Rebase,Inc. Q2 FY2026 earnings call

Core Growth Priorities for Instabase

• Management remains focused on four core growth pillars for Instabase: strengthening customer acquisition, optimizing UI/UX, improving AOV, and maximizing the number of listed spaces.
• In Q2, the company launched a new dedicated plan for corporate customers, instabase for Business, and released an Android app for space hosts, while continuing UI/UX improvement work.
• The rental space market has strong structural growth tailwinds: changing work and leisure habits are diversifying demand for short-term rental spaces, and structural demographic trends are increasing the supply of underutilized vacant space that can be listed on the platform. Rebase held ~2% market share as of 2022, with significant room for share growth alongside market expansion.

M&A and New Business Strategy

• M&A prioritizes targets that offer clear synergy with Instabase, as well as targets that enable expansion into adjacent business areas to support long-term growth.
• Management's core mid-term priority is reducing reliance on Instabase as a single revenue driver, while only pursuing new businesses that share synergy with the existing Instabase platform to enable mutual growth. The company does not pursue unrelated diversification.
• TOIRO, the new event-focused adjacent service, has completed core product development and entered a phase focused on customer acquisition and system integration with Instabase.

Operational Updates

• The company began recognizing rent for its new office in August, leading to higher occupancy costs. Some personnel and contracting costs were reclassified to R&D in Q2. Cash and deposits decreased from the prior period-end due to shareholder returns, while fixed assets increased due to security deposits for the new office.
• The company has already implemented early technical adjustments to prepare for potential impacts from generative AI agents, and a recent M&A acquisition of the upnow reservation platform is also positioned as a proactive long-term response to this trend.

Rebase operates a single core segment centered around its main rental space platform Instabase. For the Q2 standalone period (April-June), the segment generated 506 million yen in revenue, a 11% year-over-year increase, with 4 million yen in operating profit, a 96% year-over-year decrease. For the first half cumulative period (April-September), the segment generated 1 billion yen in revenue, a 15% year-over-year increase, with 66 million yen in operating profit, a 69% year-over-year decrease. Selling, general and administrative (SG&A) expenses for the cumulative period were 897 million yen, a 44% year-over-year increase, driven by higher advertising spend, new office rent, payment processing fees, and new marketing tool costs. Key operating metrics for the cumulative period: total space usage hit 411,000 bookings (up 23% YoY, a new all-time high), total gross transaction value (GTV) was up 15% YoY, average order value (AOV) was flat YoY, and listed spaces reached 42,300 (up 10% YoY), growing to over 43,000 by the earnings call date. The company also has early-stage new initiatives including TOIRO and instabase for Business, which do not yet contribute material revenue.

• Rebase downwardly revised its full-year 2026 March fiscal year guidance, after Q2 Instabase short-term growth initiatives failed to deliver expected results and revenue missed initial targets.
• The revised full-year guidance calls for 2.177 billion yen in revenue, a 13% year-over-year increase, and 70 million yen in operating profit, an 86% year-over-year decrease.
• The company will reallocate resources across existing initiatives and new businesses: shifting some developer resources from new projects to Instabase to drive near-term earnings recovery, while halting no new development work entirely to preserve mid-term growth options.
• Management maintained the mid-term target of achieving 20%+ operating margin, and confirmed it has not abandoned this goal.

• New user acquisition has underperformed initial targets, as the company's historic focus on acquiring already 'intent' (demand-visible) customers has hit saturation, requiring investment in unproven new customer acquisition strategies for latent demand that will pressure near-term margins.
• The company's ongoing heavy pre-emptive investment in long-term growth and new business initiatives means the benefits of these investments are taking longer to materialize than initially expected, contributing to near-term earnings weakness.
• Post-pandemic demand shifts toward smaller group spaces are putting downward pressure on average order value and take rate, which could pressure margins if not offset by higher booking volumes.
• AI agent growth could potentially disrupt the company's customer acquisition model over the long term, requiring ongoing strategic adjustments and investment in mitigation.
• The new office lease adds fixed cost to the company's cost base, which will pressure profitability if revenue growth does not meet expectations.

Q: Why did sales and utilization fall short of forecasts, and what is driving the miss? / A: The core issue is that new user acquisition did not progress as expected. The company’s historic strategy focused on high-intent users, but saturation of this segment has made it harder to hit growth targets. Long-term investments in new businesses are also taking longer to generate returns than planned, dragging on near-term results. Rebase is now reallocating resources to prioritize user and host acquisition to address the miss.

Q: What is your strategy for reallocating resources after the forecast miss, and are you cutting new business investment to boost Instabase? / A: While specific details are not public, the company is shifting some human resources from new business development to Instabase to speed up earnings recovery. It has no plans to completely halt development of new products and new businesses, and will adjust personnel allocations to balance near-term performance and long-term growth.

Q: Will average order value keep falling, and do you have plans to raise AOV if utilization stays slow? / A: Post-pandemic demand growth has been concentrated in smaller spaces, which naturally pushes down overall AOV, and commoditization of the service as it gains mass adoption also puts gradual downward pressure on AOV. Rebase’s top priority remains growing total GTV by increasing utilization, so it prioritizes booking growth over AOV increases. However, there are actionable steps to raise AOV, for example targeted marketing to users that book higher-value large spaces/studio, and the company will deploy these as needed.

Q: Is the rental space market still growing, or has growth stalled? / A: Management does not believe market growth has stalled. There is still substantial untapped growth potential, especially in the B2B corporate segment, which Rebase is targeting with its new instabase for Business offering. The company will target large enterprises with direct sales and SMEs with targeted marketing to grow corporate utilization, and sees ample room for expansion in this segment.