Macromill, Inc. (3978) Earnings Call Transcript & Summary

Thank you for joining us. I'm Sasaki, Representative Executive Officer and Global CEO. Today's agenda consists of 5 items. I will start with a summary of the fourth quarter and full year financial results, followed by our CFO, Hashimoto-san, presentation of the financial information for the same period. After that, I will review the current midterm business plan and explain the new midterm business plan. And finally, I will explain the guidance for the current fiscal year. Please turn to Page 3. As announced in the previous earnings presentation, the sale of other overseas business to Toluna has been completed, and it has been deconsolidated as a discontinued operation. Based on this assumption, fourth quarter revenue was JPY 8.91 billion, up 6% year-on-year. Excluding M&A expenses, adjusted operating profit was JPY 0.1 billion, up JPY 0.52 billion from the last year when the company was [indiscernible] profitability improved as [indiscernible] amount and margin of total employee expenses and outsourcing expenses were controlled below last year's levels, while revenue increased. Full year revenue was JPY 40.61 billion, up 8% year-on-year, and operating profit was JPY 4.96 billion, down 3% year-on-year. Gross revenue and operating profit exceeded the revised forecast due to a fourth quarter stronger than expected in the revised forecast announced at the previous earnings announcement. We will pay a year-end dividend of JPY 11 per share for a total of JPY 21 per share for the full year as planned. The current year is the final year of the midterm business fund. However, due to changes in assumptions such as the sale of other offices business, the new midterm business plan was formulated 1 year earlier than the initial schedule. For the fiscal year ending June 2024, we forecast an 8% increase in revenue, a 13% increase in adjusted operating profit and JPY 4 per share increase in the dividend to JPY 25. We are aware that the fact that we were able to exceed the revised forecast despite the difficult third quarter is a positive factor for the future. That concludes my summary. I will now hand over the baton to Hashimoto-san to present financial information for the last fiscal year.

Thank you, Sasaki-san. I will now present the full year financial information for FY 2023. Please refer to Page 5. Full year revenue was JPY 40.6 billion, up 8% year-on-year, exceeding the previous year's figure by about JPY 3 billion. This actual revenue exceeded the revised guidance in May of JPY 40.5 billion by about JPY 100 million. Excluding expenses related to the sale of other overseas business, the decline in adjusted operating profit was reduced to minus 3% year-on-year resulting in just under JPY 5 billion, also exceeding the revised forecast due to improved profitability on a full year basis. Page 6 shows the breakdown of operating expenses. Total operating expenses on an adjusted basis for the full year were JPY 35.6 billion, up 9% year-on-year. Total employee expenses increased 8% year-on-year. The expenses were kept below the rate of sales growth in the second half of the year, bringing the full year increase down to the same level as sales growth. Outsourcing expenses increased 12% year-on-year. These expenses are also better controlled as in the case for total employee expenses, the rate of increase for the full year was still higher than the rate of sales growth. However, we have been able to control outsourcing expenses by increasing the ratio of in-house research capabilities by reducing the turnover research directors and improving the skill level of talent. Therefore, we believe that expenses will keep the current trend and to be controlled below the sales growth rate from FY 2024 and beyond. Other expenses increased 22% year-on-year. Almost half of the increase was accounted for by expenses related to the sale of other overseas business amounting to JPY 0.46 billion, which is in line with our forecast. Now I will explain the factors behind the change in operating profit using the waterfall chart on Page 7. For the full year, adjusted operating profit was about the same level as the previous year, with the increase in revenue, largely offsetting the increase in total employee expenses. However, the nominal operating profit decreased by 12% year-on-year due to the recognition of the cost related to the sale of the overseas business, as mentioned earlier. Page 8 shows the quarterly trends of revenue and operating profit. Our business is seasonal with revenue in Korea peaking in December and that in Japan peaking in March, making revenues in the second and third quarters of each year larger. As the graph on the left shows this trend has not changed. Although the first and fourth quarters are quiet periods, revenue in the fourth quarter of FY 2023 was strong, up 6% year-on-year. As shown in the graph on the right, adjusted operating profit for the fourth quarter exceeded the revised forecast and turned positive. Please look at Page 9 for Japan business. As shown in the graph on the left, full-year revenue for the Japan business was up 7% year-on-year. In the main state research business, revenues were up 5% year-on-year as a result of strong performance in global research despite slower growth in online research. Digital and other new business achieved double-digit growth, were up 12% year-on-year with significant growth in new business offsetting the decline in digital revenue. As shown in the graph on the right, the fourth quarter saw a slight slowdown in growth in both research with plus 3% year-on-year and digital and other new business was plus 8% year-on-year, but the reasons are clear and corrective measures are already in place. We also believe the external environment including market conditions and client demand, it's showing the signs of recovery overall, although the situation varies by individual companies. Sasaki-san will provide more details on this market view and the measures we are taking. Please look at Page 10 for Korea business. As shown in the graph on the left, we achieved double-digit growth on a full year basis, and it's a 14% increase year-on-year, thanks to strong first half and the positive impact of foreign exchange rates. As shown in the graph on the right, the first quarter saw a significant increase in revenues up 17% year-on-year due to the booking of government-related research projects, which also had a positive impact on the full year results. Next, on Page 11, I'll explain the consolidated income statement for the full year. I have already covered down to adjusted operating profit. At the bottom of the page, net income attributable to owners of the parent is up significantly with JPY 5.8 billion from the discontinued business, including gain on sale of the business. Page 12, balance sheet. Both assets and liabilities have decreased due to the deconsolidation of Overseas Business segment. In addition, the equity stake in Toluna, which became an equity method affiliate on June 1 and the convertible loan to Toluna are included in non-current assets. And equity has increased due to the gain of the sale of MetrixLab Group. Page 13 [indiscernible] cash flows. Cash inflow from operating activities decreased by JPY 2.6 billion year-on-year due to lower profits and M&A-related expenses. Cash outflow from investing activities increased due to the impact of M&A transactions. Cash flow from financing activities increased by JPY 14.1 billion year-on-year because unlike FY '22, there was no corporate bond redeemed in FY '23 and new bonds were issued in FY '23. This is the end of my presentation. Next, Sasaki-san will give the review of the medium-term business plan.

Thank you, Hashimoto-san. Now I will look back on the current midterm business plan. Please refer to Page 15. First of all, some of you have asked for more explanation of the sale of other overseas business, which was reported in the previous financial results announcement, so I will explain again the aim of the sale and its impact on PL. First, looking ahead to the next 10 years, in order to respond to the major changes occurring in the market, the Macromill Group based on the concept of selection and concentration, believed it necessary to prioritize investments in Japan and Asia. We have a competitive advantage. At the same time, a certain level of investment was necessary to support MetrixLab's future growth in the global market, particularly in Europe and the United States. Of course, we considered investing in the company, but with major restructuring underway in the global market, we were uncertain whether MetrixLab could continue to grow sustainably on its own. Against this back drop as well as the fact that MetrixLab's profit contribution to our group had been modest, we sought a partner for the sale and among several candidates and conditions, we selected Toluna as the final candidate because of the expected synergies and the complement parity with MetrixLab. Toluna has invested aggressively over the past 5 years and has undergone a significant transformation. As we expect an exit event for existing shareholders to occur in the near future, we can expect a greater return than simply selling the business at this time. Of course, we also expect to have this option of no exit when the time comes in order to challenge the U.S. and European markets once again. In addition, we have loan of approximately JPY 10 billion to MetrixLab, which we were able to convert to a loan to Toluna through this M&A. This will improve the certainty of repayment, and in addition, we can expect to turn interest income of approximately JPY 600 million per year from this loan. Based on these circumstances, we determined that we should implement the M&A rather than continue to hold MetrixLab on our own. Next, I would like to review the current midterm business plan for Japan and Korea businesses. For Japan, I will look back on the research business and the digital and other new business. Please look at Page 16. The research business in Japan is performing at about the same level as the growth target set in the midterm business plan. However, growth in our mainstay online research business has been below expectations. And I will explain what happened and what measures we are taking. As the COVID pandemic has [indiscernible] the changes in consumer thinking and behavior, which has broadened the base of potential clients in the research business, we have been outsourcing more in the short term and expanding our in-house capabilities on the mid to long term. Although we were able to expand some capacity at the start of the second half of last fiscal year, we struggled to capture online demand in the third quarter, especially in the peak season of March due to the reluctance of major clients to spend because of both deteriorating business confidence and the replacement by some vendors offering quick self-service methods such as DIY and sample panel supply. However, client demand showed some signs of recovery, exceeding expectations in the fourth quarter. We are taking measures to address the growing demand for self and quick services through M&A. We will report on the details of this M&A in the near future. Regarding the internal environment, we have already resolved the issue of capacity constraints in our internal order intake due to the pandemic and the impact of the work-style reform that took effect in 2019. Our in-house research capabilities are increasing by, for example, controlling turnover. Secondly, due to the limited capacity to accept orders, we refrained ourselves from aggressive sales activities for a few years in tailing some issues with our outbound planning and proposal-based sales capabilities, which used to be one of our strengths. To tackle this problem, we are restructuring sales systems increasing sales approaches by top management, including myself. We are now seeing signs of an increase in the number of clients and projects. And the measures we are taking are proving effective. Next, turn to Page 17 for information on digital and other new business. In this segment, digital business fell short of expectations, but other new business, mainly consulting performed well offsetting the poor performance of digital business. And this segment as a whole is growing in line with the growth target set in the midterm business plan. The slump in the digital domain is largely due to external factors. And the market, as a whole continues to search for new technologies through trials and errors in light of the Cookie-less era from the autumn 2024. In addition, the advertising market has been a bit soft, and there has been delays in service development with a major platform. Although we expect the market and market transitions to remain in the stale rate, we believe that the impact on the business have run their course and that we will see a turnaround from negative growth to positive growth and the recovery from the current fiscal year onward. In addition, the joint development is a major platform is finally on track to be launched as a new solution. In other new business, consulting grew by more than 70% year-on-year. We expect further growth in Life Science business and Southeast Asia business as well. To recap, we are making good progress in our efforts to reform our business model, as outlined in our midterm business plan. Macromill is steadily expanding the range of solutions it can offer to serve clients' issues and its presence is growing. On the other hand, while revenue in Japan grew almost in line with our expectations, there is a problem in terms of product mix, lower than expected growth in highly profitable online research and digital domains has been offset by other businesses, resulting in profit shortfalls. However, the internal factors that caused the shortfall namely order-handling capacity problem has already been solved and both sales and profits are on track to recover. In addition, as we issued the press release at the timing of earnings announcement of Monday this week, we have implemented M&A that will strengthen our service capabilities, particularly in the online and digital areas. I will come back on this later. This is the end of my review on Japan business. Next please see Page 18 for a review of our Korea business. The Korea business is growing at 18%, 2 percentage points higher than the 16% growth target set in the midterm business plan. This is due to the fact that we were able to capture both offline and online needs with the competitive advantage of panel, the largest in the country, where the market and the competition is struggling. Although the market was affected by business conditions in the second half of the previous fiscal year, the data stock of purchasing data, which we have been working on since the fiscal year before the last reference to Japan business has been accumulated. We expect to see an increase in revenue contribution from the current fiscal year. This concludes my review of the Korea business. Finally, on Page 19, financial targets and results. The left-hand side shows targets for 2024 for continued business, excluding the transferred overseas subsidiary and the right-hand side shows the actual result up to 2023. As I mentioned in the review part, revenue growth has been steady, but profits have lagged behind, shortfalls in profit and the sale of overseas subsidiaries have impacted our ROE and net debt-to-EBITDA multiple. We believe it is important to place top priority on improving profitability by installing online and digital domain, especially in Japan and improving productivity across the group. This is the review of the current midterm business plan. Next, I will explain the new midterm business plan. Please look at Page 21. There are 2 directions we should aim for. First, we will refocus on our core online and digital domains. As I mentioned in the review section, revenue growth in the online and digital domain is a major driver of profit growth. Steady revenue growth will drive profit growth and productivity improvements will further boost profits. We will spend next 3 years transitioning from recovery to growth, and improving productivity and rebuild a foundation for the future. Second, we will continue to transform our business model. Clients are faced with challenges, growing more complex as consumer mindset and behaviors change, and they look for partners help them find solutions. Our value lies in our ability to leverage the data assets we acquire from our consumer panel, which is our competitive advantage to help our clients succeed in their marketing efforts. For this reason, it is essential for Macromill to change its business model. For example, by taking on the challenge of entering the consulting field, Macromill is able to commit to more upstream issues of client companies, creating opportunities to propose the correct use of research and avoiding competition when research projects arise. In other words, it is linked to the growth of our research business. I'd like to emphasize again that considering the transformation of our business model will also contribute to expansion of online and digital research business which is on the left side of the page, so much for direction. Next, before I will move on to the specifics of our new midterm business plan, let me discuss the changes in the segment and the changes in the market surrounding us. Please turn to Page 22. We decided to change our business segments into 2 segments: Japan business and Korea business. We will also disclose the cost structure of each segment separately, which we believe will promote a more accurate understanding of our business. As our growth targets under the new midterm business plan, we will aim for a 10% growth rate to the Japan business and 7% for the Korean business over the period of 3 years. . Please turn to Page 23. Let me once again explain the changes taking place in the market environment around us. Dynamic changes are happening in Japan as well as in the global market. And the marketing research industry is being redefined as an insight industry. The insight industry collects and analyzes adverse data and provides insights to clients. In addition to the established marketing research industry, several new subsegments have been added to this redefined industry, including digital data analytics and business consulting. You can see that the business environment is shifting dramatically. In this changing environment, clients are looking for solid consumer insight to help them solve their marketing challenges. Solid insights require accurate and rich pool of data. And this is the very reason why we are striving to transform our business model. The data we collect from the consumer panel is a source of our value proposition. The change that's taking place in the industry is positive for us, as this source of a value proposition enables us to continue to have a strong competitive advantage and increase our presence in this redefined and expanding market . Please turn to Page 24. We've discussed the importance of the recovery in online research and digital research business as well as the need to continue the business model transformation for enhancing the profitability. In order to clearly present whether or not we are making the right progress. We decided to [indiscernible] the segmentation disclosure as well as the revenue breakdown of the Japan business. Conventionally, the Japan business was comprised of 2 categories, the research business and digital and other new businesses. But now it will be presented in 3 categories. As shown on the right, these 3 categories are focus business, future business and foundation business. I will explain each of these categories later. But first, let me explain how we have changed the treatment of the digital domain in line with this reclassification. I mentioned earlier that our competitive advantage and the source of our value proposition is the data we obtain from the panel. In the digital domain, solutions utilizing digital behavioral logs obtained from the panel remain to be our key strength. At the same time, digital behavioral logs are now evolving into a form that is used not only in the mainstay research, but also in all other services, including new businesses. In light of the situation, we decided to focus on the service that's measuring the advertising effectiveness conducted by Macromill has achieved high profit contribution with good future growth potential and other services previously included in the digital domain have been reclassified into other business categories, subject to their business characteristics. The purpose of this reclassification of our Japan business is to demonstrate management's commitment to improving profitability and to enable investors to grasp and understand the improvements from the same perspective as ours. In the new midterm business plan, we will set revenue growth targets for each of these 3 business categories. And together with development KPIs for restrictive categories, quarterly disclosure will be made. I will now turn to more details on each of the businesses. Please turn to Page 25. Our focus business consists of online research and digital research business, and we are targeting an average annual growth rate of 7%. Focus business accounts for a large proportion of the revenue. It makes a highest profit contribution to the group, having achieved a gross profit margin of 60% last fiscal year. Revenue growth is the most important driver for profit growth, we will also focus on productivity gain for better profit margin. In order to enhance productivity, we will revamp our core research system and automate operations during the course of the midterm business plan. We have our proprietary research data and research-related expertise accumulated through our business to date. We will leverage on this data and know-how to reduce the workload quickly performed by people on tasks, such as designing the questionnaires and creating reports. To that end, we will start recruiting IT human capital and expand our development capability in the current fiscal year. We've set revenue per sales person and ratio of employee and outsourcing expenses to revenue as KPI, and they will be disclosed with the revenue data. Please turn to Page 26. In the future business, we will target an average annual growth rate of more than 25%. In this category, we have grouped together businesses in which we will make strategic investments in order to maintain stable revenue growth over the medium to long term as a group with the aim of increasing the profit contribution in the future. We recognized this to be a high growth rate, but we believe this is achievable due to the following 2 factors: First, the high growth potential in the consulting domain as the clients' needs for partners who will accompany and commit to execution phase of marketing initiatives is increasing. The second is accelerated business development of the global business with a particular focus on Thailand, as Japanese companies speed up their overseas expansions resulting in the rising needs of Japan to global research. Of course, there will be volatility, but we will invest aggressively to achieve high revenue growth rate as we can expect generation of new online and digital sales and pushed on the revenue of our focus business. However, since the gross profit margin is low at around 25% and therefore, to improve the profit margin in parallel by growing the revenues, improving productivity and increasing the unit prices per client through a value proposition. As for the KPIs, we will introduce new initiatives and client case studies. Please turn to Page 27. In the foundation business, we are targeting an average annual growth rate of 4%. In this category, we group businesses that will create competitive advantages and build barriers to entry in order to support our focus business and future business. This category includes businesses such as JVs, ad agencies and industry-specific companies and other subsidiaries as well as off-line research and data provision services. The scale of the revenue is comparable to that of the Focus business, but the aim for this business domain is to achieve stable growth and sustainable profit contribution. The gross profit margin achieved last fiscal year was approximately 45%. KPIs for this business group is the ratio of employee and outsourcing expenses vis-a-vis the revenue. That will be all for the Japan business. Now let me switch the topic to the Korea business. Page 28, please. We will target an average annual growth rate of 7% for the Korea business. We have achieved very strong growth leading up to last fiscal year and gained market share in the Korean market. As a result, we expect the business to enter a phase of more stable growth. We believe that our insights from the Japan business will be useful to achieve further growth in the future. In order to realize the new growth trajectory, we are in the process of building purchase data among others, which should be fully deployed from the current fiscal year. As revenue growth will be somewhat muted in comparison to that of the past, we're focused on improving productivity, whilst making efforts for our new level of growth phase. The change in segmentation will allow us to visualize the cost structure of the Korea business on a stand-alone basis going forward. And we will share new initiatives in client-based studies KPIs for this segment. This will give you an accurate picture of how this business is performing. That will be all for the explanation of the new business segmentation. Next, let me walk you through our capital allocation policy. Please turn to Page 29. As in the past, we will continue to place priority on growth investments and aim to achieve an optimal capital allocation by striking a balance [indiscernible] with a return in debt repayment. We will strengthen our commitment to shareholder return by changing the previous target within the range of 20% to 30% over the medium to long term to 30% or more as the renewed target. We are committed to maintaining the momentum of dividend hike, in delivering target steadily in line with the profit growth. Of course, we will also be flexible in doing share buybacks by closely monitoring the level of the surplus cash and stock price. Next, I would like to share the financial targets under the new midterm business plan. Please turn to Page 30. For the fiscal year ending in June 2026, our target for revenue is JPY 53 billion, JPY 7.5 billion for operating profit and ROE of at least 10% or more. In terms of credit rating, we intend to maintain a rating of BBB+ or higher and net debt between 2 to 2.5x. The basic idea is to enhance the shareholder return. The exit event [indiscernible] current stockholder has not been factored into the current plan due to the high degree of uncertainty at this point. If an exit event were to occur, we will reassess our options. In the event of a sell of our holdings, we will revisit our capital structure and shareholder return policy as we anticipate the large amount of cash inflow Now please turn to Page 31. The graph illustrates the trend of consolidated revenue, operating profit and OP margin, the actual from the previous periods and the projection for the upcoming years. As indicated by the graph on the right, recovery of the [indiscernible] and OP margin is our top priority. We believe that the first year of the new midterm business plan of the current fiscal year will be crucial to make sure that the business is the bottom last fiscal year and aim for a steady recovery going forward. As a show of our result, we deliberately brought the slides covering the guidance for fiscal year ending in June 2024 at the end of today's presentation material. Page 33, please. For the fiscal year ending in June 2024, we are forecasting an 8% growth in revenue over the previous year to JPY 44 billion, an OP of JPY 5.6 billion, which will be a 25% increase before adjustment and a 13% increase as adjusted OP. Before I dive into the measures that we plan to implement in order to achieve this target, I would like to give you an update of the M&A transaction we executed on July 3. Please turn to Page 34. In conjunction with the announcement of our financial results, we made a press release on Monday, July 14 (sic) [ August 14 ] regarding the transaction of making Monitas a consolidated subsidiary of Macromill effective July 3, 2023. This M&A transaction is expected to have a positive impact on all of our businesses that utilize consumer panels. And there are 3 intentions behind the deal. We see 2 types of needs for our clients. The need to obtain deeper data through research and the need to get access to a broader set of data points. There is no change in our policy of responding to the need for deeper data by continuing to utilize our own proprietary panel. On the other hand, we have been responding to the need for a broader range of data by utilizing our panel partners. Making Monitas a consolidated subsidiary is an effort to bring this in-house, thereby reduce profit outflows from the group to external parties and improve profitability over the medium to long term. On that note, as mentioned in the first bullet point, we believe that this will contribute to improving the profitability of the group's business, particularly for the Focus business. The second and the third bullet point to explain our efforts to respond to the growing demand in Japan for self-serve, do it yourself or DIY type of research where clients seek to conduct their own research more quickly and easily as well as our initiative for the panel provision market. As mentioned earlier, in the review of the previous midterm business plan, we will respond to these new needs and maximize our revenue in the market. The financial impact is expected to be an improvement in the profitability of Macromill's existing businesses in addition to growth in the company's revenue and profits. Having said that, the magnitude of the impact is now being assessed closely. And as such, we have only incorporated the minimum level of impact in the [indiscernible] guidance at this point. Therefore, the impact that I have explained will basically be upside for the current fiscal year. Based on this assumption, let me now walk you through the core initiatives in each business segment. Please turn to Page 35. For the Focus business, we are in the process of rebuilding the pool of prospective clients after having had to decline clients in the previous fiscal year. As such, while our 3-year growth target is 7%, we have positioned the current period as a recovery phase. And the target for this year is a growth of 5%. In terms of costs, we will raise the ratio of in-house production rate as well as improve the workflow and productivity, thereby improving the ratio of total employee and outsourcing expenses to revenue. Furthermore, we aim to increase unit prices for clients by strengthening the proposal-based sales activities and by enhancing value proposition through improvements in service level and quality. With the addition of Monitas as a consolidated subsidiary, the group now has the largest number of panel in the industry. We will continue to promote our offerings activity to all clients, including prospects. While at the same time, appealing that we have resolved the operational capacity challenges. As noted at the bottom of the slide, most of the current improvement is achieved by people. As we look ahead, we will work on the renewal of the core research system as well as platform building by leveraging technology. These initiatives will commence from this fiscal year, together with the recruitment of IT human capital. Page 36 please. In the future business, we continue to observe momentum of strong client demand, and we are targeting 27% revenue growth year-on-year for this fiscal year. In the foundation business, we are targeting 4% growth over the 3-year period. But due to the consolidation of Monitas for the current fiscal year, the revenue growth target is set at 6% over last year. In the Korea business, due to the impact of business sentiment and this year being a transition year to a growth phase, we are aiming for 2% revenue growth in the current year compared to our 3-year target growth rate of 7%. That's all on revenues. Now let me turn to costs on Page 37. The guidance with operating profit is JPY 5.6 billion. And as I mentioned, we are aiming for profit growth to outperform the revenue growth. The main drivers behind that will be curbing the panel expenses and the ratio of outsourcing. The total employee expenses ratio will be increasing at a slightly higher pace compared to the revenue growth. We do not plan to increase the head count in the Focus business. The plan is to strategically increase the head count in new business as needed with the subsidiaries and for IT and security-related areas. Other expenses are expected to increase due to investments for the renewal of the core research systems and systems EOL support among others, but the increase will be more moderate compared to the revenue growth rate. In accordance with IFRS, equity method earnings from Toluna is to be booked under OP, but this is not reflected in the earnings guidance at this point. So this impact is also recorded as an upside. Please turn to Page 38 for the breakdown of the guidance into the first and the second half. Against the full year projection of 8% revenue growth, the guidance for the first half and the second half revenue growth is 7% and 10%, respectively. For adjusted OP, this will be the full year growth target of 13% year-on-year, first half projection is a decline of 7% and second half is projected to grow at 38%. Due to the seasonality of our business and the underperformance in the second half of the previous fiscal year, we expect a stronger recovery in revenue and profit in the second half. Furthermore, the total profit is expected to dip for the first half. The drop is only for the first quarter, and we expect profit growth from the second quarter. Last but not least, I'd like to mention some of our other recent initiatives. Page 39, please. First point I'd like to mention is that for the first time in our industry, we obtained the latest versions of the ISMS international standard certification for all of our business domains. As a data company, we have improved our level of security and increased employee awareness regarding security. Second, we published our first sustainability report in October last year and as a recognition for the content and their effort, our stock was selected as a constituent of the FTSE Blossom Japan Sector Relative Index. We have been working on security and sustainability initiatives and we have received external recognition for these efforts, which I wanted to share with you at the end of today's presentation. Now let me wrap up. Today, I wanted to convey the background and objective of the sale of MetrixLab as well as review the previous midterm business plan and show the context of the new midterm business plan. As management, we have reaffirmed the result to grow revenue and improve profitability. We believe it is of utmost important for us to achieve the guidance for the current fiscal year in order to achieve a steady recovery in profit. First and foremost, we will make every effort to achieve this year's earnings guidance. We would appreciate your continued support. Thank you very much for your attention.