Decollte Holdings Corporation Q2 FY2025 earnings call

Overall Financial Performance

• The company achieved record-high cumulative H1 revenue of 2.979 billion yen, a 6.7% YoY increase, with operating profit of 204 million yen (9.7% YoY increase) and net profit of 90 million yen (6.7% YoY increase). Profit grew despite higher personnel costs and one-time capital policy-related expenses, driven by higher revenue, reduced procurement costs, and lower depreciation expenses.
• Q2 (typically the slowest season due to winter weather and fewer operating days) delivered revenue of 1.12 billion yen, exceeding YoY levels, and narrowed the adjusted operating loss from 80 million yen YoY to 20 million yen.
• Operating cash flow increased by 755 million yen, ending the period with 437 million yen in cash and cash equivalents, up 214 million yen from the prior fiscal year end.

New Store Expansion

• Opened Studio AQUA Utsunomiya Interpark location in June 2025 to expand share in the Kanto region. The new location repurposes a former wedding venue with minimal renovations to cap initial investment, offering diverse shooting options including an indoor garden, original chapel, and outdoor garden. It is located near a major highway interchange in a large suburban commercial area, targeting customers from a wide regional catchment to test a profitable suburban/local city store model.

Inbound Growth

• Cumulative H1 inbound shooting volume grew 30.3% YoY. The existing partnership with I-Primo Hong Kong has strengthened in-store sales, allowing the company to reallocate resources previously dedicated to Hong Kong to new regional expansion. The company is currently exhibiting at bridal fairs in multiple Southeast Asian countries to test demand and secure new orders.

Strategic Partnerships

• Launched collaboration with Escrit, which operates wedding planning businesses: Decorte's anniversary photo services are now sold on Escrit's gift e-commerce platform Anikuri Online Store, and Decorte customers receive exclusive platform benefits to drive cross-referrals, targeting higher lifetime customer value.
• Entered into a capital and business alliance with IBJ, a leading domestic marriage matching platform operator that has been a 6% shareholder since 2022. The alliance prioritizes referrals of newly engaged IBJ members to Decorte, expanding Decorte's reach to pre-need customers (couples who have just become engaged, before their wedding planning needs are formalized) that were not accessible via the company's existing web-centric customer acquisition model. The partnership will also support customer acquisition for future new store openings in regions with low existing brand recognition.

Anniversary Photo Business Development

• Rebranded the HAPISTA Amagasaki store to the new studio Ashery brand to conduct test marketing for targeting new customer segments with a revised shooting concept. Results from the test will inform future expansion strategy.
• Secured a location in Tokyo for the third HAPISTA store in the Kanto region, scheduled to open in August 2025, to build brand presence in the region.

Core Competitive Strength

• The company's in-house trained photographers and makeup artists won multiple international and domestic awards in Q2, including three consecutive months of Highly Commended Results in the SWPP Monthly Image Competition, highlighting the strength of the company's in-house professional talent.

1. Photo Wedding Service: 2.79 billion yen in cumulative H1 revenue, 7.5% YoY growth, contributing over 90% of total consolidated revenue. The segment added 155 million yen in YoY revenue growth, with both shooting volume and average shooting price exceeding prior year levels in both Q1 and Q2.
2. Anniversary Photo Service: 38 million yen in YoY revenue growth, delivering consistent revenue increases. The segment currently operates 7 stores under the HAPISTA brand primarily in the Kansai region.
3. Fitness Business: 6 million yen YoY revenue decrease following the closure of one store.

• The company maintains its medium-term target: achieve 9 billion yen in revenue and an operating profit margin of 10% or higher by the 2028 September fiscal year, after strengthening the business base for re-growth in 2025 and entering sustained growth led by photo wedding from the 2026 September fiscal year.
• At present, the impact of the IBJ capital and business alliance on the current fiscal year's performance is still under assessment. No change to existing guidance is announced currently, and any necessary future revisions will be disclosed promptly based on partnership progress and performance trends.
• Any updates to the medium-term business plan will be made after assessing concrete progress of the IBJ alliance.

• The large reported lease liability balance (approximately 4 billion yen in total) is a result of IFRS accounting rules, which require recording future store rent payments as both a right-of-use asset and corresponding lease liability, and does not represent the company's actual net leverage position under Japanese GAAP.
• Goodwill represents 44.3% of total assets. The company states that annual impairment testing indicates low impairment risk, and future profit accumulation will strengthen the capital base to improve balance sheet perceptions.
• The company currently holds only a ~10% share of the domestic photo wedding market, and requires continued expansion of customer acquisition channels to grow market share in line with medium-term targets.

No full text of question and answer exchanges is included in the provided transcript, only section headers for three Q&A topics: progress on business base restructuring, revision of full-year earnings guidance, and business alliance impact on performance.