unerry,Inc. Q3 FY2025 earnings call

Core Business Model and Positioning

• unerry is a big data company focused on fusing digital and real-world consumer behavior data, with 420 million IDs globally, ranking it in the global top 10 for active user data volume.
• Recurring revenue model: Customers typically start with low-margin entry services, and expand through upselling/cross-selling, with customer lifetime value increasing over time; the net revenue retention (NRR) rate for recurring customers holds at a high 118%, with some customers seeing 80x growth in lifetime customer value.
• Long-term goal: Become a global infrastructure for data services, analogous to electric, gas, and water utilities, open to all platform partners and enterprises.

Financial Highlights

• Quarterly revenue exceeded 1 billion yen for the first time, hitting an all-time quarterly high; TTM revenue was 3.494 billion yen, up 36% YoY.
• Cumulative operating profit reached 280 million yen, up 63% YoY; ROE improved 3 percentage points YoY to 14%; overall gross margin hit an all-time high, up 1 percentage point YoY.
• Recurring customer count grew to 134, up 30 YoY; annualized average customer revenue holds at 24 million yen per customer.

Strategic Progress

• Data Scaling Law Strategy: Partnership with Rakuten Insight expanded the breadth of data, enabling combined analysis of location data and consumer attitude surveys, and joint customer development.
• Key Partner Strategy: Collaboration with Rakuten Insight and invested company DearOne improved proposal capabilities for client companies.
• Flywheel Product Strategy: Sales of DearOne's services (ARUTANA, ModuleApps 2.0) have begun, integrated into unerry's existing product lineup to accelerate the cross-service growth flywheel.
• Human Capital Strategy: Aggressive hiring for future growth brought headcount above full-year plan by the third quarter; per-employee productivity has dipped temporarily, but long-term productivity improvement is expected via process automation and scale gains.

Operational Updates

• unerry holds approximately 1.6 billion yen in cash on hand as of March 2025, with 1.2 billion yen in short-term investments, no debt, and positive operating cash flow; capital allocation prioritizes product/R&D and strategic investments (M&A/capital contributions) within financial discipline, with shareholder returns to be considered flexibly after growth investment.

unerry operates four core business segments with the following performance in the third quarter:

1. Retail DX: Focused on the retail and food service industries; strengthened sales drove strong new customer growth, with solid contribution to overall revenue growth.
2. Retail Media: Serves consumer goods manufacturers; sales of the joint platform with Mitsubishi Foods have increased 3.1x since before the capital and business alliance, marking significant progress.
3. Smart City: Serves real estate, local governments, and public agencies; service coverage expanded to 28 prefectures, up from 21, with new partnerships announced with Tokyo Metro and other public transport operators.
4. Global Business: Focuses on inbound support and Japanese corporate overseas expansion support; revenue grew sharply in the third quarter, with inbound and overseas expansion service quarterly sales up 8.5x compared to the fourth quarter of the prior fiscal year.

By service type:

• Analysis & Visualization: YoY revenue +17% on a quarterly basis; +42% on a trailing 12-month (TTM) basis; maintains a very high gross margin.
• Behavior Change (Advertising): YoY revenue +33% quarterly; +66% TTM; gross margin held steady at 27%.
• One-to-One Solutions: Revenue declined YoY quarter-on-quarter as the company focused on higher-margin projects, but gross margin reached an all-time high of 54%, up 9 percentage points YoY.

• The company has already hit the full-year operating profit target by the third quarter, but has not revised the full-year earnings guidance at this stage; any necessary revisions will be disclosed promptly if required.
• The company set a clear medium-term target: reach 10 billion yen in total revenue by the June 2028 fiscal year, with an operating profit margin target of 15% to 25%.
• The medium-term profit model expects direct cost ratio to stay roughly flat; indirect cost ratio and selling, general and administrative (SG&A) ratio will decline as revenue outpaces fixed cost growth, driving overall margin expansion.

• Historical quarterly revenue volatility has contributed to share price volatility, creating a disconnect between company growth and market valuation.
• The company's stock has low trading liquidity, which limits market valuation, with no immediate high-impact solution currently identified.
• Broader market headwinds: Limited capital flows into the Tokyo Growth Market overall, which acts as a headwind to market valuation for the company.

Q: What is unerry's plan for leveraging AI technology, and what is the path to monetization?

A: AI has been core to unerry's Beacon Bank platform since founding, used for noise cleaning in movement data, high-precision visit duration measurement, and anonymous demographic estimation. The company is rapidly rolling out generative AI to automate manual analysis and reporting work, which improves per-employee productivity rather than being directly monetized. AI is also built into existing revenue-generating products, such as store location revenue prediction engines for Japanese firms expanding overseas, so AI is embedded across all services rather than being a separate monetized line of business.

Q: There is a perceived gap between unerry's growth and its market valuation; how does management view this gap, and what steps will be taken to address it?

A: Management is not satisfied with the current share price level. Key factors include broad capital constraints on the entire Tokyo Growth Market, and historical quarterly earnings volatility that created share price volatility. To address this, unerry introduced the new TTM revenue metric to smooth seasonal volatility and demonstrate consistent full-year growth to investors. Management is also increasing public and social media exposure to improve company recognition and address low stock liquidity, and will continue ongoing efforts to close the valuation gap.

Q: What is the impact of Mitsubishi Corporation turning Mitsubishi Foods into a wholly owned subsidiary, and how does this affect unerry's partnership?

A: The partnership with Mitsubishi Foods remains unchanged and is actually accelerating. The joint retail media platform with Mitsubishi Foods has already grown 3.1x in sales, and unerry will continue expanding collaboration on platform development and growth moving forward.