NEXYZ.Group Corporation Q2 FY2025 earnings call

• Core Business Model & Philosophy

  • The company's core concept is 0 initial investment, aligned with its group vision of "creating new common sense that did not exist before". Management only pursues business where it can become the No.1 player, following a strict framework of identifying existing industry conditions, core industry problems, and unique company solutions before launching any business.
  • The company has over 1,200 employees, with two publicly traded subsidiaries, and 38 sales locations covering nearly all of Japan.

• NEXYZ.ZERO (Embedded Finance) Key Operational Highlights

  • NEXYZ.ZERO offers 0 initial cost monthly subscription-based equipment introduction for business customers, covering product procurement, construction, and after-sales support. It has a 10 billion yen financing quota in partnership with major Japanese megabanks, partners with 200 global manufacturers, and offers over 500,000 products.
  • Financial institution referral channels now account for 53.7% of first half sales, a growing share, and average revenue per contract from these channels is 1.37 times higher than independent sales, due to more simultaneous and add-on orders. NEXYZ.ZERO has an 80%+ winning rate for public tenders, outcompeting single-brand manufacturers because of its multi-manufacturer product selection.
  • Moody's has awarded the service a top Aaa rating, and the company has earned Eco-First Company certification from the Japanese Minister of the Environment for cutting 2.2 million tons of CO2 emissions to date.
  • The company currently holds 78 billion yen in receivables for this service, with an existing 2.8 billion yen balance of unliquidated lease receivables that hold 0.84 billion yen in latent profit if liquidated.

• Accelerator Japan (Media & Promotion) Key Operational Highlights

  • This service allows small and medium enterprises (and large enterprises) to use pre-shot celebrity photos and videos for promotions with 0 initial cost and a 400 thousand yen monthly fee, solving the problem of high upfront celebrity endorsement costs for SMEs. The model also provides stable recurring income for celebrities, which has gained broad support from the talent community. Participating users include large firms like Seven-Eleven Japan, Suntory Holdings, and SBI Holdings, and client performance has increased up to 4.6 times in purchases and 1.8 times in reservation requests after using the service.

1. Embedded Finance Business: First half revenue exceeded 10 billion yen, with profit margins growing. Sales performance for the first half of the current fiscal year increased 20% year-over-year. It contributes 80% of total consolidated revenue. This segment's flagship NEXYZ.ZERO service has exceeded 110,000 introduction cases, and industrial equipment, a new product category, grew 2.6 times year-over-year, while LED, kitchen equipment, and air conditioning all saw year-over-year growth.
2. Media & Promotion Business (operated by listed subsidiary Blangista): Contributes 20% of total consolidated revenue, and both segments are currently hitting record high revenue. The segment's flagship Accelerator Japan service is growing rapidly, with over 350 A-list actors and actresses participating, over 7,300 digital magazine advertisement slots sold, and partnerships with 1,600 local governments.

• The company maintains guidance for 4 consecutive years of revenue and profit growth for the full 2025 September fiscal year. Hitting the full-year forecast of 1.5 billion yen in operating profit will represent roughly 4 times profit growth compared to 2022, following an average annual operating profit growth rate of 57.8% since the 2022 September fiscal year.
• Management plans to adjust provision for loss reserves gradually over 2 to 3 years as the share of low-cancellation financial institution referral cases grows, which will unlock significant incremental profit.
• The company will actively continue partial liquidation of existing lease receivables to realize latent profit.
• Management has stated a long-term goal to reach 5 billion yen, then 10 billion yen in annual operating profit as soon as possible through continued service expansion.
• The company maintains a policy of continuing stable dividend payouts.

• As NEXYZ.ZERO fronts capital for customer equipment and collects monthly service fees, the company bears customer default risk. Current loss provisions are calculated based on a 9.9% average 5-year cancellation rate, which has held down current reported profit despite higher revenue than pre-COVID levels, when the company generated 2 billion yen in profit on less than 2 billion yen in revenue.
• The 9.9% cancellation rate assumption is higher than the current actual cancellation rate for the growing share of financial institution-referred cases, which is just 4.9%. If the average cancellation rate does not decline as expected, profit will not increase at the projected rate.

No formal Q&A section was included in the provided individual investor presentation transcript.