FAQ (Search categories)

FY08/22_Q2

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• What is employee stock ownership?

  It is a system in which SHIFT employees themselves can acquire and hold SHIFT shares while reducing any risk of insider trading, The purpose is for employees to share with the shareholders, to further enhance corporate value, secure stable demand for purchases of SHIFT’s stocks, as well as contributing to increased trading volumes and improve liquidity in the stock market.
  Please refer to the link for more details.

  Announcement of Establishment of Employee Stock Ownership Association

• Why are the profit margins so high?

  All the efforts have resulted in record-high gross profit margins, and hence, generated great results in each stage of income (operating income, ordinary income, and net income). Specifically, the improvement of utilization ratio, reducing unprofitable projects, and the acquisition of prime customers by group companies through promoting PMI were factors that contributed.

• What are the factors contributing to the upward revision?

  In FY2022 1H, in addition to the steady recruitment of engineers, the FY2022 Q2 sales totaled 29,858 million JPY (+ 47.2% YoY) as a consequence of the strengthening sales capabilities backed by the early introduction of the Matrix Organization established in SHIFT, the development of new clients, the stable increase in the unit price of engineers, and the growth of all the group companies.
  Furthermore, while we continued to aggressively invest in hiring, the gross profit margin improved due to better commercial distribution among the group companies, improvement of productivity through the visualization of KPI, and resulted in an operating income of 3,826 million JPY (+ 157.0% YoY). Also, as a result of subsidies received under the “Special Measures for Employment Adjustment Subsidies”, the regular income was 4,249 million JPY (+ 121.0% YoY), and net income attributable to parent company shareholders amounted to 2,662 million JPY (+ 145.1% YoY).

• Why has the projected operating margin for the second half of the year been lowered?

  This is because the busiest hiring season in Japan is in April and we expect to spend expenses on recruiting. For example, 513 new employees joined the SHIFT Group in just April of 2022 (single month results). Due to this, we expect the operating margin in FY2022 2H to be temporarily lower than that of the first half.
  Additionally, the DX (digital transformation) market is expanding and the expectations for the SHIFT Group is increasing as we steadily increase sales under the branding of “supporting product making/software services that help create customers”. Therefore, we are expected to further revise our current sales forecast upwards from the original revised forecast of FY2022 Q1. Our expectation is to reach 64.5 billion for the full FY2022.

• Is a recession to be expected, or is there a change in demand?

  As of now (April 2022), we have not heard from any clients of the SHIFT Group that customer demand has declined.

• What impacts have the changes in geopolitical landscape had?

  As of now (April 2022), no impact has been confirmed.

• Why has cross-selling been so successful?

  This is because PMI is progressing, mutual understanding between companies in the group have deepened and led to further aggressive proposal-based sales, and the areas of expectation from our customers have expanded.

• How is the tone of the market?

  The promoting of DX (Digital Transformation) remains a major trend and we continue to build good relationships with our customers.

• Why was the SHIFT Growth Capital (SGC) established?

  SGC was established as a functional subsidiary of SHIFT itself. It was established in order to support the growth of each group company according to their current stage, while utilizing our knowledge of M&A and PMI cultivated throughout the years.
  Please refer to the link for more details.
  https://en.shiftinc.jp/news_en/about-future-ma-pmi-strategies-and-briefing-on-shift-growth-capital/

• Why was the Matrix Organization introduced?

  We introduced a matrix organization to further promote sales activities because the range of clients and their industries, as well as the technologies and services the SHIFT Group can provide has been expanded. While our “Industry” unit faces clients and proactively proposes solutions by arranging products, our “Solution Service” unit is responsible for refining product technology, accumulating knowledge, and recruiting and training human resources. With two clearly defined KPIs, both units have grown and developed new customers as well as deepened their loyal customer base.

• Will there be changes to the M&A policy due to the establishment of the SHIFT Growth Capital (SGC)?

  There are no plans for major changes. However, while the previous targets of M&A were: 1. Exclude companies that will be in the red after amortization of goodwill. 2. Set high levels of consideration of profitability. 3 Set a high initial screening hurdle., from now on it will be: 1. Exclude companies that will be in the red after amortization of goodwill. 2. Expand the level of consideration of profitability. 3. Adjust the initial screening hurdle. This is in order to expand the target zone for M&A.
  Please refer to the link for more details.
  https://en.shiftinc.jp/news_en/about-future-ma-pmi-strategies-and-briefing-on-shift-growth-capital/