GMO Pepabo,Inc. Q2 FY2025 earnings call

Portfolio Restructuring

• GMO Pepabo approved the share transfer of GMO Creators Network, which operates the freelance-focused financial service FREENANCE, to Free Inc., scheduled for September 1, 2025, with an estimated transfer price of 1.1 billion yen.
• The share transfer is part of the company's portfolio optimization strategy to concentrate management resources on existing stock-type businesses and new services, to rebuild corporate value.

Core Business Strategy Shift

• The company is transitioning its business model from acquiring large volumes of low-margin customers to providing high-margin, value-added services, shifting its target market to include corporate clients in addition to individual users in response to changing market demand.
• The company aims to grow the proportion of recurring stock-type revenue through expanding existing services, launching new offerings, and M&A (referred to internally as "making partners").

New Service Expansion

• Launched the corporate-focused new service Lolipop! Fixed IP Access in March 2025, targeting the growing domestic VPN market to capture new recurring revenue and raise average customer value.
• Muumu Domain expanded its service lineup by becoming a sales partner for Google Workspace starting February 2025, to drive new domain registrations and increase average customer value via bundled offerings, with new expansion initiatives planned for H2 2025.
• GMO Sokuzoku AI added a new Dify implementation support service, the AI Agent, to support corporate customer inquiry response and operational efficiency improvement, targeting new contract growth.
• Minne launched a new creator support feature in July 2025 that credits creators with advertising credits when users view ads on their shop pages, to support creator growth and boost recurring subscription revenue.

M&A Initiative

• The company has initiated a 3.0 billion yen M&A program using existing on-hand cash, targeting stock-type businesses with synergy to existing operations to drive medium- to long-term growth.

Shareholder Return

• The company maintains a target dividend payout ratio of 65%+; the financial impact of the FREENANCE share transfer is still being reviewed, and any material changes will be disclosed promptly.
• A new shareholder benefit was announced that awards bitcoin equal to 0.03% of GMO Pepabo share purchase value via GMO Click Securities to be credited to users' GMO Coin crypto asset accounts.

1. Domain & Rental Server (Hosting) Business: Revenue of 3.098 billion yen (101.9% year-over-year), operating profit of 971 million yen (96% YoY). It contributed ~56% of total consolidated revenue. Revenue grew due to price adjustment effects for Lolipop! and growing contract volumes for Muumu Server, but decreased profit due to increased investment in new corporate-focused products.
2. EC Support Business: Revenue of 1.483 billion yen (103.5% YoY), operating profit of 458 million yen (132.6% YoY). It contributed ~27% of total consolidated revenue. Growth was driven by plan consolidation for Color Me Shop that pushed customer shifts to higher-tier plans, improved production and new corporate projects for SUZURI, which turned to operating profit in Q2 thanks to cost cuts from AI-enabled operations.
3. Handmade (minne) Business: Revenue of 676 million yen (98.9% YoY), operating profit of 62 million yen (198.2% YoY). It contributed ~12% of total consolidated revenue. Revenue declined amid lower overall transaction value, but profit grew from strong cost controls and expanding monthly subscription revenue.
4. Financial Support Business: Revenue of 272 million yen (133.0% YoY), operating profit of 75 million yen (turned to net profit). It contributed ~5% of total consolidated revenue. Growth came from increased invoice purchasing volume for higher-margin individual transactions and steady debt collection performance. Total consolidated Q2 revenue was 5.539 billion yen (103.2% YoY), total operating profit was 597 million yen (120.3% YoY).

• The company confirms its 2025-2027 medium-term targets, maintaining the goal of 5% average annual revenue growth and 15% average annual operating profit growth, with a target of 12.6 billion yen in consolidated revenue and 1.26 billion yen in operating profit for the full year 2027.
• Cumulative first half year performance is currently on track to meet initial full year guidance, with core stock-type businesses performing as expected.
• The company will continue to focus management resources on existing stock-type businesses and new services, to build a stable revenue base and drive sustained growth.

• The share transfer of GMO Creators Network has not yet finalized its full financial impact, which is still under review, creating uncertainty around full year 2025 profit results.
• Handmade business transaction value continues to decline year-over-year, creating ongoing pressure on top-line growth for the segment.
• The company's new corporate-focused services are still in early stages of customer acquisition, with unproven market demand and revenue contribution, posing execution risk to its strategic shift.

No question and answer section was included in the provided earning call transcript summary.