Bleach,Inc. Q3 FY2025 earnings call

New Subsidiary Establishment

• Established Aurumtech Co., Ltd., a 100% wholly owned subsidiary with 10 million yen in capital, in March 2025 to expand the business portfolio and build a new revenue base
• Aurumtech leverages Bleach's existing digital marketing expertise to expand marketing support to overseas clients, and develops, plans and sells technology-enabled beauty, health and lifestyle products targeting unmet and latent demand in the Japanese market
• In 3Q, the subsidiary completed 0.45 billion yen in product procurement to prepare for future sales growth; product details are not disclosed at this stage for competitive reasons

Product Portfolio Optimization

• Continued executing medium- to long-term business base strengthening initiatives first outlined in September 2024 growth strategy documents
• Reallocated marketer resources from existing products to new products to accelerate new product launch and core product conversion
• Increased the number of core products (average monthly revenue over 10 million yen) from 13 in the year-ago period to 21
• Increased the number of A-rank products (average monthly revenue over 0.1 billion yen) by 1 year-over-year to 4
• Reduced reliance on any single product or client and improved overall portfolio risk profile through diversification

Marketing Capability Expansion

• Continued prioritizing video ad enhancement, a key 2025 fiscal year initiative, to capitalize on growing video ad market size
• Completed platform validation for major video platforms including Meta and TikTok, and conducted user insight analysis to identify products that can drive latent demand
• Achieved steady sales growth from video ads, primarily in the daily necessities and cosmetics categories, despite seasonal headwinds

Organizational and Operational Updates

• Changed earning call presentation policy going forward: the Representative Director and CFO will present at interim and full-year results, while only the CFO will present at Q1 and Q3 results to improve operational efficiency and maintain engagement quality
• Expanded marketer headcount from 74 to 84 year-over-year for the 9-month cumulative period to strengthen marketing support capacity; increased labor costs due to headcount growth and bonus provisioning
• Increased recruitment and training costs to support headcount expansion and marketer skill development; this was partially offset by lower outsourcing fees following the end of post-initial public offering service contracts
• Completed office expansion in August 2024 to accommodate future headcount growth, leading to higher rent and related operating costs
• Maintained strong financial health with an equity ratio of 71.5% and net cash position of 7.151 billion yen as of end-March 2025

1. New product segment: Total revenue was 2.289 billion yen, driven by strong growth of functional labeled foods, pharmaceuticals, online medical care and recruitment categories. This segment contributed 18.1% of total 3Q revenue. The number of A-rank products (average monthly revenue over 0.1 billion yen) in this segment reached 4, and A-rank product total revenue grew to 2.5 billion yen from 2.3 billion yen in the previous quarter. 2. Existing product segment: Total revenue was 10.371 billion yen, which saw a decline as marketing resources were reallocated to new products amid broader external market headwinds, contributing 81.9% of total 3Q revenue. Overall group consolidated 3Q revenue reached 12.66 billion yen, up 16.3% year-over-year; advertising profit was 2.527 billion yen, up 34.0% year-over-year; operating profit reached 0.37 billion yen, a 0.397 billion yen year-over-year increase returning to operating profit; net income was 0.252 billion yen.

Management maintained its prior strategy focused on continuous medium- to long-term growth. It will focus remaining resources in Q4 on two core priorities: continued improvement of the existing business product portfolio, and scaling the new Aurumtech subsidiary to build out the company's long-term growth foundation. No specific quantitative full-year guidance was revised or provided in this Q3 presentation.

• Ongoing negative impacts from deteriorated external market conditions
• Existing product revenue decline stemming from intentional reallocation of marketing resources to new product development
• The Q3 2025 results faced negative seasonal headwinds
• New products and categories are still in the launch phase, requiring continued aggressive advertising investment that near-term pressure margins

No question and answer section was included in the provided transcript.