PLANET,INC. Q2 FY2025 earnings call

Company Overview

• Planet builds, provides, and operates core EDI platforms that mediate B2B data exchange for order processing between manufacturers and wholesalers, with 40 years of operation, listed on the Tokyo Stock Exchange Standard market. Total current users across all services are 1,549 companies (895 manufacturers, 489 wholesalers, 165 material suppliers), primarily serving daily necessities, cosmetics, and OTC pharmaceutical sectors.
• The business is resilient to economic downturns due to its focus on essential consumer goods and stock-type recurring revenue model, and has maintained consecutive revenue growth since founding.

Operational Progress & Strategic Initiatives

• Horizontal expansion of core EDI: Expansion beyond the core daily necessities/cosmetics sectors into the pet, OTC pharmaceutical, and health food industries progressed steadily, with these three industries accounting for half of all new core EDI client additions in the period; user count, connection count, and data volume all increased.
• Deeper penetration of existing EDI data types: Promotion of underutilized data types such as billing statement data, which enables efficiency gains for the invoicing system implementation. Compared to the end of FY2022, connection count for billing data increased 1.14x and user count increased 1.04x.
• Expansion into new business areas:
  1. Logistics DX: Logistics EDI (focused on ASN advance shipment data and goods receipt data) saw 30x connection growth, 5x user growth, and 6x data volume growth versus end of FY2022; adoption of the complementary goods receipt data has begun as Logistics EDI penetration grows. Logistics EDI cuts receiving/inspection time, reduces driver wait times, and improves wholesaler operational efficiency.
  2. Marketing: POS Data Cleansing Service, which formats messy raw POS data for easier marketing analysis, is currently focused on driving trial conversions to paid contracts, and is positioned to help the industry grow sales volume amid stagnant unit growth.
• New service development: The first new end-to-end workflow service, Return Merchandise Workflow System Service, has been launched to consolidate fragmented return coordination currently done via phone/FAX/email into a single web platform, reducing operational burden and error risk. The company plans to launch additional similar services that improve end-to-end workflow efficiency around existing EDI data exchange.

1. Core EDI Services (including core EDI, material EDI, MITEOS): ~90% of total company revenue, 0.8% YoY revenue growth. Core EDI horizontal expansion progressed steadily, driving total company consolidated interim revenue of 1.592 billion yen. It is a stock-type business with ~80% of EDI revenue coming from monthly volume-based fees, and ~90% of total revenue from the EDI segment.
2. Database Business: Contribution to total revenue is smaller than EDI; the 2024 product database refresh increased depreciation costs in the interim period, raising cost bases for this segment. The sales report service within this segment delivered solid revenue growth in the period.

• Full-year new service development activity is still on track to meet original start-of-period plans, despite some planned interim development activities shifting to the second half, which caused interim profit to beat the original planned progress rate at 58.4%. There is no change to the full-year plan.
• The company maintains its dividend policy of stable continuous dividends and a payout ratio of 50% or higher, and plans a 21st consecutive year of dividend increases, with a full-year dividend of 43.5 yen per share (21.5 yen interim, 22 yen year-end).
• Management targets achieving profitability for the full portfolio of new services within 3 years.

• Persistent logistics industry risks: Truck driver labor shortage remains severe (effective job opening ratio is 2.3x the all-industry average), paired with rising logistics costs, hiring difficulties, and increasing labor costs, leaving a lasting risk of disrupted goods distribution.
• Extended implementation timelines for Logistics EDI: Unlike standard EDI implemented at the enterprise level, Logistics EDI requires per-logistics-hub adjustments to operational processes, which extends preparation timelines and slows adoption relative to core EDI services.
• Sustained consumer purchasing power decline: Three years of sustained price increases and inflation have led to consumer saving fatigue and reduced purchasing power, creating a headwind for overall consumer goods demand.

Q: Will the new services (Logistics EDI, POS Data Cleansing, Return Workflow) raise or lower operating profit margin, what is the expected revenue size relative to the existing business, and is there direct competition for these offerings? / A: Management expects overall operating margin to remain broadly unchanged, and declines to specify a concrete future revenue forecast for the new service portfolio at this stage. The company targets reaching profitability for the new services within 3 years. Management is not aware of any direct head-to-head competitors for any of the three new offerings: some firms offer adjacent logistics services like berth reservation, and others offer POS analysis services, but none offer the exact integrated solutions Planet is rolling out, especially for the return workflow service.

Q: Which industries are currently adopting Logistics EDI the fastest, what causes the extended preparation timeline, and how long does implementation typically take? Is demand driven more by manufacturers or wholesalers? / A: Adoption is currently progressing most rapidly among existing core EDI clients in the daily necessities industry, between manufacturers and wholesalers. Longer timelines stem from the need to adjust operational processes for receiving and inspection at each individual logistics hub, so even if an enterprise approves adoption, it cannot be rolled out company-wide overnight. Standard EDI takes a few months to implement, but Logistics EDI typically takes twice as long, around 6 months for most clients. Demand comes from mutual efficiency initiatives from both manufacturers and wholesalers, rather than being driven primarily by one side.

Q: What long-term business opportunities does management see, and what strategic direction will the company take to capture these opportunities? / A: Planet does not have a strategic advantage in entering entirely unrelated business areas, so all new growth will be derived from the company's existing core strength in B2B data exchange. Rather than only offering data exchange itself, the biggest opportunity lies in expanding services to cover the full end-to-end workflow before and after data exchange, to improve overall customer operational efficiency. Services can be delivered via a SaaS model or as an outsourced service depending on customer needs, and this approach can be applied to new areas beyond the traditional commercial flow space, including the new logistics and marketing areas the company is already entering. The company is currently re-evaluating the value of its 20 existing data types internally to identify new service opportunities.