coconala Inc. Q3 FY2025 earnings call

Vision, Mission and Growth Strategy

• Vision: Build a world where every individual can live their own unique story
• Mission: Match individuals' knowledge, skills and experience to all people who need them, by making these assets visible
• Growth Goal: Build a full-service platform where any need can be addressed by leveraging existing company assets

Core Assets and Competitive Advantages

• Talent Database: Over 1.15 million registered skill providers; the company can match over 90% of client talent requests for the agent business, with growing reports of clients finding matching candidates exclusively through Coconala.
• Customer Database: Business usage now accounts for 60-70% of total activity, up from an original focus on individual consumer use. The platform is used by roughly 30% of Prime-listed Japanese companies, with penetration growing among mid-sized and enterprise clients.
• Product Infrastructure: Internal commonization of heavy feature development enables fast, efficient launch of multiple new products under the compound growth strategy.
• Marketing & Sales Infrastructure: Built a full sales organization from scratch in under 2 years, with strong organic inflow from branded search traffic and accelerated matching driven by referral partnerships with Mizuho Bank for Mizuho business account holders.

Operational Updates

• The company has expanded from 2 core businesses to 10 total businesses across 5 marketplace lines, 4 agent lines and 1 SaaS business. The newly launched Coconara Content Market allows sellers to offer pre-made content (articles, videos, audio, images) for instant purchase, reducing transaction friction and unlocking new demand. A segment reporting change was implemented: the ongoing project category of Coconara Recruitment is now reclassified from the Agent segment to the Marketplace segment, as it primarily uses automated marketplace matching functionality.
• As a shareholder return measure, Coconala purchased treasury shares from large shareholder Shinakei Co.
• Multiple newly launched businesses are now approaching the profit generation phase, following the historical model of reinvesting profits from the original core skill marketplace into new business development. PMI for the Coconara Tech M&A is complete, and the business is showing early positive performance signs.

1. Marketplace (excluding legal consultation): Gross merchandise value increased 8.9% year-over-year, revenue grew 14% year-over-year driven by Coconara Skill Market and Coconara Recruitment. The overall take rate increased due to a partial take rate hike for video chat services (to 25% for standard text chat transactions, 50% for phone consultation which carries a higher take rate). Purchased unique users increased 1% YoY, while revenue per purchaser increased 8% YoY; registered members, service listings and skill provider registrations all continued to grow, with skill registrations accelerating. The newly launched Coconara Content Market had no material contribution to revenue in this quarter, as it was just released. 2. Marketplace (legal consultation): Revenue grew 12.2% YoY, with paid/advertising paying lawyers increasing 10% YoY and ARPU also growing, both contributing to revenue growth. 3. Agent Segment: Revenue grew 458.5% YoY primarily due to the impact of the prior M&A of Coconara Tech. Sequentially from the previous quarter, revenue declined intentionally as the company focused on post-merger integration (PMI) and productivity improvement. As of May, PMI efforts delivered results, with monthly active workers growing gradually and per-employee productivity improving significantly. Coconara Assist has grown steadily since launch, with monthly ARR continuing to increase driven by strong enterprise new deal flow and repeat business from existing clients. Overall company: Total company revenue grew 61.7% YoY, gross profit grew 23.3% YoY, and EBITDA has stayed near 0.2 billion yen for multiple consecutive quarters.

• Full-year 2025 August fiscal year guidance was upgraded upward, as all business segments have outperformed initial guidance progress expectations.
• The fourth quarter will see temporary one-time expenses for recruitment and marketing investments that benefit future periods; management expects consistent operating profit growth starting from the first quarter of the next fiscal year.
• The company is targeting steady cumulative operating profit growth starting from the next fiscal year, as the business transitions to a broad-based profit generation phase.
• A full mid-term strategic plan targeting large profit growth by FY2030 will be presented with the full-year 2025 financial results.
• For Coconara Tech, management expects sales to reverse the sequential decline and return to growth starting in the current post-PMI period, with a medium-term target of growing to 1,000 active workers from current levels.

No explicit material operational risks or failures were discussed in the available transcript.

Only two questions are referenced in the provided partial transcript, shown below:

Q: What is the outlook for fourth quarter operating profit after the full-year guidance upgrade?

A: The fourth quarter will include one-time temporary expenses for pre-investments in hiring and next-period marketing, which will weigh on Q4 operating profit. These investments lay the groundwork for stronger profit starting from the first quarter of next fiscal year, aligned with the company's shift to broad profit generation.

Q: What does the profit plan look like for the next fiscal year?

A: The company has now built the operational foundation for consistent operating profit growth next fiscal year and beyond. Multiple new businesses have reached the phase where they can generate profit in addition to revenue, so the company will focus on steadily growing aggregate operating profit as new businesses contribute to the bottom line.