THECOO Inc. Q3 FY2025 earnings call

• Company Overview & Vision

  • THECOO was founded in January 2014, is headquartered in Harajuku, Tokyo, has 122 employees, and operates two core businesses.
  • The company maintains the corporate vision of "Continuously challenging the impossible", focused on challenging established norms and launching new innovative businesses.

• Fan Business Platform (Fanicon) Business Highlights

  • Operates a fully paid, fully会员-based platform that enables creators (called icons: influencers, artists, athletes, sports teams, etc.) to easily launch their own fan communities and official fan clubs. The business model is based on revenue sharing of monthly fan membership fees.
  • The fully paid/closed membership model is justified for three core reasons: it helps retain high-engagement core fans regardless of overall fan base size; it builds a stable recurring revenue base; it creates a psychologically safe closed community only for engaged core fans to support creators.
  • The platform has been adopted by a diverse range of creator categories, and the company plans to continue expanding service offerings to attract more creators.

• Digital Marketing Business Highlights

  • The segment comprises two sub-businesses: influencer sales and digital advertising, providing end-to-end influencer marketing support and online advertising consulting for brand clients, earning fees and margins from advertisers.
  • Key competitive advantage: it leverages a proprietary database of over 330,000 influencer records to develop customized influencer marketing solutions that solve client-specific challenges.

• Overall Operational Performance

  • The third quarter achieved year-over-year revenue and profit growth, with both operating profit and net income remaining in positive territory. Total company revenue was 1.233 billion yen, up 11.3% YoY; total gross profit was 595 million yen, up 30.9% YoY; selling, general and administrative (SG&A) expenses were controlled at 496 million yen (up 8.7% YoY), with operating profit reaching 99 million yen, a 100 million yen YoY increase; net profit was also 99 million yen, achieving quarterly black ink profitability.
  • SG&A was managed by increasing sales promotion investment for growth while controlling other overhead expenses to maintain the same level as the prior quarter.

1. Fan Business Platform Segment: Third quarter revenue reached 940 million yen (1.233 billion yen total company revenue, 76.2% revenue contribution), up 19.0% year-over-year. Operating profit for the segment was 99 million yen. Key performance indicators (KPIs) show: icon (content creator) count of ~3,700, up 19.4% YoY; total fan count of 377,000, up 14.6% YoY; total gross merchandise value (GMV) up 25.6% YoY; ARPU grew this period driven by strong non-subscription sales, after a prior downward trend caused by OEM app revenue recognition that only records fees as revenue.

2. Digital Marketing Segment: Third quarter revenue was 293 million yen (23.8% revenue contribution), down 7.9% year-over-year. Operating profit was nearly zero, a 20 million yen improvement YoY that reduced prior operating losses. The segment saw a year-over-year decline in total project volume, but average project revenue per case performed strongly year-over-year, improving overall segment profitability.

• This is the second upward revision to full-year 2025 guidance, following an initial upward revision in August, with the latest revision announced on November 13.
• The upward revision is driven by improved profitability across both core segments, as the sales mix has shifted to higher-margin services.
• Full-year 2025 operating profit is now guided at 170 million yen, after accounting for controlled SG&A (including restrained labor costs) and planned additional investments for future growth.
• Full-year 2025 revenue is guided at 4.76 billion yen, with 72.1% of this target achieved as of the end of the third quarter, which is on track compared to historical third quarter progress.

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

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