9252.T

Organizational & Group Structure

• The company operates with a group structure split into existing companies (full 12 months of prior period results) and new companies (recent additions, including newly consolidated Terbelle acquired via M&A). The CEO oversees the entire group, with the managing president leading core Last One Mile operations.
• The company holds weekly group-wide sales meetings led by the CEO to standardize and share sales expertise across all subsidiaries.

Business Model Overview

• The company classifies revenue as stock-based (recurring, prioritized for long-term growth) and flow-based (one-time). Flow-based revenue is recognized when it generates more profit over the average contract termination period than the equivalent stock-based revenue would.
• 30% of selling, general and administrative (SG&A) costs are customer introduction fees, which scale proportionally with revenue growth, contrary to common perceptions of low variable costs for the business.

Key Operational Highlights

• Flow-based revenue lead volumes grew faster than expected, driven by strong sales performance and the expansion of flow-based electricity offerings for rental properties, a trend expected to continue into the second half of the fiscal year.
• Core Last One Mile entity absorbs group-wide management strengthening costs, but still delivered steady profit and revenue growth, with no material issues.
• A new student loan repayment support platform, Lepei, was recently launched; results will be reported as it scales.
• The company is implementing an $18$ yen interim dividend and a planned $12$ yen year-end dividend, for a total annual dividend of $30$ yen this fiscal period.
• Treasury shares are primarily acquired for share exchanges in future M&A transactions, and a prior share consolidation adjusted total outstanding shares.
• There is a focus on growing EPS even with share dilution from M&A-related third-party allocations, and the company is on track to deliver this goal.

• Full-year (current 2026.8 fiscal period) guidance is maintained at 18.8 billion yen revenue and 1.8 billion yen operating profit; management confirms the company is on track to hit both targets.
• Next fiscal year (2027.8 period) guidance is maintained at 22 billion yen revenue and 2.2 billion yen operating profit; management confirms current performance puts the target well within reach.
• M&A activity is paused at present, as no deals meeting the company's acquisition criteria have been identified; priority is currently placed on strengthening governance (increasing finance headcount, optimizing processes) to support future expansion, and M&A will resume once governance upgrades are complete.
• Growth strategy maintains the existing priority of expanding core business lines; new real estate-related ancillary business development will be evaluated for next fiscal year, with decisions on whether to pursue growth via new launch or M&A to come later.
• No changes to long-term management policy: the core goal remains growing long-term operating profit to maximize per-share earnings, with a continued focus on allocating resources to high-margin business lines and strengthening inter-group collaboration.

Consolidated cumulative revenue for the first half (2Q cumulative period) reached 9.6 billion yen, up 30.3% year-over-year from the prior year's 7.4 billion yen. Consolidated cumulative operating profit hit 1.17 billion yen, a 66.8% increase from the prior year's 0.704 billion yen. EPS increased 71.7% year-over-year, and the stock-based revenue share increased 14.7% year-over-year.

Breakdown by business segment:

1. Alliance Business: Generates both stock-based recurring revenue (a share of ongoing user service fees) and flow-based one-time revenue (introduction fees from service providers). Growth was driven by higher new power commission unit prices, increased lead volumes from strong sales activity, and higher conversion to sales, contributing to overall top-line growth.
2. Free Internet for Multi-Unit Dwellings: Primarily stock-based revenue (with flow-based revenue for construction work), this is the fastest growing segment. The company buys internet bandwidth from suppliers including NTT, then sells the service to multi-unit property owners, and it is growing quickly due to the rising norm of included standard internet service in new multi-unit construction.
3. Contact Center Business: Operates 24/7/365 in Fukuoka, serving government, food service, and real estate clients. It has both stock-based (recurring member services for rental residents) and flow-based (per-request or per-booth) revenue. Flow-based contracts have had almost no client cancellations over 3 years, effectively acting like stable recurring revenue, and the business has grown steadily with strong market reputation.
4. Hotel Business: Operates two models: a low-capital, high-margin low-margin-volume commission model (owner operates, HOTEL STUDIO manages for a share of revenue, generating ~0.1 billion yen annual profit currently) and a lower-margin higher-profit direct lease model. It has high synergy with the alliance and IoT business lines due to its expertise in long-stay accommodation and converting vacant rental properties to hotel use.
5. Listing & Media Business: Has grown over the past 3 years; it directly generates leads for water servers, electricity, gas, and other services via the company's owned media and search listings (without going through real estate partner channels), with both stock and flow revenue depending on the service, and is currently growing.
6. Terbelle (newly consolidated via M&A): Classified as a new company (less than 12 months of full consolidation), it contributed to the period's revenue growth as an M&A addition.

• Average contract tenure for utility services is roughly 3 years, as customers often cancel service when moving to a new rental property, which impacts the stability of stock-based revenue streams.
• A delay in January monthly KPI disclosure and subsequent numerical correction occurred, with no material impact on operating profit disclosed from this event; management will address underlying process issues to prevent recurrence.
• SG&A ratio increased in the 2nd quarter, which creates margin pressure that will require monitoring.
• Geopolitical tension from the Iran situation creates potential indirect supply chain and macroeconomic uncertainty, and the naphtha shortage that has impacted plastic bottled water containers for Premium Water could create supply chain disruptions.

Q: What is the company's current policy and outlook for M&A activity? / A: Management confirms M&A will only proceed when deals meet the company's established acquisition criteria. Currently, no qualifying deals have been identified, so there are no active M&A plans. The firm is prioritizing strengthening its governance structure (adding finance staff, optimizing operational processes) to support future large-scale expansion, and will resume M&A activity once these upgrades are completed.

Q: Is the 2.2 billion yen operating profit target for the 2027.8 fiscal year still achievable? / A: Management confirms the target is still on track, given the first half results are well above expectations. Strong revenue growth across core segments, faster-than-expected flow lead generation, and the contribution from the newly acquired Terbelle put the firm on pace to hit the target with no expected issues.

Q: What steps is the company taking to address the delayed KPI disclosure and numerical correction from January? / A: Management has identified the root cause as gaps in internal aggregation and reporting processes. The firm is implementing process revisions and adding oversight to prevent future delays or corrections, and confirmed the event had no material impact on reported operating profit or consolidated financial results.

Q: How is the company approaching AI integration into its operations? / A: Management confirmed the company is actively testing AI applications to improve lead conversion efficiency and streamline back-office processes. No large-scale rollout has been completed yet, but early trials show promise for improving margins and sales productivity, with updates to come as deployments scale.