QB Net Holdings Co.,Ltd. Q1 FY2026 earnings call

Quarterly Core Result

• The company achieved year-over-year revenue and profit growth for the quarter: consolidated revenue reached 6.809 billion yen (106.9% of prior year), operating profit reached 603 million yen (111.2% of prior year), and net profit reached 379 million yen (110.1% of prior year).
• Growth drivers include increased store count from accelerated new openings, higher seat utilization from active talent hiring and training, price adjustments implemented in the prior period, and the successful "Tsukiichi Campaign" that reduced customer churn after price hikes and shortened customer visit intervals.

Domestic Store Operations

• The company opened 6 planned new stores in the quarter, with 4 located in the Tokyo metropolitan area, 1 in central Japan, and 1 in Kyushu. One unplanned closure was for relocation to a better adjacent property, completed in early October.
• 4 QB HOUSE stores already opened in Q2, with 2 more QB PREMIUM stores and 3 more QB HOUSE stores scheduled to open by the end of December.
• New openings include 2 relocations for facility-related closures that minimized customer churn, one opening on the former site of a closed competitor enabling early investment recovery, and one re-opening to an existing customer base.

Domestic Talent Strategy

• Hiring hit 73 total new staff, exceeding plan: experienced hire hit 45 versus a 32 person plan, and trainee hiring hit 28, in line with plan. Total hiring exceeded both prior year and current full-year plan.
• The company expanded training capacity to accommodate 120 current trainees: it opened a new Sapporo training campus for Hokkaido candidates, relocated and doubled the size of the Osaka campus, and began hiring and training additional trainers. Trainees will begin being assigned to stores from Q2 late to Q4, driving higher seat utilization.

Overseas Market Developments

• Singapore completed strategic store consolidation, converted locations to the higher-margin QB PREMIUM format, and cut costs to return to profitability. It is testing tiered pricing to boost average order value, targeting to increase QB PREMIUM penetration from 30% to 50%.
• Hong Kong: price increased from 70 HKD to 80 HKD, customer traffic fell only 6% versus a planned 20% maximum drop, with mobile app promotions driving stable performance despite typhoon-related closures and ongoing sluggish domestic consumption from outbound spending to mainland China.
• Taiwan: opened a new training campus to support southern expansion, with 2 new stores planned for H2. A price adjustment will be implemented early next year, alongside new waiting system improvements and salary hikes to boost hiring competitiveness.
• North America: New York opened its 6th store, with post-price increase revenue up 18.1% year-over-year, and a 7th store planned for H2. Canada opened its 2nd store in a prime business district location, with a 3rd store planned for H2 to progress toward profitability.
• Vietnam: 1st store opened in January 2025 with strong sales, added new styling menus to meet unexpected high female customer demand, with 2 more stores planned for December 2025. Malaysia accelerated expansion plans, with 2 stores opening in Kuala Lumpur from January 2026, leveraging Singaporean operational expertise.

Domestic Business: Revenue grew 5.7% year-over-year, with operating profit of 531 million yen (up 41 million yen from prior year). Domestic business contributes approximately 78% of total consolidated revenue. Overseas Business: Operating profit of 71 million yen (up 18 million yen from prior year), contributing approximately 22% of total consolidated revenue. Broken down by market: Hong Kong (the largest overseas market) saw revenue grow 6% year-over-year post-price increase; Singapore returned to sustained black ink profitability after restructuring; Taiwan achieved double-digit year-over-year revenue growth; US New York business grew 18.1% year-over-year post-price increase; Canada opened its 2nd store with positive early performance; Vietnam and Malaysia are newly entered markets with early sales growth tracking expectations, operating at a loss due to upfront pre-opening investment.

• Management reaffirmed full year plans for net revenue and profit growth, targeting a new record high consolidated operating profit, with no changes to prior guidance.
• Domestic Q2 to Q4: The 60,000-70,000 customer volume shortfall from July's unseasonably hot weather is expected to be recovered in Q2 and Q3, driven by avoided customer churn from successful relocation of two closing stores.
• Talent: Experienced hiring will remain at Q1's strong level through the second half of the year, with a focus on improving conversion of applicants to hires. Trainee assignment will accelerate through H2, driving higher store capacity.
• New store expansion: If hiring continues to perform above plan, management expects the full year net store growth increase to be slightly above the original target, with a continued focus on high-efficiency dominant clustered store openings in prime locations.
• New market expansion: Vietnam will accelerate site selection for stores after the 3rd outlet, while Malaysia will speed up entry to Kuala Lumpur, bringing forward the original expansion timeline.

• Q1 revenue came in slightly below plan due to unseasonably extreme heat in July that reduced customer foot traffic, leading to a 60,000-70,000 customer shortfall that had not been recovered by the end of the quarter.
• Hong Kong's ongoing sluggish domestic consumption due to the long-term trend of local residents traveling to mainland China for consumption has created headwinds for sales growth, even after successful price adjustment.
• Q1 domestic turnover was 11 people higher than planned. Key risks include voluntary turnover driven by working environment concerns (compensation, physical workload) and unavoidable turnover from personal reasons (family care, health issues).
• New entrants to Vietnam and Malaysia carry upfront investment costs that weigh on near-term overseas operating profit, with success dependent on effective localization of the business model to local market preferences.

Q: What is the background and goal of trialing new service menus and pricing in Singapore? / A: Singapore's rising living standards have increased demand for higher-quality services, including more advanced techniques for men's short hairstyles and higher-priced quality services for children, which follows local market norms that differ from Japan's standard discounted children's pricing. The company is rolling out diversified service and pricing options to meet local needs, improve average ticket, and strengthen profitability. / Q: What caused the higher-than-planned Q1 turnover and what countermeasures is the company implementing? / A: Higher turnover has two key temporary factors: seasonal patterns where turnover typically rises after the July peak season, and a concentration of exit from employees who had been on leave for health or care reasons. To reduce long-term turnover, the company is increasing break time to reduce physical strain, and extended 3-year new hire follow-up training from 1.5 years to 3 years to reduce anxiety for new staff and improve retention for early-career employees. / Q: How does the current year's hiring and new store opening pipeline look compared to prior plans? / A: Hiring has exceeded expectations, with strong applications from both untrained candidates seeking skills and experienced stylists, driven by the company's reputation for better working conditions. New store development continues to have a strong pipeline of quality prime location opportunities, with a continued focus on clustered dominant openings to improve operational efficiency. If hiring stays strong, full year net store growth could be slightly higher than originally planned. / Q: What is the impact of the weak yen on Qube Net Holdings' business? / A: Overseas sales only account for less than 20% of total consolidated revenue, so the overall impact is very limited. Weak yen provides a 300 million yen top-line uplift and around a 30 million yen net positive operating profit impact in Q1. The company has almost no imported input costs for domestic operations, so there is no material cost inflation impact from yen weakening.