TORICO Co.,Ltd. Q4 FY2025 earnings call

• Corporate & Strategic Restructuring

  • Implemented 150 million yen in impairment charges in FY2025 to strengthen balance sheet health and lay the foundation for sustained profitability. Closed underperforming stores in Nagoya and the old Taiwan location to concentrate resources on higher-growth opportunities.
  • Achieved 20% year-over-year reduction in personnel costs by April 2025, with significant selling, general and administrative (SG&A) cost compression visible in 4Q FY2025, as year-long cost cutting initiatives delivered results.

• EC Operational Progress

  • Focused on cost optimization: reduced over-reliance on unprofitable promotional campaigns on major third-party shopping malls, refined free shipping thresholds to cut sales promotion costs, and improved warehouse operation efficiency. The segment now has a lean cost structure that will generate amplified profits if new hit manga titles drive sales growth.

• Event Operational Progress

  • Improved event selection: refined internal knowledge of which IPs deliver strong goods sales, increasing the hit rate of planned events and driving higher average revenue per event. Currently, 40 events can be held annually across the two domestic stores, with accumulated event planning and operational know-how creating sustainable competitive advantage.

• Global Expansion Progress

  • Built a scalable overseas business model: TORICO provides event planning, goods designs, and food and beverage recipes to local partner operators, who run the events in multiple cities on a tour basis, with revenue sharing. This model requires minimal initial capital and operational risk for TORICO while delivering high profit margins.
  • Partnership momentum: Currently expanding primarily across Greater China, with existing partners already growing from 1-2 stores to 3-5 locations. Launched a new collaborative store "Furuichi x Manga Ten" in Taiwan with Taitzu Co.
  • Closed a strategic partnership and up to 600 million yen in funding with Growth Partners Co., which will provide hands-on operational support to accelerate overseas expansion, improve internal operations, and support IR and M&A strategy.

• New Business: Launched a new trading card sales business via partnership with Taitzu Co. to create a new incremental revenue stream.

For the full FY2025 March term, total company revenue was 3.677 billion yen, a 220 million yen decrease year-over-year.

1. EC Service: Revenue declined, driven by the end of COVID-19 stay-at-home demand, a lack of market-driving hit manga titles, and intentional strategic sales control to prioritize profitability. The core Manga Zensetsu (complete manga set) service accounts for approximately 70% of total company revenue, and achieved monthly profitability in March 2025 after cost structure reforms.
2. Event Service: Grew over 20% year-over-year, but did not fully offset the EC revenue decline. Over half of total event revenue comes from physical stores, with 30%-40% from online EC sales of event goods. The recently opened Osaka Tennoji store saw a strong, above-expected launch, and 4Q FY2025 event revenue hit an all-time high.

• FY2026 March term guidance is set on conservative assumptions, with total revenue projected to increase slightly year-over-year.
• EC Service is projected to see a slight year-over-year revenue decline, as management accounts for potential downside risk while building a profitable cost structure, prioritizing profit over unprofitable revenue growth.
• Event Service is projected to deliver steady but slower growth than the 20%+ year-over-year expansion recorded in FY2025, with a conservative forecast set to account for uncertainty.
• Management aims to achieve company-wide profitability by Q2 FY2026 at the latest, with a full-year projected net loss of 22 million yen, targeting full black ink profitability as soon as possible.
• Overseas expansion is prioritized as the company's third core growth pillar, expected to become a major contributor to revenue and profit over the medium term. Management expects sustained growth from both optimized existing domestic operations and expanding global business.

• EC Service: There is limited expected growth in core paper manga set sales, with revenue growth dependent on the occurrence of new breakout hit manga titles, which are unpredictable.
• Event Service: Currently, approximately one-third of events do not generate sufficient revenue to match the labor and resources invested, though this risk is mitigated by multi-city overseas touring that improves overall profitability.
• Goods inventory risk: Overproduction and unsold inventory has historically been a risk for event goods, though TORICO has reduced this risk via in-house production that allows flexible volume adjustment, and multi-city touring that improves inventory sell-through across multiple locations.
• Uncertainty in international partnership execution: While the scalable tour model has low capital risk, execution depends on reliable local partner performance, which carries inherent cross-border operational uncertainty.

Q: What is the future outlook for EC and how will TORICO achieve profitability in the segment? / A: Management does not expect major growth in core paper comic sales at this stage, and plans to maintain stable current revenue rather than chasing unprofitable growth. Profitability will be achieved via deep cost cuts including personnel cost optimization, warehouse efficiency improvements, SG&A optimization, and strategic limits on unprofitable platform promotional campaigns. The lean cost structure means any future hit title will deliver outsized profit gains.

Q: What drove the recent record high quarterly event revenue, and how does event IP collaboration work? / A: Revenue grew from gradual store expansion and a higher share of large, high-revenue events selected based on accumulated internal data on which IPs deliver strong goods sales, lifting event hit rates. TORICO both initiates approaches to IP holders and receives requests from rightsholders, and popular high-performing events have lifted online goods sales to customers unable to attend in person, with online sales growing steadily.

Q: What is the typical revenue sharing split for overseas partnerships, and what is the inventory risk for goods manufacturing? / A: Revenue sharing terms differ by partner, but the model generally delivers higher gross margins than comic sales, making it a high-margin growth segment. 70-80% of goods are manufactured in-house at TORICO's warehouse, allowing flexible adjustment of production volumes based on real-time demand to minimize inventory risk and avoid opportunity loss from stockouts. Multi-city touring also improves inventory sell-through across events, further reducing excess inventory risk.

Q: What is the long-term geographic direction after initial focus on Southeast Asia? / A: TORICO is currently focused on Greater China to capitalize on strong existing demand for Japanese manga and anime IP, and will gradually expand its partner network to Southeast Asia and other global regions, working with trusted local partners to scale the touring event model.