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MarketScreener Homepage  >  Equities  >  Tokyo  >  Kakaku.com Inc    2371   JP3206000006

KAKAKU.COM INC

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Kakaku com : Summary of Main Questions and Answers at Results Briefing for First Quarter of Fiscal Year Ending March 31, 2020

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08/07/2019 | 06:35am EDT

Summary of Main Questions and Answers at Results Briefing

for First Quarter of Fiscal Year Ending March 31, 2020

The following is a summary of key questions and answers at the results briefing for the first quarter of the fiscal year ending March 31, 2020, held on Thursday August 1, 2019.

Overall

  1. Personnel cost has increased slightly. Is the increase due mainly to hiring direct sales personnel for Tabelog or new graduates?
  1. There are multiple factors involved, including expansion of Tabelog's direct sales force, hiring of both new graduates and mid-career professionals, and salary increases, including across- the-board pay raises. I am unable to disclose the details on hand but I believe personnel cost growth is due to these factors.

Overall

  1. You are forecasting first-half operating profit of 12.5 billion yen on revenue of 28.7 billion yen. The difference between the two implies a first-half operating cost budget of 16.2 billion yen. The difference between 16.2 billion yen and first-quarter operating costs of 7.8 billion yen is 8.5 billion yen. Are you actually planning to spend 8.5 billion yen in the second quarter?
  1. Tabelog's advertising cost will increase, largely because Tabelog will run TV commercials in the second quarter. Additionally, we do not envision that personnel costs will decline. Our initial operating cost budget remains unchanged for now.

Overall

Q What is the timing of your office expansion?

A We plan to start recognizing rent cost on the new office space from November, 2019.

Kakaku.com

  1. In the second quarter, are there any events that would enable Kakaku.com to maintain its robust year-on-year revenue growth rate of 8%? I imagine usage of Kakaku.com would increase if, for example, consumer demand picks up as October's consumption tax hike approaches. Do you expect pre-tax-hike consumption trends to benefit Kakaku.com or growth to slow?
  1. In the first quarter, advertising revenue jumped sharply. In the second quarter to date, trends have not materially changed. Even if nothing special happens in the second quarter, we expect Kakaku.com to grow its revenue at least somewhat. There are divergent views on how much of a consumption surge will be induced by the consumption tax hike, but looking at rates of change in page views on our sites, we are not seeing much evidence of a pickup in demand. The consumption tax hike's impact on our revenue will most likely be minor.

Kakaku.com

  1. In the financial services category, are you seeing any activity in response to the government's plan to issue consumption tax rebates in the form of reward points to consumers who use cashless payments at small retailers once the consumption tax hike takes effect?
  1. The rebate program is driving new credit card issuance because cashless payment modalities, including barcode payments, must be backed by a credit card. Additionally, we

expect demand for comparisons of cards' point rewards and issuance fees to increase. We accordingly believe that the next few years will offer a major opportunity. We intend to help bring about a cashless society by creating better content.

Kakaku.com: Shopping Business

  1. PC parts demand was strong in the first quarter. Was its strength precipitated by the pending discontinuation of support for Windows 7, Windows 8 and Windows Server 2008 in January 2020? If so, do you expect PC-related demand to be strong again next quarter?
  1. We believe demand for both PC parts and PCs themselves will be in a growth trend throughout the current fiscal year.

Kakaku.com: Service Business

  1. In Kakaku.com's service business, was the first quarter's strong revenue growth in the personnel finance and telecom categories driven mainly by external factors or your own efforts?
  1. Both. Our efforts to draw traffic and increase conversion rates by improving content paid off. Meanwhile, commissions have been recovering since last fiscal year, partly by virtue of external factors. We believe our efforts and the external environment were favorably aligned in the first quarter.

Kakaku.com / Tabelog: Advertising Businesses

  1. Kakaku.com's advertising revenue looks good on a YoY basis, but the trend in overall advertising revenue (both Kakaku.com and Tabelog's) looks a bit weak. I assume seasonality is a factor. Could you provide an update? Is there nothing to worry about? Have you had advertiser turnover?
  1. Kakaku.com's advertising business is progressing extremely well. Ad spending has been shifting back to reliable media, particularly among national clients. We expect this trend to continue. Tabelog's advertising revenue was down modestly in the first quarter because cost- effectiveness worsened as a result of a suboptimal transition to a menu model. In the first quarter, we took corrective action to successfully develop client-specific menus. We now expect Tabelog's advertising business to progress as planned, with its revenue growing to approximate parity with Kakaku.com's advertising revenue.

Tabelog

  1. I believe your TV advertising budget for the current fiscal year is 50% bigger than last fiscal year's. You do not seem to have spent much of it in the first quarter. What are your TV advertising plans and timetable?
  1. We have TV commercials, among other advertising, scheduled in the second quarter from August through September. Inclusive of the fiscal second-half, we are still projecting a roughly 50% year-on-year increase in spending on TV advertising. However, how much we advertise at year-end and fiscal year-end is subject to change in response to then-prevailing conditions. If advertising rates are cheap, we might increase our budget. We have not set a definite limit at present. Because we did not advertise on TV in the first quarter, we earned somewhat more profit than we otherwise would have, but our advertising program is proceeding as we planned.

Tabelog: Restaurant Promotion Business

  1. How much is average monthly revenue per restaurant for new and old fee plans?
    A It is 36,000-37,000 yen for the new plans and just under 20,000 yen for old ones.

Tabelog: Restaurant Promotion Business

  1. You said you are strengthening direct sales, but aren't seeing any impact from this. How much progress have you made?
  1. We are strengthening direct sales but perhaps not enough to have a noticeable numerical impact yet. Our existing fee-based service plan subscribers signed up mostly through agencies. Direct sales' share of total new fee plan subscribership is about 30%. I believe strengthening our direct sales will result in major change over the next 1-3 years relative to where we are today.

Tabelog: Restaurant Promotion Business

  1. Could you provide an update on Tabelog's transition to its new fee plans with respect to how restaurants are currently responding, your strategy once the transition has been completed, and the transition's scheduled completion date?
  1. The transition to the new fee plans and acquisition of new subscribers are generally progressing in line with our internal plan. Nothing in particular has changed since the fourth quarter of last fiscal year. We aim to further expedite growth in fee-based service plan subscribership, particularly new-fee plan subscribership, through year-end and fiscal year- end. We have not yet set a timeline for converting all subscribers to the new fee plans. Once the number of remaining old fee plan subscribers falls below a certain threshold, we intend to internally decide upon a plan from among several options.

Tabelog: Restaurant Promotion Business

  1. I am curious about subscribership growth inclusive of both new and old fee plans. Could you comment on new sign-ups and cancellations?
  1. New sign-ups are growing even on a quarter-on-quarter basis. Cancellations temporarily increased substantially, partly because we lost a number of large corporate subscribers. With new sign-ups holding up well, we believe we can continue to grow subscribership.

Tabelog: Restaurant Promotion Business

  1. The quarterly net increase in new fee-based service plan subscribership has been decreasing every quarter and net growth in total subscribership also has been slowing. Are you planning any initiatives, promotions, or events to change the current trend?
  1. We will get new sign-ups growing again by improving site functionality, advertising on TV, and focusing on online reservations. Additionally, we believe we can increase the current growth rate if we can reduce to at least some extent cancellations by sufficiently impressing upon restaurants Tabelog's customer drawing power. I cannot give you a timeline, but as long as there is a market and Tabelog remains a restaurant discovery and reservation site supported by legions of users, we are confident that subscribership will grow.

Tabelog: Restaurant Promotion Business

  1. I assume you are implementing strategies to capture reservations for large parties heading into the year-end party season, but the reservation booking growth rate does not appear to have materially changed yet. How much progress are you making in increasing average reservation party size and how is the response to efforts targeted at the year-end party season?
  1. We have room for improvement in terms of collecting and better presenting information that was previously lacking such as information on "all-you-can-drink" plans or "saké

connoisseurship". We plan to steadily address such shortcomings. We want to make Tabelog a useful site even for users looking for a restaurant to host a banquet or party, but we plan to make steady improvements instead of rapidly increasing reservations' average party size by the year-end party season. We are also making changes so that restaurants that have previously not made many seats available for online reservations will make more available. Through such improvements, we are laying the groundwork so users who visit the site to book reservations for large parties do not end up leaving without making a reservation. By doing so, we believe we can increase reservation numbers.

New Media & Solutions / Finance Businesses

  1. Your stance toward new media seems to have changed somewhat. Previously, I think you quite flexibly and efficiently launched new businesses in rapid succession. Are any costs such as advertising going to increase?
  1. Our stance has not materially changed. We sowed a number of seeds and some of the plants are now bearing the fruit. Even in businesses that have yet to incur advertising costs, we may spend money on advertising as warranted by their size and other attributes.

New Media & Solutions / Finance Businesses

  1. Which businesses will contribute to increasing the new media & solutions and finance businesses' share of revenue to 20%?
  1. Sumaity and Kyujin Box serve huge markets. Time Design also has a large market in that it can reach out to hotels throughout the world, although its gross margin is not so high. We expect big contributions from categories with large promotion costs.

New Media & Solutions / Finance Businesses

  1. The New Media & Solutions business is now growing very robustly but is its growth sustainable? Also, what can you qualitatively tell us about your mindset, organization, resource allocations, etc., with respect to strengthening the new media & solutions business?
  1. Rather than being in a growth trend, the new media & solutions business has previously had little revenue and a fluctuating growth rate. The media that are currently growing have sizable usership and revenue and have completely settled into growth trends, or are well positioned in their industries. A case in point is eiga.com. Another is Time Design. Even Sumaity is growing its monthly usership. We are confident that these services are on track.

New Media & Solutions / Finance Businesses: Sumaity

  1. I think you increased Sumaity's commission rates. What prompted you to do so and are the increases temporary or permanent?
  1. We did not really raise commission rates. In some cases, commission rates improved because we negotiate terms on a client-by-client basis, but we did not raise commission rates across the board. One reason we have high hopes for Sumaity is that it now increasing unique users. It has reached the point where it can benefit from economies of scale. We can now promote it very well, including through search engine marketing.

New Media & Solutions / Finance Businesses: Kyujin Box

  1. When will employers be able to directly post job openings on the Kyujin Box site? I believe Kyujin Box derives most of its revenue from HR recruitment media. Is it adopting a model that accepts ads directly from employers through direct job postings?
  1. Employers are already directly posting job openings on the Kyujin Box Saiyo (Hiring) Board and this is progressing steadily. We plan to also expand to a business model that collects

advertising revenue directly from employers.

New Media & Solutions / Finance Businesses: Kyujin Box

  1. Will Kyujin Box's profit growth initiatives involve many sales personnel? Taking costs into account, what kind of growth are you projecting?
  1. We of course need qualified sales personnel, even when we use agencies. That said, how many sales personnel are specifically needed to bring in revenue differs by company. Our hallmark is that we place top priority on upgrading our content capabilities. Additionally, we are migrating from analog sales to online sales. Amid such a trend, we will determine how much to use in-house sales personnel versus agencies in accordance with businesses' operational progress and appropriate profit margins, but we are not expecting to incur heavy sales force costs.

New Media & Solutions / Finance Businesses: Kyujin Box

  1. Does Kyujin Box display job openings posted on its Saiyo Board at the top of search results? If not, are you planning to add such a feature?
  1. Kyujin Box does not have such a feature at present. We are thinking of adding various features in the future, but I cannot definitively say anything about any one feature at present. We will explain in due time.

New Media & Solutions / Finaance Businesses: Kyujin Box

  1. What is your approach to ranking Kyujin Box's search results when users web search engine?
  1. Keywords are currently displayed atop the search results. It's the factor that unique users are increasing. However, rankings are a result. Our focus is on our changes in users' actions. For example, we optimize content to minimize visiting user bounce rates.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Kakaku.com Inc. published this content on 07 August 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2019 10:34:07 UTC

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Net income 2020 18 552 M
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