Japan Specialist

Mark Chadwick

Equity Bottom-Up

<div><p><span xml:lang="EN-US" data-contrast="auto"><a href="https://www.smartkarma.com/entities/kaonavi-inc" target="_blank" data-smartkarma-citation="entities:29703:1" rel="noopener">Kaonavi Inc (4435 JP)</a> </span><span xml:lang="EN-US" data-contrast="auto"> operates a cloud-based Human Capital Management (HCM) service that helps companies manage their HR talent from Recruitment to Onboarding, Training to Communication, and Performance reviews to Promotion</span><span xml:lang="EN-US" data-contrast="auto">. </span><span data-ccp-props='{"201341983":0,"335559739":200,"335559740":360}'> </span></p></div><div><p><span xml:lang="EN-US" data-contrast="auto">The company released its 2Q20 results on Friday 13</span><span xml:lang="EN-US" data-contrast="auto"><span data-fontsize="12">th</span></span><span xml:lang="EN-US" data-contrast="auto">, which may be unlucky for some, but not for </span><span xml:lang="EN-US" data-contrast="auto">Kaonavi</span><span xml:lang="EN-US" data-contrast="auto"> which reported 30% sales growth. </span><span data-ccp-props='{"201341983":0,"335559739":200,"335559740":360}'> </span></p></div><div><p><span xml:lang="EN-US" data-contrast="auto">This note will look at the core trends in Q2. For a more in-depth view of the company, please refer to the </span><span xml:lang="EN-US" data-contrast="auto">previous</span><span xml:lang="EN-US" data-contrast="auto"> note: <a href="https://www.smartkarma.com/insights/small-cap-growth-kaonavi-4435-turning-talent-into-teams" target="_blank" data-smartkarma-citation="insights:44415" rel="noopener">Small Cap Growth: Kaonavi (4435) – Turning Talent into Teams</a> </span></p></div>

Kaonavi Inc (4435 JP)  operates a cloud-based Human Capital Management (HCM) service that helps companies manage their HR talent from Recruitment to Onboarding, Training to Communication, and Performance reviews to Promotion.  The company released its 2Q20 results on Friday 13th, which may be unlucky for some, but not for Kaonavi which reported 30% sales growth.  This note will look at the core trends in Q2. For a more in-depth view of the company, please refer to the previous note: Small Cap Growth: Kaonavi (4435) – Turning Talent into Teams 

Small Cap Growth – Kaonavi (4435) - Talent Factory

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<p><span xml:lang="EN-US" data-contrast="auto">In May, Facebook CEO Mark Zuckerberg said that more than 95% of the company’s workforce was working remotely and that it planned to ensure employees could continue to do so on a long-term basis. Google workers will stay remote until summer 2021. Many others made similar announcements. </span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><span xml:lang="EN-US" data-contrast="auto">This would have been unthinkable even a decade ago, but cloud-based platforms are enabling employees to work from anywhere, on any device. Companies must now deploy systems rapidly, in a cost-effective and scalable manner to adapt to this new worldview. </span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><span xml:lang="EN-US" data-contrast="auto"><a href="https://www.smartkarma.com/entities/teamspirit-inc" target="_blank" data-smartkarma-citation="entities:29704:1" rel="noopener">TeamSpirit Inc (4397 JP)</a> ’s</span><span xml:lang="EN-US" data-contrast="auto"> workforce management platform helps Japanese companies to support telework, not only an essential way of working following the outbreak of COVID-19, but also a necessity as companies shift to a hybrid workforce. </span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><strong> <span xml:lang="EN-US" data-contrast="auto">Recent FY8/20 numbers (13 October)</span> </strong></p>
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<p><span xml:lang="EN-US" data-contrast="auto">Q4 revenue +25% YoY to ¥654m (slowed from 38% YoY in Q3)</span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><span xml:lang="EN-US" data-contrast="auto">Gross margin 60%</span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><span xml:lang="EN-US" data-contrast="auto">Annual Recurring Revenue +32% to ¥2.2b</span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><span xml:lang="EN-US" data-contrast="auto">Number of active licenses rose 41% to 269,000</span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> <br></span><span xml:lang="EN-US" data-contrast="auto">Number of client companies 1,409 (+14% YoY; +2% QoQ)</span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><span xml:lang="EN-US" data-contrast="auto">Covid had a negative impact on the business. The inflow of leads slowed due to the cancellation of promotional events. On boarding was delayed as customer struggled with the unfamiliarity of telework, with small businesses in particular slowing in terms of </span><span xml:lang="EN-US" data-contrast="auto">licenses</span><span xml:lang="EN-US" data-contrast="auto"> added.</span><span xml:lang="EN-US" data-contrast="auto"> </span><span xml:lang="EN-US" data-contrast="auto">The company guided for 29% revenue growth in FY8/21</span><span data-ccp-props='{"201341983":0,"335559739":160,"335559740":259}'> </span></p>
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<p><span xml:lang="EN-US" data-contrast="auto">The stock has corrected by around 20% in the week following full year earnings and is worth looking at for long-term growth investors.</span></p>
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In May, Facebook CEO Mark Zuckerberg said that more than 95% of the company’s workforce was working remotely and that it planned to ensure employees could continue to do so on a long-term basis. Google workers will stay remote until summer 2021. Many others made similar announcements.  


This would have been unthinkable even a decade ago, but cloud-based platforms are enabling employees to work from anywhere, on any device. Companies must now deploy systems rapidly, in a cost-effective and scalable manner to adapt to this new worldview.  


TeamSpirit Inc (4397 JP) ’s workforce management platform helps Japanese companies to support telework, not only an essential way of working following the outbreak of COVID-19, but also a necessity as companies shift to a hybrid workforce.  

 Recent FY8/20 numbers (13 October) 


Q4 revenue +25% YoY to ¥654m (slowed from 38% YoY in Q3) 


Gross margin 60% 


Annual Recurring Revenue +32% to ¥2.2b 


Number of active licenses rose 41% to 269,000  Number of client companies 1,409 (+14% YoY; +2% QoQ) 



Covid had a negative impact on the business. The inflow of leads slowed due to the cancellation of promotional events. On boarding was delayed as customer struggled with the unfamiliarity of telework, with small businesses in particular slowing in terms of licenses added. The company guided for 29% revenue growth in FY8/21 


The stock has corrected by around 20% in the week following full year earnings and is worth looking at for long-term growth investors.


Small Cap Growth: TeamSpirit (4397) - Nirvana for Workers

United States

Dayforce, Inc. provides technology solutions. The Company offers a platform for talent and workforce management, human resources, benefits, and payroll services that help to manage the entire employee lifecycle, from recruiting and onboarding, to paying people. Dayforce serves customers worldwide.

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Small Cap Growth – Kaonavi (4435) - Talent Factory

Kaonavi operates a cloud-based Human Capital Management service that helps companies manage their HR talent. Talent management is growing rapidly...

Mark Chadwick

Small Cap Growth: TeamSpirit (4397) - Nirvana for Workers

TeamSpirit is a cloud-based Workforce Management SaaS that enables workers to work from anywhere and allows companies to get the best out of their...

Mark Chadwick

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