company overview and earnings results for …... company overview and earnings results for fy08/19...

www.shiftinc.jp

Company Overview and

Earnings Results

for FY08/19 Q3

Investor Briefing

SHIFT Inc. (TSE Mothers：3697)

July, 2019

www.shiftinc.jp

AGENDA0

2

1. Performance in Q3 FY08/19

2. Action Plan and Q3 Results

3. Reference Materials

www.shiftinc.jp

1．Performance in Q3 FY08/19

3

www.shiftinc.jp

FY20193Q

Net sales were 1.5x the level we achieved in Q3 FY08/18 (of ¥9.253 billion). We moved forward with management focused on profit generation while continuing to cultivate new customers. The results were in line with plan.

We began raising approx. ¥5.0 billion through moving strike (MS) warrants from March 2019. By combining a scheme under which permission is required to exercise the warrants with IR strategies, we achieved strong performance compared to conventional (general) MS warrants.

SHIFT’s recognition is improving through mass media advertising measures, and this continues to strengthen our recruiting efficiency. As a result of expanded recognition, one in seven individuals seeking a job in the IT industry through a recruitment agency applies to SHIFT.

Remained on steady growth track with an eye toward

achieving full-year results and next fiscal year

Successful fundraising efforts provide foundation for medium-to long-term growth

Accelerated recruitment through improved recognition driven by commercials and other measures

1

4

2

Executive Summary1

4

Customers recorded sales of each accounting period is increasing every quarter; over 500 customers in this Q3.

The number of customers of each accounting period ismaintaining a steady upward trend3

We aim to realize a smart society, devoid of waste. By growing as a group company, we will enhance corporate value on an ongoing basis. As we do so, we intend to position ourselves as a leading company offering high added value and guaranteed quality.

Business

policy for

FY08/19

Gross profit: Operating profit:¥4.331bn ¥894mn

Q3 FY08/18:Q3 FY08/18: Q3 FY08/18:¥9.253bn (1.48x) ¥904mn (0.9x)¥2.784bn (1.56x)

SG&A expenses: ¥3.437bn

Q3 FY08/18: ¥1.880bn (1.83x)

¥13.649bnNet sales:

Performance in Q3 FY08/19

www.shiftinc.jp 5

Net sales rose 1.5x YoY due in part to contributions of two new group companies. The gross profit margin declined temporarily, but we target a higher level than before through post-merger integration (PMI).

1

(Millions of yen)

Q3 FY08/2019 Q1-Q3 FY08/2019

ResultsQ3 FY08/18

ResultsQ1-Q3 FY08/19

ResultsIncrease

(decrease)Results

Increase(decrease)

Net sales 5,377 3,452 55.7% 13,649 9,253 47.5%

Gross profit 1,645 1,086 51.4% 4,331 2,784 55.6%

Gross profit margin 30.6% 31.5% (0.9)pt 31.7% 30.1% 1.6pt

SG&A expenses 1,234 723 70.6% 3,437 1,880 82.8%

Operating profit 410 363 13.0% 894 904 (1.1)%

Operating profit margin 7.6% 10.5% (2.9)pt 6.6% 9.8% (3.2)pt

Ordinary profit 408 369 10.6% 888 932 (4.7)%

Profit before income taxes 408 369 10.6% 901 932 (3.3)%

Profit attributable to owners of parent 255 226 12.6% 517 567 (8.8)%

Performance in Q3 FY08/19Consolidated Balance

Sheet

※PMI：Post Merger Integration

www.shiftinc.jp

1,363

2,032 2,267

2,509 2,657

3,143

3,452 3,539

3,954

4,317

5,377 5,850

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

FY2017 FY2018 FY2019

6

Net sales have continued to grow for 11 consecutive quarters, reaching a new high. This was attributable to steady progress with M&A, the acquisition of new customers, and expansion of business with existing customers.

Consolidated Net Sales, by Quarter

Q3 Growth Factors

・Sharp rise in customer numbers in the insurance industry and expansion in transaction value/company as a result of efforts to capture projects in the finance field in each quarter of the fiscal year

・SAP-related sales beginning to grow steadily

・Contributions from two new group companies


(Millions of yen)

Net Sales, by Quarter

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY08/2017 FY08/2018 FY08/2019

1

www.shiftinc.jp

29.3% 29.2%

31.5% 31.3%32.1%

32.8%

30.6%

8.8%9.8%

10.5%

8.4% 8.1%

3.8%

7.6%

20.6% 19.4%

21.0%22.9%

24.0%

29.0%

23.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0

500

1,000

1,500

2,000

2,500

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

FY2018 FY2019

売上総利益営業利益売上総利益率営業利益率販管費比率

7

Gross profit and operating profit also reached new highs.The SHIFT group continued to expand.

Q3 Growth Factors

<Gross Profit>・The gross profit margin fell temporarily due to the addition of new companies to group. Plan to pursue improvement through PMI

・Assigned personnel in anticipation of growth at major customers from Q4. Positioned such assignments as investment in future growth

<SG&A, OP>・Kept SG&A expense levels under control while recruiting a record number of human resources

・Continued branding activities to improve recognition and accelerate recruitment. Placed transit ads in major train stations and taxis in the Tokyo metropolitan area.

Consolidated Profit, by Quarter

Performance in Q3 FY08/19 Profit, by Quarter

(Millions of yen)

GrossProfit

OperatingProfit

Gross profitmargin

Operating profit margin

SG&A expense ratio

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY08/2018 FY08/2019

1

www.shiftinc.jp 8

Performance by Category

Overview

Overview

• We accelerated efforts to cultivate new customers in the SAP and insurance fields, and corresponding sales rose steadily.

• Amid growing needs for operational improvements at companies, there was an increase in projects undertaken jointly with strategic and general consulting companies.

• We are continually expanding test automation, support for agile development, and API tests at leading companies in the finance industry.

• We continue to expand our market share for major titles in the social games field. Companies are transitioning away from small-scale, on-premise testing and expanding off-site testing.

• Testing needs for major titles in the consumer games field are rising.

• SHIFT PLUS is expected to start making earnings contributions following its conversion into a consolidated subsidiary.

(Millions of yen)

(Millions of yen)

304 288

318

393

343 345

400 427 444

464

585

97 85 96 122

104 92 108 119 105 114

131

32.1%

29.6% 30.3% 31.2% 30.3%

26.9% 27.1%28.1% 23.8%

24.7%22.4%

0.0%

10.0%

20.0%

30.0%

40.0%

0

100

200

300

400

500

600

700

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

FY2017 FY2018 FY2019

売上高セグメント粗利セグメント粗利率

1,059

1,744 1,949

2,115 2,314

2,798 3,052 3,112

3,510 3,853

4,791

302 452 506 616 675

825 978 987

1,164 1,302 1,513

28.5%

25.9% 26.0%

29.1% 29.2% 29.5%

32.0% 31.7%33.2% 33.8%

31.6%

0.0%

10.0%

20.0%

30.0%

40.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

FY2017 FY2018 FY2019

売上高セグメント粗利セグメント粗利率


Ente

rprise

Ente

rtain

ment

Net sales Segment gross profit

Segment gross profit margin

Net sales Segment gross profit

Segment gross profit margin

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY08/2017 FY08/2018 FY08/2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY08/2017 FY08/2018 FY08/2019

1

www.shiftinc.jp

103 104 115 123 125 146 160 193 228 341 383 409678 743 808 849 876 905 995

1,158 1280 13751711

138 192 190 234 276 300 335 371 433404 415 372

231298

376 425 366 418451

476531

585

1050

40 64 85 59 51120 145 144

207189 164 114

254244

274289 374

527452

420

454

509

624

281 360 390 416 452566

640 708868

934 962 895

11631,285

1,458 1,563 1,616

1,850 1,898

2,054

2,265

2,469

3,385

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

9

Number of Engineers

Partners Engineers(Fixed-term)

Engineers(Permanent)

As of May 31, 2019

Engineers (Consolidated Basis)

Our number of engineers is growing steadily thanks to measures to strengthen our recruiting capabilities and M&A activity


• Figures indicate the effective number of engineers for

which contracts were in place at the end of the period.

• Registered part-time employees are not included.

• Back-office personnel area not included.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY08/2015

Q1 Q2 Q3 Q4

FY08/2016

Q1 Q2 Q3 Q4

FY08/2017

Q1 Q2 Q3 Q4

FY08/2018

Q1 Q2 Q3

FY08/2019FY08/2014

1

www.shiftinc.jp

459 452

427

463482 483

507526

515

539

589

551

592576

590 583598

646 653638 637

648635

300

400

500

600

700

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

10

Unit Price for Engineers

We added four new companies to the group, and are promoting PMI to further increase the unit price for engineers. We plan to strengthen collaboration in sales and recruitment.

• We added four new companies to the group via M&A in March

• We are strengthening sales collaboration as part of PMI• System I Co., Ltd.: Won high-value project through

sales collaboration• SHIFT PLUS Inc.: Won customer service project in

enterprise market• We are expanding sales through cross-selling of high-

value-added services

Unit Price for Engineers (Consolidated Basis)


(Thousands of yen)

Supply

• Stronger technical skills

• Prime customers

• Cross-selling

• Increased productivity

Unit price

for

engineers

Number

of

engineers

• Good recruiting capabilities

• High retention rate

• Salaries and evaluation

systems

• Employee satisfaction

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY08/2015

Q1 Q2 Q3 Q4

FY08/2016

Q1 Q2 Q3 Q4

FY08/2017

Q1 Q2 Q3 Q4

FY08/2018

Q1 Q2 Q3

FY08/2019FY08/2014

1

www.shiftinc.jp

3,437

3,041

3,945

3,426

4,787

5,166

4,856

5,402

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

51

91

107

154

196

245

274 277 FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

444

495

540

577

629629632665

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

393

549

761 771

1,213

1,498 1,571

1,816

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

11

1 KPIs

111% 101% 116%105%

*PM: Project Manager


Monthly Sales per Customer Unit Price for EngineersNumber of Customers Number of Engineers

Note: Excludes internal R&D engineers and people undergoing trainingNote: Excludes small customer transactions involving Hinshitsu

University, and CAT licensesNote: All companies with which the company

conducts transactions, including for Hinshits

University and CAT licenses

(Average number

of people during

the quarter)

(Thousands

of yen)

(Companies)(Thousands

of yen)

We steadily expanded our services horizontally at existing customers, and increased services with high unit prices for engineers such as project management, contributing to higher monthly sales per customer. This trend is expected to accelerate going forward.

Parent-only

*Due to the change of calculation method from this quarter, there are changes in some past numbers.

www.shiftinc.jp

3,437

3,041

3,854

2,056

2,934

3,1733,062

3,554

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

51

91 119

348

392

462

497

548 FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

450

502

550585

635638659

635

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

393 549

830

1,152

1,681

2,054

2,186

2,779

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019-1

Q

FY2019-2

Q

FY2019-3

Q

12

1 KPIs

116％ 110％ 127%96%

By adding four companies to the group, our number of customers and engineers both increased sharply. Although our unit price for engineers declined in relative terms, we will continue to improve the unit price through PMI.

Consolidated

Monthly Sales per Customer Unit Price for EngineersNumber of Customers Number of Engineers

(Average number

of people during

the quarter)(Thousands

of yen)

(Companies)(Thousands

of yen)

Note: Excludes small customer transactions involving Hinshitsu

University, and CAT licensesNote: All companies with which the company

conducts transactions, including for Hinshitsu

University and CAT licenses

Note: Excludes internal R&D engineers and people undergoing training


*Due to the change of calculation method from this quarter, there are changes in some past numbers.

www.shiftinc.jp

0

1,000

2,000

3,000

4,000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

FY2017 FY2018 FY2019

13

We steadily expanded our services horizontally at existing customers, starting with new customers for which the first transactions occurred in Q2 FY08/19. Sales at these customers have been growing above ¥100 million or more, suggesting that they could become our next major customers.

Net Sales by Size of Customer

（Thousands of yen）


Parent-only Net Sales by Size of Customers

売上規模

1億円未満売上規模売上規模売上規模売上規模

1億円超 4億円超 7億円超 10億円超Net sales:

<¥100mn

Net sales:

>¥100mn

Net sales:

>¥400mn

Net sales:

>¥700mn

Net sales:

>¥1.0bn

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY08/2017 FY08/2018 FY08/2019

1

www.shiftinc.jp

0

1,000

2,000

3,000

4,000

5,000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

FY2017 FY2018 FY2019

14


Consolidated

We strengthened sales collaboration within the group, and promoted cross-selling of total solutions that combine various services, focusing on customers with high growth potential.


Net Sales by Size of Customers

売上規模

1億円未満売上規模売上規模売上規模売上規模

1億円超 4億円超 7億円超 10億円超Net sales:

<¥100mn

Net sales:

>¥100mn

Net sales:

>¥400mn

Net sales:

>¥700mn

Net sales:

>¥1.0bn（Thousands of yen）

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY08/2017 FY08/2018 FY08/2019

1

www.shiftinc.jp 15

Gross Profit

In spite of seasonal factors in April and changes in sales structure due to M&A lowered gross profit margin, it fit within the expected range

Gross profitmargin

30.6%

△2.2pt

（2Q比）

Gross profit marginTesting

66.0％

30.1％

Sales ratio

Gross profit margin

High-valueAdded service

7.9％

60.3％

Sales ratio

Gross profit margin

Development

26.1％

22.9％

Sales ratio

△1.5pt

（2Q比）

△1.3pt

（2Q比）


www.shiftinc.jp 16

SG&A Expenses

We continued to actively recruit human resources to drive business expansion in the next fiscal year and beyond. We also aggressively invested in initial training for new team members, and pursued quality that is synonymous with the SHIFT brand.

Q3 FY08/2019 Q1-Q3 FY08/2019

Results FY2018 3Q

Increase

Results Q1-Q3 FY08/2018

Increase

(Millions of yen)

% of Net Sales

Results% of Net

Sales% of Net

SalesResults

% of Net Sales

Personnel expenses 634 11.8% 355 10.3% 78.5% 1,639 12.0% 933 10.1% 75.5%

Recruiting expenses 254 4.7% 150 4.4% 69.2% 657 4.8% 382 4.1% 71.6%

Advertising expenses 15 0.3% 7 0.2% 103.8% 230 1.7% 12 0.1% 1731.8%

Rents 65 1.2% 56 1.6% 15.5% 178 1.3% 131 1.4% 35.9%

Compensation 31 0.6% 22 0.7% 36.6% 168 1.2% 57 0.6% 193.5%

Goodwill amortization 43 0.8% 20 0.6% 106.8% 92 0.7% 62 0.7% 48.1%

Depreciation 13 0.2% 9 0.3% 47.0% 41 0.3% 22 0.2% 87.4%

Other 176 3.3% 100 2.9% 75.6% 428 3.1% 276 3.0% 54.8%

Total 1,234 23.0% 723 21.0% 70.6% 3,437 25.2% 1,880 20.3% 82.8%


www.shiftinc.jp 17

Consolidated Balance Sheet

We made steady progress with our fundraising plan announced on February 28, 2019. ROE has held at a high level following the procurement of said funds.

* Calculations are on the basis of the revised forecast for FY08/19

(Millions of yen)Q3 FY08/2019 Q4 FY08/2018 Change

Current assets 8,546 4,416 93.5%

Of which, cash and deposits 5,769 2,474 133.2%

Non-current assets 2,806 1,868 50.2%

Total assets 11,352 6,284 80.6%

Current liabilities 3,123 2,377 31.3%

Non-current liabilities 2,330 1,400 66.4%

Shareholders’ equity 5,616 2,304 143.7%

Shareholders’ equity ratio 49.5% 36.7% 12.8pt

Share acquisition rights 6 2 161.4%

Non-controlling interests 276 199 38.5%

Return on equity (ROE)* 22.7% 17.4% 5.3pt

Return on invested capital (ROIC)* 14.2% 9.2% 5.0pt

Return on assets (ROA)* 10.2% 6.3% 3.9pt


www.shiftinc.jp 18

Fundraising achievements

Eighth share acquisition rights

Estimated amount

to be raised

Sharesoutstanding 14,731,000 shares

Approx. ¥5.0 billion

We successfully raised ¥3.7 billion through the issuance of share acquisition rights (as of the results announcement on July 11). We target a stable share price that can support corporate growth, and plan to increase the number of foreign shareholders.

Amount raised

Sharesoutstanding

15,232,000 shares(Unissued balance: 300,000 shares)

¥3.7 billion(Percentage of shares issued: 70%)

Outcome

（円）（株）

As of February 28, 2019 As of July 11, 2019

Potential shares to be issued: 1,000,000 shares

0

350,000

700,000

3,000

6,000

2/25 3/4 3/11 3/18 3/25 4/1 4/8 4/15 4/22 4/29 5/6 5/13 5/20 5/27 6/3 6/10 6/17 6/24 7/1

Share price and trading volume

出来高終値

2/28Announcement of fundraising plan

4/151st exercise: 100,000 shares

4/182nd exercise: 80,000 shares3/25

Start of rights exercise

4/193rd exercise 20,000 shares

5/94th exercise: 300,000 shares

6/245th exercise: 200,000 shares


Closing price

Tradingvolume

(Shares)

(¥)

Feb 25 Mar 4 Mar 11 Mar 18 Mar 25 Apr 1 Apr 8 Apr 15 Apr 22 Apr 29 May 6 May 13 May 20 May 27 Jun 3 Jun 10 Jun 17 Jun 24 Jul 1

(stocks)

1

www.shiftinc.jp 19

Fundraising achievements

We achieved strong performance compared to conventional (general) MS warrants by combining a scheme under which permission is required to exercise the warrants with IR strategies.

Initially estimated

exercise pricevs.

Actual exercise price

(average)

Share price on day following

resolution vs.

Share price three months

later

Conventional warrants* Average for warrants issued

from [month] 201X to February 2019


Initially estimated

exercise pricevs.

Actual exercise price

(average)

Share price on day following

resolution vs.

Share price three months

later

＋30.5%¥4,560 → ¥5,950

3/1 closing price 5/31 closing price

＋8.4%＠¥4,895→＠¥5,306

SHIFT

Eighth share acquisition

rights

△10.7%*Average variation rate of the stock

price at the date of issue resolution and the price in three months of companies

△20.3%*Only warrants with exercise results are

included

1

www.shiftinc.jp 20

SHIFT recorded the highest number of M&As, 4 activities, during 1H of 2019

※Reference: M&A Online

https://maonline.jp/articles/ma_by_company

The number of companies by number of M&A implementation

0 20 40

4件

3件

2件 38

10companies

2companies

⇒During the first half of 2019, 50 companies implemented multiple M&As⇒SHIFT recorded the highest number of M&As

To further expand businesses, SHIFT will strengthen its deal sourcing capability and explicitly show how group companies benefit by joining SHIFT Group

M&APerformance in Q3 FY08/19

companies

2activities

3activities

4activities

1

https://maonline.jp/articles/ma_by_company

www.shiftinc.jp

2．Action plan andAchievements

21

www.shiftinc.jp 22

2 Action Plan and Q3 Results 4 pillars for growth

Defined four key aspects for growth, set and promoted strategies for each

www.shiftinc.jp 23

Mid-Term Action PlanAction Plan and Q3 Results

Actions based on 4 pillars that form the growth strategy have been continued in order to achieve 100billion in sales

2

www.shiftinc.jp

Market size and SHIFT’s target

24

Action Plan and Q3 Results

We are winning payments-related projects in the finance sector and cultivating customers in the distribution sector at an accelerated pace

2

www.shiftinc.jp 25

Sales in the insurance and SAP fields rose steadily supported by the launch of dedicated teams in 2H. We look to accelerate related growth heading into next fiscal year.


• We provided services not only to SAP partner companies, but also to user companies that have adopted SAP

• In addition to testing, we provided and expanded peripheral services such as project management office (PMO) and manual creation services

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

１Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q

FY2018 FY2019 FY2020

保険領域の売上と顧客数

取引額顧客数

• We handle projects for roughly 60% of the top 20 insurance companies (by sales), and that share continues to rise

• Initial adoption of our testing services has been steady, and the number of customers switching to full-scale adoption is increasingOur sales outlook for next fiscal year is expanding

0

2

4

6

8

10

12

14

16

18

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

１Q ２Q ３Q ４Q １Q ２Q ３Q ４Q １Q ２Q

FY2018 FY2019 FY2020

取引額顧客数

SAP: Sales and number of customers


Insurance: Sales and number of customers

Transaction value

Transaction value

Number of customers

Number of customers

FY08/2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY08/2020FY08/2018 FY08/2019

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY08/2020FY08/2018

2

www.shiftinc.jp

1Q 2Q 3Q 4Q 1Q 2Q 3Q

FY2018 FY2019

26

Instead of relying on specific tool venders, we provide services with broad support for robotic process automation (RPA), which are increasingly being adopted in the market. Related inquiries are on the rise.

Strengthening Services (RPA Initiatives)

Net sales

January 2018Announced business tie-up with RPA Technologies

July 2018Formed alliance with Automation Anywhere

May 2018Announced RPA diagnosis and repair service ROBOPIT!


Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY08/2018 FY08/2019

March 2019Formed alliance with Pega Japan

2

www.shiftinc.jp

0

0

0

0

0

0

0

0

500

1,000

1,500

2,000

2,500

27

We are steadily expanding our services horizontally at existing customers, and our number of customers with quarterly transactions of over ¥10.0 million is growing. We are also seeing a sharp increase in companies whose average monthly rate per engineer is over ¥1.0 million.

Engineer Unit Rate

Quarterly sales

Q1 FY08/2019Q2 FY08/2019Q3 FY08/2019Salesscale Large Small Large LargeSmall Small

Q3 FY2019

Average of

920thousand yen/month

Q2 FY2019

Average of


Q1 FY2019

Average of


1.2million yen/month

Target

Approx.

Primary vendors’average rate

(Thousands of yen)

Average unit price for engineersCustomers whose average monthly rate per engineer is over ¥1.0 million

* Based on enterprise market customers with quarterly transactions of over ¥10.0 million

Average Monthly Unit Price for Engineers, by Customer Type(Customers at ¥10 million/quarter or more)

48 36 24Customers with quarterly

transactions of over ¥1.0 million


companies companies companies

2

www.shiftinc.jp 28

Strengthen hiring capabilities (acquisition of human resources)

SHIFT applicants (monthly)

708

Our efforts to boost recruiting via recruiting agencies are paying off, but we see scope to further strengthen our recruiting capabilities through advertising and our corporate website.

Recruited

56

Working population

6.257mn

IT I

ndust

ryN

on-I

T I

ndust

ries

One in seven individualsseeking a job in the IT sector via a recruiting agency applies to SHIFTPeople switching jobs (annually)

Approx.100,000

People switching jobs (monthly)

8,000

People switching jobs (monthly)

274,000

People switching jobs (annually)

3.29mn

34

Scope for further growth in recruiting through advertising and corporate website. Utilize commercials and other means

Point①

Point②

SHIFT applicants (monthly)

298

Success insecuring human resources with non-IT backgrounds

deemed to have strong potential

Point③

Successfully implemented measures such as video interviews

and strengthened collaboration with recruiting agencies

Secure diverse range of human resources

with non-IT backgrounds

Identify promising candidates through proprietary certified exams that determine effective human resources

IT human resources:

1.03mn

345

363

Via agencies

2,400

Via other channels

5,600

14.4%

Share recruitedvia agencies

6.5%

Share recruited via other channels

*1 Working population, people switching jobs, and share recruited via agencies reflect SHIFT estimates based on Labor Statistics (MHLW), Labor Force Survey (MIC), IT Human Resources White Paper (METI), and materials released by various recruiting agencies. *2 Reflects mid-career recruits in February 2019.

*1

*1

*1

*1

*2

Action Plan and Q3 Results2

www.shiftinc.jp 29

We continue to pursue PMI at all group companies, encourage communication, and promote the generation and maximization of synergies across the SHIFT Group.

Conditions at Subsidiaries

1 Group-wide management camp

2

Fostered shared vision among management

team members

Tool to share information across group

Set up social media page to facilitate group-wide communication

YoY growth at existing group companies

0

600

1200

0

3,000

6,000

FY2018 FY2019

Net sales No. of employees

FY2018 FY2019

ALH MethodoLogic SHIFT SECURITYAiritech SHIFT ASIA

132% 130%

Sharp expansion due to collaboration in sales and recruiting

FY2018 FY2019

売上高

FY2018 FY2019

従業員数

FY2018 FY2019

売上高

FY2018 FY2019

従業員数

1.5x

1.8x 2.9

x2.9x

(people）(¥mn)

PMI outcomes in FY08/2019Encouraging exchange and communication


Net sales Net salesNumber of employees

Number of employees

FY03/18 FY03/19 FY03/18 FY03/19 FY03/18 FY03/19 FY03/18 FY03/19

2

www.shiftinc.jp

To expand this industry from Japan to overseas

30

Software product development being divided internationally into specialized

labor fields

“ Made-in-Japan quality for all software products ”To make safety and reasonable quality a part of our lives where IT is all over the world.

This is the future that SHIFT is looking toward.

Development

in Asia

QA

in Japan

“We aim to expand our business to the global market by taking advantage of what we have as Japanese.”

Planningin the

WEST

www.shiftinc.jp

3．Reference Materials

31

www.shiftinc.jp 32

Company Overview

SHIFT specializes in software “quality assurance” that has great demand globally

Company Name SHIFT Inc. Foundation September 7, 2005

Representative President & CEO Masaru Tange

Location【HQ】 2-4-5, Azabudai Minato-ku, Tokyo Japan

【Test Centers】 Tokyo, Sapporo, Fukuoka, Nagoya, and Osaka

Subsidiary

SHIFT INDIA PRIVATE LIMITED (India)

SHIFT GLOBAL PTE LTD (Singapore)SHIFT ASIA CO., LTD (Vietnam)

Three key points

about SHIFT

Rapid growth in “5 trillion JPY” blue ocean market

(Potential of more than 100 billion JPY in sales)

Created a market for non-engineers

(Shortage of works in IT industry, three million engineers are needed by 2020)

(Skilled SHIFT members operate tasks that engineers are not happy to do)

Developed de facto standard of software quality assurance(Quality Assurance based on 580 thousand bugs’ Database)

(CAT examination for employment examination, “Hinshitsu* University” to educate

members, developed CAT to manage projects.)

MethodoLogic, Inc. (Tokyo, Japan)Baristride Group Inc. (Tokyo, Japan)ALH Inc. (Tokyo, Japan)SHIFT SECURITY Inc. (Tokyo, Japan)

Assion, Inc. (Tokyo, Japan)Saunashi Co., LTD. (Tokyo, Japan)SHIFT PLUS Inc. (Kochi, Japan)System I, Inc. (Kanagawa, Japan)

*Hinshitsu means quality.

Reference materials3

www.shiftinc.jp 33

Representative

President & CEO Masaru Tange

19.5


www.shiftinc.jp 34

By ensuring polished final products for end-users, SHIFT aims to achieve a “smart

society with no waste”

Business DirectionReference materials3

www.shiftinc.jp 35

SHIFT’s Ideal State

Be a company continuously trying to change ourselves to reach “Attainment of a smart

society without unnecessary disruption


www.shiftinc.jp 36

Sustainable strengthening of services and increases in business value with the good

cycle begun with testing

Good cycle of business valueReference materials3

www.shiftinc.jp 37

SHIFT’s Strength

Best performance carried out by best talents in thoroughly -

structured teams

(As of April, 2019)

(As of April, 2019)

38,000


www.shiftinc.jp 38

Target Market

Market Scale *1 is 5 trillion yen, a blue ocean

The outsourcing ratio is only 1%, and most of the time in-house

engineers take charge of the testing process.Also, there are only three competitors for SHIFT.

The scale of the

software development

industry in Japan is

about 14.8 trillion yen. (Approx. 133.9 billion USD)

Market Scale *1 is 5 trillion yen, a blue ocean


www.shiftinc.jp39

The forecasts, objectives, plans, and strategies of the Company and its

consolidated subsidiaries on this web site include forward-looking statements.

These forward-looking statements are based on judgments and assumptions

made in accordance with information available at the time of original publication.

They involve known and unknown risks and assumptions. Accordingly, due to

these variable factors or to other risk factors, the Company's future results and

growth could differ materially from the estimates included herein. The Company

assumes no responsibility to update or revise forward-looking statements,

including forecasts or estimates of future results, due to new information,

subsequent events, or other factors.

This material is not intended as a solicitation for investment.

Investment decisions should based upon the judgement of the investors.

Cautionary Note Regarding Forward-Looking Statements

■Inquiry

[email protected]

mailto:[email protected]

www.shiftinc.jp

EOF

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