4496.T

Core Business (Futureshop) Updates

• Operates an economically efficient multi-tenant, non-customized SaaS platform that shares server and software environments across all customers, delivering three core advantages: up-to-date secure infrastructure, fast version updates due to no custom development, and high-quality standardized customer support. This model enables low engineer turnover, easy knowledge sharing, and high repeatable growth.
• Holds 26 consecutive quarters (6 consecutive years) of the "Leader" badge from ITreview for high customer satisfaction and recognition in the EC site building category. 28.4% average revenue growth for customers with 2+ year contracts, and higher per-store GMV than competing SaaS platforms, with a fixed monthly fee + commission pricing model that improves customer ROA.
• GMV grew 2.7% YoY to 159.7 billion yen, with steady growth driven by increasing customer product variety and customer efforts supported by the company's services. ARPU has grown steadily for multiple consecutive periods, driven by expanded option and alliance service adoption from growing customers and the impact of prior period price adjustments. Maintains a low 0.70% annualized churn rate, with long-term customer growth driving sustained business growth.
• Growth strategy: Expanded into the food industry post-COVID-19, is pursuing OMO (online merge offline) business expansion as customers return to physical stores, plans to expand capabilities via data accumulation and multi-channel data utilization, will expand EC peripheral service alliances and scale up data-driven EC consulting, and is launching new solutions including live commerce and UGC tools.
• New product launch: Released future Review, a UGC/review solution that collects purchaser reviews for display on product pages to improve site trustworthiness and conversion rates. Future use of structured review data for AI applications is planned.
• Is developing cross-border EC solutions to support domestic SMEs expanding into overseas markets, building support infrastructure and marketing analytics tools to help SMEs enter global markets.

Back-Office Business (Softel) Updates

• Is transitioning the core back-office efficiency service from the existing "Tsuhan Suru Kura" to the next-generation platform Commerce Connect, with continued maintenance support for Tsuhan Suru Kura after March 2028.
• Tsuhan Suru Zou acts as a unified data hub for multi-channel EC (marketplaces, owned EC, physical stores) that integrates warehouse, inventory, sales, product, and customer data for seamless connection to external backend systems. Will continue API development and expand physical AI-powered warehouse efficiency features until the Commerce Connect transition is complete in 2028, and increased maintenance fees starting in Q3 already contribute to group profit.
• Commerce Connect is an in-development next-generation integrated EC platform that aggregates and structures multi-channel and cross-group service data into an AI-ready infrastructure, to serve as a foundational platform supporting EC business growth and sustained group growth.
• Is pursuing partial automation of delivery operations via real-time order data connection with physical AI and IoT devices, and integrates with core enterprise systems (accounting, etc.) to improve customer value.

TradeSafe Business Updates

• Originally founded to build trust in the early EC market via third-party trust certification for EC sites, and has expanded into financial and decarbonization businesses.
• Launched One Credit, a factoring service that purchases future accounts receivable to meet upfront funding needs for growing EC businesses. Leverages 19 years of industry knowledge and real-time EC sales data analysis via proprietary algorithms to deliver low-cost, fast credit assessment.

New Environmental Energy Business Initiative

• Is planning to enter the environmental energy business to address rapidly growing global electricity demand driven by AI adoption, data center expansion, and climate change (increased air conditioning use). The IEA projects 4% annual average global electricity demand growth from 2025-2027 (up from 2.6% 2015-2023), equivalent to adding one year of Japan's total electricity consumption annually.
• Leverages technology from equity-method investee Enesycle, which produces high-purity biochar from waste biomass via patented carbonization furnaces, plus tar-free, hydrogen-rich gas from gasification of combustion gasses.
• Generates carbon credits from the CO2 emission reductions delivered by biochar, which are certified and can be sold to high-emission companies for offsetting. Partnership with Carbontribe Labs leverages AI and blockchain to cut credit generation time to 1/20 of traditional processes and reduce operating costs by 50%, while blockchain provides transparent tracking to prevent greenwashing.
• Addresses the large supply gap in the fast-growing CDR (carbon dioxide removal) market, where currently less than 0.11% of offset-contracted credits have been delivered due to high costs, complex processes, and technical barriers. The company's technology converts organic waste (food scraps, coconut shells) into high-quality biofuel without fossil fuels, creating a competitive advantage.

• Full year consolidated revenue budget is 4.38728 billion yen, with Q3 cumulative revenue reaching 2.92454 billion yen (66.74% of budget, below the 75% 3/4 milestone progress). Management notes progress is slightly under target, will pursue sales growth to close the gap in Q4.
• Full year consolidated operating profit budget is 665.32 million yen, with Q3 cumulative operating profit reaching 314.6 million yen (47.3% of budget), with slower progress driven by unavoidable AI-related development and adoption investment, and proactive talent investment for future expansion. Management will work to close the gap and meet budget targets in Q4.
• Full year consolidated ordinary income budget is 673.09 million yen, with Q3 cumulative progress of 58.5% (393.99 million yen), and management will work to improve results in line with operating profit initiatives in Q4.
• future Review is expected to have a minimal impact on full year FY2026 profit, with meaningful customer acquisition and profit contribution expected from FY2027 onward.
• The transition to Commerce Connect will be completed by 2028, with continued maintenance for existing Tsuhan Suru Kura customers after that date.

1. Futureshop (core EC platform business): Reported revenue of 2.12 billion yen, a 60 million yen increase year-over-year. Operating profit was 530 million yen, a 100 million yen decrease year-over-year, with an operating margin of 25.3% (down 6.0 percentage points YoY). GMV (gross merchandise value) reached 159.7 billion yen, a 4.25 billion yen increase YoY. Contract count was 2,733 (down 62 contracts from the previous quarter end), and ARPU (average revenue per contract) was 85,462 yen, an increase of 4,860 yen YoY. Revenue contribution percentage: 72.6% of total consolidated revenue. 2. Softel (back-office efficiency solutions): Reported revenue of 671 million yen, a 42.1 million yen increase YoY. Operating profit was 67 million yen, a 28.2 million yen increase YoY, with an operating margin of 10.0% (up 3.8 percentage points YoY). Development revenue was 290 million yen (up 29.8 million yen YoY), and recurring maintenance revenue (stock revenue) reached 361 million yen (up 14.5 million yen YoY). Revenue contribution percentage: 23.0% of total consolidated revenue. 3. Sorairo (new product development): Reported operating loss driven by upfront R&D investment for new products, with 28.89 million yen of R&D expense recorded for future Review in the quarter, contributing to the consolidated operating profit decline. 4. Consolidated results: Total consolidated revenue was 2.92 billion yen (up 170 million yen, +6.3% YoY). Consolidated operating profit was 314.6 million yen (down 180.78 million yen, -36.5% YoY), operating margin 10.8% (down 7.2 percentage points YoY). Consolidated net income attributable to parent shareholders was 260 million yen (up 140 million yen, +109.6% YoY), and consolidated ordinary income increased 18.2% YoY.

• Current slower-than-budget revenue and profit progress reflects the cost impact of proactive upfront investment in AI development, talent expansion, and new product development for future growth, which has reduced near-term operating margin and profit.
• The global carbon credit market faces structural barriers including high project costs, complex certification processes, and limited supply of deliverable credits, though the company's technology is positioned to address these gaps, market development carries inherent uncertainty.
• The EC market has recently experienced slower GMV growth overall, which could impact near-term revenue growth for Futureshop.

Q: What level of impact on this fiscal year's profit do you expect from the newly launched future Review product?

A: We expect the impact on this fiscal year's profit to be minimal. While we are still finalizing detailed calculations, we expect to acquire a meaningful customer base and generate profit starting from next fiscal year onward. We will continue to actively roll out new features post-launch to improve usability for tool users and enable more effective review collection: planned upcoming features include stepped review request email distribution timed to post-purchase usage, SNS integration to leverage customer feedback more effectively, Google seller and product review feed integration to display review ratings on Google Shopping, structured data support for AI search and SEO optimization, and AI summary functionality to speed up review reading. We plan to roll out these features sequentially to position future Review as a full marketing tool that maximizes the value of purchaser feedback.

Q: Why will Commerce Connect enable the accumulation of valuable information in the generative AI era after launch?

A: First, we define "valuable information" in the generative AI era as human-sourced, structured, trustworthy information that can serve as a credible foundation for AI discovery and recommendations. In an era where AI can mass-produce information, authentic content from unbiased third-party reviews and creator live streams is the most trustworthy information for AI. Commerce Connect aggregates trustworthy information from all group company services, and accumulates it as structured valuable information by linking all purchase and behavioral data across multiple channels including marketplaces, owned EC, social, and cross-border EC, rather than storing fragmented single-channel data. We believe this accumulated data will become a hard-to-replicate asset that enables autonomous sales promotion and inventory management even when AI agents become widely adopted in the future.