THECOO Inc. Q1 FY2025 earnings call

• Overall Company Performance

  • Total company revenue was 1.076 billion yen, up 9.6% year-over-year, with gross profit of 476 million yen (0.476 billion yen), up 19.2% YoY
  • Operating profit was 2 million yen, an 89 million yen improvement YoY; net profit was 4 million yen, both operating and net profit remained positive
  • The company achieved cost control: selling, general and administrative expenses decreased 2.4% YoY, driven by organizational efficiency improvements and headcount adjustments that reduced labor costs
  • Full-year 2025 revenue target is 4.76 billion yen, and first quarter progress reached 22.6%, which is a solid start compared to historical first quarter performance

• Fan Business Platform (Fanicon) Operation

  • Fanicon is a fully paid, members-only closed fan community platform for creators, athletes, influencers and other public figures (called icons), with revenue generated via revenue sharing from fan membership fees and merchandise/ticket sales
  • The fully paid membership model has three core advantages: preserves high fan engagement regardless of icon size, builds a stable recurring revenue base, and creates psychologically safe closed spaces free of antis for icons and fans to interact closely
  • Fanicon has expanded to a wide range of categories including idols, artists, actors, YouTubers, and sports teams; in the first quarter, the company formed a strategic partnership with RBW JAPAN that brought on new K-Pop creator accounts including Yongji from KARA
  • ARPU is declining due to growth in fee-only OEM custom app partnerships, which is expected to continue; management identifies gross merchandise value as the more important growth metric for Fanicon going forward

• Digital Marketing Operation

  • The segment includes two core businesses: influencer marketing and digital advertising, and provides end-to-end influencer marketing support leveraging a database of over 330,000 influencer profiles
  • The segment has received strong client feedback for its influencer campaign work, as exemplified by its successful partnership with game industry client Metacore Games

1. Fan Business Platform Segment: Revenue was 851 million yen (0.851 billion yen), up 18.2% year-over-year, accounting for 79.1% of total company revenue. Operating profit reached 41 million yen (0.041 billion yen), driven by strong user growth and controlled selling, general and administrative expenses. Key KPIs: 3,300 icons (+13.8% YoY), 359,000 fans (+25.5% YoY), gross merchandise value up 19.6% YoY.
2. Digital Marketing Segment: Revenue was 224 million yen (0.224 billion yen), down 14.2% year-over-year, accounting for 20.9% of total company revenue. Operating loss was 38 million yen (-0.038 billion yen), which was flat year-over-year, with a 2 million yen improvement in loss compared to the prior year period. The revenue decline was caused by a major client's temporary ad spend cuts, but profitability improvements from other projects offset the decline. Case volumes decreased YoY while average project value stayed flat YoY.

• Management maintains the full-year 2025 December fiscal revenue target of 4.76 billion yen, with first quarter progress on target at 22.6%
• The Fan Business Platform segment is expected to continue growing gross merchandise volume, with ARPU expected to continue its downward trend due to the growing share of fee-only OEM custom app partnerships
• Management expects the Fan Business Platform segment to achieve full-year profitability, building on its strong first quarter performance

• Digital Marketing Segment: Revenue is exposed to volatility from large client ad budget cuts or temporary pauses in ad spending, which caused the segment's year-over-year revenue decline in the first quarter
• Fan Business Platform: ARPU will continue to face downward pressure due to the expected growth of lower-margin fee-only OEM custom app partnerships

No questions and answers were included in the provided transcript.