Sansan,Inc. Q1 FY2026 earnings call

• Company-wide Financial Performance

  • Total revenue grew 28.2% year-over-year, with gross margin improving 1.2 percentage points YoY driven by efficiency gains in Bill One's data processing operations.
  • Adjusted operating profit grew 178.8% YoY; despite a 1.081 billion yen increase in advertising expenses from continued large-scale promotions, higher sales, improved gross margin, and a 2.5 percentage point drop in the personnel cost ratio drove strong profit growth.
  • One-time costs from the prior year's head office relocation (including double rent) were eliminated, cutting rent and relocation-related expenses by 258 million yen and bringing the SG&A ratio down 6.5 percentage points YoY.
  • Annual recurring revenue (ARR) exceeded 43.7 billion yen as of August 2025.

• Sansan Product Operational Highlights

  • Total contracts grew 10.3% YoY, with net additions of over 350 contracts in the quarter. Monthly stock revenue per contract grew 6.6% YoY, remaining at a high level.
  • The 12-month average monthly churn rate held at 0.52% (below 1%), with the 0.12 percentage point YoY increase attributed to temporary factors from concentrated contract renewals in the prior quarter, with no near-term concerns.
  • Q1 new order value grew 20.8% YoY.

• Bill One Product Operational Highlights

  • Net MRR expansion hit 72 million yen in the quarter, marking 3 consecutive quarters of expanding net increases, with stable growth continuing.
  • Paid contracts grew 40.2% YoY, with 320 net additions in the quarter (holding above 300 for 3 consecutive quarters).
  • Monthly stock revenue per paid contract fell 0.4% YoY due to higher small customer acquisition, but remains at high levels across all customer segments with no material issues.
  • The 12-month average monthly churn rate held at a low 0.33%. Q1 new order value fell 3% YoY due to pushed-out large orders, but management notes the cause is clear and progress toward full-year targets remains on track.

1. Sansan/Bill One segment: Total revenue grew 26.4% year-over-year. The Sansan product sub-segment grew 19.3% YoY (the highest growth rate in the last 3 fiscal years), with stock revenue up 17.3% YoY. The Bill One product sub-segment maintained high growth at 42.6% YoY, with August 2025 MRR of 985 million yen (up 40.1% YoY). Adjusted operating profit for the full segment grew 66.4% YoY despite higher advertising expenses. Adjacent growth areas (Contract One and Nine Out) are performing well; Contract One reached 463 total contracts, up 218 contracts YoY. 2. Eight segment: Total revenue grew 52.4% YoY, with B2C revenue up 12.9% YoY and B2C revenue up 57.4% YoY driven by business events. The adjusted operating loss narrowed by 102 million yen.

• The medium-term financial policy remains unchanged, as near-term performance is on track with no need for numerical adjustments.
• The full-year 2026 May fiscal year guidance is maintained from initial public disclosures: revenue growth of 22% to 25% YoY, and adjusted operating profit growth of 92.7% to 143% YoY.
• Due to the company's stock-based business model, earnings accumulate through the year. The current fiscal year plans to front-load advertising spending for large promotions in the first half, with 75% of full-year profit expected to be recognized in the second half.
• Q1 adjusted operating profit is ahead of internal plans despite the apparent low progress rate, and Q1 was planned as the peak for advertising spending, with higher profit levels expected from Q2 onward.

• Sansan's 12-month average monthly churn increased 0.12 percentage points YoY, though this is attributed to temporary factors from concentrated contract renewals in the prior quarter, with no ongoing concerns.
• Bill One Q1 new order value fell 3% YoY due to some orders being pushed to Q2, though management notes the cause is idiosyncratic and progress toward full-year targets remains on track.
• Higher small-customer acquisition at Bill One creates downward pressure on ARPU that offsets upside from cross-selling and multi-product sales, requiring ongoing monitoring of the net impact.

Q: How does management measure the impact of the elevated Q1 advertising spend, and what is the plan for future advertising allocation? / A: Management states it is too early to judge full success, and uses multiple metrics for evaluation. The core metrics for mass marketing are brand awareness and lead generation, while order value is the main metric for targeted marketing; full impact will be evaluated over the next 3 to 6 months. The large Q1 promotion is complete, and the remaining portion of the full-year 6.5 billion yen advertising budget will be spread evenly over the next three quarters, with a slight skew to Q4. Management notes good early traction from increased advertising for Bill One's new expense settlement feature, which is expanding awareness of Bill One beyond just invoice reception.

Q: Has the competitive environment changed to prompt the higher recent advertising spend? / A: Management does not see any major change in the competitive landscape. Contract acquisition growth remains solid for both Sansan and Bill One, with Sansan achieving record-high customer acquisition levels, so no material competitive shifts have occurred.

Q: Why is small customer growth outpacing other segments at Bill One, and how is enterprise sales progressing? / A: The faster small customer growth is a natural outcome of the company's sales training structure, where new sales staff gain experience in the small customer segment before moving to mid-market and enterprise accounts, and the current sales force allocation prioritizes the more accessible small and mid-market segments. Enterprise sales are progressing, as Sansan's existing enterprise sales know-how is being transferred to the Bill One team, and large deal acquisition capabilities are now in place. Management expects enterprise results to become more visible starting from Q2.

Q: What is driving Sansan's recent accelerated growth, and is this growth sustainable? / A: The acceleration is not driven by one-off new initiatives, but by gradual refinement of sales and marketing processes that have better aligned customer needs with Sansan's value proposition. New AI-powered services are scheduled to launch from fall 2025 onward, which management expects to drive further sales growth acceleration.