., ladies’ fashion firm ANAP, men’s fashion EC business P.B.I. Co., Ltd. with theSilver Bullet brand, eco-friendly product importer and wholesale firm e.oct Inc., and Maruhisa, operator of internet
commerce kimono wholesaler Kimono Kyokomachi.

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07 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Business overview(4) Real-world store and EC customer and loyalty point integrated management software CROSS POINT(web)
This product supports integrated management of real-world store and EC customers and loyalty points throughdevelopment of a real-world store and EC omni-channel and use of a smartphone app, etc., as well as improved
sales via the omni-channel and expansion of the fan segment through enhanced branding. Leading deployment
examples are shirt and necktie firm Maker’s Shirt Kamakura, stocking and socks firm Fukuske Corporation,babies’, kids’, and mothers’ clothing firm BRANSHES, casual women’s clothing “w closet” firm Wears Inc.,
American vintage Ameri EC firm B STONE, ladies’ fashion EC “flower” operator Sola Of Tokyo Co., Ltd., and bag
and other apparel planning, production, and sales firm COO COMPANY LIMITED.
3. CROSS-OVER Synergy strategy
The Company is known for its CROSS-OVER Synergy strategy that presents hybrid proposals suited to customer
needs from real-world (System Solutions Business) and web (Web Solutions Business) perspectives in order topromote proposals to customers more effectively and achieve powerful synergies, and thereby supports stronger
management capabilities at mid-tier and small/medium-size companies. This strategy seeks realization of an “allone-stop” service that organically links mission-critical operation systems from the System Solutions Business that
support better operation efficiency and services from the Web Solutions Business that assists reinforcement of sales
capabilities and creation of stronger synergy effect.
Business model and CROSS-OVER Synergy

Source: From the Company’s results overview

4. Characteristics and strengths
The Company’s main characteristics and strengths are (1) strong sales and inventory management know-how,(2) specialization in mid-tier and small/medium-size company markets, (3) ability to accommodate real-world andweb environments and high market share, (4) designated industry emphasis strategy and partner strategy, (5) highproprietary product and service ratios, (6) product ecosystem strategy that realizes total solutions, (7) operations
with engineers making up about 70% of employees, (8) omni-channel strategy in retail business, and (9) ability toaccommodate individual customization.

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08 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Business overview(1) Strong sales and inventory management know-how
The Company has consistently provided sales and inventory management software that requires understandingof customer operations since its founding. It has extensive deployments and robust know-how in real-world andweb environments for manufacturing, wholesale, retail, and other business formats and industries and sales andinventory management with different management methods for each firm.
(2) Specialization in mid-tier and small/medium-size company markets
The Company has delivered proprietary services that specialize in mid-tier and small/medium-size company
markets since its founding. Small/medium-size companies with less than ¥5bn in annual sales account for roughly
90% of customer volume. In recognition of these efforts, the Company received the Special Award (Commerceand Information Policy Bureau Director-General's Award) in METI’s “IT Management Awards for Small and Medium
Enterprises 2011” in 2011. It also obtained certification as an “IT deployment assistance business” under the“services and other productivity improvement IT deployment assistance business” promoted by METI. Certified
services are Aladdin Office, Aladdin EC, CROSS MALL, CROSS POINT, and CROSS STAFF.
(3) Ability to accommodate real-world and web environments and high market share
An important advantage in competing with other firms is the Company’s ability to conduct proprietary development
and provision of real-world and web support that specializes in mid-tier and small/medium-size companies. The
Company is the only provider with market shares exceeding 10% in real-world and web environments.
Market advantage (positioning)

Source: From the Company’s results overview(4) Designated industry emphasis strategy and partner strategy
Another strength is the Company’s strategy of heavy focus on industries with many small/mid-size companies
in wholesale, retail, and manufacturing sectors. It forms operations with robust service and sales capabilities,
including development of industry-specific systems and establishment of expert teams for individual industries, andthereby boosts new customer acquisition capabilities. Specifically, it positions apparel and fashion, food, medical
equipment, screws and metal parts, and steel and non-ferrous metal industries as the five main industries. It seeks
to deepen market coverage with industry-specialized package software Aladdin Office Series and other products.

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09 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Business overview

A feature of the Company is that it is also highly trusted by partners in new deal introductions and sales cooperation (banks, system integrators, IT equipment manufacturers, consultants, accounting offices, etc.). Deals
introduced by partners are just over 40% of new orders (on a value basis) in the System Solutions Business.
(5) High proprietary product and service ratios
The Company promotes sales expansion mainly for its own products and services as an important aspect of the
management policy of building an income structure that does not depend on sales of other company products,
such as hardware, readily affected by price fluctuations. Its own products and services (software, operation,
maintenance, membership fees, etc.) hence have a large presence at about 70% of sales.
(6) Product ecosystem strategy that realizes total solutions
The product ecosystem strategy that consists of multiple product groups is a strength too. The Company develops
proprietary products and services that cover the internet field of building internet shops and related management
assistance services, the real-world store and headquarter field of store sales management and back-side inventory
managements, and the real-world and web integration field of integrated management of inventories and loyalty
points in real-world and EC operations. It is also capable of making hybrid proposals that combine various
products and realizes total solutions for customers.
(7) Operations with engineers making up about 70% of employees
Employee composition at end-July 2020 was engineers at 75%, salespeople at 15%, and general staff at 10%.
The Company places emphasis on post-system provision support too with an operation in which roughly 70% of
employees are engineers. It intends to continue strengthening technology division personnel with the aim of having
an organization that promotes cultivation of human resources who handle three roles (industry and operation
know-how, mission-critical systems, and web) and reinforcement of technology capabilities. Meanwhile, it has
adopted a policy to promote an environment and product development to overcome labor-intensive production.
(8) Omni-channel strategy in retail business
The retail industry has shown interest in recent years in omni-channel strategy that integrates real-world storesand web stores and realizes an environment and distribution paths in which customers are capable of purchasing
products in the same way from all channels (sales channels and customer contact points). Since the Company
has commercialized integration of real-world and web environments from its founding and accumulated businessknow-how and a track record that was not achieved in a short period of time, FISCO thinks it possesses anadvantage in advancement of omni-channel strategy in the retail industry that cannot be copied by other firms.
(9) Ability to accommodate individual customization
Given differences in operation implementation methods by industries and individual cases at mid-tier and small/medium-size companies, the Company adheres to a fundamental strategy of supporting individual customizationof software that meets diverse needs. Meanwhile, the number of companies capable of handling individual
customization of software has been trending lower in the software development market in recent years. This shift
has lowered orders competition and is boosting profit margin.
Customer volume is steadily increasing thanks to the Company’s robust offensive and defensive capabilities asa result of its advantages and strengths from the ability to make real-world and web proposals as a single entity.
The customer repeat rate is high too (98.2% in FY7/19).

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10 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Business overview

5. Measures to increase sales and expand profits
The Company promotes upgrades to existing products, service alliances with business partners in various areas,
and other strategies as part of its pursuit of higher sales and profits.
Measures to expand sales and profits

Source: From the Company’s results overview

The Company added a production management option to Aladdin Office in January 2020 as an updated versionof the existing product. With this capability, manufacturing customers can efficiently systematize production management functions that they require. It also provides functionality handled in customization work as an option. The
Company’s gross profit margin benefits from reduction of SE process steps and ensuring quality.
Regarding business partners and service alliances, Aladdin Office has a book ledger data collaboration with Rakus’<3923> web form issuance system “Rakuraku Meisai” (November 2019) and Aladdin EC interacts with SB Payment
Service’s payment service (November 2019) and OBIC Business Consultants’ (OBC) <4733> Bugyo Cloud (August2020).
CROSS MALL complies with Amazon’s <AMZN> EC operator product inventory storage and delivery agent service“FBA Multichannel Service” (June 2019), supports inventory collaboration with LOCONDO’s <3558> LOCONDO.jo,
STRIPE DEPARTMENT CO., LTD.’s smarby, ZenMarket’s ZenPlus, and Qoo10 PTE. LTD.’s (Singapore) Qoo10.com(September 2019 in all cases), supports orders, inventory, and product collaboration with Z Holdings Corporation’s<4689> EC mall PayPay Mall (November 2019), complies with the CMS function of Future Shop Co., Ltd.’s“futureshop” (March 2020), interacts with BASE’s <4477>BASE (June 2020), and interacts with Brain Wave Co.,
Ltd.’s Happy Logistics (July 2020).
In July 2020, the Company’s IT services received certification for METI’s IT deployment subsidies 2020 program.
Meanwhile, the Company phased out services offered by the @VAL job openings and job seeker information site in
November 2019 on likely shrinkage of the staffing market following changes in the legal system.

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11 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.

6-Nov.-2020

3854 Tokyo Stock Exchange First Section

https://www.ill.co.jp/ir/

Business overview

6. Policy change
The Company presented a policy of putting emphasis on profits from FY7/17 and has promoting improved quality
control in development and customization, enhanced productivity, expansion of recurring-type business, etc. aspriority measures since then. As a result, company-wide gross profit margin moved upward from the recent bottomof 38.0% in FY7/16 and reached an all-time high at 44.7% in FY7/20.
As ways of strengthening quality control and improving productivity in development and customization, the Company
implements comprehensive measures to boost quality and productivity and gross profit margin enhancement measures, such as reducing customization steps and preventing trouble ahead of time through reinforced collaboration
between sales and development teams at the orders stage. Since FY7/20, it integrated sales and support (systemsales and system support) with organizational change and further enhanced collaboration. Additionally, despite theCompany’s support for individual customization as a fundamental strategy, it intends to promote further improvementin the gross profit margin by expanding orders that do not require customization and shortening lead time withenhanced quality and productivity.
Sales from recurring-type business, such as system maintenance in the System Solutions Business and CROSS
MALL and CROSS POINT in the Web Solutions Business, are steadily expanding, and ratios in company-wide sales
and gross profit have been climbing too.
Recurring-type business results in FY7/20 were ¥4,588mn in net sales (up 15% YoY), ¥2,397mn in gross profit (up16%), and 52.2% gross profit margin (up 0.2ppt). Even with one-time decline in recurring-type business share due
to special demand impact in FY7/20, net sales continued to expand, and there was no change in profit contributions
leading an increase in total profit margin. The Company has established income operations in which gross profit
from recurring-type business covers a large portion of salary costs in overall fixed expenses and wants to covereven more personnel expenses and fixed costs from this business.

Results trend in recurring-type businessNet sales (left)

Gross profit (left)

Gross profit margin (right)

(¥mn)
5,000

47.7%

51.7%

50.3%

52.0%

52.2%

60.0%

4,000

48.0%

3,000

36.0%
4,588

2,000
3,486

3,096

2,680
1,000
1,278

1,801

1,557

24.0%

3,992

2,073

2,397

0

0.0%
FY7/16

FY7/17

FY7/18

FY7/19FY7/20Source: Prepared by FISCO from the Company’s results overview



12.0%



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12 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Business overview

7. Risks, income characteristics, and measures
System development-related companies confront fluctuation in profit margin from profitability of individual development projects. General income risks are longer development periods accompanying increasingly larger projects,
increase in personnel costs and outsourcing expenses, individual projects becoming unprofitable and other factors.
In the Company’s case, however, since it mainly develops and sells package software, there is less risk of incurring
losses on individual projects compared to system development companies that primarily handle consigned development work.
The Company encounters profit margin setback from increase in process steps and software bugs in development
and customization because it pursues differentiation from rivals through provision of flexible customization suited tocustomers. It is addressing this challenge with the policy of stronger emphasis on earnings described above. Specificmeasures are efforts to reduce customization process steps and prevent trouble ahead of time by strengthening
collaboration between sales and development and initiatives to boost quality and productivity with improvementsin the workplace environment.
Another income feature at system development-related companies is volatility in quarterly results due to booking
sales from large projects and timing of customer inspections. The Company (July fiscal year) similarly tends tobook higher sales and profits in 2H (February to July) than in 1H (August to January). To adjust this tendency, it
has been trying to rectify unevenness in sales recognition timing by spreading out orders and increasing orders
for maintenance and other continuous services. It expects gradual progress in standardizing income recognition.
In FY7/20, meanwhile, 1H was stronger because of one-time special demand from the consumption tax hike andintroduction of a reduced tax rate in October 2019 and completion of Windows 7 support in January 2020. SG&A
expenses are typically higher in 4Q due to entry of new employees and incentives.
While personnel recruitment is an issue for system development companies, the Company is generally smoothly
hiring and training engineers thanks to successes with workstyle reforms and workplace environment improvement
measures. It also strives to eliminate fluctuations in development efficiency by actively hiring engineers throughout
the year with the aim of maintaining engineer technology levels at a certain threshold.

█ Results trends
Special demand contributed to steep sales and profit increases in
FY7/20
1. Overview of FY7/20 results
The Company reported FY7/20 consolidated results with ¥12,679mn in net sales (up 20.5% YoY), ¥1,700mn inoperating profit (up 78.8%), ¥1,715mn in ordinary profit (up 76.3%), and ¥1,189mn in profit attributable to ownersof parent (up 91.5%). Sales and profits posted all-time highs on steep gains beyond even upward-revised targets
from December 6, 2019 (¥12,342mn in net sales, ¥1,519mn in operating profit, ¥1,536mn in ordinary profit, and¥1,008mn in profit attributable to owners of parent).

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13 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.

6-Nov.-2020

3854 Tokyo Stock Exchange First Section

https://www.ill.co.jp/ir/

Results trends

FY7/20 highlights

N e t s a l es(¥mn)
15,00012,6799,412

10,00010,522

Operating profit

(¥mn)
2,000

1,700

1,500
1,000

5,000

951

526

500

0

0
FY7/18

FY7/19FY7/20FY7/18

Ordinary profit

(¥mn)

1,715

2,000
1,500

1,189

1,200

600

546

500

FY7/20

Profit attributable to owners of
p a r ent

900

972

1,000

(¥mn)

FY7/19

621
336

300

0

0
FY7/18

FY7/19FY7/20FY7/18

FY7/19FY7/20Source: Prepared by FISCO from the Company’s results overviewIn segment trends, the Systems Solutions Business sales rose 22% YoY and the Web Solutions Business sales wereup 10%. Both segments posted higher sales. Recurring-type business steadily expanded due to rising customer DX
needs. Additionally, the System Solutions Business benefited from one-time special demand from the consumption
tax hike and introduction of a reduced tax rate in October 2019 and completion of Windows 7 support in January
2020.
The COVID-19 outbreak did not have much impact on an overall basis. In the System Solutions Business, despite
curtailment of face-to-face sales activities in April and May during the state of emergency declaration period, theCompany restored normal sales operations from June and inquiries are moving upward. The CROSS Business,meanwhile, handles the entire process from opportunity development to the contract over the web.
Key contributions in earnings were higher sales, expansion of recurring-type business, improved deal accuracy
through a structure integrating sales and development SE, and increased quality and productivity. Gross profit
increased 28.1% YoY to ¥5,664mn, and gross profit margin climbed 2.7ppt to 44.7%. SG&A expenses were up
14.2% to ¥3,964mn, though the SG&A expenses ratio dropped 1.7ppt to 31.3%. Despite higher personnel expenses
accompanying increases in headcount and incentives and expanded advertising and promotional costs driven by
reinforced sales promotion measures, operating profit, ordinary profit, and profit attributable to owners of parent
were sharply higher as increased gross profit more than absorbed these impacts.
Looking at the quarterly level, sales and profits improved significantly in 1Q FY7/20 thanks to special demand, while
non-recurrence of special demand that started a year earlier caused YoY declines of 17% in net sales and 11% ingross profit in 4Q.

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14 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.

6-Nov.-2020

3854 Tokyo Stock Exchange First Section

https://www.ill.co.jp/ir/

Results trends

Results trend (quarterly)
Net sales

Gross profit

（¥mn）
5,000

3,988
4,000
3,193
3,000

2,375

2,356

3,080

2,969

2,641

2,596
1,827

2,000
1,022

1,103

2Q

3Q

986

1,310

1,309

1,365

2Q

3Q

1,162

1,000
0
1Q

4Q

1Q

FY7/194Q

FY7/20Source: Prepared by FISCO from the Company’s results overview

2. Trends by business segments(1) System Solutions Business
The System Solutions Business reported ¥11,111mn in net sales (up 22% YoY) and ¥4,951mn in gross profit(up 30%). Main sales drivers were increase in customer DX needs and special demand from the consumption
tax hike and introduction of a reduced tax rate and completion of Windows 7 support. Earnings benefited fromhigher sales, enhanced profitability on build-up of recurring-type sales, improved deal accuracy through integrated
sales and development SE structure, and reduction of customization process steps via addition of the production
management option feature, etc. Gross profit margin improved 2.8ppt to 44.6%, rising on the success of measuresplacing more emphasis on earnings.

Trends in System Solutions Business results
Net sales (left)

Gross profit (left)

Gross profit margin (right)（¥mn）
12,500

44.6%
40.8%

10,000

50.0%

41.8%

38.1%

40.0%

7,500

30.0%
11,111

5,000
7,496
2,500
2,858

20.0%

9,094

8,111

3,309

3,805

4,951

0

10.0%

0.0%

FY7/17

FY7/18

FY7/19FY7/20Source: Prepared by FISCO from the Company’s results overview

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15 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Results trends(2) Web Solutions Business
The Web Solutions Business reported ¥1,568mn in net sales (up 10% YoY), including the CROSS Business at¥1,040mn (up 16%) and the Other Web Business at ¥527mn (down 1%), and ¥713mn in gross profit (up 16%),
including the CROSS Business at ¥569mn (up 23%) and the Other Web Business at ¥143mn (down 6%). Sales
sustained double-digit growth as gains in CROSS MALL and CROSS POINT more than offset decline related toexiting @VAL service business. The CROSS Business’s gross profit margin rose 2.7ppt to 54.7%, and the Web
Solutions Business’s gross profit margin was 45.5%.

Trends in Web Solutions Business results
Net sales (left)

Gross profit (left)

Gross profit margin (right)

（¥mn）
2,000

44.7%

45.5%

43.2%

41.9%

50.0%

1,600

40.0%

1,200

30.0%

800
1,124
400
471

617

582

20.0%

1,568

1,427

1,301

713

0

10.0%

0.0%
FY7/17

FY7/18

FY7/19FY7/20Source: Prepared by FISCO from the Company’s results overview
3. Financial conditions and management indicators
In financial standing, total assets increased ¥938mn YoY to ¥7,585mn and total liabilities rose ¥76mn to ¥3,871mn
at end-FY7/20. In total assets, cash and cash equivalents increased. In liabilities, borrowings decreased. Total net
assets were up ¥862mn to ¥3,713mn due to increased retained earnings. The equity ratio rose by 6.1ppt to 49.0%.
FISCO thinks the Company has sound financial standing based on these results.

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16 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Results trends

Main management indicators(¥mn)
FY7/16

FY7/17

FY7/18

FY7/19FY7/20Net sales

7,896

8,621

9,412

10,522

12,679

Cost of sales

4,894

5,291

5,519

6,099

7,014

Gross profit

3,001

3,329

3,892

4,422

5,664

38.0%

38.6%

41.4%

42.0%

44.7%

Gross profit margin
SG&A expenses
SG&A expenses ratio

2,625

2,897

3,366

3,471

3,964

33.2%

33.6%

35.8%

33.0%

31.3%

376

432

526

951

1,700

4.8%

5.0%

5.6%

9.0%

13.4%

Non-operating profit

17

28

24

25

23

Non-operating expenses

2

4

4

3

8

392

455

546

972

1,715
13.5%

Operating profit
Operating profit margin

Ordinary profit

5.0%

5.3%

5.8%

9.2%

Extraordinary income

80

-

-

2

-

Extraordinary losses

0

0

0

0

2

Profit before income taxes

472

455

545

975

1,713

Total income taxes

224

155

208

354

523

Profit attributable to owners of parent

247

299

336

621

1,189

3.1%

3.5%

3.6%

5.9%

9.4%

142

370

355

654

1,175

Ordinary profit margin

Profit attributable to owners of parent margin
Comprehensive income

4,981

5,565

5,719

6,646

7,585

(Current assets)

3,485

4,076

3,936

4,409

4,993

(Non-current assets)

1,495

1,488

1,783

2,236

2,591

3,083

3,410

3,321

3,794

3,871

(Current liabilities)

1,593

1,798

1,781

2,335

2,366

(Non-current liabilities)

1,490

1,611

1,539

1,459

1,505

1,897

2,155

2,397

2,851

3,713

2,018

2,205

2,429

2,850

3,727

354

354

354

354

354

25,046,856

25,046,856

25,042,576

25,042,528

25,037,434

Net income per share (yen)

9.89

11.98

13.45

24.81

47.55

Net assets per share (yen)

75.77

86.06

95.74

113.87148.33

Total assets

Total liabilities

Total net assets(Shareholders’ equity)
Share capital
Total number of outstanding shares at period end
excluding treasury stock (shares)

Dividend per share (yen)Equity ratio

4.50

4.50

5.00

8.00

15.00

38.1%

38.7%

41.9%

42.9%

49.0%

Cash flows from operating activities

519

920

217

1,006

2,088

Cash flows from investing activities

-601

-287

-451

-600

-587

Cash flows from financing activities

627

-21

-332

-420

-663

1,326

1,938

1,371

1,356

2,194

Cash and cash equivalents at end of period

Note: Values per share retroactively revised for 2-for-1 stock splits on August 1, 2018 and November 1, 2019 respectively.
Source: Prepared by FISCO from the Company’s financial results

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17 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/█ Outlook
Projects temporary declines in sales and profit in FY7/21 basedon the end of special demand, though there is the possibility of
improvement
1. FY7/21 outlook
In FY7/21 consolidated results outlook, the Company targets ¥12,350mn in net sales (down 2.6% YoY), ¥1,200mn
in operating profit (down 29.4%), ¥1,226mn in ordinary profit (down 28.5%), and ¥784mn in profit attributable toowners of parent (down 34.0%). Additionally, in 1H FY7/21 consolidated results outlook, it targets ¥6,467mn in net
sales (down 7.1% YoY), ¥792mn in operating profit (down 35.4%), ¥802mn in ordinary profit (down 34.9%), and¥521mn in profit attributable to owners of parent (down 35.7%).
FY7/21 outlook(¥mn)
FY7/201H

FY7/21 (E)Change (%)

Full year

Net sales

6,957

12,679

6,467

-7.1%

12,350-2.6%

Operating profit

1,226

1,700

792

-35.4%

1,200-29.4%

Ordinary profit

1,232

1,715

802

-34.9%

1,226-28.5%

809

1,189

521

-35.7%

784-34.0%

32.37

47.55

20.81

-

31.35

-

Profit attributable to owners of parent
Net income per share (yen)Full year

1H

Change (%)

Source: Prepared by FISCO from the Company’s financial results

The Company projects lower sales and profits in 1H and the full year mainly because of non-recurrence of special
demand from the consumption tax hike and introduction of a reduced tax rate and completion of Windows 7 support
in the previous fiscal year. While there is no change in sales growth on a basis excluding special demand considering
heightened customer DX needs, the Company sees this as a period of building up orders for FY7/22 becauseof temporary delay in orders on curtailment of face-to-face sales in April and May under the state of emergency
declaration in response to the COVID-19 outbreak. In expenses, the Company is factoring in increase in personnel
costs driven by employee additions in 2H (new graduates being hired in spring 2021) and increase in headquarter
rent accompanying contract renewal.
Impact of the COVID-19 outbreak, meanwhile, has been limited, and inquiries appear to be healthy again withresumption of face-to-face sales activities from June. At the quarterly level, the Company expects restoration of
positive sales growth (YoY) in 4Q. FISCO thinks the Company has modest earnings upside room because of possible
declines in budgeted business trip costs and socializing costs depending on the COVID-19 situation.
2. Priority measures
Due to likely increase in DX needs for operation standardization and streamlining and pick-up in IT investments
utilizing subsidies as impacts of the COVID-19 outbreak, the Company intends to promote recruitment of new
customers using the web, customer development in a new channel by holding webinars, expanded sales of Aladdin
EC, the BtoB EC and web orders reception and placement system that eliminates fax services, wider sales of CROSS
MALL integrated management software for operating multiple EC sites, reinforcement of package software features,and improvement in SE productivity with customized part templates.

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18 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

OutlookFurthermore, the Company plans to continue implementing telework internally (sustained reduction of the company
attendance rate by 30%) for the rest of this year. It hopes that this initiative will lead to standardizing web meetingsand cutbacks in traveling time.
In social contribution activities, the Company was a sponsor of MOVE FES. 2019 held on December 22, 2019.
This is an event by WITH ALS General Incorporated Association that promotes awareness of amyotrophic lateralsclerosis (ALS), a designated intractable disease. The Company intends to continue to actively promote corporatesocial responsibility (CSR).

█ Medium-term growth strategy
Medium-term growth direction aimed at being the leading company
in DX assistance is unchanged
1. New three-year medium-term management plan
The Company delayed disclosure of goals for the new three-year medium-term management plan (FY7/21-FY7/23;
rolling plan updated once a year) because of higher uncertainty with the COVID-19 outbreak. It intends to disclose
goals once it is possible to calculate estimates after conducting a necessary review of the likely impact of the
COVID-19 outbreak. Goals for FY7/22 in the plan disclosed on September 6, 2019 were ¥13,200mn in net sales,¥2,000mn in operating profit, ¥2,026mn in ordinary profit, and ¥1,338mn in profit attributable to owners of parent.
2. Growth strategies
Despite delaying disclosure of new goals, as medium-term growth strategies, it calls for (1) building a robust income
foundation through stable growth in the System Solutions Business (2) cultivating the Web Solutions Business asa second major income source, and (3) entering the field of new business operation systems that incorporate newtechnologies. The Company promotes a unique CROSS-OVER Synergy strategy and aims to build highly profitable
operations through organic coupling of proprietary services and products that incorporate new technologies andprovision of total solution packages with high added value to the market.
(1) Building a robust income foundation through stable growth in the System Solutions Business
The Company is accelerating reinforcement of various industry package products, expansion of its customer basein five specialization industries (apparel and fashion, food, medical equipment, screw and metal parts, steel andnon-ferrous industry), opening new sales locations and widening commercial zone areas, and development of the
ERP market and BtoB EC market. In customer segment expansion, while wholesale business had been the main
segment previously, it is pursuing additions of manufacturing, import, and retail customers in the five specializationindustries utilizing functions and know-how cultivated in industry-specific standard package development for the
Aladdin Office mission-critical operation management system.
(2) Cultivating the Web Solutions Business as a second major income source
The Company intends to promote reinforcement of back-side assistance for the BtoB EC market through development of next-generation cloud services and formulation of a new fee plan.

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19 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/

Medium-term growth strategy(3) Entering the field of new business operation systems that incorporate new technologies
The Company plans to promote development of services utilizing blockchain and artificial intelligence (AI).
3. Aims to be a leading company in DX assistance
The Company also wants to be a leading company in DX assistance and intends to promote development of
next-generation cloud services and other services using blockchain technology and AI technology.
(1) Utilizing blockchain technology through a capital and business alliance with Sivira
The Company invested in Sivira and formed a capital and business alliance in June 2017. Utilizing Sivira’s proprietary blockchain technology Broof, it is jointly enhancing security in cloud services, opening up inventory data,and planning, developing, and selling an open platform that extends across companies, stores, and services. In
August 2017, it started operation of Sivira’s proprietary blockchain technology Broof in the CROSS Series, its
operation management cloud service.
(2) Next-generation cloud R&D office I’LL Matsue Laboratory
The Company opened I’LL Matsue Laboratory in Matsue (Shimane Prefecture) as a next-generation cloud R&D
office and began full-fledged operations in October 2017. Part of the lab is also available as “IT interaction
space.” Matsue is a “sacred city” for engineers as a city promoting use of “Ruby,” the first programming language
developed in Japan approved as an international standard. The Company aims to achieve high quality more
efficiently in development of the next-generation version of existing cloud service “CROSS SERIES” by uniformly
adopting Ruby, a programming language known for its simplicity and high productivity and flexibility, as thedevelopment language.
(3) Actively investing in R&D for services utilizing AI
Anticipated trends in the market environment are growing IT investments toward realizing DX, rising IT investments
in ERP and other products as part of promoting workstyle reforms (boosting productivity), expansion of the EC
market, and expansion of blockchain, AI, and other new technology markets. The Company is promoting R&D
activities for data analysis and automated operations utilizing AI in operation system areas as an initiative toboost competitiveness in this market environment. It also plans to build a proprietary CROSS-OVER platform thatincorporates know-how cultivated in mission-critical systems and cloud services and further accelerate mutual
collaboration between mission-critical systems and cloud services.
4. Medium-term growth momentum unchanged as a trend
Market conditions are healthy, and customer volume is increasing. Profit margin is rising too on improved quality
and productivity and expansion of recurring-type business. FISCO hence thinks medium-term growth momentum
targeting a position as a DX assistance leader is unchanged, despite the prospect of sales and profit declines in
FY7/21 on one-time impact from non-recurrence of special demand.

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20 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/█ Shareholder return policy
Targets dividend payout ratio in the 30% range and a stable dividend
The Company’s basic policy is to pay a dividend based on results while comprehensively considering things likemanagement and the balance between retained earnings for maintaining and strengthening its competitiveness in
the industry and return on equity (ROE) when allocating profits. The Company targets a dividend payout ratio in the
30% range and a stable dividend.
Based on the Company's basic policy, it intends to pay an annual dividend of ¥15.00 per share in FY7/20 (¥7.00
interim, ¥8.00 year-end). Taking into account a 2-for-1 stock split on November 1, 2019 and retroactively calculating
the annual dividend of ¥16.00 per share in FY7/19 as ¥8.00 per share, the dividend for FY7/20 increased by ¥7.00
per share for a payout ratio of 31.5%.
The Company forecasts an annual dividend per share of ¥12.00 (¥6.00 interim, ¥6,00) for FY7/21, ¥3.00 lower YoY,
for a dividend payout ratio of 38.3%. It can be expected to increase dividends and improve shareholder returns inconjunction with expanded earnings.

Dividend per share and dividend payout ratio
Dividend per share (left)

（¥）
20.00

37.6%

Dividend payout ratio (right)
38.3%

37.2%
32.3%

40.0%

31.5%

15.00

30.0%

10.00

20.0%
15.00

12.00

5.00

10.0%

8.00
4.50

5.00

FY7/17

FY7/180.00

0.0%

FY7/19FY7/20FY7/21 (E)Source: Prepared by FISCO from the Company’s financial results

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

21 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

I’LL Inc.
3854 Tokyo Stock Exchange First Section

6-Nov.-2020
https://www.ill.co.jp/ir/█ Information security
Amid concerns about large-scale cyberattacks and rising interest in corporate information security measures,
the Company views information security and information protection as one of its most important management
issues. In its provision of services that assist management operations at customers as part of efforts to strengthen
management and sales foundations, the Company defines internal rules related to information system operationand handling of confidential information and promotes information security measures.
In September 2016, the Company obtained international standard ISO27001 certification for its information security
management system (ISMS). It also has a dedicated department related to information security within the company,
issues warnings to all employees utilizing the internal portal site, and rigorously manages the internal firewall.

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

22 22

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
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mentioned in this report may increase or decrease in value or lose their value due to influence
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subject to change without notice. FISCO is not obligated to update this report.
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may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-11-9 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (Financial information Dept.)
Email: support@fisco.co.jp