7320.T

• Overall Financial Performance

  • Solvvy achieved an all-time record high revenue for the 2Q period, with all key top-line metrics exceeding the prior year same quarter. First half recurring profit hit 1.044 billion yen, exceeding the half-year plan, while the full-year plan remains unchanged.
  • Existing home (pre-owned/used residential) guarantee products are the top growth driver, with very strong demand that is expected to accelerate further in the second half of the fiscal year. Solvvy has an inherent second half weighted sales trend, with most revenue concentrated in the fourth quarter ending June 2026.
  • Management approved a 300 million yen share repurchase program to strengthen shareholder returns.

• Core Business Model: Stock Business Consulting & Member-Based Business OS

  • The company's core strategy is to help clients move beyond one-off product sales to monetize and activate their existing customer base, increasing customer lifetime value (LTV) through sustainable recurring revenue. This model is particularly relevant for the residential sector, which has historically been dominated by one-off transactional sales.
  • Solvvy delivers this strategy through its proprietary "Member-Based Business OS", an engagement platform that integrates a centralized customer member database with tools for personalized one-to-one marketing, guarantee services, mobile apps, loyalty point programs, and other engagement features. The platform enables low-risk, high-accuracy closed marketing for clients, building stronger long-term customer relationships.
  • The company offers end-to-end accompanying support beyond just platform provision, including contact center operations, cybersecurity protection, content planning and distribution, subscription service development, and bundling guarantees and financing options for trending products. Services can be provided as a full end-to-end solution or modularized based on client needs.
  • The core monetization model is profit sharing from database activation, which is already performing very well in the residential sector. A key example is a partnership with a major condominium developer to build an owner's club member organization, and monetize through renovation service operations.

• Growth Expansion Strategy

  • Management plans to expand the successful residential sector engagement platform model into non-residential industries. The first target expansion areas are the culture center sector and the university sector:
    • Culture center: Leveraging MediaSeek (recently merged into Solvvy) industry-leading core system "MyClass", which holds 60-70% market share in Japan, to add stock business consulting and engagement platform services to target new monetization opportunities centered on reskilling.
    • University sector: Co-developing university mobile apps with Accenture, also focused on reskilling-driven member activation and monetization.
  • The company's two-tier revenue structure combines B2B platform/solution sales to clients, followed by B2B2C revenue from activating the client's end customer base. This structure is already proven in the residential sector, and management is piloting it in new non-residential sectors.
  • The new 3-year mid-term management plan (F2026.6 to F2028.6) remains on track to its original target of 5 billion yen in total revenue.

• The full-year fiscal 2026 earnings guidance is maintained as originally guided, with no upward or downward revision.
• While EXT (ExtendTech) segment full-year revenue is expected to see a slight downside miss relative to the original 1.923 billion yen full-year guidance due to lingering impacts from GIGA Guarantee operational normalization, management expects this downside to be fully offset by upside to HWT (HomeworthTech) revenue, which is tracking ahead of plan driven by strong demand for existing residential guarantee products.
• HWT (HomeworthTech) is currently tracking to exceed its original full-year revenue guidance of 4.491 billion yen and operating profit guidance of 2.062 billion yen, with upside already visible from the strong existing home guarantee segment.
• Revenue from existing home guarantee products is expected to be concentrated in the April-June 2026 period (fourth quarter), which aligns with the company's historical sales cycle, and management projects it will deliver sufficient second half growth to offset the first half EXT weakness and hit full-year targets.
• The 3-year mid-term management plan launched in August 2025 remains on track to its original 5 billion yen 3-year revenue target with no changes.

For the 2Q standalone period (July-December 2025 first half second quarter):

• HWT (HomeworthTech) segment: 1.008 billion yen revenue, +13.8% year-over-year; 408 million yen operating profit, which exceeded the prior year quarter result.
• EXT (ExtendTech) segment: 568 million yen revenue, +12.7% year-over-year; 391 million yen operating profit, which exceeded the prior year quarter result.
• LFT (LifeTech) segment: 157 million yen revenue, +45.7% year-over-year; 45 million yen operating profit, which exceeded the prior year quarter result.
• Total standalone 2Q revenue: 1.741 billion yen, all three segments grew year-over-year.

For the 2Q cumulative first half period (April-December 2025):

• HWT (HomeworthTech) segment: 1.961 billion yen revenue, +13.5% year-over-year; 778 million yen operating profit, +27.5% year-over-year. HWT accounts for ~59.9% of total first half cumulative revenue.
• EXT (ExtendTech) segment: 988 million yen revenue, -12.2% year-over-year; 631 million yen operating profit, which declined from the prior year first half. EXT accounts for ~30.1% of total first half cumulative revenue.
• LFT (LifeTech) segment: 327 million yen revenue (calculated from total), accounts for ~10.0% of total first half cumulative revenue.
• Total first half cumulative revenue: 3.276 billion yen, +9.9% year-over-year. Total first half cumulative operating profit: 557 million yen, -16.6% year-over-year, driven by EXT weakness.

• The EXT (ExtendTech) segment faced delayed operational normalization for GIGA Guarantee, which negatively impacted first quarter and first half performance, though issues have largely stabilized and the business is now in a recovery trend. It is still expected to post a slight full-year revenue miss relative to original guidance.
• The residential guarantee market has seen increasing new competitor entry, leading to heightened price competition for traditional standalone guarantee offerings.
• Non-residual expansion into new sectors like culture centers and universities carries inherent uncertainty: these sectors have lower demand for guarantee products, requiring new non-guarantee monetization models that are still being tested and have not yet delivered meaningful revenue.
• Smaller clients (such as mid-sized homebuilders that deliver 50-100 homes per year) do not have sufficient scale to build their own member engagement and marketing systems independently, but the market for Solvvy's platform in this segment relies on widespread adoption that is still growing.

Q: HWT hit a 778 million yen first half operating profit versus an 825 million yen plan, a slight miss. Is this miss within a normal margin of error, and are there any underlying issues?

A: The slight miss is just within the margin of error and nothing to be concerned about. The HWT business is performing extremely well, with very positive customer response. The business has shifted over the past 18 months from a sales approach focused exclusively on guarantee products to a broader approach focused on stock business consulting. The current focus is on selling the full engagement platform, with a sales pitch centered on helping clients better utilize their existing customer databases, increase customer referrals, and grow renovation revenue. This approach includes multiple solutions beyond guarantees, such as mobile apps and subscription products, leading to a more consulting-focused, database marketing-driven approach that reduces price competition and builds deeper client relationships. This shift has already delivered clear positive results since it launched in the second half of last fiscal year, with very high client loyalty and strong conversion from one-to-one personalized marketing, so the business is on a very positive track.

Q: Full-year guidance is unchanged despite first half misses. How will you recover the missed amount in the second half, and what role will existing residential guarantees play in this recovery?

A: The recovery will come from strong demand for existing residential guarantee products, which have gotten a very positive market response, and this demand has been partially factored into guidance from the start of the year. Our sales cycle for these products runs from planning and product development from July-October, sales outreach and closing from November through March, with revenue recognition concentrated in April-June, which aligns with our typical seasonal trend. We have pre-tested the product and have clear visibility into expected conversion rates, so we are confident we will hit our targets. While EXT is expected to see a slight downside relative to plan, HWT is expected to exceed plan by a sufficient amount to offset the EXT miss. HWT's growth is still led by guarantee products, which remain our core strength and most easily monetized offering; other platform components like security systems generate only minimal revenue. New products are structured to allow partial upfront revenue recognition (admin fees) alongside deferred installment recognition, so we get some near-term revenue from new product launches.

Q: Who are the target "members" for the Member-Based Business OS, and do you charge membership fees?

A: In the residential sector, members are end customers who have previously purchased homes from our developer/homebuilder clients. We build the member organization with proper consent for customer data, enabling one-to-one personalized marketing tracking customer engagement and purchase responses. We do not charge end customer membership fees: customers become members by registering for an app, enrolling in a loyalty program, purchasing a guarantee, or agreeing to member terms. This model delivers far higher response and conversion rates than general B2C marketing, because it targets existing customers who already have a relationship with the client. Most small to mid-sized residential clients don't have the scale to build this kind of system themselves, so our platform provides a generalized solution that can be customized for each client, similar to how a major bakery produces private-label products for different retail chains that appear unique to each chain. We serve both detached home builders and condominium developers; for condominiums, opportunities are led by developers rather than property management companies, which generally do not engage with the private owner unit portion of the business. This model is not new: it has been part of our business for several years, already accounts for a meaningful portion of residential revenue, and we are now just expanding it to more clients and adding new non-guarantee product offerings.

Q: What is the outlook for EXT future growth?

A: Operational issues with GIGA Guarantee have largely stabilized, and we are working to fully resolve remaining issues. Renewable energy remains a focus area with ongoing demand, but the market size is limited. We are shifting focus from residential/consumer energy storage to industrial energy storage, which has stronger demand growth. We are also exploring expansion into non-residential guarantee opportunities in healthcare, manufacturing, and other new sectors, in line with EXT's original mandate of covering non-residential guarantee markets. For sectors where guarantee is not a good fit, we are expanding our engagement platform model instead of just selling guarantees: for example, the culture center and university sectors have strong demand for member activation and system solutions focused on reskilling, even with limited guarantee demand, so we will monetize those sectors through solutions aligned with their specific needs. We are currently evaluating potential new products to confirm their market fit before wider rollout.

Q: How has the integration with MediaSeek progressed, and what impact has it had on Solvvy?

A: MediaSeek's capabilities are already a core part of our offering, because our engagement platform always requires system integration like app development and database infrastructure. Even though our core monetization is through guarantees, we cannot deliver our offering without embedded system capabilities. MediaSeek was originally a systems integration (SI) firm focused on project-based system consulting revenue, but we do not expect that traditional SI revenue to deliver large growth on its own. Instead, we are using MediaSeek's system capabilities to enable our broader engagement platform and guarantee model in new sectors. This integration has been extremely valuable: having in-house system capabilities is a major competitive advantage when expanding into new sectors, because it allows us to offer fully integrated solutions combining system infrastructure with guarantees and financing, which gets much better client response than offering guarantee as a standalone product. The integration also allowed us to reposition the company as a stock business consulting firm, which has meaningfully expanded our total addressable market and delivered strong synergy with our existing guarantee business.

Q: What is your outlook for growth of the home equipment guarantee business, and do you need to expand outside this core area to sustain growth?

A: Home equipment guarantee is a very strong product with ongoing high demand, and it will remain a core part of our business. However, we do need to expand the offering to sustain growth: we have already extended to building guarantees (which can offer 20-year terms due to longer asset lifespans, compared to shorter-lived equipment) and existing residential guarantee products, which is our current high growth area. We are flexible to adjust guarantee terms and products based on asset characteristics and market demand, working in partnership with insurance carriers. We have come to recognize that the residential market is still our largest and most attractive opportunity: even within residential, there are many untapped areas including existing homes, renovations, and renewable energy (which is effectively a residential renovation adjacent market). So we are doubling down on deepening our presence in the residential market, which will drive our growth for the foreseeable future, while selectively testing new non-residential opportunities.