NIFTY Lifestyle Co.,Ltd. Q3 FY2025 earnings call

• Company Overview & M&A History

  • Nifty Lifestyle was spun off from Nifty Inc. in 2018, listed on the Tokyo Stock Exchange Growth Market in 2021, acquired GiRAFFE&Co. in 2023 and Doors Corporation (operator of Gaiheki Toso no Madoguchi) in 2024, with ~100 employees total.
  • The company's purpose is to support individual lifestyle decision-making through technology, operating three core segments: Real Estate Tech, Wellness Tech, and Cross Tech.

• Product & Operational Updates

  • Real Estate Tech: Core service Nifty Real Estate aggregates listings from all major Japanese real estate portals (over 15 million total listings), with separate apps for rental and home purchase that have reached nearly 12 million downloads. The platform has high conversion rates for client inquiries thanks to strong user loyalty. Gaiheki Toso no Madoguchi operates a matching platform for exterior painting with 5,400 partner contractors, and is expanding a low-capital franchise-based original contracting model (focused on rural markets where contractor shortages are common) that has expanded from Kyushu to the Tohoku region, with planned expansion to Chugoku/Shikoku. Post-acquisition PMI for Doors is focused on shifting marketing to target high-intent users, leveraging Nifty Real Estate's search functionality and GiRAFFE's SEO capabilities to build organic user acquisition and reduce reliance on paid advertising.
  • Wellness Tech: Core service Nifty Onsen is a day-use onsen/thermal bath information platform that has expanded electronic pre-paid ticketing to 169 locations nationwide, including an ASP model for direct onsen website sales that creates new user touchpoints, plus new alliance integration with Google/Google Maps for direct ticket purchase. Shareholder benefits have transitioned fully from paper to electronic ticketing, expanding the number of participating facilities from 12 to ~30 nationwide.
  • Cross Tech: DFO provides SaaS tooling and ad operation services to simplify digital ad placement across major platforms, including support for Mercari Ads. GiRAFFE's technical SEO consulting supports external clients and also improves organic traffic for the group's own core platforms.

1. Real Estate Tech Segment: Cumulative revenue for the first 3 quarters is 2.577 billion yen, up 43.4% year-over-year, accounting for 76% of total revenue. Growth is driven by the inclusion of Doors Corporation (operator of Gaiheki Toso no Madoguchi) after acquisition, plus double-digit growth from core Nifty Real Estate. Closed deal sales for Gaiheki Toso no Madoguchi grew year-over-year on optimized promotion. 2. Wellness Tech Segment: Cumulative revenue for the first 3 quarters is 250 million yen, up 9.9% year-over-year, centered on Nifty Onsen. Growth comes from strong performance of experiential advertising through the first half of the fiscal year. 3. Cross Tech Segment: Cumulative revenue for the first 3 quarters is 634 million yen, up 81.3% year-over-year. This segment includes DFO (Data Feed Optimization) services and SEO consulting from subsidiary GiRAFFE&Co., with growth driven by a large client SEO project secured in the quarter. For the standalone 3rd quarter, total revenue hit 1.303 billion yen, up 48.2% year-over-year (a new quarterly record), with operating income of 318 million yen (up 49.2% YoY) and EBITDA of 415 million yen (up 51.9% YoY).

• Full-year FY2025 (ending March 2025) financial guidance is maintained at its original level, with cumulative 9-month results on track to meet full-year targets.
• The current mid-term management plan's quantitative revenue target is on track to be met, and the company is currently developing its next mid-term management plan, scheduled for publication in May 2025.
• The company maintains a medium-long term target of reaching 10 billion yen in total revenue, growing via expansion of existing segments, new business pillars, and strategic M&A.
• Starting from the next fiscal year, the company will adopt a 50% payout ratio target as its core shareholder return guideline, replacing the prior DOE framework. For FY2025, the company raised its full-year dividend forecast to 32 yen per share (a 14 yen increase to the year-end dividend, bringing the annual dividend to 32 yen per share).

• Organic user acquisition growth for Doors Corporation's Gaiheki Toso no Madoguchi is still in early stages, with ongoing testing of new strategies that has not yet produced fully realized results, and there is uncertainty around the timeline for positive outcomes.
• The shift in Gaiheki Toso no Madoguchi marketing to target high-intent users may temporarily reduce inflows of lower-intent users and result in near-term pressure on sales, even as it builds a more sustainable long-term business model.
• Rural market shrinkage and population aging create long-term headwinds for rural real estate tech and exterior painting services demand.

Q: Why is Nifty Lifestyle adopting a 50% payout ratio target, and what internal discussion led to this decision? / A: Management confirmed that the decision balances continued growth investment with shareholder returns. Nifty Real Estate generates consistent solid profit and cash flow, and the company's balance sheet has sufficient capacity to support both 50% payout and ongoing growth investments, with no expected negative impact on future expansion. This framework will be formalized in the upcoming mid-term plan.

Q: What is Nifty Lifestyle's competitive positioning in the onsen/wellness space relative to existing players? / A: Management states there is no direct equivalent to Nifty Onsen, which focuses on day-use local thermal bath facilities rather than travel or sauna-only niches. While general e-ticket platforms like Asoview operate in the space, Nifty focuses on expanding the overall day-use onsen market by attracting new users rather than competing for existing market share, prioritizing content marketing to drive new user interest in day-use onsen.

Q: What explains improved selling, general and administrative (SG&A) efficiency, and what changes have been implemented? / A: The core driver is improved conversion rates from app optimization, which increases inquiry volume per user, reducing the required ad spend to hit target referral volumes. The company also leverages its internal DFO tool to optimize ad feed performance and continuously optimizes media channel mix to improve return on ad spend, resulting in lower overall SG&A per conversion.

Q: Is there opportunity for Nifty to expand into coupon-based local business, leveraging its Nifty Onsen e-ticket infrastructure? / A: Management confirms high strategic fit, as most Nifty Onsen users visit local facilities near their home, creating natural demand for discounts and coupons for nearby complementary businesses (such as drugstores and grocery stores). The company is exploring adding local coupon functionality to the e-ticket app to improve user convenience and capture new adjacent revenue.