Kakaku.com, Inc. (2371) Earnings Call Transcript & Summary

Hello. This is Murakami of Kakaku.com. Thank you for taking the time to join us today. Let me begin with an overview of our financial results for the first quarter of the fiscal year ending March 2026. Starting this quarter, we have included an executive summary at the beginning of the presentation. To begin with a brief recap for the current fiscal year, we have announced a consolidated forecast of JPY 92.0 billion in revenue and JPY 28.0 billion in operating profit, projecting increased revenue but lower profit. We plan to drive company-wide revenue growth exceeding recent levels by intensifying investment in Kyujin Box while positioning this year as an investment phase, during which we expect operating profit to decline slightly year-on-year. On a consolidated basis, the first quarter progressed smoothly with revenue up 24.0% year-on-year and operating profit up 4.9% year-on-year briefly on each of the 4 segments. Kakaku.com continued to achieve steady revenue and profit growth, albeit at a moderate pace. Tabelog recorded revenue and profit growth in line with our plan, supported by strong performance in online reservations. Kyujin Box, which is in an investment phase saw a decline in profit, but the top line exceeded our plan significantly with 72.4% year-on-year growth. Incubation achieved revenue and profit growth with the addition of LiPLUS Holdings, which operates a matching service for home services. In addition, we divested Eiga.com Inc., which operates the site Eiga.com effective August 1, as part of our business portfolio reorganization. Next, on Page 4, we have consolidated financial results. Consolidated revenue for the first quarter was JPY 21.958 billion, up 24.0% year-on-year with a progress rate of 23.9% against the full year forecast. Operating profit was JPY 7.318 billion, up 4.9% year-on-year with a progress rate of 26.1%. Next, on Page 5, we have revenue and profit for the first quarter by segment. Kyujin Box delivered strong top line growth of 72.4% year-on-year. Incubation also saw significant growth compared to the previous year, mainly due to the contribution from LiPLUS. Slides 6 through 8 show trends in consolidated financial performance, changes in operating profit and trends in key operating expenses. Please review these as well. That concludes the executive summary and overview of consolidated results. Our CFO, Mr. Kasuya, will now explain the detailed performance by segment.

First, results for Kakaku.com. Please have a look at Page 10. Revenue was JPY 5.836 billion, representing 4.0% year-on-year growth. Growth was driven by steady performance in Shopping, Telecom and Insurance. Shopping grew by 5.7% year-on-year. The PC category which accounts for about 20% of sales, continued to grow due to last-minute demand ahead of the end of Windows 10 support in October. Telecom grew by 15.6% year-on-year. Broadband comparison services featuring cashback incentives remained strong. Insurance was up by 7.8% year-on-year. Growth was especially notable in life insurance and pet insurance. Segment profit has remained at a high level since the third quarter of the previous fiscal year, and increased faster than revenue, with year-on-year growth of 9.6%, indicating very favorable performance. Next, on Page 11, we have Tabelog. Revenue was JPY 9.257 billion, a 21.3% increase year-on-year. Segment profit was JPY 5.227 billion, growing at a similarly high rate. Both revenue and profit have been trending steadily, driven by strong performance in online reservations since last year. As for inbound reservations, we observed a slight deceleration in growth during the first quarter. We have already begun implementing countermeasures, such as enabling seat-only reservations in the multilingual version. In any case, inbound reservations still only account for a small percentage of total reservations and revenue, and the impact on overall performance is therefore minimal. Next, on Page 12, we have key KPIs for Tabelog. Contracted restaurants continued to increase both year-on-year and quarter-on-quarter. The number of online reservations reached 29.76 million, setting a new record for the first quarter, supported by an increase in available seating inventory and a higher ratio of online bookings. Next, on Page 13 are the results for Kyujin Box. Revenue grew 72.4% year-on-year, a very strong performance. This was driven by enhanced collaboration with sales agencies, leading to a significant increase in direct job postings by employers. On the other hand, advertising expenses for TV commercials and agency commissions for new account acquisition increased, resulting in segment profit of JPY 356 million, a 69.0% decrease year-on-year. Looking at the outlook for the second quarter, we will continue to strengthen collaboration with agencies and aim to maintain a high revenue growth rate. While we were able to remain profitable in the first quarter, we launched a new TV commercial at the end of July and plan to fully deploy branding investments in the second quarter. As a result, segment profit is expected to turn negative, in line with our initial plan. On Page 14, we have the key KPIs for Kyujin Box. To better explain the effects of growth investment and revenue drivers, we have newly disclosed 2 metrics. Monthly visits, which is the number of times users accessed the site and active client accounts posting paid job ads. Monthly users shown in the left chart continued to grow, but monthly visits increased at an even faster pace, boosted by brand investment. This indicates that more users are actively searching for jobs on the platform. The chart in the middle shows the number of active accounts. The number of accounts grew 45.3% year-on-year, thanks to enhanced collaboration with sales agencies. Most of this increase came from individual company accounts, which directly contributed to revenue growth. Revenue per active account is shown in the chart on the right. ARPU rose 17.1% year-on-year, showing strong performance. The slight Q-on-Q decline is attributed to seasonal factors. Finally, we have the Incubation segment on Page 15. Growth in the real estate and travel and transportation categories has slowed and remained roughly flat. However, with the addition of LiPLUS, which is shown here as the home services domain, revenue and profit have expanded accordingly. Looking ahead to the second quarter, we expect growth to continue, supported by ongoing performance from LiPLUS. As mentioned earlier by Mr. Murakami, we divested Eiga.com, Inc., but as it accounted for a very small portion of revenue and profit, the impact on performance is negligible. Going forward, we have begun exploring specific strategies for M&A and organic growth in the Incubation segment as we work toward building a fourth pillar of our business. This concludes our explanation of the financial results for the first quarter of the fiscal year ending March 2026.