GMO Pepabo,Inc. Q3 FY2025 earnings call

Company Identity and Core Strategy

• Guided by the corporate mission "We can make it more interesting", the company has focused on lowering barriers for creative output online, building a cumulative user base of 8.54 million supported creators across its platforms. This large, diverse user base is viewed as a core asset for future growth.
• The company is adapting to market changes: domestic internet penetration has plateaued, shifting the business model from low-price, volume growth to higher average revenue per user (ARPU), high-value added services, with expansion from individual users to corporate clients.
• The company is pursuing a strategy of selective focus: it completed exit from the financial support business via share transfer in September, and is concentrating resources on expanding stock-based revenue in existing core businesses and entering new high-growth areas, plus pursuing targeted M&A (called "team-building" internally).

Segment Operational Updates

• Domain and Rental Server Business: Growing stock-based revenue from existing services (Lolipop!, Muumu Domain, Muumu Server) plus new offerings including Lolipop! for Gamers and Lolipop! Fixed IP Access. ARPU increased for both core brands year-over-year, with growth driven by price adjustments for Lolipop! and rising contract count for Muumu Server; lower profit reflects ongoing investment in new corporate-focused services.
• EC Support Business - ColorMeShop: Discontinued low-priced plans in Q3 FY2024, shifting customers to higher-tier plans, driving 5.4% YoY growth in gross merchandise value (GMV) to 50.4 billion yen. Continued growth in ARPU and per-store GMV, with ongoing focus on acquiring new Premium Plan customers and adding corporate features to grow stock-based revenue.
• EC Support Business - SUZURI: 9M cumulative GMV was flat YoY at 1.51 billion yen, with revenue growth driven by improved production systems and higher corporate client volume. Profit grew due to AI-driven efficiency gains and lower promotion costs. Launched a new "personal use goods" feature in October to capture daily hobby and life event demand, targeting new users who have never created or sold goods before to drive future GMV growth.
• Handmade Business (minne): Experienced a YoY decline in GMV, but reduced revenue decline via growth in click-based ads and monthly subscription plans. Profit grew due to improved profit margins from optimized human resource allocation. Launched a new creator support "cheer feature" in July and updated the minne PLUS monthly plan to support creator sales and reverse the GMV decline trend.

Mid-Term Growth Priorities (2025-2027)

• Core focus on two strategic pillars: 1) expanding the addressable market for existing stock-based businesses to improve profitability, and 2) entering new business areas to secure future growth drivers.
• For stock-based business expansion: Target higher-ARPU customers: roll out specialized high-value offerings (gaming servers, fixed IP for corporates in hosting; Premium Plan for large merchants in EC) to drive sustained ARPU growth.
• For new business expansion: Invest in two large high-growth markets: 1) Live streaming: Alive Studio to support content creators, targeting the projected 2.5 trillion yen domestic market by 2030; 2) Corporate DX: GMO Sokuresu AI to offer AI-powered inquiry response and digital transformation services, targeting the projected 9.2 trillion yen domestic DX market by 2030.

1. Domain and Rental Server (Hosting) Business: Revenue of 4.675 billion yen, +2.5% year-over-year; Operating profit of 1.478 billion yen, -0.7% year-over-year. This segment contributes ~56.6% of total cumulative 9M revenue. 2. EC Support Business: Revenue of 2.244 billion yen, +1.0% year-over-year; Operating profit of 727 million yen, +24.0% year-over-year. This segment contributes ~27.1% of total cumulative 9M revenue. 3. Handmade Business (minne): Revenue of 974 million yen, -2.2% year-over-year; Operating profit of 68 million yen, +52.5% year-over-year. This segment contributes ~11.8% of total cumulative 9M revenue. 4. Financial Support Business: Revenue of 355 million yen, +10.3% year-over-year; Operating profit of 1 million yen (break-even to small black ink). Results only reflect performance through August due to an upcoming share transfer. This segment contributes ~4.3% of total cumulative 9M revenue.

• Full year 2025 guidance has been upwardly revised: The revenue forecast reflects a decline due to the deconsolidation of GMO Creators Network following a share transfer, while operating profit is projected to increase year-over-year, driven by higher penetration of high-tier ColorMeShop plans and improved cost efficiency at SUZURI.
• Below operating profit line items were sharply revised upward due to the receipt of 304 million yen in dividends from investee companies, plus special gains from the share transfer of exited businesses.
• The annual dividend per share was upwardly revised from the initial forecast of 67 yen to 105 yen, aligned with the higher full year profit forecast and the company's 65%+ consolidated payout ratio policy.
• For the 2025-2027 mid-term period, the company maintains its targets of average annual growth of over 5% for revenue and over 15% for operating profit, with 2027 full year targets of 12.6 billion yen in revenue, 1.26 billion yen in operating profit, and an operating profit margin of 10% or higher.

No explicit material risks or operational failures were discussed in the available transcript. The company notes ongoing market environment changes (shifting user demand, plateaued internet penetration) that require strategic adaptation, which it is already addressing via business model transformation and selective focus.

No question and answer section was included in the provided transcript fragment.