Kurashicom Inc. Q2 FY2026 earnings call

• Overall Financial Performance

  • Consolidated revenue reached 2.84 billion yen, 23.8% YoY growth, marking a new all-time high for a single quarter.
  • EBITDA reached 560 million yen, 28% YoY growth, also a new all-time high, with an improved EBITDA margin of 19.8% (up 0.7 percentage points YoY).
  • Classicom standalone revenue reached 2.76 billion yen, 24.3% YoY growth, also an all-time quarterly high.
  • Total purchasers hit 120,000, 13.9% YoY growth, an all-time high; nearly all key performance indicators hit record levels, and the quarter progressed in line with plan with very strong results.

• User and Engagement Growth

  • Total engagement accounts (the sum of SNS followers, YouTube subscribers, app downloads, newsletter members, and other accounts where users actively choose to engage with the company) surpassed 10 million, and exceeded 11 million at the end of the first half of the fiscal year.
  • Total shopping members increased by approximately 60,000 in the first half to over 840,000; full-year new member acquisition is on track to greatly exceed the previous all-time high.
  • Half-year total purchasers reached nearly 190,000, greatly exceeding the prior year first half level of 165,000, and is on track to hit a new full-year record.
  • The 「北欧、暮らしの道具店」 app set new monthly download records for three consecutive months from November 2025 to January 2026, reaching an all-time high download level, which is expected to drive future revenue growth from new customers.

• Profitability and Cost Structure Improvement

  • Gross profit reached 1.3 billion yen, 23.1% YoY growth, with gross margin largely unchanged from the prior year.
  • Selling, general and administrative (SG&A) expenses reached 760 million yen, with growth capped at 19.1% YoY; SG&A as a percentage of revenue improved 1.1 percentage points YoY to 26.7%.
  • Labor cost only increased 3.1% YoY (despite base salary increases, headcount remained nearly flat), which was the largest contributor to the improvement in SG&A margin.
  • Gross profit grew 23.1% YoY while labor costs grew only 3.1% YoY, resulting in significant improvement in labor productivity.
  • While advertising expense increased by 85 million yen YoY to support active marketing investment, advertising as a percentage of revenue is controlled at approximately 11%, within the planned target range for the period.
  • The company achieved simultaneous improvement of overall profit structure and expansion of marketing investment for growth, and plans to continue controlling overall SG&A margin while expanding marketing investment going forward.

• Advertising Efficiency Improvement from In-House Transition

  • The company transitioned almost all performance advertising (including app download advertising) to an in-house operation model during the current fiscal year, from the prior model that relied on multiple external agencies.
  • Currently, 52% of advertising budget is directly managed in-house, and the number of partner agencies has been reduced from 3 to 1, resulting in a 50/50 split of budget between in-house and the remaining agency partner.
  • Two core benefits have been delivered from this transition: 1) Elimination of agency management fees allows the saved funds to be reinvested directly into additional advertising, improving overall advertising efficiency; 2) In-house staff that have deep customer understanding from the company's long-term content operation experience now directly create advertising materials, improving advertising targeting accuracy and efficiency.
  • The company plans to continue partnership with its remaining agency while further increasing the in-house advertising ratio to drive additional efficiency gains.

• Balance Sheet and Cash Flow

  • The balance sheet remains very healthy, with an equity ratio of 82.7%.
  • Cash and deposits decreased by 63 million yen from the end of the prior fiscal year, due to larger dividend payments in Q1 than operating cash generation, which was in line with plan.
  • Inventory increased by 300 million yen from the end of the prior fiscal year, in line with business expansion and seasonal inventory build; after seasonal adjustment, inventory decreased by 210 million yen from Q1, with no major stagnant inventory and inventory remaining at a healthy level.
  • Operating activities generated nearly 600 million yen in cash during the quarter, with no major changes from investing or financing activities; free cash flow also reached nearly 600 million yen, and ending cash and cash equivalents totaled 4.66 billion yen. Cash flow progressed in line with plan.

1. 「北欧、暮らしの道具店」 (Hokuou, Kurashi no Doguten): Revenue of 2.7 billion yen, 24.3% YoY growth; EBITDA of 550 million yen, 27.9% YoY growth; EBITDA margin exceeded 20%. This segment contributed 95.1% of total consolidated revenue for the quarter.
2. 「foufou」: Revenue of 80 million yen, 10.3% YoY growth; EBITDA was slightly negative in the quarter. For the first half of the full fiscal year, 「foufou」 achieved over 70% revenue growth and delivered positive EBITDA. This segment contributed 2.8% of total consolidated revenue for the quarter.

• Full fiscal year consolidated revenue progress through the first half (the halfway point of the fiscal year) reached 51.7%, which is in line with the original full-year forecast. All profit metrics are tracking slightly above forecast, with first half progress reaching nearly 60% of the full-year target.
• For 「北欧、暮らしの道具店」, first half revenue progress is 52.2% (in line with forecast), and EBITDA progress is nearly 60% (slightly above forecast), with the segment tracking very strongly.
• For 「foufou」, first half revenue reached 190 million yen and EBITDA reached 13 million yen. The segment started the year with high targets, so it is slightly behind the original plan, but management still targets strong revenue growth in the second half and expects to deliver full-year positive EBITDA.
• The full-year annual dividend per share forecast remains unchanged at 48 yen, same as the initial announcement at the start of the fiscal year.

No specific risks or operational failures were discussed in the available transcript content.

Q: What are your thoughts on the future expansion, stable revenue generation framework, and scalability of the Brand Solution business?

A: The Brand Solution business has been operating for over 10 years, and has consistently delivered stable revenue and high profit margins, continuing to grow steadily this term and supporting overall company growth. However, due to its highly creative, labor-intensive business model that requires additional headcount to grow revenue, it is not structured for rapid, exponential revenue growth. Two years ago, we began developing a new agency domain alongside our original platform domain that leverages the 「北欧、暮らしの道具店」 platform. This new domain does not rely on our own platform, and instead uses our internal capabilities to deliver planning, content creation, and execution for other brands on external platforms, and this segment has already grown to represent a large share of total Brand Solution revenue. This gives us expansion room not limited by our own platform. By further expanding this agency domain, we can leverage the capabilities we have built through operating 「北欧、暮らしの道具店」 to achieve scalability unconstrained by our own platform assets.

Q: In the environment of rising generative AI, what is your approach to the boundary between areas where you want to use AI to accelerate growth, and areas you will intentionally not rely on AI to protect your unique brand worldview? What is your current thinking on this boundary?

A: AI is currently developing very quickly, and it is difficult to predict how far it will progress. I believe the worst approach is to rule out AI use in specific areas from the start, so my current stance is that we do not set any restricted areas for AI adoption. It is possible that once AI development matures and its full impact becomes clear, we may choose to set boundaries for certain areas, but in the current period of rapid progress, not creating restrictions for exploration is the right approach for managing the business. AI is already being used across many areas of the business, and it is one of the key factors allowing us to grow revenue without materially increasing headcount. We do not think it is the only decisive factor, but it has definitely contributed to our current results, and we expect this trend to accelerate as AI adoption expands. We are currently running experiments to use AI to improve the accuracy of demand forecasting and operations by combining qualitative and quantitative data with AI, especially for corporate planning tasks that have historically been difficult to automate, which we expect will lead to more accurate earnings forecasting and earlier detection of business changes if these experiments are successful. We have already achieved a high level of operational efficiency, and on track to hit over 100 million yen in revenue per employee if we meet full-year targets, so we do not expect AI to lead to material headcount reduction in the near term. However, AI does increase the scope for growth without requiring large increases in headcount on our current lean staffing base, which opens up much more room for scalable growth.