Japanese Startup Surges 300% on Demand for Cloud-Based Accounting, , on October 5, 2020 at 2:00 am

By
On October 5, 2020
Tags:

(Bloomberg) — Daisuke Sasaki has seen his cloud-based accounting company’s valuation swell to $3.7 billion despite having yet to show a profit, but he’s not letting that pressure him.Shares of Freee K.K. have quadrupled since going public on the Tokyo Stock Exchange in December, along with rising demand for cloud services amid the remote-working trend. The stock rose as much as 1.6% Monday to a new high.“We don’t have a set timeframe for when the company will swing to profits,” Sasaki, founder and chief executive of Freee, said in an interview on Aug. 17. “Our business is about subscription.”The Tokyo-based firm’s stock is one of the many technology names that have surged during Covid-19, fueled by investor euphoria over stay-at-home and DIY themes. While the pandemic roiled the outlook for companies around the world, U.S. accounting software giant Intuit Inc. beat recent earnings estimates, helped by better-than-expected growth for its cloud-based service for small businesses.Freee has the top shares of the Japanese cloud accounting and human-resources software markets, according to an August report from Daiwa Securities Co., with competitors including Money Forward Inc. Subscriptions to Freee’s flagship accounting service stand at over 220,000, having grown at more than 50% annually over the past five years. Its sales surged 53% in the year ended June 30.Acquiring new users takes priority over near-term earnings, said Sasaki. He estimates that Japan has a total of about six million small- to medium-sized enterprises, with only 15% of them currently using cloud-based accounting. Freee’s goal is to outpace market growth to be the dominant player.“We’re still extremely small in terms of where we could be,” Sasaki said, whose resume includes stints in marketing at Google and as an analyst at CLSA.Market expert views on Freee are mixed, with just two buy recommendations among the six analysts that cover the stock. Masato Araki, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co., cut his rating on the company to underweight on Aug. 26. While Freee has the potential for strong sales growth longer term, the coronavirus outbreak will likely be a “short-term drag” on its marketing efforts by making it harder to conduct face-to-face meetings, the analyst said.In contrast, Sasaki sees the pandemic as an opportunity to help accelerate the shift toward digitalization of office tasks.“It’s possible for this trend to be ignited, accelerating the adoption of cloud-accounting software even further,” he said. “Our business is really just getting started.”(Updates with latest share move)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.,

Japanese Startup Surges 300% on Demand for Cloud-Based Accounting(Bloomberg) — Daisuke Sasaki has seen his cloud-based accounting company’s valuation swell to $3.7 billion despite having yet to show a profit, but he’s not letting that pressure him.Shares of Freee K.K. have quadrupled since going public on the Tokyo Stock Exchange in December, along with rising demand for cloud services amid the remote-working trend. The stock rose as much as 1.6% Monday to a new high.“We don’t have a set timeframe for when the company will swing to profits,” Sasaki, founder and chief executive of Freee, said in an interview on Aug. 17. “Our business is about subscription.”The Tokyo-based firm’s stock is one of the many technology names that have surged during Covid-19, fueled by investor euphoria over stay-at-home and DIY themes. While the pandemic roiled the outlook for companies around the world, U.S. accounting software giant Intuit Inc. beat recent earnings estimates, helped by better-than-expected growth for its cloud-based service for small businesses.Freee has the top shares of the Japanese cloud accounting and human-resources software markets, according to an August report from Daiwa Securities Co., with competitors including Money Forward Inc. Subscriptions to Freee’s flagship accounting service stand at over 220,000, having grown at more than 50% annually over the past five years. Its sales surged 53% in the year ended June 30.Acquiring new users takes priority over near-term earnings, said Sasaki. He estimates that Japan has a total of about six million small- to medium-sized enterprises, with only 15% of them currently using cloud-based accounting. Freee’s goal is to outpace market growth to be the dominant player.“We’re still extremely small in terms of where we could be,” Sasaki said, whose resume includes stints in marketing at Google and as an analyst at CLSA.Market expert views on Freee are mixed, with just two buy recommendations among the six analysts that cover the stock. Masato Araki, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co., cut his rating on the company to underweight on Aug. 26. While Freee has the potential for strong sales growth longer term, the coronavirus outbreak will likely be a “short-term drag” on its marketing efforts by making it harder to conduct face-to-face meetings, the analyst said.In contrast, Sasaki sees the pandemic as an opportunity to help accelerate the shift toward digitalization of office tasks.“It’s possible for this trend to be ignited, accelerating the adoption of cloud-accounting software even further,” he said. “Our business is really just getting started.”(Updates with latest share move)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

,

Instant Quote

Enter the Stock Symbol.

Select the Exchange.

Select the Type of Security.

Please enter your First Name.

Please enter your Last Name.

Please enter your phone number.

Please enter your Email Address.

Please enter or select the Total Number of Shares you own.

Please enter or select the Desired Loan Amount you are seeking.

Please select the Loan Purpose.

Please select if you are an Officer/Director.

High West Capital Partners, LLC may only offer certain information to persons who are “Accredited Investors” and/or “Qualified Clients” as those terms are defined under applicable Federal Securities Laws. In order to be an “Accredited Investor” and/or a “Qualified Client”, you must meet the criteria identified in ONE OR MORE of the following categories/paragraphs numbered 1-20 below.

High West Capital Partners, LLC cannot provide you with any information regarding its Loan Programs or Investment Products unless you meet one or more of the following criteria. Furthermore, Foreign nationals who may be exempt from qualifying as a U.S. Accredited Investor are still required to meet the established criteria, in accordance with High West Capital Partners, LLC’s internal lending policies. High West Capital Partners, LLC will not provide information or lend to any individual and/or entity that does not meet one or more of the following criteria:

1) Individual with Net Worth in excess of $1.0 million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000 USD. (In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.)

2) Individual with $200,000 individual Annual Income. A natural person (not an entity) who had individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

3) Individual with $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

4) Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring an interest in the Corporation or Partnership.

5) Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an Accredited Investor as defined in one or more of the other categories/paragraphs numbered herein.

6) Irrevocable Trust. A trust (other than an ERISA plan) that (a)is not revocable by its grantors, (b) has in excess of $5 million of assets, (c) was not formed for the specific purpose of acquiring an interest, and (d) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Trust.

7) IRA or Similar Benefit Plan. An IRA, Keogh or similar benefit plan that covers only a single natural person who is an Accredited Investor, as defined in one or more of the other categories/paragraphs numbered herein.

8) Participant-Directed Employee Benefit Plan Account. A participant-directed employee benefit plan investing at the direction of, and for the account of, a participant who is an Accredited Investor, as that term is defined in one or more of the other categories/paragraphs numbered herein.

9) Other ERISA Plan. An employee benefit plan within the meaning of Title I of the ERISA Act other than a participant-directed plan with total assets in excess of $5 million or for which investment decisions (including the decision to purchase an interest) are made by a bank, registered investment adviser, savings and loan association, or insurance company.

10) Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million.

11) Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements.

12) A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

13) A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

14) A broker-dealer registered under the Exchange Act.

15) An insurance company, as defined in Section 2(13) of the Securities Act.

16) A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act.

17) A small business investment company licensed under Section 301 (c) or (d) of the Small Business Investment Act of 1958.

18) A “private business development company” as defined in Section 202(a)(22) of the Advisers Act.

19) Executive Officer or Director. A natural person who is an executive officer, director or general partner of the Partnership or the General Partner, and is an Accredited Investor as that term is defined in one or more of the categories/paragraphs numbered herein.

20) Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an Accredited Investor, as that term is defined in one or more of the categories/paragraphs numbered herein.

Please read the notice above and check the box below to continue.

Singapore

168 Robinson Road
#12-01 Capital Tower
Singapore 068912

New York

Coming Soon!

Dubai

Coming Soon!

Market Coverage