MERCURY Inc. Q4 FY2025 earnings call

• Company Overview and Core Strengths

  • Mercury is a real estate marketing platform operator with a 30+ year history of collecting condominium data, with a core competitive advantage from the high quality, comprehensiveness, timeliness, and accuracy of its proprietary real estate big data, which has built high barriers to entry for new competitors. Its core platform, Realnet, provides tailored services for both new and resale condominium segments.
  • The company's data collection process captures nearly 100% of all new condominium projects, updates information for customers by the next business day after collection, and maintains strict cross-checked quality control via an in-house specialized data development department.

• 2025 Fiscal Year Operational Updates

  • Completed expansion of the rental property database, finishing construction of a dataset covering 1.86 million buildings and 160 million listing entries, which will be used to expand existing services and develop new offerings.
  • Launched the Current Value API, which provides estimated current condominium prices based on original new construction price, resale price, and price fluctuation rate. The API can be integrated into both internal and third-party services, creating new revenue opportunities.
  • Used incremental profit from the large one-off gain to make active investments in business growth, competitiveness improvement, employee productivity equipment upgrades, and workplace environment improvements.
  • Software depreciation expenses increased after fiscal 2023 February due to capitalized development of additional usability features for SaaS products, and are expected to remain at the current level through fiscal 2025 February before declining significantly starting fiscal 2026 February.

• 2026 February Fiscal Year Strategic Priorities

  • Overall company priorities are expanding SaaS product offerings and scaling CGM advertising sales.
  • Platform Business: Target ARPU growth by adding usage-based pricing to high-usage existing accounts, leverage the completed rental database to expand existing services and launch new offerings. For the new condominium segment, focus on ARPU growth via additional license sales and recurring product adoption. For the resale condominium segment, focus on revenue growth via recurring product adoption and service expansion using the new rental database.
  • Digital Marketing Business: Continue scaling CGM advertising sales, with a specific focus on supporting large developers with large property portfolios to grow the number of listed properties. CGM advertising has a core strength of high-quality user traffic: 41% of users complete on-site visit bookings as of February 2025, and is a high-margin product that will shift the segment to a more profitable business model.

• Long-Term Growth Strategy

  • The company plans to grow across four strategic phases: Phase 1 and 2 focus on upselling and cross-selling to the existing stable customer base; Phase 3 focuses on new customer acquisition and new market expansion via new products built from the company's existing big data and technology, including the new rental database; Phase 4 focuses on accelerating growth via strengthened synergies with the GA Group.

Total company revenue for the period hit a record high of 1.763 billion yen, up 23% year-over-year, with operating profit of 170 million yen, up 199% YoY driven by a large one-off gain in the Platform Business (resale condominium segment).

1. Platform Business (70% of total revenue contribution): 32% YoY revenue growth.

   • New condominium segment: 4% YoY revenue growth, with 4% YoY ARR growth and a stable 0.23% churn rate. Average customer value increased 2.5% YoY from additional license sales, while customer count remained flat consistent with the segment's already high market share.
   • Resale condominium segment: 494% YoY revenue growth driven by the large one-shot gain and strong performance of the Data Download Service. Even excluding the one-off gain, revenue grew 31% YoY.

2. Digital Marketing Business (27% of total revenue contribution): 16% YoY revenue growth, driven by strong performance from both listing ads and the growing CGM advertising service launched in October 2023, which has seen consistent growth in the number of listed properties.

3. Other Business (3% of total revenue contribution): 40% YoY revenue decline, driven by a 56% YoY drop in contracted system development revenue, resulting in a 23% YoY overall decline for the segment.

• Management upwardly revised the 2025 February full year guidance in January 2025 after third quarter results significantly outperformed the initial forecast, driven by the early recognition of the large one-off gain.
• For the 2026 February full fiscal year, management projects total revenue of 1.6 billion yen, a 9.3% YoY decline, and operating profit of 110 million yen, a 35.4% YoY decline. This projected decline is solely due to the lapping of the large one-off gain recognized in fiscal 2025.
• Excluding the impact of the 2025 one-off gain, core organic revenue is projected to grow 6% YoY in fiscal 2026, with growth driven primarily by the strong performance of the Digital Marketing Business.

No explicit discussion of material business risks or operational failures was included in the provided earning call transcript.

No question and answer section was included in the provided earning call transcript.