RACCOON HOLDINGS,Inc. Q2 FY2026 earnings call

Key Strategic Partnership with Advantage Partners

• Partnership Purpose: Racoon HD operates three core services serving nearly 500,000 vetted SME customers, a key strategic asset. The firm aims to create an integrated BtoB network allowing SMEs to freely use all of Racoon HD's services, expand service offerings via M&A, capital partnerships and new product development, and shift from founder intuition-based decision making to data-driven, scientific decision making to accelerate growth. This addresses investor feedback that the firm's business model is strong but growth has been slower than potential.

• Support from Advantage Partners:

  • M&A and PMI support: Shifts Racoon from a passive deal sourcing approach to proactive, targeted outreach aligned with the BtoB network strategy, and provides expertise to smooth post-acquisition integration. The firm has prior M&A experience, including one successful acquisition that forms the core of its current financial business.
  • Growth support for EC business: Provides research and decision making support for the underdeveloped BtoB cross-border EC market, and supports advertising strategy optimization.
  • Growth support for Financial business: Supports marketing, advertising, and sales organization building for large enterprise clients.
  • Corporate governance and talent support: Advances portfolio management, strengthens KPI management, fills the firm's gap in structured, analytical expertise, and supports mid-career talent recruitment while preserving Racoon's existing collaborative venture culture.

• Financing Details: The firm raised a total of 5 billion yen from Advantage Partners via 2 billion yen in convertible bonds (CB, 5-year maturity, conversion/exercise from June 2026 to December 2030, 0% interest, conversion price of 645 yen) and ~3 billion yen in warrants.

  • Capital Allocation: ~3 billion yen for M&A and business expansion (targeting companies that can add new services to the BtoB network for the 500,000 SME customer base), 1.5 billion yen for advertising and sales promotion (750 million yen for EC customer acquisition, 750 million yen for Financial business partner acquisition), and ~500 million yen for personnel and development expenses to strengthen management teams for accelerated growth.

Q2 Operational Highlights

• Consolidated revenue: 3.134 billion yen, +2.7% YoY (+9.8% YoY excluding the former rent guarantee business, in line with expectations).
• Consolidated operating profit: 574 million yen, -7.3% YoY. Adjusting for 46 million yen in new shareholder benefit costs and 50 million yen in extra overseas shipping costs, operating profit was nearly flat YoY (+0.1% YoY adjusted), in line with expectations.
• Lower defaults in Financial business reduced cost of sales, providing an offset to the one-time negative impacts.

1. EC Business (Super Delivery): Q2 revenue grew 6.8% YoY, while segment profit declined 0.8% YoY. GMV reached 14.475 billion yen, up 8.6% YoY, missing the full-year growth target of 10.8%. Domestic GMV hit 10.453 billion yen (+9.7% YoY), slightly exceeding the full-year target; overseas GMV reached 4.022 billion yen (+6% YoY), missing the 14.5% full-year growth target. Unexpected 50 million yen in extra shipping costs was the main driver of the slight profit decline, which accounts for ~500 million of the 660 million yen in negative incremental pressure. Domestic purchasing customers rose 9.2% YoY, average order value (AOV) turned positive +0.2% YoY after multiple quarters of decline, confirming a bottoming out. Overseas purchasing customers fell 6.6% YoY due to declines in the US (tariff impacts) and Hong Kong, while overseas AOV rose 14.6% YoY to an average of 327,152 yen, more than double domestic AOV. EC business accounts for approximately 58.7% of total consolidated revenue (after excluding the former rent guarantee business).

2. Financial Business (Paid, URIHO): Q2 revenue was 1.293 billion yen, down 2.6% YoY, which reflects the sale of the former rent guarantee business in the prior year. Excluding this impact, revenue grew 14.4% YoY (double-digit growth). Segment profit reached 402 million yen, up 7.2% YoY. Within the segment, Paid revenue grew 15.8% YoY and URIHO revenue grew 13.5% YoY, both achieving double-digit growth, though GMV and guarantee balance are slightly below full-year targets. URIHO guarantee balance grew strongly in Q2, with non-subscription guarantee growth hitting 10% QoQ. Driven by lower-than-expected default rates, cost of sales fell to 20.2% (compared to a normal 25% average), leading to a record high Q2 segment profit of 221 million yen (287 million yen excluding advertising expenses, also a record). Financial business accounts for approximately 41.3% of total consolidated revenue (after excluding the former rent guarantee business).

• The firm maintains its original full-year earnings guidance and has no plans to revise it at present. Management is confident full-year targets will be met.
• The original medium-term management plan remains unchanged, though management will adopt improved strategies from Advantage Partners and pursue higher targets if opportunities arise. There is no plan to lower medium-term profit targets; investments in advertising and personnel are predicated on sales growth, and strengthened KPI management will improve return on investment to hit the original profit targets.
• Overseas shipping cost pressures are expected to improve significantly in H2 (second half of the fiscal year). The impact of the October 2025 US shipping irregularity is temporary, and the extra 500 million yen in profit pressure from shipping in H1 will shrink substantially in H2.
• Shareholder benefit costs will be lower in Q4 than in Q2 due to the program's ownership duration rules, reducing profit pressure in the second half.
• H2 is expected to deliver higher sales growth and higher gross profit than H1, so the full-year plan remains achievable.
• M&A activity is expected to increase in frequency going forward, and M&A contributions to revenue growth are already reflected in medium-term growth projections.

• Higher-than-expected overseas shipping volatility (driven by tariff changes and logistics disruptions in the US) created unexpected cost pressure in Q2, leading to a slight YoY decline in EC segment profit.
• Growth of Paid GMV and URIHO guarantee balance is slightly below plan, driven by lower-than-expected large new client onboarding in the Financial business segment.
• Overseas EC growth in the US and Hong Kong is slower than plan, due to tariff impacts and challenging market conditions leading to customer declines that offset strong AOV growth.
• The large 5 billion yen financing results in a 34.82% dilution for existing shareholders, which management acknowledges will cause investor concern.
• Geopolitical tensions between China and Japan could create slight indirect pressure, as some of Racoon's EC customers serve inbound tourism businesses that could face slowdowns, though there is no material impact to core operations at present.
• The firm lacks in-house expertise for managing a growing portfolio of M&A investments and subsidiaries, which created the need for the Advantage Partners partnership.

Q: Why did the in-house-focused company decide to accept outside capital for this partnership with Advantage Partners, what caused the change in strategic thinking? / A: The large-scale BtoB network vision requires M&A and minority investments that will expand the number of subsidiaries and investee companies, and the firm currently lacks the in-house expertise and capacity to manage this larger portfolio. Management decided to build the required capability proactively rather than pull back from the ambitious vision. The partnership is time-bound and structured to preserve Racoon's independent corporate culture, and allows the firm to try new approaches it could not execute with internal resources alone, which management views as an exciting strategic opportunity.

Q: Is the current medium-term management plan still valid after this partnership, or will it be revised? / A: There are no current plans to revise the existing medium-term plan. The conversion and exercise period for the financing runs for 5 years, which extends beyond the current medium-term planning window, and management expects to grow alongside Advantage Partners over this longer period. If Advantage Partners suggests improved strategies or higher targets during the partnership, management will adopt them proactively.

Q: Why did you set total financing at 5 billion yen, and why split it 2 billion yen CB / 3 billion yen warrants? / A: The 5 billion yen amount balances the need to secure sufficient capital for expansion against the impact of shareholder dilution; a larger amount would have created excessive dilution, which management wanted to avoid. The split into CB and warrants is intentional: CB provides immediate cash upfront to respond to sudden M&A opportunities, while warrants only deliver capital when the stock price rises, which aligns the incentives of Advantage Partners with existing shareholders and avoids excessive immediate dilution.

Q: Will you need to revise full-year guidance, and why do you expect H2 profit growth? / A: Management has not revised guidance and does not see a need to do so, as the full-year target remains achievable. The 500 million yen in H1 profit pressure from shipping costs will improve substantially in H2, and shareholder benefit costs will be lower in Q4 than Q2. H2 is also expected to have higher sales growth, which will flow through to higher profit, so the full-year plan remains on track.