Long-term Vision And Medium-term Management Plan

Management plan for the 10th anniversary of Smaregi

TO BE THE
NEW STANDARD

Smaregi reached its 10th anniversary in 2021. During our first decade, we grew consistently by supplying products with basic functions required by stores of all types. Growth was also backed by outstanding services with the scalability to support the distinctive operating formats of individual stores.

Our goal is to supply these functions and services to an even larger number of stores. We want to use our powerful support of stores to play a role in the advancement of Japan’s economy too.

Over the next 10 years, we aim to go beyond the tablet POS category to become the leader in Japan’s POS market.

Long-term Vision

VISION2031

In 2021, hardware vendors still dominate the POS market in Japan. Smaregi started operating in 2011 as this market was beginning the shift from hardware to software.

During the next decade, Smaregi will use its strengths as a software and database company to be a leader in the emerging age of the cloud and the digital transformation (DX). Our goal is to increase our market share and become the POS market leader.

Smaregi envisions a future in which anyone can utilize data with ease.

Our goal is to be Japan’s POS market leader

KPI Aiming for 300,000 active stores and a 14% market share in Japan

The target has been enlarged from the core midsize business category to include big businesses (demand for replacing conventional POS systems) and small businesses (fee income from use of the app market).

Number of active stores Market share in Japan

Medium-term Management Plan FY4/22 – FY4/24

Plan for Doubling ARR 2021/6/11 UPDATE

  • Further increase in business investments during the next three fiscal years, resulting in lower earnings, in order to establish a continuous cycle for fast growth
  • Investments, primarily for high-profile advertisements, have the goals of more active stores and more sales per customer
Plan for ARR growth

300,000 active stores First step toward the long-term goal The goal of the medium-term plan is
an ARR of more than ¥5 billion

  • Use advertising and marketing expenditures to increase the number of active stores.
  • Increase sales per customer by increasing the volume of business in the app market.
  • Increase payment processing income by reexamining payment services.
  • Upgrade and expand the functions of Smaregi Time Card.

Information Session For Long-term Vision And Medium-term Management Plan

Information Session Video 2021/3/12

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Chapter

Play from the beginning
  • Introduction 1:24
  • Long-term Vision - VISION2031 1:85
  • Medium-term Management Plan - Plan for Doubling ARR 0:28
  • Medium-term Management Plan - Four Key Activities 6:06
  • Q&A 6:76

Q&A 2021/3/12

Please explain the reasons for your decision to change your previous stance and begin making business investments consisting mainly of substantial advertising and marketing activities?

February 2021 was the second anniversary of our IPO. The IPO generated cash of about 1.5 billion yen to 2.0 billion yen. In the first year after the IPO, the demand for our products and services was high because of one-time demand created by the consumption tax hike and associated reduced tax rates. There was no need to spend money on advertising. In the second year, we decided to use TV commercials and other marketing activities on a trial basis. But this quickly ended because of the state of emergency and the remainder of the year was impacted by the COVID-19 crisis. As a result, most of the funds procured at the IPO are still unused. In our third year as a publicly owned company, based on the outlook for the effects of the COVID-19 crisis to slowly decline, we have decided to step up our expenditures when the timing is right.
Since before the IPO, our goal was to maintain an operating margin of 20%. We are still aiming for rapid sales growth but are instead placing emphasis on the growth of annual recurring revenue (number of customers) as a SaaS business. Consequently, we are no longer aiming to maintain a 20% operating margin and instead plan to take on new challenges with the understanding that our initiatives will result in lower earnings.

Why did you decide to announce your medium-term plan now?

We are now in the last quarter of this fiscal year, so we have a good idea of what our fiscal year sales and earnings will be. This is a time when everyone at Smaregi needs to start taking many actions to prepare for the next fiscal year. Announcing our plan in the third quarter demonstrates our desire to enable our people to start measures early to prepare for activities beginning in the next fiscal year.

There is a chronic shortage of engineers at many companies in Japan. Recruiting talented people is very difficult. What are you doing to differentiate Smaregi from other companies in order to attract these people?

There is no doubt that the increasing demand for IT engineers is making it difficult to hire these engineers. But we do not have a negative view of this situation. To help end the IT engineer shortage, we believe that we should start by taking the initiative to increase the number of people who want to become an IT engineer. In 2020, Smaregi joined the Computer Software Association of Japan and became a member of the Executive Committee of the U-22 programming contest and a sponsor of this contest. We also operate programming classes for students, have sponsorship activities for non-profit organizations, and help hold events where engineers gather to share their ideas.
To train large numbers of engineers, we first need to create a culture that makes people realize that software is interesting work. We are determined to take the initiative to be a source of information within our organization and externally that will play a role in the invigoration of the entire software industry.

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