Trenders,Inc. Q4 FY2025 earnings call

Group Overview

• Completed full acquisition of event production firm zenplus in March 2025, expanding the group to 7 consolidated subsidiaries. zenplus was only included on the balance sheet for this reporting period, with no profit/loss consolidation.
• Acquired zenplus to add in-house end-to-end event production capabilities, which have strong synergy with existing SNS influencer marketing services for beauty clients.

Overall Financial Performance

• Full-year consolidated revenue: 6.19 billion yen, 9.1% YoY growth; operating profit: 988 million yen, 25.3% YoY growth, in line with prior forecasts.
• Selling, general and administrative expenses remained flat YoY: 70 million yen in M&A-related costs for the zenplus acquisition were offset by lower advertising spend (compared to 2024's large TV campaign) and improved labor productivity.
• Net income attributable to parent shareholders: 600 million yen; ROE: 14%. The balance sheet remains healthy, with the zenplus acquisition funded via external borrowing, leading to increases in total assets and fixed liabilities.
• Productivity: Per-employee gross profit for marketing business grew 8% YoY, and 10% YoY for the beauty category. Reported employee count declined on paper due to a higher number of employees on maternity/parental leave, with no actual reduction in headcount.

Core Beauty Marketing Strategic Updates

• Market environment: TikTok's influence in beauty information collection has grown to over 30% as of 2025, and the digital/SNS shift in cosmetics brand advertising budgets continues accelerating.
• Key assets: Mimi Beauty (SNS beauty media) has 5.87 million total followers as of April 2025, with steady follower growth on core platforms. The LIN influencer network has 13,000 members across all major platforms. TikTok now accounts for 10% of platform-level revenue, up from prior periods.
• New initiatives:
  • Launched beauty-focused EC mall marketing/operation support via partnership with Shirushi Co., an Amazon Platinum Partner agency, to help beauty brands increase sales and optimize SNS-to-Amazon conversion.
  • Launched TikTok Shop operation support services, leveraging the company's core strength of matching beauty products with optimal influencers, ahead of TikTok Shop's full Japan launch.
  • Filed a patent for AI influencer mapping technology, which uses 10+ years of influencer campaign data to deliver data-driven influencer selection. Over 70% of all employees use AI tools in daily work as of the reporting period.
  • Expanded into new geographic areas: started supporting Japanese beauty brand expansion into the US and South Korea, with positive early traction from partnership with istyle's Korean subsidiary Glowdayz, reaching 79 million yen in cumulative orders from Korean beauty brands and 330 million yen in gross upsell sales of @cosme ad packages.

New Medical Marketing Business

• Operates marketing/operational DX support and private-label product development for free-treatment cosmetic clinics, with revenue via revenue share. Currently has two active clinic clients.
• Monetization is slower than originally planned, driven by clinic staffing challenges and higher-than-expected customer acquisition ad costs. Management is implementing cost and operational improvements to target profitability in the 2027 March fiscal year.

1. Marketing Business (core segment): Revenue of 5.99 billion yen, 8% YoY growth, accounting for 96.8% of total consolidated revenue. Operating profit reached 0.96 billion yen, with 13.6% YoY growth. Within the marketing segment, the Beauty Marketing sub-segment saw 22% YoY revenue growth for influencer marketing, 3% YoY growth for Mimi Beauty, and 10% total YoY growth for the entire beauty category. Over 90% of the beauty category's gross profit comes from beauty-related business. In Q4 2025, beauty category influencer marketing grew 21% YoY and Mimi Beauty grew 15% YoY.
2. Investment Business: Achieved revenue and profit growth driven by sales of investment securities in Q1 and Q3, accounting for the remaining ~3.2% of total consolidated revenue. No full-year absolute figures were disclosed.

• For the 2026 March fiscal year, management forecasts 8.7 billion yen in total consolidated revenue (40% YoY growth), 1.3 billion yen in operating profit (31%+ YoY growth), and 800 million yen in net income attributable to parent shareholders. Growth will be driven by continued expansion of core influencer marketing and Mimi Beauty, plus full-year consolidation of zenplus. The investment business is expected to see revenue and profit declines as no asset sales are planned at this time.
• Profit progress will be heavily skewed to the second half: zenplus's events are concentrated in H2, and core beauty business revenue recognition is also expected to be weighted to H2, so lower Q1 progress is within expectations and should not cause concern.
• Updated mid-term strategy: The prior target of 2 billion yen in operating profit by 2026 March was revised after non-beauty business underperformed and medical marketing monetization was delayed. The new mid-term plan (2026-2029 March fiscal years) targets a 25-30% compound annual growth rate for operating profit over 4 years, with no fixed absolute profit target to allow flexibility for M&A and strategic investment.
• Dividend guidance: 2025 March fiscal year annual dividend is confirmed at 27 yen per share, marking 9 consecutive years of dividend increases. 2026 March fiscal year annual dividend is guided at 35 yen per share, a 30% increase aligned with profit growth. The core shareholder return policy is to continuously increase dividends per share, maintain or raise dividends even during temporary profit declines, and maintain a DOE of at least 4%. Share buybacks will be considered flexibly based on market conditions.
• M&A strategy: Management will actively pursue flexible M&A to supplement organic growth in the core beauty marketing space, primarily funding deals via existing cash on hand and debt financing, based on current market and financing conditions.

• Non-beauty business has underperformed original projections, forcing a downward revision of mid-term growth targets.
• Medical marketing business monetization is delayed compared to initial plans, due to clinic operational and staffing challenges plus higher-than-expected advertising acquisition costs.
• Mimi Beauty's gross profit growth was lower than sales growth in Q4 2025, driven by the accounting treatment of event sponsorship revenue (sponsorship is recorded as revenue but event costs are recorded in cost of goods sold), though management expects 10-20% sales and gross profit growth going forward.
• First half 2026 fiscal year profit will appear lower than expected due to seasonal skewing of zenplus events and core business revenue to the second half, which may cause unnecessary investor concern.

Q: How has zenplus performed operationally in the two months since its acquisition?

A: The transcript provided cuts off before the full answer to this question is published, with only the question header included in the available text.