istyle Inc. Q4 FY2026 earnings call

• Company Overview & Core Strategy

  • アイスタイル operates an integrated beauty platform centered on @cosme, which includes the @cosme media, @cosme SHOPPING EC site, and @cosme STORE physical retail chain
  • The company's core strategy is to integrate media, EC, and physical retail via a consolidated database of consumer-generated content, user behavior data, and brand data to deliver comprehensive beauty services
  • @cosme is Japan's largest beauty website, with over 22 million consumer product reviews; it maintains strict editorial neutrality, with no preferential treatment for brand clients, resulting in high user trust
  • @cosme has 17 million monthly unique users, with particularly high penetration: 51.0% of women in their 20s, 75.9% of women in their 30s, and 43.6% of women in their 40s are monthly active users, making it a leading national beauty service

• Marketing Services Operational Highlights

  • Serves approximately 1,000 cosmetics brands, covering all major categories from large domestic Japanese manufacturers to global luxury brands and new Asian indie brands
  • Focuses on content-driven edited tie-up campaigns rather than simple banner ads, providing clients with integrated multi-product marketing campaigns

• Retail Operational Highlights

  • EC (@cosme SHOPPING) aims to stock all cosmetics sold in Japan, ranging from luxury department store brands to newly entered Korean and Chinese indie brands, and secures exclusive limited items, early access to new product launches, and hard-to-find in-stock items leveraging its top-tier sales scale in Japan
  • The company holds twice-yearly major sales events in June and December, offering point-based rebates (up to 30% with brand sponsorship) instead of direct price cuts; 6-month point expiration drives repeat customer visits, supporting sustained EC user and sales growth
  • Japan currently has 34 physical stores concentrated in major metropolitan areas; stores focus on experiential shopping, with testers for almost all products (including luxury goods) and highly trained beauty advisors to assist customers, breaking traditional cosmetics distribution barriers by offering products across all retail channels (drugstore, specialty, department store) in one location
  • Store expansion is focused on Japan's 5 major cities: a third flagship store, @cosme NAGOYA, is scheduled to open at Nagoya Station in June 2025, with plans for continued incremental expansion and upgrading of existing locations

• Global Business Operational Highlights

  • Following post-COVID restructuring, the company holds 100% ownership of Korean beauty media GLOWPICK, operates @cosme media in Taiwan and Hong Kong (with a new large-format Hong Kong store planned for FY2025 end), runs cross-border EC and wholesale of Japanese cosmetics to China plus influencer marketing, and operates 26-year-old US beauty media MakeupAlley

• Mid-Term Strategic Direction

  • Core existing business strategy: Expand user-brand touchpoints via the retail segment to drive monetization of user data and touchpoints through the marketing services segment
  • Incremental new business exploration: Gradually expand into non-cosmetics beauty-related categories, including health supplements and aesthetic medicine

• Shareholder Return Policy

  • Dividends were suspended in 2019 due to weak performance during the COVID-19 pandemic; dividend payments will resume at the end of the current fiscal year, with plans for gradual dividend increases over time, paired with growth-driven capital gains for balanced shareholder returns

1. Marketing Services: Provides advertising, marketing solutions, and marketing SaaS products to cosmetics brands. Accounts for 15% of total revenue. Performance was weak during 2021-2023 (the COVID-19 pandemic period), but has recovered starting from the 2024 fiscal year. This is a high-margin online service. 2. Retail: Combines domestic online EC (@cosme SHOPPING) and physical brick-and-mortar stores (@cosme STORE). It is the company's largest segment, accounting for 75% of total revenue. The segment maintained growth through the COVID-19 pandemic, driven by a surge in EC demand; post-pandemic, EC sales have not declined, and physical store sales have rebounded strongly, leading to robust overall revenue growth. As a retail business, it has relatively low profit margins. 3. Global Business: Accounts for 7% of total revenue. The business faced severe challenges before the COVID-19 pandemic, leading to extensive restructuring: operations were reduced from 12 countries/regions to approximately half that number. Revenue declined sharply following restructuring, and the segment is currently working to return the unprofitable business to net positive income. It focuses on Asian markets, operating EC, wholesale, physical stores (in select markets), and media operations across multiple countries. 4. Other Businesses: Includes @cosme Career staffing services, @cosme premium paid memberships, and corporate venture capital investment activities. This segment accounts for 3% of total revenue.

• Current fiscal year (FY2025) initial plan targets 66 billion yen in revenue and 2.8 billion yen in operating profit; this guidance was upgraded during the mid-term period, and management expects full-year results to exceed the already upgraded guidance, reaching a new all-time high for both revenue and profit
• Mid-term (4-5 year horizon, targeting FY2028-FY2029) financial targets: 100 billion yen in revenue, 8 billion yen in operating profit, 8% operating margin, annual compound revenue growth of 12% to 15%, and maintain return on equity (ROE) above the estimated 10%-11% cost of equity; prior-year ROE was 11%, with a target of further improvement

• The Marketing Services segment faced sustained weak demand during 2021-2023 (the COVID-19 pandemic period)
• The Global Business segment faced severe operational challenges pre-COVID, resulting in significant restructuring, sharp revenue declines, and continued unprofitability that the company is working to resolve
• The COVID-19 pandemic negatively impacted overall company profitability, leading to operating losses at the peak of the crisis and the suspension of dividend payments starting in 2019

The provided transcript does not include a question and answer section.