coconala Inc. Q4 FY2025 earnings call

Company Overview & Core Performance

• Coconala's vision is to build a world where every person can live their own story, with a mission to empower individuals by building a platform that visualizes personal knowledge, skills and experience and connects them to people who need these resources.
• Full year FY2025 consolidated performance: total revenue grew 42.8% year-over-year, reaching an all-time high. Gross profit and EBITDA also hit new record highs. The company maintains disciplined cost management and has achieved operating profit. Increased cost of goods sold reflects the shift to the new agent business model, which is a planned outcome of strategic expansion.
• The company expanded from 2 core businesses to 9 total businesses under the "Coconala Economic Zone" strategy through FY2025, focusing on seeding the agent segment with early investments. The FY2026 to FY2030 5-year plan will focus on scaling these seeded new businesses, developing additional new ventures, and building multiple second and third core business lines through organic growth and M&A, to become a full-service matching platform for skills and services.

Core Strategic Assets

• Talent Database: Over 1.2 million registered skilled providers as of Q4 FY2025. For agent matching, this allows near-zero talent acquisition cost (compared to high acquisition costs for peers) and a near-90% matching success rate for client requests.
• Customer Database: Over 5 million total registered members, including over 500,000 corporate members, covering approximately 30% of all Tokyo Stock Exchange Prime listed enterprises. A joint venture with Mizuho Bank provides access to hundreds of thousands of Mizuho corporate accounts, and past mass marketing has built strong brand recognition that drives steady organic new user inflow and a dedicated sales team has been formed to activate the existing customer base.
• Shared Product Infrastructure: Core platform infrastructure (registration, matching, user management) is shared across all 9 businesses, so new business lines only require lightweight UI customization, reducing new product development time and cost.

Growth Priorities

• 1. Expand Marketplace Matching: Develop features to support recurring (not just one-off) service matching, add multiple matching methods (original service listing model, project posting model, new direct scout model that lets enterprises access the 1.2 million person talent database directly) to suit different customer preferences. Add content matching (for pre-produced articles, videos, images) and launch niche vertical e-commerce for underserved specialized categories to grow matching volume.
• 2. Launch and Scale Agent Business: Build on the combined strengths of the large talent database and newly built sales team to deliver advanced matching. Expand from current frontline/operational level talent matching to add business unit level project/team-based services (such as engineering development support and BPO), and launch the new Cocona Consult business to address C-level executive management consulting needs, which will funnel downstream execution work to Cocona Tech and Cocona Assist.
• 3. Aggressively Deploy AI: Apply AI to all customer-facing marketplace matching funnels to improve productivity, user experience, and make the platform accessible to less digitally literate users. Develop the in-house Coconala AI Agent for internal matching use, and also plan to distribute the AI agent to large global platforms to reach a global user base. Internally, deploy generative AI across all internal job functions to improve productivity.
• M&A Strategy: M&A targets include businesses that deepen existing vertical categories and accelerate entry into new business areas. The company maintains strict valuation discipline, only pursuing acquisitions that achieve operating profit surplus after goodwill amortization, and will only approve deals that do not threaten official guidance. Capital allocation priority is 1) internal business development, 2) M&A, 3) shareholder returns, funded by operating cash flow and limited bank borrowing.

1. Marketplace (excluding Legal Consultation): Gross transaction value grew 4.6% year-over-year, with a stable take rate near 30%. Segment revenue grew 8.3% year-over-year. Q4 segment profit declined quarter-over-quarter due to one-time transitional investments in advertising and hiring for FY2026. Key KPIs: registered members, service listings, and skill registrants all increased, with skill registrants exceeding 1.2 million. Purchasing unique users declined year-over-year due to reduced low-ticket demand from AI, but average spend per purchaser increased as high-skill, high-value demand remained strong. 2. Marketplace (Legal Consultation): Revenue grew 15.9% year-over-year. Key KPIs: the number of paid advertising subscribing lawyers increased, and ARPU grew steadily from successful new product launches and cross-selling. 3. Agent: The segment faced soft year-over-year sales growth for most of FY2025, but hit a bottom in Q3 and achieved a V-shaped recovery in Q4. Recently acquired Cocona Tech has returned to growth and is on track for increased revenue and profit from FY2026 onward. Internally launched Cocona Assist (a talent matching and BPO service) is growing rapidly, with both client count and active worker count increasing steadily. Cocona Assist expanded its service lineup to add team-based professional sales outsourcing, drawing on the 120,000+ person talent database to select specialized sales professionals, which has received positive market reception.

• For FY2026 (August 2026) full year: consolidated revenue is guided at 11 billion yen, representing 16.9% year-over-year growth; operating profit is guided at 450 million yen, representing 75.7% year-over-year growth; net income attributable to parent shareholders is guided at 360 million yen, representing 17.3% year-over-year growth. Growth will be driven primarily by scaling of Cocona Assist, with improvements also expected in the core marketplace from AI-enabled improvements.
• 5-year guidance through FY2030: the company targets a minimum of 1.5 billion yen in operating profit, achievable through organic growth of existing businesses like Cocona Assist, with upside potential from new business development and M&A.
• The updated total addressable market (TAM) is approximately 37 trillion yen, expanded from the original focus on one-off services for individuals and SMEs to now include recurring services and enterprise clients.

• Generative AI adoption creates a risk of reduced demand for low-ticket, low-skill services, which has already caused a decline in purchasing unique users for the core marketplace.
• The company is transitioning from a single-core business model to a multi-business model with heavy early investment in new lines, which creates near-term pressure on profitability and execution risk if new businesses fail to scale as expected.
• M&A activity carries inherent integration and valuation risk, though the company mitigates this through strict discipline requiring post-goodwill operating profit.

Q: Why did operating profit fall year-over-year in FY2025 full year results?

A: The decline is driven entirely by temporary cost increases. Some planned investments for FY2024 were carried over into FY2025, and Q4 saw increased one-time spending on advertising and accelerated hiring to prepare for FY2026 growth. Management confirms this is a temporary effect, and the FY2026 guidance already projects a 75% year-over-year increase in operating profit to 450 million yen.

Q: How much of the FY2026业绩 guidance includes new businesses and M&A?

A: Guidance includes almost no contribution from the newly launched Cocona Consult business, and no contribution from potential M&A. This means better-than-expected performance from new ventures or completed M&A will create upside to the current guidance. The company maintains its policy of only pursuing M&A that deliver operating profit after goodwill amortization, to avoid downside risk to official earnings projections.

Q: What is the current launch status of the new Cocona Consult business?

A: Cocona Consult previously only operated as a service matching freelance consultants to client requests within the agent segment. Starting this fiscal year, the company is building an in-house team of high-end full-time consultants to serve enterprise-level strategic management challenges. Management is prioritizing quality of hires over rapid revenue or headcount growth, and has already hired two senior strategy consultants from top Japanese consulting firms, and will continue to build out the team gradually.