COMPANY RESEARCH AND ANALYSIS REPORTI’LL Inc.
3854
Tokyo Stock Exchange Prime Market

1-May.-2024
FISCO Ltd. Analyst

Masanobu Mizuta

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

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Forming a virtuous cycle spiral in which increased productivity leads to higher gross profit margin. ...........

01

2. Net sales and profit both increased in 1H FY7/24, while the interim dividend, dividend payout ratio,
and DOE were upwardly revised. . .......... ......................................................................................................

02

3. Maintained outlook for double-digit growth in operating and ordinary profit in FY7/24,
with a possibility for even higher upside. .....................................................................................................

02

4. Aiming for operating profit margin in the 30% range over the long term......................................................

03

5. FISCO applauds the upward trend in profitability and is focusing on growth acceleration through BX. .......

03■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 04
1. Company overview......................................................................................................................................

04

2. History................................................... ......................................................................................................

05■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 07
1. Overview of services.............................. ......................................................................................................

07

2. Main products..............................................................................................................................................

08

3. “CROSS-OVER Synergy” strategy...............................................................................................................

10

4. Characteristics and strengths......................................................................................................................

10

5. Forming a virtuous cycle spiral in which increased productivity leads to higher gross profit margin. ...........

12

6. Strengthen collaborations with business partners........................................................................................

14

7. Risk factors as well as issues and countermeasures . .................................................................................

15■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 15
1. Overview of results for 1H FY7/24...............................................................................................................

15

2. Trends by business segments................ ......................................................................................................

17

3. Financial condition ......................................................................................................................................

17■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 18• Outlook for FY7/24 results...........................................................................................................................

18■Growth strategy----------------------------------------------------------------------------------------------------------------------------------------------------------- 19
1. Three-year medium-term (rolling) plan... ......................................................................................................

19

2. Shareholder return policy.............................................................................................................................

21

3. Sustainability management..........................................................................................................................

22

4. FISCO’s perspective.............................. ......................................................................................................

25

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

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/■ Summary
Net sales and profit both increased significantly and reached record
highs in 1H FY7/24, while the interim dividend was upwardly revised
I’LL Inc. <3854> (hereafter, also “the Company”) is a total system solutions company that helps mid-tier and small/medium-size companies enhance their management capabilities. The “CROSS-OVER Synergy” strategy is theCompany’s base strategy, and it supports DX*1 of companies through an IT-driven convergence of real-world andonline capabilities. The Company aims to support value creation through the industry’s first*2 “BX,”*3 a new concept
to support backyard*4 operations, which are becoming increasingly complex day by day, thus not limiting itself tosupporting efficiency gains through DX.
*1	DX is an abbreviation of digital transformation, and represents the idea that “wider IT usage changes people’s lives in amore positive direction in all aspects” and that the conversion of existing business models and business methods throughdigital technology creates new value.
*2	Based on Company research*3	BX is an abbreviation of backside transformation. It is a concept in which value creation is realized through transformationfrom the backside based on the Company’s proprietary CROSS-OVER Synergy strategy.
*4	The term “backyard” refers to the people, teams and sites that handle order processing, inquiry responses, inventory
management, product registration and other such tasks behind the scenes at companies, online stores, and real-world
stores.

1. Forming a virtuous cycle spiral in which increased productivity leads to higher gross profit margin
The Company operates a System Solutions Business centered on the mission-critical operation management
system Aladdin Office series, as well as an Online Solutions Business focused on CROSS MALL, a cloud-based
software product for integrated management of multiple e-commerce websites, and CROSS POINT, a software
product for the integrated management of customer and loyalty points at both real-world stores and e-commercesites. In addition, the backyard platform BACKYARD™, which was released in December 2022 as a next-generation
service of CROSS MALL, was launched in November 2023. In order to improve profitability, the Company is working
to improve productivity and expand recurring net sales through an integrated production and sales system. The
strategy is to form a virtuous cycle spiral that will lead to higher gross profit margins through overall improvements
in quality and productivity, such as reducing customization man-hours and preventing problems before they arise
by strengthening collaboration between sales and development at the order receiving stage. As a result, sales areon the rise and the gross profit margin is increasing.

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01 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Summary

2. Net sales and profit both increased in 1H FY7/24, while the interim dividend, dividend payout ratio, and
DOE were upwardly revised
In 1H FY7/24 consolidated results, net sales increased 12.9% year on year (YoY) to ¥8,571mn, operating profit
rose 34.9% to ¥2,238mn, ordinary profit was up 34.5% to ¥2,249mn, and profit attributable to owners of parent
increased 34.8% to ¥1,489mn. Net sales and profit both increased significantly and reached record highs, surpassing
initial forecasts. The interim dividend for FY7/24 was upwardly revised. The System Solutions Business delivered
sustained high growth as it pushed ahead with an integrated production and sales system and partner strategy,
in addition to benefiting from high levels of DX demand at mid-tier and small/medium-size companies dealing withacute personnel shortages. The Online Solutions Business also performed strongly. The gross profit margin rose 2.1
percentage points (pp) to 56.6%. The main contributing factors were an improvement in the project turnover rate due
to an improvement in product quality and enhancement of options, as well as growth in recurring net sales. SG&A
expenses rose 5.6%, but the SG&A expenses ratio declined 2.1pt to 30.5%. Although personnel costs, advertisingexpenses and other expenses increased, the rate of increase in the SG&A expenses ratio was far lower than therate of increase in net sales, thanks in part to a teleworking and work-from-home system that curtailed office rent
increases. As a result, the operating profit margin rose 4.2pt to 26.1%. In addition, the Company has increased its
dividend policy targets to a dividend payout ratio of at least 35% and a DOE of at least 10%.
3. Maintained outlook for double-digit growth in operating and ordinary profit in FY7/24, with a possibility foreven higher upside
For FY7/24 consolidated results, the Company has maintained its initial forecasts, with net sales forecast to increase
6.1% from FY7/23 to ¥16,900mn, operating profit to grow 12.8% to ¥4,000mn, ordinary profit to rise 12.8% to¥4,026mn, and profit attributable to owners of parent to increase 8.5% to ¥2,683mn. Although developments
related to the end of Windows 10 support planned for 2025 will not have as much of an impact as a surge indemand, the Company expects that demand for business DX will remain at a high level. In terms of net sales, theSystem Solutions Business and the Online Solutions Business are both expected to grow. On the profit front, SG&A
expenses are expected to increase as the Company continues to actively invest in human resources, development
and sales promotion, but this is expected to be absorbed through productivity improvements and higher gross profit
from recurring business, along with other factors. The profit growth rate is expected to slow down in comparison
to FY7/23, but this considers factors such as a recoil from the large growth in FY7/23 and a sense of uncertainty,
as well as temporary cost increases due to the parallel operation of both the CROSS MALL and BACKYARD™
platforms, so this forecast seems quite conservative. The business environment is favorable, and the Company’s
achievement rate against forecasts in 1H was 50.7% for net sales, 56.0% for operating profit, 55.9% for ordinary
profit, and 55.5% for profit attributable to owners of parent. Profit enhancement measures centered on the integrated
production and sales system are delivering results at an accelerated pace. Considering these and other factors, we
at FISCO believe that there is a high possibility that the Company’s results will exceed its forecasts.

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

02 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Summary

4. Aiming for operating profit margin in the 30% range over the long term
For its medium-term management plan, the Company’s policy is to adopt a rolling plan in which it can revise thetargets at any time, such as to respond to rapid changes to its business environment. Based on this policy, in
September 2023, the Company formulated a three-year medium-term management plan with FY7/26 as the final
year. Under this plan, the Company’s forecast for FY7/26 is net sales of ¥20,400mn, gross profit of ¥11,728mn,
gross profit margin of 57.5%, operating profit of ¥5,400mn, operating profit margin of 26.5%, and profit attributableto owners of parent of ¥3,616mn. These figures represent upward revisions for net sales and profit compared to theprevious three-year plan. Furthermore, the Company has set an operating profit margin of 30% as a long-term goal,
and has positioned this plan as a three-year period to solidify its operating profit margin at over 20%. As a basic
policy, the Company has set an internal goal of double-digit growth for both the System Solutions Business and theOnline Solutions Business, supported by the promotion of DX as a national policy. In terms of costs, it will continue
to actively recruit human resources, but its policy is to absorb these costs by further improving productivity throughincreased recurring net sales and an integrated production and sales system, as it aims to increase profit margin.
The migration from CROSS MALL to BACKYARD™ in the CROSS Business is expected to take approximately two
to three years.
5. FISCO applauds the upward trend in profitability, and is focusing on growth acceleration through BX
The Company’s gross profit margin increased by 12.5pt from 42.0% in FY7/19 to 54.5% in FY7/23, and subsequently
to 56.6% in 1H FY7/24. In addition, the operating profit margin rose by 13.3pt from 9.0% in FY7/19 to 22.3% in
FY7/23, and subsequently to 26.1% in 1H FY7/24. Moreover, the current medium-term management plan’s FY7/26
targets for gross profit margin of 57.5% and operating profit margin of 26.5% are now likely to be met ahead of time.
This upward trend in profitability is primarily due to the success of the Company’s basic strategies of continuously
implementing overall quality and productivity improvements through an integrated production and sales system,
while continuing to actively invest in human resources and expanding recurring net sales. At FISCO, we positively
evaluate these results. Furthermore, the Company has set a long-term goal of attaining an operating profit margin in
the 30% range, and it is tackling challenges in new domains such as realizing value creation through BX. Therefore,
FISCO will pay attention to the progress of the three-year plan and trends in growth acceleration through BX.
Key Points
Total system solutions company supporting customers’ enterprise capability through its “CROSS-OVER
Synergy” strategy• Net sales and profit both increased significantly and reached record highs in 1H FY7/24, while the interim
dividend was upwardly revised• Maintained outlook for double-digit growth in operating and ordinary profit in FY7/24, with a possibility for evenhigher upside• Aiming for operating profit margin in the 30% range over the long term
• FISCO applauds the upward trend in profitability, and is focusing on growth acceleration through BX•

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

03 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Summary

Results trends
Net sales (left)(¥mn)

Operating profit (right)(¥mn)
16,90018,00015,92416,000

4,500
4,000

14,00012,67912,00013,2034,000

12,944
3,547

3,500
3,000

10,522

10,000

2,500

8,000

2,000

2,100

6,000

1,700

1,829

1,500

4,000

1,000
951

2,000

500

0

0
FY7/19FY7/20FY7/21

FY7/22

FY7/23

FY7/24 E

Source: Prepared by FISCO from the Company’s financial results■ Company overview
A total system solutions company supporting customers’ enterprisecapability
1. Company overview
The Company is a total system solution company that supports the enterprise capability of mid-tier and small/medium-size companies, which are its main customers, through various types of internally developed systems.
With the mainstay, internally developed mission-critical operation management system Aladdin Office series, theCompany supplies products and services to mid-tier and small/medium-size companies needing efficient use of IT
to enhance management capabilities. By providing various types of systems, solutions, and services, the Company
aims to realize not only efficiency support through DX but also value creation support through the new concept of“BX” to transform backyard operations, which are becoming increasingly complex day by day, through convergenceof real-world and online capabilities with the “CROSS-OVER Synergy” strategy to support DX as its base strategy.

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

04 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Company overview

The Company’s Solutions

Source: From the Company’s results overview

As of the end of 1H FY7/24, the Company’s headquarters are located in Kita-ku, Osaka, and its offices include
the Osaka Headquarters, Tokyo Headquarters (Minato-ku, Tokyo), Nagoya Branch (Naka-ku, Nagoya). It also has
research and development operations at the I’LL Matsue Laboratory (R&D center in Matsue, Shimane Prefecture).
The Company also operates I’LL Career Colleges (ICCs) in Osaka and Tokyo as educational entities that offer
individual and corporate training. The Group comprises the Company and one consolidated subsidiary (web-base.
co.). Also, in June 2017, the Company invested in Sivira Inc. (additional investment made in June 2021) andconcluded a capital and business alliance. At the end of 1H FY7/24, the Company had total assets of ¥12,822mn,
net assets of ¥8,710mn, an equity ratio of 67.9%, and the total number of issued shares was 25,042,528 (including
11,119 treasury shares).
2. History
The Company was established as a sales company for office computers in February 1991, and subsequently
expanded into proprietary software development and sales. It released Aladdin Office, a proprietary sales management software, in October 2004, CROSS MALL, a cloud-based software product for integrated management ofmultiple e-commerce websites, in March 2009, and in April 2013, it released CROSS POINT, a software productfor the integrated management of customers and loyalty points at both real-world stores and e-commerce sites.
The Company obtained ISO 27001 (ISMS) certification in September 2016 and in December 2022, it released
BACKYARD™, the industry’s first backyard platform.
In terms of stocks, the Company went public with a listing on the Osaka Stock Exchange (OSE) Hercules Market inJune 2007, and subsequently was listed on the OSE JASDAQ Market accompanying a merger of OSE markets in
October 2010 and then 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 April 2022, it was moved to the TSE Prime Market as part of the TSE’s market restructuring.

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

05 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Company overview

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 online 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 E-commerce websites

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 E-commerce customers andloyalty 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

June 2017

Invested in Sivira and concluded a capital and business allianceOctober 2017

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
December 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 – KIZASHI
Obtained Shopify Experts certification as a Shopify partner

June 2021

Made additional investment in Sivira

April 2022

Moved to the Tokyo Stock Exchange Prime Market as part of the TSE’s market restructure
Services provided certified as tools of the Ministry of Economy, Trade and Industry’s “IT deployment subsidies 2022”

December 2022
March 2023
April 2023

Launched BACKYARD™, the industry’s first backyard platform
Strengthened the document approval feature of Aladdin Office, released as the optional function Aladdin Workflow
I’LL services approved as tools covered by METI’s IT deployment subsidies 2023 (for four consecutive years since FY2020).

October 2023

Opened Kanda Showroom in Chiyoda-ku, Tokyo

February 2024

Received a Management level B- score in the climate change questionnaire of the CDP, an international NGO

Source: Prepared by FISCO from the Company’s annual securities reports, website, and releases

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

06 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/■ Business overview
Distinctive characteristic is the “CROSS-OVER Synergy” strategy tosupport DX through IT-driven convergence of real-world and online
1. Overview of services
The Company’s business segments are the System Solutions Business with mainstay Aladdin Office series, amission-critical operation management system series, as the primary product and the Online Solutions Business(CROSS Business and Other Online Business) with CROSS MALL, a software product for integrated managementof multiple e-commerce websites, and the mainstay solution, CROSS POINT, a software product for integrated
management of real-world store and e-commerce customers and loyalty points, available as cloud services.
Business activities

Source: From the Company’s results overview(1) System Solutions Business
The System Solutions Business designs and develops mission-critical systems and handles hardware mainte­
nance, system operation support, network construction, and security management for customer companies
almost entirely on its own. It primarily supplies the mainstay Aladdin Office series, an internally developed mission
critical operation management system with deployments at more than 5,000 companies and offers Aladdin Shop,a store management system for the fashion industry, Aladdin EC, a B2B e-commerce platform specifically fortransactions between companies, and Aladdin Cloud, a data center-based IaaS* solution. In March 2023, theCompany strengthened the document approval function of Aladdin Office, released as the optional function Aladdin
Workflow. The Company also operates the ICC Osaka School and Tokyo School as educational institutions that
conduct training for individuals and companies.
*	An acronym for Infrastructure as a Service. A service that provides infrastructure such as virtual servers and networks
through the internet. Aladdin Cloud operations are carried out at a data center unlike Aladdin Office, which is operated on
the client’s premises.

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07 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Business overview

The Company aims to secure competitive advantages, including by developing systems that are tailored to theindustries and business formats of its customer companies, conducting flexible customization, and enhancing
product variations specialized for each industry. For after-sales as well, it is emphasizing the recurring businessthat acquires recurring revenue from maintenance and operations support. By industry, in 2006, it was the first IT
company to be recognized as a supporting member of the Kansai Screw Cooperative, and utilizes this connection
to conduct sales activities.
(2) Online Solutions Business
The Online Solutions Business comprises the CROSS Business and Other Online Business. The CROSS Businessdelivers cloud-based applications, and its main focuses are CROSS MALL, a software product for the integrated
management of multiple e-commerce websites, and CROSS POINT, a mainstay software product for the integrated
management of customers and loyalty points at both real-world stores and e-commerce websites. Profitability
is high because these software products are offered as recurring services. From November 2023, the Company
started offering BACKYARDTM, the backyard platform released in December 2022 as the next generation of
CROSS MALL.
The Other Online Business consists of CROSS STAFF, a cloud-based staff management system for temporary
staffing agencies (launched in 2016), B2C e-commerce platform assistance and web marketing assistance (corporate webpage production and operation assistance, e-commerce websites construction assistance, customer
business analysis and strategy consulting, promotions, and updates and revisions based on log analysis results
after webpage production).
2. Main products
Below is a list of the Company’s main products and leading customer deployment examples. In April 2023, theservices provided by the Company were certified as tools eligible for the IT Deployment Subsidies 2023 provided
by the Ministry of Economy, Trade and Industry (for four consecutive years since FY2020).
(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
management, 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., suitcase and carry-on bag manufacturer and distributor T&S Co., Ltd., Nagoya
specialty Tenmusu firm Jiraiya, salt and rock salt wholesale firm Japan Seasoning, Co., Ltd., automotive brakepart manufacturer DIXCEL Co., Ltd., screw specialty trading firm Touyo Screw Co., Ltd., bundling and packaging
material wholesaler YANAGIDA CO., LTD., and stage lighting equipment importer and distributor Ken Production
Services inc.

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

08 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Business overview(2) B2B e-commerce platform Aladdin EC (online)
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 firm Suntory Marketing & Commerce Limited,furniture and interiors manufacturer FRANCE BED Co.,Ltd., producer and distributor of steamed chicken andother processed foods AMATAKE Co., Ltd., commissioned meal service and foodstuff distributor HITOWA Food
Service Co., Ltd., cosmetics and beauty and health devices and goods firm Comfort Japan Inc., dairy productand Western confectionery firm Kurokawa Co., Ltd., bicycle firm RITEWAY (Riteway Products Japan), men’s andladies’ apparel company GUEST LIST, medical equipment seller SHEEN MAN CO., LTD.
(3) Multiple e-commerce websites integrated management software CROSS MALL (online)
This product handles integrated management of multiple online shops, including online marketplaces and e-commerce platforms, and boosts sales through workstyle reforms with better operational efficiency and reinforced
e-commerce 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 e-commerce business P.B.I. Co., Ltd. with the Silver Bullet brand, eco-friendly product importer and wholesale firm e.oct
Inc., and Maruhisa, operator of e-commerce kimono wholesaler “Kimono Kyokomachi.”(4) Real-world store and e-commerce customer and loyalty point integrated management software CROSSPOINT (online)
This product supports integrated management of real-world store and e-commerce customers and loyalty points
through development of a real-world store and e-commerce 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 shoe manufacturer and distributor REGAL CORPORATION <7938>, shirt andnecktie firm Maker’s Shirt Kamakura, stocking and socks firm Fukusuke Corporation, babies’, kids’, and mothers’
clothing firm BRANSHES, casual women’s clothing “w closet” firm Wears Inc., Ameri vintage “Ameri” e-commerce
firm B STONE, ladies’ fashion e-commerce “flower” operator Sola Of Tokyo Co., Ltd., and bag and other apparelplanning, production, sales firm COO COMPANY LIMITED, and women’s fashion retailer ANAP.
(5) Backyard platform BACKYARD™ (online)
BACKYARD™ is a cloud service for supporting backyard operations, which are becoming increasingly complex
day by day, across business formats such as wholesale, retail, and e-commerce, and realizes BX by not only
improving operational efficiency but also by transforming from the backside (the Company started offering this service in November 2023). The Company has positioned this service as a next-generation service for CROSS MALL,
and it has management and collaboration functions that support borderless and multiple channels, efficiency
gains through automatic processing, and data fusion to achieve unified management of all backyard operations,covering not only online shops but also include all business formats. It comprises five management functions(CROSS/collaboration management, ORDER/order management, ITEM/product management, STOCK/inventory
management, COMMUNICATION/customer service support), and is equipped with functions in the themes ofautomation, visualization, customization, and communication. By promoting communication with backyard teams
and customers, it enables the realization of “ONE by 1.”**	The vision that BACKYARDTM intends to become the new standard: “Achieving a one-of-a-kind shop experience on one
borderless platform.”

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09 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Business overview

BACKYARD™ will be offered starting with the provision of online shop management, for the e-commerce businesses, but in the future, it plans to gradually provide upgraded versions of physical store management for retailbusinesses, order management and sales management for wholesale businesses, and inquiry management
for customer support, or as optional services. In conjunction with the start of BACKYARD™ use, the Company
opened a dedicated backyard base called BACKYARD TOKYO at the Kanda Showroom (Chiyoda-ku, Tokyo,
opening in October 2023), as well as began exhibiting and selling BACKYARD BOX, eco-friendly original cardboard
shelving to be used in the backyard. The Company is also publishing the media “LOVE by BACKYARD” whichsheds light on the “uniqueness” of backyards.
3. “CROSS-OVER Synergy” strategy
The Company is advancing the “CROSS-OVER Synergy” strategy which aims to enhance the enterprise capabilityof small and medium-size companies that require effective IT usage by developing and proposing solutions to the
management challenges faced by these customers from both real-world and online perspectives. This strategy seeks
realization of an “all one-stop” service that proposes a combination of mission-critical operation systems from the
System Solutions Business (real-world) that support better operation efficiency and services from the Online Solutions
Business (online environments) that assists reinforcement of sales capabilities and creation of stronger synergy effect.
The Company possesses robust offensive and defensive capabilities thanks to this “CROSS-OVER Synergy” strategy,
and the number of client companies is on the rise. In FY7/23, the number of client companies increased 3.3% YoY
to 7,307 companies (a 2.7% increase to 5,054 companies in the System Solutions Business and a 4.5% increase
to 2,253 companies in the Online Solutions Business). An increase in the number of customers has also prompteda significant increase in the net sales of recurring business, one of the Company’s focuses, thereby enhancing
profitability.
4. Characteristics and strengths
The Company’s main characteristics and strengths are: (1) specialization in the mid-tier and small/medium-size
company markets; (2) designated industry emphasis strategy; (3) strong sales and inventory management know-how;(4) product ecosystem strategy that realizes total solutions; (5) operations with engineers making up about 70% of
employees; (6) ability to accommodate individual customization; (7) omni-channel strategy in retail business; (8) highproprietary product and service ratios; and (9) partner strategy.
(1) 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 ¥5.0bn 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. As a result of the strengthening of (9) partner strategy, there is an increasing trend inorders from major customers, which has led to an overall increase in order unit prices (details in later section).

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10 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Business overview(2) Designated industry emphasis strategy
Another strength is the Company’s designated industry emphasis which places a heavy focus on industries withmany 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, and thereby 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. In July 2023, the Company started offering an updated version of Aladdin OfficeTetsuo, a sales, inventory, and processing management system for the steel and non-ferrous metal industries. In
addition to managing receivables and payables by segment such as for specific offices and business divisions,the Company has also strengthened functions such as processing process planning management in response to
demand for improved management of processing operations.
(3) Strong sales and inventory management know-how
Since its founding, the Company has consistently provided sales and inventory management software that
requires understanding of customer operations. It has extensive deployments and know-how in real-world andonline environments for manufacturing, wholesale, retail, and other business formats and industries and sales
and inventory management with different management methods for each firm.
(4) Product ecosystem strategy that realizes total solutions
The product ecosystem strategy that consists of multiple product groups is also a strength. The Company devel­ops proprietary products and services that cover the online field of building online shops and related management
assistance services, the real-world store and headquarter field of store sales management and backside inventory
managements, and the real-world and online integration field of integrated management of inventories and loyalty
points in real-world and e-commerce operations. It is also capable of making hybrid proposals that combine
various products and realizes total solutions for customers.
(5) Operations with engineers making up about 70% of employees
As of the end of FY7/23, the composition of the Company’s 852 employees (up 48 employees from the end of
the previous fiscal year) on a consolidated basis was engineers at 72%, salespeople at 18%, 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 theaim of having an organization that promotes cultivation of human resources who handle three roles (industry andoperation knowhow, mission-critical systems, and online) and reinforcement of technology capabilities. Meanwhile,
the Company is also promoting an environment and product development to overcome labor-intensive production.
(6) 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. To further improve productivity and profit margin, theCompany is also striving to minimize the amount of individual customization and provide it as an optional feature.

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11 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Business overview(7) Omni-channel strategy in retail businessIn recent years, the retail industry has seen an increase in the popularity of an omni-channel strategy that integrates
real-world stores and online stores and realizes an environment and distribution paths in which customers canpurchase products in the same way from all channels (sales channels and customer contact points). Since theCompany has commercialized integration of real-world and online environments from its founding and accumulated
business know-how and a track record that was not achieved in a short period of time, FISCO thinks it possesses
an advantage in advancement of omni-channel strategy in the retail industry that cannot be copied by other firms.
(8) 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, which is readily affected by price fluctuations and has low profit margins. Its own products
and services (software, operation, maintenance, membership fees, etc.) hence have a large presence at about
70% of sales.
(9) Partner strategy
A feature of the Company is that it is also highly trusted by partners in new deal introductions and sales cooper­
ation (banks, system integrators, office equipment manufacturers, consultants, accounting offices, etc.). Deals
introduced by partners represented 42.7% (2.5pt higher than the previous fiscal year) among new orders received
by sales channel (on a value basis, FY7/23) in the System Solutions Business. In addition, inquiries via the
Company’s website accounted for 38.1% (0.3pt lower) of new orders, while acquisitions through internal sales
were 19.1% (2.2pt lower). In addition to proposals that address the essence of customer issues, increased
awareness of the Company has contributed to an increase in the percentage of pull-type sales, including partner
referrals and inquiries through the Company’s website, leading to more efficient sales activities. There is also an
increasing trend in orders received from major customers based on partner introductions, which has led to an
overall rise in unit sales prices on orders received.
In this way, the Company has the competitive advantage of preparing human resources who become very familiar
with different industries and work and have knowledge of mission-critical systems, and the online shops, as well as
a partner strategy. As a result, the System Solutions Business’s competitive tender victory rate is 91.6% (FY7/23)
and the repeat customer rate is 98.4% (same period), which can be said to show the height of its competitive
advantages.
5. Forming a virtuous cycle spiral in which increased productivity leads to higher gross profit margin
In an aim to improve profitability, the Company is working to improve productivity and expand recurring revenue
sales through an integrated production and sales system. The strategy is to form a virtuous cycle spiral that will leadto higher gross profit margins through comprehensive improvements in quality and productivity, including efforts to
reduce customization man-hours and prevent problems ahead of time through reinforced collaboration between
sales and development teams at the orders stage. Since FY7/20, it has 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 is improving its gross profit margin
through measures such as expanding orders conforming to packaged functions to minimize customization andshortening lead time with enhanced quality and productivity.

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12 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Business overview

Profit improvement for continuous growth and virtuous cycle spiral
3. Increase in orders received for which
I’LL can leverage its strengths

6.

• Increase in Aladdin Office orders focused on unique sectors andbusiness formats• Customer satisfaction leads to partner satisfaction and leads to an increase inreferrals• Reduce customization as much as possible, proposals in linewith package functions

6.

3.

2. Selection and concentration•

Examine the system requirements andpackage conformance rate before
receiving order•

Win orders in line with operating status
of SE

•

Establish the stable operation of a
project as an evaluation criterion

2.

Advancement through higher customer satisfaction• New customer introductions and expansion of case studies by ensuring
customer satisfaction through improved operational efficiency and generous
after-sales support

Integrated
Favorable
Favorableorderproduction
operations
receivingand sales
1.

5.

5.

Strengthen package functions• Expand template by accumulating knowhow• Continue to strengthen package functions
and add options based on frequentcustomization cases and customer/market
requests• Expand the target customer segment while
reducing customization through enhanced
features and options

4.

1. Abundant business deals• Enhancement of Company’s website andeffective marketing initiatives• Focus on partner strategy*From August 2022 at the Tokyo head office and from August 2023 at the Osaka head office, Sales and SE will be
integrated both in terms of the organizational structure and work floor

4. Stable operations and improvement inproject turnover ride
• Reduce problems accompanying customization reduction
and delivery quality improvements• By reducing the man-hours associated with problems,
SEs can efficiently start on the next project, improving the
project turnover rate

Source: From the Company’s results overview

As a result of the above, net sales are on an increasing trend, while the gross profit margin has also been rising.
Starting with FY7/19 as the base year for comparison, on a Company-wide basis, net sales increased 51.3% throughFY7/23, while the gross profit margin rose 12.5pt from 42.0% to 54.5%. Notably, the gross profit margin of the
System Solutions Business increased 13.7pt from 41.6% to 55.3%, which drove the overall increase in the grossprofit margin. Within the Online Solutions Business, the gross profit margin of the CROSS Business rose just 1.2pt,
from 54.6% to 55.8%. This was due to increased development-related costs for BACKYARD™. Going forward, theCompany expects the gross profit margin to increase in tandem with the expansion of recurring net sales.
On a Company-wide basis, recurring net sales rose 75.4% in the five year-period from FY7/19 to FY7/23, whilegross profit from recurring business increased by 81.4%. As a result, the coverage ratio for SG&A expenses againstgross profit from recurring business increased from 58.5% in FY7/19 to 71.7% in FY7/23, and subsequently rose
to 79.7% in 1H FY7/24. This means that the Company now has a profit structure that can cover about 80% of
SG&A expenses with gross profit from recurring business. Over the next three years, the Company aims for a 100%coverage ratio for SG&A expenses against gross profit from recurring business. The ratio of recurring net sales
and the ratio of gross profit from recurring business declined in FY7/23, but this was due to a temporary factor in
the System Solutions Business, which was the increase in hardware device sales accompanying the termination ofserver maintenance by manufacturers. The overall gross profit margin is continuing to rise as the Company seeks
to uncover demand for software modifications and updates and proposes migration to cloud services. Furthermore,
the gross profit margin on recurring business is generally in the high 50% range.
The gross profit margin for 1H FY7/24 was 56.6% on a Company-wide basis. The gross profit margin for eachbusiness was 57.5% for the System Solutions Business and 50.9% for the Online Solutions Business (within theOnline Solutions Business: 57.2% for the CROSS Business and 33.0% for Other Online business). The gross profit
margin in the System Solutions Business increased to a higher level.

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13 25

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

I’LL Inc.

1-May.-2024

3854 Tokyo Stock Exchange Prime Market

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

Business overview

Results trends by business(¥mn)
FY7/19FY7/20FY7/21

FY7/22

FY7/23

1H FY7/24

10,522

12,67913,203

12,944

15,924

8,571

System Solutions Business

9,138

11,167

11,505

11,036

13,857

7,480

Online Solutions Business

1,384

1,512

1,698

1,907

2,067

1,090

CROSS Business

851

984

1,186

1,385

1,521

807

Other Online Business

533

527

512

522

546

282

4,422

5,664

6,137

6,738

8,682

4,854

System Solutions Business

3,805

4,951

5,298

5,775

7,659

4,298

Online Solutions Business

617

713

838

962

1,022

555

CROSS Business

464

569

667

792

849

462

Other Online Business

152

143

171

170

172

93

42.0%

44.7%

46.5%

52.1%

54.5%

56.6%

System Solutions Business

41.6%

44.3%

46.1%

52.3%

55.3%

57.5%

Online Solutions Business

44.6%

47.2%

49.4%

50.4%

49.4%

50.9%

CROSS Business

54.6%

57.8%

56.2%

57.2%

55.8%

57.2%

Other Online Business

28.5%

27.1%

33.4%

32.6%

31.5%

33.0%

Recurring net sales

3,586

4,172

4,803

5,576

6,290

3,494

Ratio of recurring net sales

34.1%

32.9%

36.4%

43.1%

39.5%

40.8%

Net sales

Gross profit

Gross profit margin

Gross profit from recurring business

2,030

2,354

2,791

3,304

3,682

2,083

Ratio of gross profit from recurring business

45.9%

41.6%

45.5%

49.0%

42.4%

42.9%

Gross profit margin from recurring business

56.6%

56.4%

58.1%

59.3%

58.5%

59.6%

SG&A expenses

3,471

3,964

4,307

4,637

5,134

2,615

Coverage ratio for SG&A expenses againstgross profit from recurring business

58.5%

59.4%

64.8%

71.3%

71.7%

79.7%

Note: R
 esults for FY7/21 and prior periods have been retrospectively adjusted due to a change in accounting standards from FY7/22. There has been
no change to Company-wide results.
Source: Prepared by FISCO from the Company’s results overview

6. Strengthen collaborations with business partners
The Company is pushing ahead with strengthening service collaborations with business partners in various fields
as an initiative to drive further sales growth and profit expansion. As for collaborations in FY7/24, in October 2023
Alladin Office began collaboration with V-ONE Cloud, which is the receivables management and payment matchingsystem of R&AC Co., Ltd. In November 2023, CROSS MALL began collaboration on order, shipment and inventory
data with ANA Mall, an online shopping mall operated by ANA X Inc., which is part of the ANA (ANA HOLDINGS
INC. <9202>) Group.
In conjunction with the capital and business alliance between Sivira and Dentsu Group Inc. <4324>, in June 2021,
the Company made an additional investment in Sivira, with which the Company has a capital and business alliance,in order to maintain the ownership ratio. By further strengthening the alliance, the Company plans to pursue newservices offering both security and convenience. In June 2023, the Company participated as a partner company in“Mizuho Digital Connect,” a DX support program for institutional clients that Mizuho Bank, Ltd. and Mizuho Research& Technologies, Ltd. are working on. Through this program, the Company will support improvements in the corporate
value of Mizuho Bank’s institutional clients.

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14 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Business overview

7. Risk factors as well as issues and countermeasures
General risks in the information systems and services industry include competition for orders, longer development
periods accompanying increasingly larger projects, individual projects becoming unprofitable, delays in addressing
technological innovations, securing human resources, and other factors. In the Company’s case, however, since itmainly develops and sells package software, there is less risk of incurring losses on individual projects comparedto system development companies that primarily handle consigned development work. On the other hand, theCompany encounters profit margin setback from increases in process steps and customization because it pursues
differentiation from rivals through the provision of flexible customization suited to customers. It is addressing thischallenge by promoting productivity improvement through an integrated production and sales system.

■ Results trends
Net sales and profit both increased significantly and reached record
highs in 1H FY7/24
1. Overview of results for 1H FY7/24
In 1H FY7/24 consolidated results, net sales increased 12.9% YoY to ¥8,571mn, operating profit rose 34.9% to¥2,238mn, ordinary profit was up 34.5% to ¥2,249mn, and profit attributable to owners of parent increased 34.8%
to ¥1,489mn. Net sales and profit both increased significantly and reached record highs, surpassing initial forecasts(forecasts announced on September 8, 2023: net sales of ¥8,318mn, operating profit of ¥1,986mn, ordinary profit of¥1,998mn, and profit attributable to owners of parent of ¥1,334mn). The interim dividend for FY7/24 was upwardly
revised. The System Solutions Business delivered sustained high growth as it pushed ahead with an integrated
production and sales system and partner strategy, in addition to benefiting from high levels of DX demand at mid-tierand small/medium-size companies dealing with acute personnel shortages. The Online Solutions Business also
performed strongly. On a Company-wide basis, recurring net sales increased 15.0% to ¥3,494mn, gross profit
from recurring business rose 16.0% to ¥2,083mn, the gross profit margin from recurring business increased 0.5pt
to 59.6%, and the coverage ratio for SG&A expenses against gross profit from recurring business was up 7.2pt to79.7%.

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15 25

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

I’LL Inc.

1-May.-2024

3854 Tokyo Stock Exchange Prime Market

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

Results trends

Overview of 1H FY7/24 consolidated results(¥mn)
1H FY7/23
Results

Composition
ratio

1H FY7/24

InitialtargetYoY

Vs. initial forecast

Results

Composition
ratio

Change%changeChange%change7,591

100.0%

8,318

8,571

100.0%

980

12.9%

253

3.0%

Gross profit

4,136

54.5%

-

4,854

56.6%

718

17.4%

-

-

SG&A expenses

2,476

32.6%

-

2,615

30.5%

138

5.6%

-

-

Operating profit

1,659

21.9%

1,986

2,238

26.1%

579

34.9%

252

12.7%

Ordinary profit

1,672

22.0%

1,998

2,249

26.2%

576

34.5%

251

12.6%

Profit attributable to owners of parent

1,105

14.6%

1,334

1,489

17.4%

384

34.8%

155

11.7%

System Solutions Business

6,569

86.5%

7,480

87.3%

910

13.9%

-

-

Online Solutions Business

1,021

13.5%

1,090

12.7%

69

6.8%

-

-

CROSS Business

748

9.9%

807

9.4%

59

7.9%

-

-

Other Online Business

272

3.6%

282

3.3%

10

3.7%

-

-

3,039

40.0%

3,494

40.8%

455

15.0%

-

-

System Solutions Business

3,614

55.0%

4,298

57.5%

684

18.9%

-

-

Online Solutions Business

521

51.0%

555

50.9%

34

6.5%

-

-

CROSS Business

431

57.6%

462

57.2%

31

7.2%

-

-

Other Online Business

89

32.7%

93

33.0%

4

4.5%

-

-

1,795

59.1%

2,083

59.6%

288

16.0%

-

-

-

72.5%

-

79.7%

7.2pt

-

-

-

Net sales

Breakdown of net sales

Company-wide recurring net sales
Breakdown of gross profit

Company-wide gross profit fromrecurring business
Coverage ratio for SG&A expenses againstgross profit from recurring businessNotes: 1. Initial forecasts were disclosed on September 8, 2023.
2. The composition ratio for gross profit represents the ratio of gross profit to net sales, which equates to gross profit margin by business.
Source: Prepared by FISCO from the Company’s results overview

Gross profit increased 17.4% YoY, while the gross profit margin rose 2.1pt to 56.6%. The main contributing factors
were an improvement in the project turnover rate due to an improvement in product quality and enhancement of
options, as well as growth in recurring net sales. SG&A expenses rose 5.6%, but the SG&A expenses ratio declined
2.1pt to 30.5%. Personnel costs increased mainly due to factors that included an increase in employee headcountreflecting continuous hiring of new graduates and experienced employees, an increase in base salary (provided auniform increase in base salary of ¥10,000 per person from April 2023), establishment of a new work-from-homeallowance (provided since August 2023). Additionally, advertising expenses increased due to the start of a new TVcommercial to increase public recognition of Aladdin Office (started airing commercial on February 2, 2024, during
broadcasts of TV Tokyo’s “Dawn of Gaia” program). SG&A expenses were pushed up by factors such as development costs for BACKYARD™, costs for opening the BACKYARD TOKYO service showroom, expenses related to
exhibitions, and disaster relief donations for those affected by the 2024 Noto Peninsula Earthquake. Meanwhile,
the rate of increase in the SG&A expenses ratio was far lower than the rate of increase in net sales, thanks in partto a teleworking and work-from-home system that curtailed office rent increases. As a result, the operating profit
margin rose 4.2pt to 26.1%. The main factors behind the ¥579mn YoY increase in operating profit were an increaseof ¥684mn due to an increase in gross profit in the System Solutions Business and an increase of ¥34mn due to anincrease in gross profit in the Online Solutions Business, which were partially offset by a decrease of ¥124mn due
to an increase in personnel costs, and a decrease of ¥13mn due to an increase in other SG&A expenses.

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16 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Results trends

The System Solutions Business delivered sustained high growth
2. Trends by business segments(1) System Solutions BusinessIn the System Solutions Business, net sales increased 13.9% YoY to ¥7,480mn, gross profit rose 18.9% to¥4,298mn, and gross profit margin rose 2.5pt to 57.5%. The gross profit margin increased due to significant
increases in both net sales and profit. Although replacement demand for server devices associated with theconclusion of maintenance support by manufacturers settled down in 1Q, there were high levels of DX demandat mid-tier and small/medium-size companies. In addition, profit enhancement measures were also effective.
These measures included the accumulation of recurring net sales; the improvement in project precision anddevelopment of more accurate work plans when providing quotations due to the integrated production and sales
system; increased permeation of profit awareness throughout the progression of project phases; the reduction
in after-sales support man-hours following system operation due to the improvement in quality deliveries; thelaunch of new packages and the bolstering of functions and enhancement of options; the efficient use of partnercompanies; and the increase in the SE utilization rate due to both progress on new projects and final checks of
invoices of existing customers. Moreover, the number of large-scale projects has been increasing due to referrals
from partner companies, and the average price per project has shown a stronger upward trend.
(2) Online Solutions BusinessIn the Online Solutions Business, net sales increased 6.8% YoY to ¥1,090mn, gross profit was up 6.5% to¥555mn, and gross profit margin declined 0.1pt to 50.9%. In the CROSS Business, net sales increased 7.9%
to ¥807mn, gross profit rose 7.2% to ¥462mn, and gross profit margin declined 0.4pt to 57.2%. In terms of themarket environment, there was an increase in the number of EC enterprises that downsized or exited operations
due to the impact of changes in post-pandemic EC consumer behavior. However, the Company saw contract
cancellation rates remain at low levels, and the CROSS Business and Other Online Business performed strongly
with increases in net sales and profit. The gross profit margin declined slightly. However, this decline was mostly
caused by an increase in personnel and development costs associated with ongoing development to expand thefunctions of BACKYARD™. Therefore, at FISCO we believe that this is only a temporary factor.

Financial health is strong
3. Financial condition
Looking at the Company’s financial condition, total assets had increased ¥707mn from the end of FY7/23 to¥12,822mn as of the end of 1H FY7/24. This was mainly attributable to increases of ¥413mn in cash and cash
equivalents, ¥146mn in notes and accounts receivable – trade, and contract assets, and ¥238mn in software in
progress, while there was a decrease of ¥148mn in software. Total liabilities decreased ¥262mn to ¥4,112mn. This
mainly reflected decreases of ¥213mn in consumption taxes payable and ¥125mn in accounts payable – other,both of which are included in other under current liabilities. Total net assets increased ¥969mn to ¥8,710mn, mainly
due to the recording of profit attributable to owners of parent, despite a decrease due to ¥500mn in dividends ofsurplus. As a result, the equity ratio rose 4.0pt to 67.9%. At FISCO, we think that the Company’s financial health isstrong, and find no particular cause for concern.

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

17 25

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

I’LL Inc.

1-May.-2024

3854 Tokyo Stock Exchange Prime Market

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

Results trends

Balance sheets and statements of cash flow (condensed)
(¥mn)
Item

EndFY7/19

EndFY7/20

EndFY7/21

EndFY7/22

EndFY7/23

End-1HFY7/24

Change

6,646

7,585

8,449

9,576

12,115

12,822707

Current assets

4,409

4,993

6,087

7,249

9,675

10,216541

Non-current assets

2,236

2,591

2,362

2,326

2,440

2,605

165

3,794

3,871

3,860

3,861

4,374

4,112

-262

Current liabilities

2,335

2,366

2,246

2,134

2,546

2,202

-344

Non-current liabilities

3,794

1,505

1,613

1,727

1,828

1,909

81

2,851

3,713

4,589

5,715

7,740

8,710

969

Current ratio

188.8%

211.0%

271.0%

339.7%

379.9%

463.9%

84.0ptNon-current (assets) ratio

78.4%

69.8%

51.5%

40.7%

31.5%

29.9%

-1.6ptEquity ratio

42.9%

49.0%

54.3%

59.7%

63.9%

67.9%

4.0pt

EndFY7/19

EndFY7/20

EndFY7/21

EndFY7/22

EndFY7/23

End-1HFY7/24

Cash flows from operating activities

1,006

2,088

2,027

1,134

3,073

1,306

Cash flows from investing activities

-600

-587

-216

-482

-547

-392

Cash flows from financing activities

-420

-663

-551

-465

-526

-500

Cash and cash equivalents at end of the period

1,356

2,194

3,453

3,640

5,639

6,053

Total assets

Total liabilities

Total net assets(Management indicators)

Item

Source: Prepared by FISCO from the Company’s financial results■ Outlook
Maintained outlook for increases in net sales and profit in FY7/24,
with a possibility for even higher upside• Outlook for FY7/24 results
For FY7/24 consolidated results, the Company has maintained its initial forecasts, with net sales forecast to increase
6.1% from FY7/23 to ¥16,900mn, operating profit to grow 12.8% to ¥4,000mn, ordinary profit to rise 12.8% to¥4,026mn, and profit attributable to owners of parent to increase 8.5% to ¥2,683mn.
Overview of FY7/24 consolidated results forecast(¥mn)
FY7/23

FY7/24

YoY

Results

Composition
ratio

Forecast

Composition
ratio

Change% change

1H
achievementrate

15,924100.0%

16,900100.0%

975

6.1%

50.7%

Gross profit

8,682

54.5%

9,464

56.0%

781

9.0%

51.3%

SG&A expenses

5,134

32.2%

5,464

32.3%

329

6.4%

47.9%

Operating profit

3,547

22.3%

4,000

23.7%

452

12.8%

56.0%

Ordinary profit

3,571

22.4%

4,026

23.8%

454

12.8%

55.9%

Profit attributable to owners of parent

2,472

15.5%

2,683

15.9%

210

8.5%

55.5%

Net sales

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

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

18 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

OutlookAs for overall market sentiment, although developments related to the end of Windows 10 support planned for 2025
will not have as much of an impact as a surge in demand, the Company expects that demand for business DX willremain at a high level, mainly because of severe personnel shortages. In terms of net sales, the System Solutions
Business and the Online Solutions Business are both expected to grow through aggressive sales activities. As key
measures, in the System Solution Business, the Company will expand its sales area and accumulate know-how onlarge-scale projects for major customers. The Company will also advance measures such as expanding the scaleof supported business sectors and target customers by strengthening package functions. In the Online Solutions
Business, the Company will promote the migration of existing CROSS MALL customers to BACKYARD™ and workon cultivating new BACKYARD™ customers after the migration of existing customers is complete. Furthermore,in response to changes in EC consumer behavior, the Company will broaden the scope of companies eligible forservices from the EC business to include retail, manufacturing, and wholesaling, and continue to expand functions toachieve borderless operation management, which has become a market issue. On the profit front, SG&A expenses
will increase as the Company continues to actively invest in human resources (plans called for 63 new graduates,
12 more than in the previous year, to join the Company in April 2024, along with the hiring of 15 to 25 experienced
employees), development and sales promotion, but this is expected to be absorbed through productivity improvements and higher gross profit from recurring business, along with other factors.
The profit growth rate is expected to slow down in comparison to FY7/23, but this is based on factors such as arecoil from the large growth in FY7/23 and a sense of uncertainty, as well as temporary cost increases due to theparallel operation of both the CROSS MALL and BACKYARD™ platforms, so this forecast seems quite conservative.
The business environment is favorable, supported by trends such as further growth in corporate demand for DX. The
Company’s achievement rate against forecasts in 1H was 50.7% for net sales, 56.0% for operating profit, 55.9%
for ordinary profit, and 55.5% for profit attributable to owners of parent. Profit enhancement measures centered on
the integrated production and sales system are delivering results at an accelerated pace. Considering these andother factors, we at FISCO believe that there is a high possibility that the Company’s results will exceed its forecasts.

■ Growth strategy
Aiming for operating profit margin in the 30% range over the longterm
1. Three-year medium-term (rolling) plan
For its medium-term management plan, the Company’s policy is to adopt a rolling plan in which it can revise thetargets at any time, such as in response to rapid changes to its business environment. Based on this policy, in
September 2023 the Company formulated a three-year medium-term management plan with FY7/26 as the final
year. Under this plan, the Company’s forecast for FY7/26 calls for net sales of ¥20,400mn, gross profit of ¥11,728mn,
gross profit margin of 57.5%, operating profit of ¥5,400mn, operating profit margin of 26.5%, and profit attributableto owners of parent of ¥3,616mn. These represent upward revisions for net sales and profit compared to the previous
three-year plan. Furthermore, the Company has set an operating profit margin in the 30% range as a long-term goal,
and has positioned this plan as a three-year period to solidify its operating profit margin of over 20%.

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

19 25

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

I’LL Inc.

1-May.-2024

3854 Tokyo Stock Exchange Prime Market

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

Growth strategy

Three-year medium-term (rolling) plan(¥mn)
CAGR (%)
2023-2026

FY7/23 results

FY7/24 target

FY7/25 target

FY7/26 target

15,924

16,90018,50020,400

9

8,682

9,464

10,497

11,728

11

54.5%

56.0%

56.7%

57.5%

-

3,547

4,000

4,600

5,400

15

22.3%

23.7%

24.9%

26.5%

-

2,472

2,683

3,083

3,616

14

Net sales
Gross profit
Gross profit margin
Operating profit
Operating profit margin
Profit attributable to owners of parent

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

As a basic policy, the Company has set an internal goal of double-digit growth for both the System Solutions
Business and the Online Solutions Business, supported by the promotion of DX as a national policy. In the System
Solutions Business, the Company will gradually expand the sales area from the Tokyo-Nagoya-Osaka key metro
areas to other areas on the assumption of providing 100% remote support. It will also work further on developing
new partners in response to the progress of regional expansion. In terms of handling large projects, the Company
will reinforce contact with partners and pursue recruitment activities aimed at securing human resources, centeredon talented engineers and technicians. In the CROSS Business, the Company will pursue the migration of CROSS
MALL existing customers to BACKYARD TM, and work to cultivate new customers after the migration of existingcustomers is complete. In terms of costs, the Company will continue to actively recruit human resources (15-25
experienced hires and 55-65 new graduate hires annually), but its policy is to absorb these costs through the effects
of increased recurring net sales which are more profitable than initial sales and strengthened project management
through an integrated production and sales system, as it aims to increase profit margin. In the System Solutions
Business, net sales for cloud products in FY7/23 were 4.9 times that of FY7/20 for Aladdin Project’s Management
Reinforcement Cloud, and 2.2 times higher for Aladdin EC, as both marked large growth in sales. Also, since themigration from CROSS MALL to BACKYARD™ in the CROSS Business is expected to take approximately two to
three years, the Company expects temporary cost increases due to the parallel operation of both platforms.
Recurring net sales / gross profit mix

Recurring net gross profit mix andCompany-wide gross margin

Recurring net sales mix(¥mn)
25,000(¥mn)■

Initial businesses■

Recurring business

20,00015,924

16,90058.0%

18,500

9,558

10,081

Recurring business

10,640

54.5%

54.0%

12,00053.0%
10,000

8,682

9,464

52.0%

6,290
39％

43％

8,418
46％

57.5%

56.0%

8,000

7,341

56.7%

56.0%

10,0005,000

Initial businesses

■
57.0%

14,00055.0%

15,0009,634

20,400

■

9,759
48％

51.0%

6,000

4,999

5,043

50.0%

4,000

49.0%

2,000

0

3,682
42％

4,420
47％

10,497

5,360

5,137
49％

11,728

5,700

6,027
51％

0

2023年

FY7/23
7月期

2024年

FY7/247月期(planned)
（計画）

2025年

FY7/257月期(planned)
（計画）

2026年

FY7/267月期(planned)
（計画）

2023年

7月期
FY7/23

Source: From the Company’s results overview

2024年

FY7/247月期(planned)
（計画）

2025年

FY7/257月期(planned)
（計画）

2026年

FY7/267月期(planned)（計画）

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

20 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Growth strategy

The Company believes that its current cost of capital is around 9.5% (average for the period from FY7/19 to FY7/23).
The Company’s Return on Equity (ROE) is around 30%, surpassing the cost of shareholders’ equity. Accordingly,
the Company believes that it is delivering a performance exceeding the industry average for the information andcommunications industry. Moreover, the Company’s Price-to-Book Ratio (PBR) stands at roughly 8, which is far
higher than the industry average in the range of 2. Therefore, the Company believes that it has earned a measureof positive valuation from the markets. Going forward, the Company’s policy is to increase corporate value throughongoing improvement in profit margins and investment in human resources.
Management that is conscious of cost of capital and stock price
Trend in ROE■■

Trend in PBRI’LL Inc.
Average for the information and communications industry*1

36.2%

40.0%

30.0%

36.7%

I’LL Inc. (As of end of July)
Average for the information and communications industry*1

9.5

12.0

29.5%

35.0%

■
■

23.7%

26.7%

7.8

10.0

7.4

7.2

(Unit: times)

8.4

8.0

Cost ofshareholders’ equity(CAPM*2):
approx. 9.5%
25.0%

20.0%

6.0

23.0%

15.0%

4.0

2.4

2.6

2019年
FY7/192020年
FY7/20

2.6

2.3

2.4

10.0%

5.0%

12.7%

2.0

7.3%

0.0%

2019年

FY7/197月期

2020年
FY7/20
7月期

2021年
FY7/21
7月期

5.7%

7.5%

2022年
FY7/22

2023年
FY7/23

7月期

0.0

7月期

7月期

7月期

2021年 FY7/22
2022年 FY7/23
2023年
FY7/21
7月期

7月期

7月期

Source: From the Company’s results overview

The Company is working to enhance its English-language disclosure documents in response to a growing share of
non-Japanese investors and an increase in requests for information gathering opportunities from them. In addition toproviding its consolidated financial results reports in English as before, the Company also makes English-language
0
resources available on its website such as documents that assist in understanding the Company and its businessmodel.

Upwardly revised the interim dividend for FY7/24, and raised targets
for dividend payout ratio and DOE
2. Shareholder return policy
The Company’s basic policy for returning profits is to pay a dividend based on results, while comprehensively
considering factors such as ROE and the dividend payout ratio when allocating profits, while ensuring the necessary
retained earnings for future business expansion and strengthening the management structure. The Company targets
a dividend payout ratio of at least 35%, and a dividend on equity (DOE) of at least 10%. Previously, the Company
had targeted a dividend payout ratio of at least 30% and a DOE of at least 8%. Both of these targets were increased
in FY7/24. Furthermore, in terms of the dividend forecast for FY7/24, the Company upwardly revised its interim
dividend by ¥2.0 and maintained its year-end dividend forecast on March 7, 2024. For FY7/24, the Company’s
dividend forecast calls for a ¥5.0 increase from FY7/23 to an annual dividend of ¥36.0 (¥16.0 at 2Q-end and ¥20.0
at fiscal year-end). The Company expects to increase the dividend for the seventh consecutive year since FY7/18,
and the forecast dividend payout ratio is 33.6%. At FISCO, we think that further enhancement of shareholder returns
can be expected accompanying the growth in earnings.

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

21 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Growth strategy

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

(¥)
40.0

Dividend payout ratio (right)

40.0

34.8
32.3

（%）

32.7

31.5

33.6
31.4

30.0

30.0

20.0

36.0

20.0

31.0
10.0
8.0

15.0

17.0

18.0

FY7/20FY7/21

FY7/22

10.0

0.0

0.0
FY7/19FY7/23

FY7/24 E

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

Emphasis on investment in personnel
3. Sustainability management
The Company’s mission is “Always free, love & dream with you. That is our responsibility,” and it considers its social
responsibility to be placing importance not only on profit-making activities through its businesses, but also on being
able to feel “free, love & dream” through its businesses. Also, the Company’s values are “Giving dreams to society
through ‘BX’” (With Society), “Conducting management together with the environment and creating a world withzero excess stock” (With the Environment), “Developing a corporate culture and systems in which each and every
employee can demonstrate their abilities,” (With Coworkers), and “Maintaining transparent and sound management
and improving enterprise value alongside corporate growth” (With Shareholders).
In “Giving dreams to society through ‘BX’,” the Company is creating opportunities for new value creation by supporting opening-up from “simple” work through “BX” in order to help build a better society, and also helping to realize
diverse workstyles, such as teleworking, aiming to contribute to the creation of a society in which everyone can play
an active role. In addition, it places trust with customers and partners as its top priority and is building relationships
not merely as “a business partner” but relationships of co-prosperity in which each partner can grow by working
together collaboratively. In “Conducting management together with the environment and creating a world with zero
excess stock,” the Company is enhancing its disclosure of environment-related information in support of TCFD
(the Task Force on Climate Related Financial Disclosures) which was determined at the Board of Directors meetingin July 2022, and is actively working to achieve the goal of reducing emissions of GHG (greenhouses gases) byhalf by FY2030 and to effectively zero by FY2050. Also, through “BX,” it intends to increase the accuracy of stock
management and forecasts and to work together with customers to help resolve the social problems of apparelloss and food loss.

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

22 25

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

I’LL Inc.

1-May.-2024

3854 Tokyo Stock Exchange Prime Market

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

Growth strategy

In “Developing a corporate culture and systems in which each and every employee can demonstrate their abilities,”
the Company is working to foster autonomy among its employees and to build a corporate culture that enables
them to work freely with dreams. It is also establishing a fair evaluation system that rewards “people who work hard”
regardless of their race, gender, age, or position. In addition, it is establishing an environment in which employees
are not restricted by work hours or work places and in which even employees who are raising children, providing
nursing care, and living in regional areas can still demonstrate their abilities. In “Maintaining transparent and soundmanagement and improving enterprise value alongside corporate growth,” the Company is maintaining soundmanagement in which various opinions are reflected through a system of having five independent external directors(from among 14 directors in total). It is also actively holding dialogues with stakeholders (shareholders, customers,
business partners, and employees) and reflecting their opinions in management.
Among these values, the Company places particular importance on “Developing a corporate culture and systems
in which each and every employee can demonstrate their abilities.” Specifically, in creating its corporate culture, theCompany is promoting glass (transparent) management, a culture that praises people who take on challenges anddoes not criticize their failures, diverse workstyles tailored to the individual, and training for new employees from theCompany president himself. With respect to systems, the Company has established a system for dinner meetings
with the president and executive officers and annual prizes, and also systems in which women can work with peaceof mind, including paid menstrual leave and a flextime system, and a fair evaluation system of “correctly evaluating
people who work hard.” Also, the Company encourages employees to send email messages to enable them todirectly message the president and officers. The average annual income of employees (non-consolidated, excluding
those on leave), when indexed with FY7/19 as 100, increased to 114 in FY7/23. Through these efforts to establish
a good work environment, in FY7/23 the employee turnover rate (non-consolidated) was 3.4% (3.4% for men and3.6% for women), which is very low compared to the industry average (11.9% based on Company research). Also,
the percentage of women returning to work after maternity leave (FY7/23) was 100% for the sixth consecutive
period and the percentage of eligible men taking paternity leave (FY7/23) rose to 55.2%. In an engagement survey
conducted in January 2024, the Company achieved high scores that exceeded the industry average for every item.
Going forward, the Company is aiming to improve the work environment and create an even more virtuous circle.
Human capital data (1) (non-consolidated)
Number of employees andratio of women
Number of

男性社員数
male employees

1,300

1,200

26%

26%

Number of
女性社員数
femaleemployees

28%

Number of new graduate hires andratio of women

Ratio of women
女性比率

28%

Men
男性

30%

41%

100

30%

90

80

Women
女性

47%

Ratio
of women
女性比率

42%

35%

Number of experienced hires andratio of women

45%

Men
男性

65
64
63
45%

60
59
58
57

500

654

709

752

804

170

185

208

225

54

484

524

544

579

852

35%

70

200

40%
14%

44

50

20%

18

40

597

49
48
47

25%

60

255

54
19

47
22

46

53

51

22

23

45
44
43
30%

42
41
40
39
38
37
36

25%

35
34

33

33

28
27
26
25
24
23
22

15%

32

14

9

19

23

’19

’20

32
31
30
29
20%

21
20
19
18

15%

26

20

10
100

35

17

31

25

16

28

15
10%

14
13
12
11
10
9
8

5%

7
6
5
4
3
2

0

10%

'19

'20

'21

'22

'23

'19

'20

'21

■ Engineers
技術職 ■ Sales
営業

54

60

50

'22

'23

40

44
4
11

4
10

47
3
14

53
4

12

29

30

2
12

35

30

37

’22

15
8
’23

51
33
3
1

25

40

’21

23

■ Engineers
技術職 ■ Sales
営業 ■ Staff
スタッフ

32
3
1

20

21

28

5
1

5

6

14

16

17

’21

’22

’23

20

20

Engineers
72 %

21
3
18

73%
72%
71%
70%
69%
68%
67%
66%
65%
64%
63%
62%
61%
60%
59%
58%
57%
56%
55%
54%
53%
52%
51%
50%
49%
48%
47%
46%
45%
44%
43%
42%
41%
40%
39%
38%
37%
36%
35%
34%
33%
32%
31%
30%
29%
28%
27%
26%
25%
24%
23%
22%
21%
20%
19%
18%
17%
16%
15%
14%
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
-10%
-11%
-12%
-13%
-14%
-15%
-16%
-17%
-18%
-19%
-20%
-21%
-22%
-23%
-24%
-25%
-26%
-27%
-28%
-29%
-30%
-31%
-32%
-33%
-34%
-35%
-36%
-37%
-38%
-39%
-40%
-41%
-42%
-43%
-44%
-45%
-46%
-47%
-48%
-49%
-50%
-51%
-52%
-53%
-54%
-55%
-56%
-57%
-58%
-59%
-60%
-61%
-62%
-63%
-64%
-65%
-66%
-67%
-68%
-69%
-70%
-71%
-72%
-73%
-74%
-75%
-76%
-77%
-78%
-79%
-80%
-81%
-82%
-83%
-84%
-85%
-86%
-87%
-88%
-89%
-90%

Number of experienced hires by job type

■ Staff
スタッフ

30

Sales 18 %

8

12

0

Ratio of new graduate hires by job type

7.2%

Staff 10 %

20

1
0%

0

Number of female managers

Employee mix

Ratio of women
女性比率

65%
28%

51
50

30
400

300

55
53

900

600

42%

52

1,000

700

62
61

56
40%

1,100

800

Women
女性

50%

37

15

29

10

10

5

0

23

0

’19

’20

’21

’22

’23

’19

’20

Note: Results as of the end of each July

Note: Results as of the end of each July
Source: From the Company’s results overview

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

23 25

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

I’LL Inc.

1-May.-2024

3854 Tokyo Stock Exchange Prime Market

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

Growth strategy

Human capital data (2) (non-consolidated)
Number of men and women by age
男性
Men

0

12

* Includes directors, advisors, and non-regular employees

女性
Women
50

60代
60s
and
60代以上
over
以上

2

50代
50代
50s

6

100

150

200

0%

250

100%

90%

20代
20s

3%
19%

80%

31

40s
40代
40代

1%

30s
30代

3%
22%

40s
40代

1%

4%

50s
50代

1%

23%

60s
and over
60代以上

4%

2%

4%

24%

26%

32%

31%

Overallturnover
全体離職率
rate

12.0%

189
187

20代
20s
20代

200

250

150

100

50

Female turnover
女性離職率
rate

rate

10.4%

35

36%

34%

10.0%

33%

50%

4.2%

8.0%

6.0%

4.3%

3.9%

40%

30代
30代
30s

Male turnover
男性離職率

70%

60%

193

Trend in employee turnover rate

Trend in age mix* Includes directors, advisors, and non-regular employees

84

20%

42%

41%

39%

39%

36%

'19

'20

'21

'22

'23

2.2%
0.0%

0%

0

2.8%

2.1%

2.4%

'21

'22

3.7%

2.0%

10%

130

'19

'20

3.8%

3.2%

2.4%

4.0%

30%

3.6%

3.4%
3.4%
'23

Trend in average annual income (index) Ratio of women returning from maternity leave Ratio of men taking paternity leave* Indexed with FY7/19 as 100* Results exclude job seekers

120

55.2%

60.0%

114

120%

100%

100%

100%

100%

100%
50.0%

115

108

110

109

110

100%

30.4%

40.0%

80%

30.0%
60%

105

100

10.0%

20%

95

0%

’19

13.2%

20.0%
40%

100

’20

’21

’22

’23

3.1%

9.1%

0.0%

'19

'20

'21

'22

'23

'19

'20

'21

'22

'23

Note: Results as of the end of each July

Note: Results as of the end of each July
Source: From the Company’s results overview

Some examples of the Company’s initiatives for sustainability are as follows. As part of its series of social contribution
activities, the Company was a sponsor of “MOVE FES.2023 Supported by AIRU,” an event held by the General
Incorporated Association WITH ALS in June 2023. WITH ALS conducts awareness-raising activities on the intractabledisease ALS (amyotrophic lateral sclerosis). (This marks the third year of sponsorship, following 2019 and 2021.)
In October 2023, the Company invested in the Social Bond (73rd JASSO Social Bond) issued by Independent
Administrative Institution Japan Student Services Organization (JASSO). In February 2024, the Company received aManagement level B- score in the climate change questionnaire of the CDP, an international NGO that runs a global
disclosure system for environmental assessments. Additionally, in February 2024, the Company received the Best
Culture Co-creation Award (Secretariat x Management category) in the Culture Headquarters Awards 2023 hosted
by Unipos Inc. Furthermore, as a regional-support initiative (Matsue City, Shimane Prefecture), at I’LL Matsue Lab,
which was opened in 2017, the Company conducts local recruitment centered on Shimane University and Matsue
National College of Technology and has opened the IT Exchange Space on the first floor of the office, where it
conducts activities to increase interest in IT and improve IT skills. As an activity toward the practical utilization ofblockchain technology, the Company is working together with Sivira, in which it has invested, toward the practicalrealization of a next-generation platform that can achieve both safety and convenience for the e-commerce industry.

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

24 25

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

I’LL Inc.
3854 Tokyo Stock Exchange Prime Market

1-May.-2024
https://www.ill.co.jp/ir/

Growth strategy

FISCO applauds the upward trend in profitability, and is focusing on
growth acceleration through BX
4. FISCO’s perspective
The Company’s gross profit margin increased by 12.5pt from 42.0% in FY7/19 to 54.5% in FY7/23, and subsequently
to 56.6% in 1H FY7/24. In addition, the operating profit margin rose by 13.3pt from 9.0% in FY7/19 to 22.3% in
FY7/23, and subsequently to 26.1% in 1H FY7/24. Moreover, the current medium-term management (rolling) plan’s
FY7/26 targets for gross profit margin of 57.5% and operating profit margin of 26.5% are now likely to be met
ahead of time. This upward trend in profitability is primarily due to the success of the Company’s basic strategies
of continuously implementing overall quality and productivity improvements through an integrated production andsales system, while continuing to actively invest in human resources and expanding recurring net sales. At FISCO,
we positively evaluate these results. Furthermore, the Company has set a long-term goal of attaining an operating
profit margin in the 30% range. It has positioned the current medium-term management plan as a three-year period
to solidify its operating profit margin at over 20%, and it is also tackling challenges in new domains such as realizing
value creation through BX. Therefore, at FISCO we will pay attention to the progress of the three-year plan andtrends in growth acceleration through BX.

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

25 25

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.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
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and the like, belong to FISCO, and any revision, reprocessing, reproduction, transmission,
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is strictly prohibited.
FISCO and its affiliated companies, as well as the directors, officers and employees thereof,
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.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp