Gurunavi,Inc. Q4 FY2025 earnings call

Overall Financial Result

• Achieved profitability in the second year of the mid-term business plan, beating the original target, with the core Restaurant Support business growing steadily. Fully completed all planned fixed cost reduction initiatives, though current profit levels remain modest.
• Repaid all remaining Class A preferred shares in Q4, funded by 1.2 billion yen in short-term bank borrowing. The resulting annual interest expense will be significantly lower than the prior preferred share dividend obligation.

Key Service Progress

• Launched the "Organizer Rank Program" as part of Rakuten Gurunavi strengthening to drive repeat reservations and stimulate group banquet demand, aligned with observed user trends of higher group booking frequency among frequent users.
• Expanded Gurunavi FineOrder mobile order services beyond restaurants to new adjacent segments including hotel room service and corporate cafeterias, which also benefit from automated order and payment efficiency gains.
• Completed sustainability milestones including identifying material sustainability issues and formalizing a sustainability policy, while continuing to推进 the Green Innovation Fund project.

Strategic Environment & Direction for FY2026

• Restaurant industry context: Outbound dining demand continues to recover, with customer volume growth outpacing average check increases driven by price hikes, indicating consumer acceptance of price adjustments. However, restaurants face sustained headwinds from rising ingredient costs and chronic labor shortages, so efficient, low-burden customer acquisition support is the company's core priority.
• 2026 March fiscal year core strategy: Prioritize full-scale expansion of the systems built in FY2025 to accelerate revenue growth and increase the profitability of the Restaurant Support business, via targeted growth investment. Key focus areas include strengthening Rakuten Gurunavi, expanding the Marketing Agent service, and推进ing mobile order service development.

Total company revenue for the 2025 March fiscal year was 13.458 billion yen, with operating profit of 0.262 billion yen, and net income attributable to parent company shareholders of 0.211 billion yen, all exceeding initial guidance. The core Restaurant Support business (which includes Restaurant Promotion Services) grew 9.5% year-over-year, driven by expansion across both recurring (stock-type) and one-off (spot-type) services: 1) Stock-type services grew 8.6% year-over-year from steady customer accumulation; 2) Spot-type services grew ~16% year-over-year from growth in promotional product sales and online reservation fees; 3) The Promotion segment saw a year-over-year revenue decline, driven by the scaling back of a large prior-year Ministry of Agriculture, Forestry and Fisheries project, but performed in line with the current year plan. Key sub-segment performance within Restaurant Promotion Services: 1) Online reservation service: Conversion rate from site visit to reservation is well above pre-pandemic levels due to growth in high-intent Rakuten ID linked members and ongoing UI improvements; Q4 saw a sustained shift toward larger group reservations, with 5+ person reservations increasing 0.6 percentage points combined year-over-year, and frequent users (4+ reservations/year) driving the largest growth in average group size. 2) Marketing Agent service: The Google Business Profile management support offering saw strong growth in adopted restaurant locations, with some new franchisees joining specifically to access this service. 3) Mobile order service Gurunavi FineOrder: Grew to 129 contracted enterprise clients as of March 2025, with 84% of contracted locations fully activated and a 97% active usage rate among activated locations.

• Total revenue guidance for the 2026 March fiscal year is 14.9 billion yen, representing a 10% year-over-year increase, with all growth driven by the core Restaurant Support business.
• Operating profit is guided at 0.3 billion yen, ordinary profit at 0.21 billion yen, and net income attributable to parent company shareholders at 0.234 billion yen, representing a slight year-over-year profit increase even after accounting for planned growth investments.
• The company expects cost increases from multiple sources: ~0.5 billion yen in personnel-related costs (including hiring) for team strengthening, 0.25 billion yen in increased advertising and point costs for online reservation service expansion, a nearly 0.3 billion yen increase in depreciation expense, and a 0.32 billion yen increase in outsourcing costs tied to revenue growth.
• Profitability will remain positive in the first half of FY2026, though cost increases will have a larger impact on H1 results than H2.
• Gurunavi FineOrder will focus on cross-expansion to affiliate locations of existing 129 contracted clients and penetration into new non-restaurant segments to build a long-term customer base for restaurant digital transformation support.

• Restaurant operators face ongoing structural headwinds from elevated ingredient costs and persistent labor shortages, which could reduce restaurant demand for third-party marketing and support services or limit their ability to pay for such offerings.
• Current profitability levels are modest after completing all major fixed cost cuts, so misallocation or underperformance of new growth investments could delay further profit expansion.
• Online reservation volume per location declined year-over-year in Q4 FY2025, creating near-term pressure to expand user inflow to Rakuten Gurunavi to offset this trend.

Q: The 14.4 billion yen total revenue growth planned for FY2026 is attributed almost entirely to the Restaurant Support business. What is the expected performance of non-core segments like Promotion for the coming year? / A: All projected top-line growth comes from the core Restaurant Support business. Non-core Promotion and other adjacent segments are expected to remain relatively flat year-over-year, with no material contribution to top-line growth, aligned with the company's renewed focus on its core restaurant support mission. The company does not plan to pursue large external projects similar to the prior-year Ministry of Agriculture, Forestry and Fisheries contract that boosted non-core revenue in that period.

Q: What are the company's expectations for growth in average revenue per user (ARPU) and paid franchise store count for the Restaurant Support business in FY2026? / A: The company targets growth across both metrics. New franchise acquisition will be a key focus of expanded sales and marketing investment, while the rollout of higher-value new offerings like Google Business Profile management support is expected to drive gradual ARPU growth across the existing store base. The company is prioritizing expanding the total paid franchise network as a foundation for long-term recurring revenue growth.

Q: What is the focus and planned scale of growth investment in personnel for FY2026? / A: After several years of headcount reduction for cost control, the company will increase total headcount in FY2026 to support core business expansion. All new hires will be focused on strengthening the sales force, planning and operations teams for the Restaurant Support business, to improve service delivery and drive new franchise acquisition. No material headcount increases are planned for non-core functions or segments.

Q: What is the current progress of investment in hiring and paid franchise acquisition? / A: Hiring for expanded core teams is already underway, aligned with the FY2026 plan. Investment in new franchise acquisition is being scaled up gradually, with the company focused on balancing customer acquisition cost efficiency with the target for net store growth, to ensure sustainable growth in recurring revenue without near-term margin pressure.