Aiming for steady growth despite “frustrations” about the English learning program “down-round listing”

Progrit, an English learning service, will be listed on the Tokyo Stock Exchange Growth Market on the 29th. It was a small-scale listing in a down-round, but why was it at this timing? We asked CEO Shogo Okada (31) about his capital strategy and future plans.

Financing focused on individual investors

The company’s main service is “Progrit,” which bears the company name.Unlike ordinary English learning services,“Self-study” instead of “class”It is characterized by providingSelf-study2-3 hours daily.professional consultantcreates a curriculum, corrects it every day, and conducts a test every week. The cost is 599,500 yen (tax included) for three months.High-class business people are the main customers, and users areCumulative total of 13,000 peopleis.

IPO (Initial Public Offering)Estimated market capitalization is about 2.8 billion yen,Market absorption amount is 750 million yen.Public offering price is 730 yenSo, compared to the stock price of 1502 yen at the time of the third-party allotment in October 2021, it became a so-called down-round listing. Mr. Okada

“Of course, I feel frustrated, but first of all, I am grateful to all the existing shareholders who accepted the listing at this stock price.” (Mr. Okada)

talk to.

This is largely related to the company’s capital policy. Progrit has raised about 230 million yen so far, including the late Tetsushi Takimoto, Keisuke Honda, Toru Shimada, former vice president of USEN-NEXT Holdings, and Yuji Mizoguchi, CEO of WEIN Group. I’ve been

“We are not a so-called VC,Financing focused on individual investorsI’ve been So, the pressure to go public with a large market capitalization is not as much as a typical startup.

Listing is just the beginning. I think it is important to raise the stock price over the long term.” (Mr. Okada)

English conversation business crosses paths due to COVID-19

Mr. Okada founded Progrit in 2016.

“originallyDon’t raise money until you go publicThat was the basic policy. We want to be profitable from the first term of our founding. Sometimes we ended up in the red.” (Mr. Okada)

As declared, sales exceeded 100 million yen in the first term, the term ending August 2017. The net profit was 17 million yen. Since then, the service has grown steadily,Decrease in opportunities for overseas assignments and business trips due to COVID-19and slowed growth.

In the fiscal year ending August 2021, it posted a net loss of 76 million yen against sales of 1.98 billion yen.

“The online English conversation services of other companies were growing due to the corona crisis, but our unit price is high, so you need to be enthusiastic about joining. We are analyzing that it may be.” (Mr. Okada)

Currently, it seems that the number of customers has returned with the convergence of corona, but on the other hand, there were other reasons for the deficit.

“Essentially, it was completely a management problem. It wasn’t a business model that would allow us to maintain profits in the event of unforeseen circumstances,” says Okada.

Shifting management to a restaurant where reservations cannot be taken

The exclusive consultant for English learning, which is the heart of Progrit,Full-time employeesis. Although it is unusual in the English industry where there are many outsourced and contracted employees as instructors, we have consistently aimed to “ensure that employees can work with peace of mind” and “provide high-quality services” to users. I have adhered to this policy.

In addition, as a place for weekly interviews, etc.9 school buildings nationwideis set up.

While the number of members did not increase due to Corona, it was these fixed costs such as personnel expenses and school buildings that weighed heavily.

“Previouslystepping on the accelerator abnormallyI was there. We hired more and more people, and we were running at an operating rate of about 80%.

Triggered by Corona”Steady growth, not rapid growth”I changed my policy to aim for.

Now we are hiring consultants after seeing the number of users increase. We are always 100% Capamax and have users wait. Inevitably, I tried to keep the demand high.Stores that cannot take reservationsIt’s an image like that.” (Mr. Okada)

If you apply for the program now, it will take about a month and a half to two months to take the course. Perhaps due to this change in management policy, the earnings forecast for the fiscal year ending August 2022 is for net sales of 2,239 million yen and net income of 186 million yen.

Focus on corporate contracts and M&A after listing

Four years ago, Okada decided to go public.Consumer (B to C) services need to gain trustBased on this judgment, we have aimed to be listed as early as possible.

In addition, in futurecorporate contractHe also wants to focus onSo far, Toyota, Suntory, Nomura Real Estate Development, Sompo Holdings, Mercari, etc.Corporate contracts with a total of 198 companiesHowever, taking the opportunity of listing, he is enthusiastic about strengthening the corporate sales team and accelerating it further.

AlsoI want to challenge M&A (Merger and Acquisition)talk to.

“I believe that M&A is essential for growth. Funds are necessary for M&A, but listing a company offers a wider range of funding options than an unlisted company. I wanted to go public as soon as possible.” (Mr. Okada)

What kind of company are you thinking of M&A? The first is an “English learning service,” with the aim of expanding the customer base by working with companies that provide services that are not expensive, such as Progrit.