Ｒｅｔｔｙ（7356） – [Delayed]FY2022.9 ２Q Presentation Material

FY2022.9 2QPresentation MaterialRetty Inc.May 2022Table of ContentsSecond Quarter Results for the Fiscal Year Ending September 30, 2022Full-Year Results Forecast for the Fiscal Year Ending September 30, 2022123Growth strategy(Supplementary Material)2Executive Summary2Q results✓ Q2 progressed as planned despite being under the influence of the state of semi-emergency.✓ Sales in the first half of the year were 47% of the annual plan, and progress was made as planned.FY2022 full-year forecast✓ The state of semi-emergency of January-March 2022 is within expectations, and there is no change to the full-year earnings forecast.Growth strategy✓ On April, a total of 20 new graduates entered the company as sales personnel and several new distributors started operations, solidifying the footing for future growth.✓ Continued investment based on internal data and feedback from customers confirming a recovery trend in sales promotion.3Table of ContentsSecond Quarter Results for the Fiscal Year Ending September 30, 2022Full-Year Results Forecast for the Fiscal Year Ending September 30, 2022123Growth strategy(Supplementary Material)41Results Highlight▶ In the second quarter, Net sales were 414 million yen and operating loss came to 160 million yen. As a result, cumulative Net sales were 842 million yen and operating loss was -324 million yen.▶ The number of paying member restaurants totaled 8,382.▶ Investments to lay the foundation for future growth are being made as planned, and costs are under control.51Summary of the Second Quarter ResultsIn the second quarter, Net sales were 414 million yen and operating loss came to 160 million yen. As a result, cumulative Net sales were 842 million yen and operating loss was -324 million yen.Results for Fiscal Year Ended Sept. 20222Q cumulative resultsFull Year Forecast(million yen)Net salesGross profitOperating lossOrdinary lossNet lossGross profit to net sales ratioOperating profit to net sales ratio842457-324–325-3261,810-674—–61Quarterly Net Sales CompositionSales of FRM were 295 million yen for the Second quarter, while those of advertisement / contents came to 117 million yen.Quarterly Net Sales Composition (million yen)FRM 広告コンテンツAdvertisement / contents6005004003002001000147130137123 90 117373 337332353336 2952021/1Q2021/2Q2021/3Q2021/4Q2022/1Q2022/2QAdvertisement / contents・Although there were some projects that were postponed from the previous quarter However, sales were generally in line with the plan.・Gave 6 million yen worth of payment exemptions for the Second fiscal year to restaurants that remained closed in 2QFRM・The number of new participating restaurants in the second quarter did not recover significantly due to the declared state of semi-emergency, and a full recovery was carried over to April and beyond.*1 FRM is an abbreviation for Fan Relationship Management. It is a business that provides restaurants with solutions with functions for attracting customers and managing customers for a monthly fee.71Jan.-Mar. operating conditionsAlthough a state of semi-emergency was declared for the 2Q, the number of new participating restaurants gradually increased.SalesNumber of member restaurantsAverage revenue per user (ARPU)Volatility factors of the number of member restaurantsNumber of new member restaurantsCancellation ratio*1290-346 per monthAbout 2.7%(Increase on a monthly basis)(Average for Apr. 2021- Mar. 2022)ARPU*2On a basis of store selling price17,000 yenOn the income statement13,100 yen(As of the end of Mar. 2022)*1 The average of the number of restaurants that cancelled their contracts at the end of the contract period and at the time of renewal, as a percentage of the total number of member restaurants.*2 ARPU based on store billing (including options), excluding trial stores (in which we receive orders for a large number of restaurants as a trial at a low price and in bulk for major restaurant operators).81Increase in the number of premium-booking restaurantsInitially, the strategy for premium-booking restaurants was to offer the system free of charge and then gradually shift to a fee-based system, but the strategy was changed to a fee-based system from the start of the contract,resulting in a steady increase in the number of fee-paying restaurants.Strategy changedProvided free of charge at the start of the contractOffered for a fee from the start of the contractNumber of premium booking restaurants1,4001,2001,0008006004002000Free to use restaurants無料利用店舗有料利用店舗Paying restaurants0 0 0 1,013 0 1,220 624 642 687 763 834 20/0920/1221/0621/0921/1222/039233 21/031Number of FRM paying restaurants (including premium-booking restaurants)In 1Q 2022, the number of paying restaurants totaled 8,382, including premium booking restaurantsQuarterly trends in the number of paid stores (restaurant)8,668（FY2022-1Q）8,382（FY2022-2Q）└ paying member restaurants (7,905)└ Premium booking restaurants (763)└ paying member restaurants (7,548)└ Premium booking restaurants (834)Regular contracts are trending upward12,00010,0008,0006,0004,0002,000014/0614/1215/0615/1216/0616/1217/0617/1218/0618/1219/0619/1220/0620/1221/0621/12101Trends in Cost StructureIncrease in personnel and recruiting costs due to investments, which are under control and progressing as planned.Quarterly Cost Trends (million yen)Includes one-time expenses of 251 million yen, such as promo expenses in conjunction with GtEIncluding 95 million yen of investment for the purpose of maintaining and expanding the sales staff structure, which had previously been planned.900800700600500400300200100019 166 254 30 42 12 78 61 26 42 30 112 73 29 42 282 10 80 76 31 36 9 79 62 25 36 30 74 65 26 36 25 161 77 27 36 23 74 91 35 36 30 69 80 31 36 297 295 289 294 297 319 338 312 2020/1Q2020/2Q2020/3Q2020/4Q2021/1Q2021/2Q2021/3Q2021/4Q2022/1Q労務費＋外注費地代家賃サーバー代その他経費販売促進費広告制作原価11Table of ContentsSecond Quarter Results for the Fiscal Year Ending September 30, 2022Full-Year Results Forecast for the Fiscal Year Ending September 30, 2022123Growth strategy(Supplementary Material)122Relationship between COVID situation and performance in the futureThe infection situation to date has been in line with the scenario incorporated in the plan. The future external environment will require close monitoring.✓ The state of semi-emergency , which has already been completed, has already been incorporated in the plan, as we have been assuming a certain degree of impact since the plan was formulated.✓ No further emergency declarations are anticipated in the plan, and the plan may need to be revised if such declarations are issued again.132Full-Year Forecast for Fiscal Year Ended September 2022Full-year forecasts are maintained because the state of semi-emergency to be issued from January to March 2022 was factored into the plan.FY 2021/09ResultsNet sales1,938 million yenOperating loss-283 million yenPremise of the planSpring 2022Full-scale sales promotion recovery•••The number of customers at restaurants has began recovering.At the same time, we also incorporate the possibility of a resurgence of COVID-19 infections through this winter.Based on these, we have made an assumption that restaurants’ appetite for sales promotion will fully recover from around spring 2022.FY2022/09Results forecastNet sales1,810 million yenOperating loss-764 million yenIncluding investment of 47114Table of ContentsSecond Quarter Results for the Fiscal Year Ending September 30, 2022Full-Year Results Forecast for the Fiscal Year Ending September 30, 2022123Growth strategy(Supplementary Material)153Purpose of this year’s investmentThe current external environment has been factored into our assumed scenario, and we expect a recovery in the willingness of restaurants to promote sales in the future. Therefore, investments are being made as planned for the current fiscal year.Investment inrestaurant sales channels150 million yenHiring of direct sales staffExternal salesEstablishment of a systemInvestment in DX products320million yenImprove convenience of existing servicesDevelopnew productsIncrease in the number of newly participating restaurantsImprove convenienceImprove ARPU 163Progress in investment in restaurant sales channelsInvestments in the sales channel, including the hiring of direct sales personnel and the establishment of new distributors, have progressed well and laid the foundation for future growth.Investment in direct sales(73 million yen)• Very high rate of member restaurant acquisition per •personTo hire about 30 new graduates for the current fiscal yearInvestment in establishment of an external sales system (80 million yen)• Aim for significantly expanding the scale with the introduction of a new outsourcing contract* with an initial lump-sum payment20 employees joinedBecoming a workforce in an average of 3 monthsSeveral companies started operationsprogressing as planned173Progress in investment in restaurant sales channels20 new graduates joined the company as salespeople in April, and after 10 days of training, they will become full-fledged employees after an average period of 2.6 months.Average length of time for new hires to enter the workforce ※2.6months20名※ The average period from the time a new graduate employees begins sales activities until they are able to produce sales result figures equal to the employee 18average is calculated based on past results.3Increase in the number of performance fee-based restaurants among paying restaurantsThe number of restaurants subject to performance fee (fixed charge plus performance fee-based charge) increased steadily to about 3100. This will be an upside factor for sales by boosting the number of users in the future.Overview• A scheme that adds on a fixed price• Unit cost is 200 yen per dinner booking• Of the paying members, it has been incorporated into more than 2,500 restaurants32% UP3,119 2,518 User• Users will receive a PayPay bonus when they make online reservations at participating stores.Restaurants• Since it is linked to the PayPay bonus, restaurants can expect to attract customers from the PayPay economic zone.12月December20212021年3月March20222022年193,5003,0002,5002,0001,5001,00050003 Progress of product development in the first quarter (excerpt)Various developments are underway to improve user convenience and increase bookings accordingly.PayPay Bonus Campaignto increase the number of online reservationsCertification of 121 TOP USERto strengthen the restaurant searchRenewal of popular restaurant labels to strengthen the restaurant searchImproving application functions to enhance the online reservation experience203Target Market of FRMFocus on swiftly converting 60,000 potential restaurants to member restaurants once the state of emergency is lifted700,000 restaurants in Japan*1Total of 600 billion yen in sales promotion expensesPotential market for attracting customers*2300,000 restaurantsCaptured market among parallel users*360,000 restaurantsRetty members:10,000 restaurantsIncrease orders with cost performance and sales effortsTake on challenges such as new alliances*1 Based on figures from Ministry of Economy, Trade and Industry (METI): Food Business Index 2016 (Food Service Operations [as of 2014])*2 Calculated by multiplying the number of restaurants located in Tokyo and other prefectures with ordinance-designated cities by the ratio of restaurants who responded “monthly expense for new and repeat customer attraction is 5,000 yen or more” to the survey (survey on sales promotion [as of March 2018]) by LINE Corporation.*3 Calculated based on number of members at the end of June stated on the earnings result materials of competitors by taking into consideration the rate of parallel users. 213Current status of the sales promotion market in the restaurant industryAs shown below, we have confirmed a strong need for stronger sales promotion in the food and beverage industry. We intend to capture this need through ongoing investments, leading to a strong growth.Want to focus on attracting new customers in the future Restaurants reach 82%.77% of respondents said they will focus on attracting new customers within the next 3 months.Not need new customers promotionNeed new customers promotion新規顧客に対する集客意欲はない積極的に新規顧客に対して集客を行いたいnow今すぐ3ヶ月以内 半年以内 半年以降 予定はないafter 6mnot planningin 3min 6m※ We are conducting a survey of our paid and free store members in May 2022.223Boost from changes in the external environmentRegarding the external environment surrounding the restaurant industry, positive changes have emerged, including active discussions on reclassification of the new coronavirus and the prospect of resumption of acceptance of foreign visitors to Japan.Discussion of reclassification of novel coronaviruses also gains momentumAcceptance of inbound tourists is expected to resume※Source: Jiji.com News※Source：THE SANKEI NEWS233Focus on laying the foundation for the coming growth phaseBased on the aforementioned survey and our internal sales KPIs, we recognize that we are currently just before the recovery phase. Steadily laying the groundwork for future recovery and normal growth phases.2020.012021.012022.012023.01NOWTemporary recovery due to government-led campaigns, etc. Temporary recovery due toCurrently, a gradual market is beginning to show signs of recovery.GrowthPhaseRecoveryPhaseRecoveryPhaseStagnationPhaseStagnation PhaseCorresponding PhaseRepeated declarations of a state of emergency have stalled the market.243Current cash marginMaintain ample funds to invest for future growth by increasing the amount of subordinated loans and overdraft facility.Existing credit facility420 million yenCash and deposits1,219[As of the end of March, Unit Millions of yen]Current liabilitiesNon-current liabilities779544Net assets814Other current assetsNon-current assets606313AssetsLiabilities, net assets253ESG Initiatives at RettyBased on advice from experts, we have summarized our approach and initiatives on ESG issues and published them on our corporate website. Our Approach to ESGWe believe that by advancing our business activities based on our vision of “Shaping a new food experiencefor a happier future,” we can contribute to solving environmental and social issues. We will realize a sustainable society by using technology to update the area of food, which is deeply related to all people.Translated with www.DeepL.com/Translator (free version)https://corp.retty.me/en/esg/263Creation of an image video to accompany the vision updateShaping a new food experience for a happier futurehttps://www.youtube.com/watch?v=DEjr2bWpiII27Supplementary MaterialsBoard of DirectorsCEOHead of HROutside DirectorKazuya TakedaHe founded Retty Inc. in 2010. Prior to founding the company, he was engaged in marketing-related businesses such as Internet advertising sales at Net Age, Inc. After leaving the company, he stayed in the U.S. West Coast to prepare for starting his own business. After returning to Japan, he founded Retty with co-founder Natsuka in order to contribute to the prosperity of Japan’s world-class food culture.Tetsuya NatsukaCo-founder of Retty. After being in charge of development and initial growth, he is in charge of strengthening governance and the HR area.Kosuke HondaHe has served as a director and senior managing executive officer of Recruit Co. He has served as an outside director for many IT companies.Outside DirectorAudit committee memberOutside DirectorAudit committee memberOutside DirectorAudit committee memberIzumi OsugiAfter working for KPMG AZSA & Co. as a CPA, she served as an outside director for several companies before assuming his current position.Issei MoriAs an attorney, he specializes in start-up and venture business legal affairs. He also serves as an outside director of Demaekan Co.Yuka UeharaShe has served as head of divisions in charge of fundraising through IPOs, stock markets, etc. at several securities firms in Japan and the U.S., including Merrill Lynch.29Executive OfficersHead of SalesVPoEVPoPTaro AndoAfter working for Recruit Co., Ltd. as the person in charge of HPG in the Tokyo metropolitan area, he worked for Bellsystem24 before joining Retty.Akihiro KosakoAs an engineer, he also experienced planning, design, etc. in multiple startups before joining Retty. He currently serves as VPoE.Hiroki NoguchiAfter working at Speee Corporation, he joined Retty in 2015. Prior to his current position, he served as Growth Team Manager and Head of HR.CFOHead ofIR & Corporate Planning OfficeHead ofBusiness Management OfficeYuzaburo TsuchiyaJoined Retty after working for an audit firm, a strategy consulting firm, a PE fund, and a secondment (as a director) to Hotland Co.Kenta OkudaAfter working for Mitsubishi Corporation in the screening of investment and loan projects, he joined Retty as CFO in the early stage.Kanji KawanoHe joined Retty in 2016 after serving as head of the sales department at a website development and management company.30Service ImageFind the BEST restaurant for you31Retty Inc.Real-name typeRecommended ReviewsLook for “people”without score ratingYou can find a restaurant suitable for yourself from a reliable person.Real name-based gourmet platform32Business modelBuilding customer base / Customer AttractionRettyFRM※1Monthly FeeRestaurantsForfreeEnd usersProviding advertising and accumulated content utilizing RettyAdvertisementContentsFee per advertisement etcAdvertiser※1 FRM: Fan Relationship Management33Platform enabling stable customer attractionNew customersStockIncreased accessDineRepeat customerCustomer management34Approach and Initiatives Regarding Restaurant Industry Amid COVID-19 CrisisWe will implement the following initiatives with top priority on the revival of the restaurant industryWaive fees for restaurants in Go to Eat CampaignUse SNS as a public relations tool for Restaurant Support ProjectWaive fees of cloud funding for restaurants in a joint effort with CAMPFIRELaunch takeout products in response to requests by restaurants Develop Mobile Order products, which optimize restaurantoperations in COVID-19 crisis.35Parallel User Market, Where Many Restaurants Use Multiple Restaurant Review ServicesThe number of services used by restaurants to attract customers*14media12%1media33%2media7%Parallel user ratio70%3media49%*1 Agencies conducted a questionnaire survey of restaurants including non-Retty users in July and August 2017.3636Composition of FRM’s products and member storesProduct outline“Regular contract”Paying restaurant membershipPerformance fee targetsNo performance feeProducts to attract customersbased on fixed + performance fees targeting individual stores, the product for new regular contracts in the future.Traditional monthly fixed fee-based products to attract customers that are basically not or sale at present.Target restaurants(Number of target customer restaurants)Individual stores(Several hundred thousand restaurants)“Trial contract forchain restaurants”A fixed price products to attract customers which collectively receive orders from a large number of restaurants as a trial at a low price for major food and beverage companiesChain restaurants(About 50,000 restaurants)PremiumbookingPerformance fee-based products to attract customers with no fixed monthly fee for some popular restaurants and exclusive restaurantsNewly disclosed from this quarterExclusive and popular stores(About 30,000 restaurants)Non-paying restaurant membershipA product that allows the use of minimum functions such as modifying basic information on Retty. For us, it is positioned as a potential customer for paid restaurans membership.All restaurants37Trend in Marginal Profit RatioWe maintained marginal profit ratio at a similar levelTrends in marginal profit*1, fixed costs*2 (million yen), and marginal profit ratio80.2%82.1%76.9%1,604 1,705 1,434 75.2%1,522 1,300 1,910 1,749 75.6%1,465 1,626 73.4%1,021 1,041 433 ”Expenses for supporting agency operating framework” and “GtE promotion fee” are included in variable and fixed costs, respectively.2,0001,8001,6001,4001,2001,000800600400200076.6%969 644 90.0%80.0%70.0%60.0%50.0%40.0%30.0%20.0%10.0%0.0%2016/9期2017/9期2018/9期2019/9期2020/9期2021/9期2022/9期-2Q固定費限界利益限界利益率·*1 Marginal profit is calculated by subtracting variable cost from net sales. Variable cost is the sum of production cost which is the cost of production for advertisement/contents solution business, and sales promotion cost which is the fees paid to agencies for restaurant customer attraction business.·*2 Fixed cost mainly comprises of costs other than variable costs such as personnel cost, communication cost (server cost), and land and building rent.38Type of sales channel• Agencies with sales persons who sell products of both Retty and other • Restaurants sign a contract with the agencies• Sales are recorded net after deducting the agencies’ fees. ARPU 併売代理店Agency concurrently selling other productscompanies.appears low.products• Agencies that have secured sale persons dedicated to selling Retty Exclusive agency• Retty directly signs contract with restaurants• Sales are recorded gross, and fees to the agencies are recorded as 併売代理店sales promotion costDirect sales• Sales persons directly employed by Retty併売代理店• Started hiring new graduates exclusively for sales in April 201939Expanding the range ofvalue provided to restaurants by expanding DX productsInvesting approximately 320 million yen, the company aims to increase ARPU by providing a group of products that can be customized by restaurants to meet their needs.A group of new products40Mobile Ordering Helps Restaurants Improve Operational EfficiencyComparison of order taking workflowExistingOrder systemMobileOrder system1. Take ordersStoreCustomer2. Communicate order to kitchenStoreAuto3. Bring out foodStoreStore4. PaymentStoreCustomerSignificantly reduce tasks by restaurant(Enables better pricing/investment in quality of food)41お客様自身のスマホから注文WinRestaurantSave on laborWinCustomerImproved convenienceCapture offline dataImage of growth to be achieved through this investment42Shareholder’s compositionShareholder’s composition（as of Mar. 2022）VC Others0.94% 1.29%Our company’s personnel Individualinvestor23.24%35.36%Z Holdings16.92%6.28%15.97%Domestic institutionalinvestorsOverseas institutionalinvestors43Company ProfileCompany nameRetty Inc.HeadquartersSumitomo Fudosan Azabujuban Building 3F, 1-4-1 Mita, Minato-ku, TokyoEstablishedNovember 2010Capital630 million yenEmployees129Stock exchangeTokyo Stock Exchange GrowthSecurities code735644DisclaimerThis material is not intended for soliciting investments in securities issued by the Company.Forward-looking statements in this material are based on information available to management at the time this report was prepared and assumptions that management believes are reasonable, and does not represent a guarantee from the Company that they will be achieved. Actual results may differ significantly from these statements for several reasons.