BASE,Inc. Q4 FY2024 earnings call

• Core Mission and Strategic Framework

  • BASE Group's mission is "Payment to the People, Power to the People", focused on empowering individuals and small teams in the e-commerce, payment and financial service spaces.
  • Group strategy centers on two core KPIs: expanding total GMV (gross merchandise value, the base for revenue and profit) and improving take-rate (margins from value-added services).
  • The company achieved operating profit one quarter earlier than originally planned, with full-year 2024 revenue up 36.8% YoY and gross profit up 42.4% YoY, beating all prior performance forecasts.
  • Group GMV exceeded 100 billion yen in Q4 2024, with growth across both BASE and PAY.JP businesses.

• Business Segment Strategies

  • BASE Business: Will re-focus on new shop opening to drive sustained long-term GMV growth, after making solid progress on take-rate improvement in recent years. Will leverage the fast-growing Pay ID buyer service to further improve profitability.
  • PAY.JP Business: Will maintain its cost-efficient inbound-only customer acquisition model (no outbound sales team), while adding new payment methods and expanding marketing to drive GMV growth and margin improvement.
  • YELL BANK Business: Will maintain its high-profit business model and expand cross-group to PAY.JP merchants and upcoming Estore Shop Serve merchants, growing beyond existing BASE shop customers.
  • want.jp Business: Priority is stabilizing and restoring existing business to its original growth trajectory, while continuing on-schedule development of cross-border e-commerce functionality for BASE shops, the core strategic goal of the acquisition.

• M&A and Governance

  • The company prioritizes M&A that expands GMV (customer base) and creates synergies via cross-deployment of the group's existing take-rate driving products (YELL BANK, Pay ID).
  • The planned acquisition of Estore Corporation, which targets larger merchants than BASE and holds ~100 billion yen in GMV, aligns with this strategy. BASE will deploy its existing value-added products to improve Estore's take-rate, with expected cost synergies from larger group scale. The TOB is scheduled for March 2025, with consolidation expected after August 2025, and its impact is not included in 2025 guidance.
  • Governance has been strengthened with the addition of a new independent outside director, and executive leadership changes: the COO role has transitioned to Takahashi, who will oversee all existing group products, with Yamamoto remaining in group leadership.

• Shareholder Return

  • Following the achievement of profitability, the company will initiate share buybacks as a core shareholder return measure, with an approved maximum of 1 billion yen in share repurchases.

1. BASE Business: Q4 2024 revenue increased 20.3% YoY, gross profit increased 25% YoY. GMV grew 13.3% YoY, exceeding expectations, beating the original full-year annual GMV target after a downward revision in August. Gross profit margin saw a slight decrease quarter-over-quarter linked to take-rate movement. It is the largest revenue contributor to the group, with its revenue share slightly down from the prior period following the addition of want.jp. 2. PAY.JP Business: Q4 2024 revenue increased 45.1% YoY, gross profit increased 113.5% YoY. GMV grew 34.1% YoY. The large gross profit growth included a one-time factor that improved gross profit margin; excluding this factor, gross profit margin was flat quarter-over-quarter. Take-rate has been stable recently. 3. YELL BANK Business: Q4 2024 revenue increased 154.3% YoY, gross profit increased 167.7% YoY, continuing strong growth. All uncollected factoring receivables (approx 1 billion yen balance) are being properly collected and managed. 4. want.jp Business: Consolidated into the group's P&L starting from Q4 2024. An 867 million yen special loss was recorded due to goodwill impairment. Existing business revenue declined post-acquisition due to external pressures, but began a gradual recovery in early 2025.

• No major changes to the medium-term growth outlook disclosed in the August 2024 half-year results. The 2025 December fiscal year guidance maintains the core strategy of balancing top-line growth and profitability improvement, targeting EBITDA growth from 2026 onward.
  • 2025 selling, general and administrative expenses will increase year-over-year, driven by higher promotion spending for BASE and Pay ID, the full-year consolidation of want.jp, and 300 million yen in planned investments for long-term top-line growth. There is a possibility of project timing delays leading to some unspent investment budget.
  • The performance impact of the Estore acquisition is not included in the 2025 guidance, and will be updated once the consolidation timing is confirmed.
  • For want.jp, management is projecting a more conservative 2025 performance outlook based on recent market conditions, while targeting a return to the original acquisition growth trajectory over the medium to long term.

• want.jp's existing cross-border e-commerce business is heavily exposed to external risks, including sudden sharp exchange rate volatility and unexpected changes to overseas platform operational policies, which caused revenue declines and higher-than-expected operating costs in 2024, leading to an 867 million yen goodwill impairment charge.
  • New regulatory and policy changes from overseas e-commerce platforms remain outside of BASE's control, creating ongoing uncertainty for want.jp's recovery timeline.
  • The planned Estore acquisition is subject to regulatory and shareholder approval, with consolidation timing still to be confirmed.
  • Planned 2025 growth investment spending may experience timing delays or partial unspending, leading to potential variability in annual operating profit.

Q: How have overseas e-commerce platform policy changes impacted want.jp's revenue, and what is the expected timeline for recovery? / A: Sudden unexpected changes to platform product listing and acceptance standards negatively impacted want.jp's revenue. BASE cannot control third-party platform policies, but is actively adjusting operations to adapt. Management expects the business to recover over a 2-3 year timeline, while continuing to prioritize cross-selling synergies with the broader BASE group.

Q: Is the 2025 operating profit guidance based on conservative assumptions, given the historical trend of operating profit beating initial guidance? / A: It is true that past operating profit has beaten initial guidance due to unspent selling and administrative expenses. The 2025 budget includes 300 million yen reserved for long-term growth investment, so there may be some variability in spending within this 300 million yen range. Excluding this investment budget, other SG&A are tightly controlled, so no large deviation from the forecast is expected.

Q: What specific initiatives are planned to boost new shop openings, and what is BASE's view on the current macro e-commerce market environment? / A: Management has observed that the overall pace of new e-commerce shop openings has slowed across the industry after the COVID-19 pandemic. BASE focused on improving take-rate over the past several years in this environment. The company is currently evaluating increased promotion investment to drive new shop openings, including a potential return to large-scale advertising like TV commercials, which is still under review.