(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.
“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.
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