Koukandekirukun,Inc. Q4 FY2025 earnings call

Overall Consolidated Performance

• Full year consolidated revenue grew 36.1% year-over-year. Full year consolidated operating profit came in at 163 million yen (0.163 billion yen), a slight increase over the revised guidance issued in March 2025.
• No material changes to the balance sheet were reported. Cash flow follows the disclosed schedule in presentation materials.

Business Development and Partnerships

• B2B strategic partnerships with large enterprise clients, including Nomura Real Estate, are progressing smoothly, with new initiatives set to launch in the near term.
• The company expanded its shareholder benefit program to address feedback: shareholders can now choose between QUO cards or company service points, instead of only service vouchers that were unusable for shareholders outside service coverage areas.

Branding Investment Rationale

• The company has delivered 52.4% total revenue growth between the 2023 March fiscal year and 2025 March fiscal year, with growth reliability improving steadily after the launch of branded advertising. Limited budget branding investments over the past 1-2 years have already moved company name recognition in the Tokyo 1-prefecture 3-prefecture region from 6.2% in December 2022 to 17.1% in March 2025.
• Management targets reaching 40% regional recognition, which internal and industry data indicates is the threshold where advertising spend directly drives material revenue growth breakouts. The company estimates roughly 47 million yen (0.047 billion yen) in spend is required for each 1% increase in recognition, totaling more than 1 billion yen in total branding advertising over the medium term.
• Investments will span TV CM, taxi advertising, and rail advertising to accelerate growth. Management acknowledges this will near-term suppress profit growth, but believes prioritizing bold investment over near-term profits is the correct strategy to hit 3-year medium-term targets, and expects shareholders to support this direction.

Strategic Clarification of Planning Frameworks

• The newly released 3-year medium-term management plan sets conservative achievable targets aligned with current weak consumer demand. Stock option performance targets are set as stretch, achievable-if-all-strategies-perform targets, explaining the gap between the two metrics.
• Previous informal long-term growth imagery that included large M&A contribution is discontinued from public disclosure after the formal medium-term plan launch. While the company has completed multiple M&A in the past and remains actively open to attractive opportunities, M&A will only be pursued when there is strong strategic fit, synergy potential, and favorable terms, not to hit arbitrary numerical targets. M&A remains a potential upside add-on rather than a core requirement for the medium-term plan.

1. Jusetsu DX Business: Revenue grew 26.7% year-over-year, gross profit grew 27.4% year-over-year. Pre-group offset operating profit came in at 193 million yen (0.193 billion yen). In Q4 2025, operating profit was 30 million yen (0.03 billion yen), after 65 million yen (0.065 billion yen) of upfront branding investment recorded in the quarter. Despite slower-than-expected sales of seasonal products like water heaters at the start of Q4, increased advertising drove higher sales of other products, allowing the segment to secure solid revenue. Average selling price saw a mild uptick driven by industry-wide manufacturer price increases, with no meaningful underlying change to product mix margins. B2B repair order volumes continue to grow steadily, though they contribute small overall revenue. Order intake dipped in January-February 2025, but recovered to positive growth in March. This segment is the core growth driver of the company, contributing the majority of total consolidated revenue. 2. Solution Business (SE domain): There was a large year-over-year percentage increase in revenue because the prior year comparative period only included one quarter of revenue booking. Actual revenue has grown steadily, with no major material changes to segment operations reported. Revenue contribution from this segment is currently small.

• The 2026 March fiscal year (first year of the 3-year medium-term plan) guidance targets consolidated revenue of 12.2 billion yen, and consolidated operating profit of 0.2 billion yen.
• The 3-year medium-term plan targets consolidated revenue of 20 billion yen, and consolidated operating profit of 1 billion yen for the 2028 March fiscal year, doubling revenue over the 3-year period.
• Guidance is intentionally set at a conservative achievable level to account for current weak consumer demand, while internal stretch targets aligned with stock option incentives are set higher.

• Until the company reaches 40% regional brand recognition, branding investments will not immediately translate to direct revenue growth, leading to an extended period of lower-than-otherwise-possible near-term profits.
• Current domestic consumer demand is weaker than historical averages, creating headwinds for revenue growth that led management to set conservative medium-term targets.
• Pursuing M&A purely to hit growth targets carries inherent integration and overpayment risk, which the company mitigates by only pursuing high-fit opportunities.

No formal Q&A section is included in the provided transcript snippet.