Hakuten Corporation Q3 FY2025 earnings call

• Opening and Corporate Purpose

  • The CEO apologized for the delayed earnings release originally scheduled for November 12, which was caused by expanded business scale, growing project size/complexity that extended cost/expense recognition confirmation and audit procedures, combined with the need to confirm upward revision and dividend increase before disclosure. Management will improve internal processes to stabilize closing operations.
  • Hakuten's corporate purpose is to create heart-to-heart communication between people and society, and build driving force for the future. It has focused on solving social and corporate problems through experience creation since its founding in 1967, and has expanded into digital and sustainability sectors in recent years. It currently works with over 740 clients, and has over 600 group employees after steady new graduate and mid-career hiring.

• Operational and Project Highlights

  • The third quarter achieved record high revenue and gross profit for a Q3 period, driven by growth of large-scale events including Osaka-Kansai Expo and Tokyo 2025 World Athletics Championships. Completed three notable delivered projects: KITTE MARUNOUCHI "KITTEza Lantern Ondo" cultural event, Shueisha Games booth at Tokyo Game Show 2025, and Ricoh RICOH Value Presentation 2025 business conference.
  • Orders for circular resource events remain strong. The co-hosted ETHICAL DESIGN WEEK TOKYO 2025 was a great success and received media coverage, opening up new business opportunities.
  • Cumulative orders for the first three quarters maintained above 5.5 billion yen per quarter, which is stable compared to prior periods. Q3 ending order backlog hit a record high of 9.419 billion yen, with a shortened rotation period of 3.8 months. Most of the backlog is expected to contribute to Q4 (the company's peak season) performance.
  • Revenue-based nominated order rate is 55.3%, and competitive bid projects account for 44.7% of revenue. By project count, nominated orders account for over 82%, maintaining a high level. The higher share of large competitive bid projects reflects expansion of new customer groups, which management views positively. Revenue-based repeat rate is 67.6%, a slight decline, which is also attributed to new customer acquisition via competitive bids and viewed positively.

• Financial Performance Summary

  • Q3 standalone: Revenue = 4.636 billion yen, operating profit = 0.404 billion yen. Cumulative first three quarters: Revenue = 14.95 billion yen (up 2.103 billion yen YoY), gross profit = 4.944 billion yen (up 1.073 billion yen YoY), gross margin = 33.1% (up 2.9pp YoY), operating profit = 1.572 billion yen (up 0.705 billion yen YoY), operating margin = 10.5% (up 3.8pp YoY), net profit = 1.063 billion yen (up 0.487 billion yen YoY), achieving strong double-digit growth in both revenue and profit. Gross margin remained 33.1% in Q3, and the company still secured profit even in the typically slow Q3 period.

1. 首都圏・B2Bマーケティング事業 (Tokyo Metropolitan Area B2B Marketing): Decreased revenue year-over-year; gross margin improved. 2. 首都圏・B2Cマーケティング事業 (Tokyo Metropolitan Area B2C Marketing): Increased revenue by 0.901 billion yen (the largest growth among all segments), led improvement in gross margin for the whole company. 3. 仮設：イベントプロモーション (Temporary Event Promotion): All sub-units achieved gross margin improvement. 4. Subsidiaries: Continued to contribute positively to overall profit. No specific revenue contribution percentage for individual segments is provided in the transcript.

• Full-year 2025 guidance was revised upward: Revenue increased from 20.9 billion yen to 22.5 billion yen, operating profit increased from 1.7 billion yen to 2.15 billion yen, and net profit increased from 1.19 billion yen to 1.5 billion yen. As of Q3, progress rates are 66.5% for revenue, 73.1% for operating profit, and 70.9% for net profit.
• Based on the upward revision, annual dividend is planned at 24 yen (an increase of 2 yen), with a payout ratio of 25%, balancing shareholder return and future growth investment. Shareholder preferential treatment was updated to JCB Gift Card from JCB PREMO with an increased amount.
• All current unrecognized order backlog is expected to largely contribute to Q4 performance, which is the company's traditional peak season. Management will continue to steadily推进 operations to achieve full-year targets.
• Profits earned this fiscal year will be allocated to growth investments to support the new mid-term management plan starting next fiscal year.

• Business expansion has led to larger and more complex projects, which extended the required time for internal confirmation and external audit procedures, causing a delay in earnings release. Management has acknowledged this issue and will improve internal closing processes to resolve this.
• No other material business or operational risks were explicitly discussed in the provided transcript.

All Q&A content is hosted on Hakuten's IR website, and no full Q&A exchange is included in the provided transcript.