Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>Freee reported 4Q and full-year FY06/2022 results. 4Q revenue increased 31.2% YoY to JPY3.87bn (vs consensus JPY3.9bn) while full-year revenue grew 40.2% YoY to JPY14.4bn beating own guidance by 0.2%.</li>
<li>Operating losses decreased to 18.7% of total revenue from 32.5% of revenue in the same period a year ago. Full-year OP. losses were 15.7% of revenue vs guidance 17.1%.</li>
<li>Improvement in profitability was driven by growth in ARPU from mid-and-large paying users.</li>
</ul>


Freee reported 4Q and full-year FY06/2022 results. 4Q revenue increased 31.2% YoY to JPY3.87bn (vs consensus JPY3.9bn) while full-year revenue grew 40.2% YoY to JPY14.4bn beating own guidance by 0.2%.
Operating losses decreased to 18.7% of total revenue from 32.5% of revenue in the same period a year ago. Full-year OP. losses were 15.7% of revenue vs guidance 17.1%.
Improvement in profitability was driven by growth in ARPU from mid-and-large paying users.


Freee: Medium-Term Plan Seems Attainable but Profits to Delay

<ul>
<li>
<a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> reported 2QFY11/2022 results yesterday. Revenue grew 27.2% YoY to JPY5.08bn (vs consensus JPY5.13bn). Operating losses for the quarter was JPY2.2bn (vs consensus JPY1.9bn).</li>
<li>MF’s top line growth has been slowing down, and the company continues to spend heavily on advertising to acquire users for its SaaS business.</li>
<li>Though MF continues to grow its user base, it comes at the cost of profits.</li>
</ul>



Money Forward (3994 JP) reported 2QFY11/2022 results yesterday. Revenue grew 27.2% YoY to JPY5.08bn (vs consensus JPY5.13bn). Operating losses for the quarter was JPY2.2bn (vs consensus JPY1.9bn).
MF’s top line growth has been slowing down, and the company continues to spend heavily on advertising to acquire users for its SaaS business.
Though MF continues to grow its user base, it comes at the cost of profits.


Money Forward: Growth at the Cost of Profits

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Q2 financial results were in-line or better than management targets but lagged consensus expectations</li>
<li>Guidance for Q3 is slightly disappointing with the target range for revenue mostly below expectations whilst promotional and marketing spend continues to expand</li>
<li>The secular growth story is attractive and operating KPI growth remains robust but investors probably needed more from a stock that trades at 7.5x EV/FY22 rev in a risk-off environment</li>
</ul>


Q2 financial results were in-line or better than management targets but lagged consensus expectations
Guidance for Q3 is slightly disappointing with the target range for revenue mostly below expectations whilst promotional and marketing spend continues to expand
The secular growth story is attractive and operating KPI growth remains robust but investors probably needed more from a stock that trades at 7.5x EV/FY22 rev in a risk-off environment


Money Forward - Q2 22 Results Reaction: Mixed Results Short of Consensus

Japan Specialist

Mark Chadwick

<ul>
<li>Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation </li>
<li>The stock has fallen 48% year to date as valuations crashed with global SaaS multiples</li>
<li>We think MF will emerge from downturn in good shape. At 10x EV/Rev, we see 22% upside (maybe even 55%....)</li>
</ul>


Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation 
The stock has fallen 48% year to date as valuations crashed with global SaaS multiples
We think MF will emerge from downturn in good shape. At 10x EV/Rev, we see 22% upside (maybe even 55%....)


Money Forward (3994) | SaaS Crash Survivor

Research from Mita Securities, Mita Securities

Mita Securities

Research from Mita Securities

Mita Securities provides a full scale diversified investment banking and financial services. A comprehensive investment banking department, specializes in rights offerings advisory, take-over bids agents, M&A etc. Including a proprietary trading desk, and wealth management department that offers brokerage, custody, real estate, and full proxy services.

<ul><li>Our new target price 4,000 yen; Raising our rating to Buy</li><li>We believe that market participants have become increasingly concerned about the sustainability of high growth for loss-making SaaS companies</li><li>We raise our 2Q (Mar-May) FY11/22 sales forecast from 5.102bn yen to 5.145bn yen (+28.8% YoY, company guidance median 4.912 bn yen)</li></ul>

Our new target price 4,000 yen; Raising our rating to BuyWe believe that market participants have become increasingly concerned about the sustainability of high growth for loss-making SaaS companiesWe raise our 2Q (Mar-May) FY11/22 sales forecast from 5.102bn yen to 5.145bn yen (+28.8% YoY, company guidance median 4.912 bn yen)

Money Forward (3994 JP): Raising Our Rating to Buy. Cash Is King

Japan

Money Forward, Inc. develops mobile application software. The Company produces automatic household account book softwares, household account book application softwares, and other products. Money Forward also provides personal financial management, cloud based accounting solutions, and other services.

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Money Forward (3994 JP)

Freee: Medium-Term Plan Seems Attainable but Profits to Delay

freee's medium/long-term plan is likely to further impact the company's profitability as it seeks for aggressive user growth. We think the plan is...

Shifara Samsudeen, FCMA, CGMA

Money Forward: Growth at the Cost of Profits

MF's revenue and EBIT for 2QFY11/22 fell below consensus. It seems that the top line growth has started decelerating while MF continues to spend...

Shifara Samsudeen, FCMA, CGMA

Money Forward - Q2 22 Results Reaction: Mixed Results Short of Consensus

Money Forward Q2 results met or beat its own targets but fell short of a more optimistic consensus. Guidance for Q3 sales also disappoints whilst...

Kirk Boodry

Money Forward (3994) | SaaS Crash Survivor

Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation. It is a SaaS...

Mark Chadwick

Money Forward (3994 JP): Raising Our Rating to Buy. Cash Is King

Our new target price 4,000 yen; Raising our rating to Buy. We believe that market participants have become increasingly concerned about the...

Mita Securities

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