BASE,Inc. Q1 FY2025 earnings call

• Overall Quarterly Performance

  • All business segments performed in line with management expectations. Consolidated revenue grew 27% YoY, consolidated gross profit grew 31% YoY, and operating profit hit 380 million yen, up 89% YoY, beating forecasts due to disciplined selling, general and administrative (SG&A) cost control.
  • The company maintains a strong balance sheet with 23.3 billion yen in cash and equivalents as of quarter-end, with approximately 12 billion yen in deployable capital for strategic investments and shareholder returns.
  • A 1 billion yen share repurchase program was completed in April 2025 as planned.

• Strategic M&A Progress

  • The TOB for Estore Inc. has completed successfully, with integration preparations including personnel exchanges already underway. Estore brings 100 billion yen in existing GMV and serves larger merchant clients than BASE's core small merchant base, expanding the group's total addressable customer base.
  • The company's M&A strategy targets deals that either expand total group GMV or improve group-wide take rates, leveraging BASE's existing in-house payment and financial service ecosystem to generate synergies from acquired businesses.

• Pay ID Monetization

  • Starting July 1, the company will introduce a 9.5% + 40 yen per transaction fee for sales completed through the Pay ID shopping app. Pay ID transactions currently account for just over 10% of total BASE business GMV; existing self-directed merchant sales outside the app will not see any fee changes.
  • Pay ID is a built-in shopping mall for all BASE merchants that provides additional aggregated traffic and marketing tools including push notifications, and has received positive merchant feedback after years of product development.

• Takeover Response Update

  • Mr. Maki launched a hostile tender offer for BASE shares on May 7, 2025, after rapidly accumulating a large stake without prior detailed disclosure of terms and plans. The board of directors is currently evaluating the offer and will release a formal position statement in the near term.

1. BASE Business: GMV grew 8% YoY, revenue increased 15% YoY, gross profit grew 19% YoY. Take rate increased quarter-over-quarter due to higher GMV share from the free monthly Standard plan, driving gross margin improvement. It holds the largest revenue share of the group, which decreased quarter-over-quarter. 2. PAY.JP Business: GMV grew 20% YoY, revenue increased 19% YoY, gross profit grew 43% YoY. Take rate rose quarter-over-quarter due to higher GMV share from higher fee rate plans, leading to continued gross margin improvement. 3. YELL BANK Business: Revenue increased 44% YoY, gross profit grew 46% YoY. Growth rate moderated compared to the sharp expansion seen last year following a major product update, but underlying performance remains on track. Outstanding factoring receivable balance grew to 1.2 billion yen as the business expanded.

• Full-year 2025 cost spending is expected to remain back-loaded consistent with historical trends, so the high first quarter operating profit progress versus full-year guidance does not indicate a full-year overshoot is expected at this stage.
  • Management expects continued sustainable, repeatable GMV growth for the group, with Estore's acquisition expected to deliver non-continuous GMV expansion going forward.
  • YELL BANK is expected to deliver long-term growth as adoption expands to non-BASE platform merchants, despite near-term moderation in year-over-year growth rates after 2024's sharp expansion.
  • Management targets Pay ID to become a new core revenue and profit pillar for the group over the long term, following the launch of monetization.
  • The company will continue to pursue active M&A for high-synergy deals to drive non-continuous growth, while maintaining a solid financial base and continuing consistent shareholder returns.

• A hostile unsolicited tender offer for the company by Mr. Maki is now underway, after the accumulated stake was built without adequate prior disclosure of terms and strategic plans. Uncertainty around the outcome of the offer may create near-term investor uncertainty.
  • YELL BANK growth has moderated from the very high growth rates seen in 2024, which may create investor misperception around underlying business performance.
  • Pay ID monetization could face pushback from merchants or impact transaction volumes on the platform, which would affect expected profitability gains.

Q: Why did SG&A costs come in below forecast for the quarter? / A: SG&A was lower primarily because the large coupon promotion run during the prior year fourth quarter holiday season was not repeated in this quarter. The only material SG&A increase came from the consolidation of want.jp, which is aligned with expectations. Full-year costs are still expected to follow the normal back-loaded trend, so current lower spending does not change the full-year outlook.

Q: How will the Estore acquisition impact the consolidated income statement going forward? / A: Estore operates a similar transaction-based business model to BASE, serving larger merchants than BASE's core base. The company is focused on executing integration quickly to capture synergies, with both topline growth and cost saving opportunities expected from leveraging BASE's existing payment and financial services across Estore's GMV base. Final income statement contributions will be shared once integration planning is finalized.

Q: What is the impact of TikTok Shop on BASE's core business? / A: Management sees limited material impact from TikTok Shop on BASE. BASE's core value proposition focuses on supporting independent merchant brands that own their direct customer relationships, which is a fundamentally different positioning than the platform-centric TikTok Shop model, so the two serve different merchant needs.

Q: When will BASE consider initiating a cash dividend? / A: The company's shareholder return policy evaluates share repurchases based on share price levels and cash dividends based on profit levels. No final decision on a cash dividend has been announced, but the board regularly evaluates shareholder return options against the company's growth and capital needs.