MUSCAT GROUP Inc. 3Q Earnings Flash
M&A-driven brand portfolio expansion delivers +34.7% YoY revenue growth; key focus is on MiiS's proven "SNS × Marketplace" success model and the path to profitability in 4Q
Key Positives From The Results
Brand Produce segment revenue doubled to JPY 1,928M (+118.3% YoY), driving overall group growth. MiiS contributed JPY 227M in standalone 3Q revenue (+22% QoQ), while Kanarabo added JPY 297M in 3Q consolidated contribution. The establishment of a replicable "SNS × Marketplace" growth model and the foundation for cross-group rollout mark a critical milestone for medium-term growth.
- MiiS third-party EC customer count expanded +80.2% QoQ to 32,664, establishing a proven "SNS × Marketplace" winning formula
- Kanarabo (Fujiko/b idol) posted JPY 297M in standalone 3Q revenue; digital marketing know-how injection into the EC channel has commenced
- Brand Produce segment quarterly revenue hit a record high of JPY 920M
- HaD (bialne) subscription retention rates are tracking in line with plan, contributing to stabilization of recurring revenue streams
- Standalone 3Q adjusted EBITDA turned positive at JPY 58M, marking a clear recovery trajectory from the 1Q trough (operating loss of JPY -161M)
Key Concerns From The Results
Cumulative operating loss of JPY -238M (vs. JPY +31M in the prior-year period), with P&L swinging to a loss. Gross margin deteriorated to 51.0% (from 53.9% YoY) as M&A-related expenses, holding company transition costs, and yen depreciation-driven procurement cost increases weighed on profitability. The equity ratio dropped sharply to 17.6% (from 32.7% at prior FY-end), raising risk management concerns amid elevated financial leverage.
- Brand Partner segment posted revenue of JPY 894M (-26.3% YoY), with recovery outlook unclear due to sales headcount shortages and pricing pressure
- Goodwill ballooned to JPY 2,460M (42.7% of total assets), warranting close monitoring of impairment risk
- Matsumura Shoten saw gross margin erode by approximately 5pt due to FX impact, with absorption of higher procurement costs likely requiring time
- MOVE.eBike decelerated to JPY 58M in standalone 3Q (-33% QoQ), impacted by intensifying competition and internal ad delivery system issues
- Kanarabo's variety store sell-through rates fell short of expectations, highlighting challenges in the offline wholesale channel
Focus Areas / Items To Monitor Going Forward
- Probability of achieving JPY 250–350M in standalone 4Q adjusted EBITDA. Key variables include the magnitude of PMI-related cost reclassification to adjusting items at earnings finalization, and the profit contribution from the Brand Produce segment given its March-weighted revenue structure
- Progress on Kanarabo PMI. Quantification of EC channel launch impact, specifics of variety store sell-through improvement initiatives, and progress toward earnout conditions based on operating income ahead of the second tranche share acquisition (May 2027)
- Structural reform in the Brand Partner segment. Tangible benefits from strategic focus on the "Food" vertical, sustainability of per-capita revenue at JPY 8.3M (3Q), and timeline for recovery in BtoB headcount and pricing competitiveness
- Expected PMI-related cost add-backs embedded in the 4Q adjusted EBITDA target of JPY 250–350M
- Current EC revenue mix at Kanarabo and target level for next fiscal year
- Specific shelf-space acquisition strategy and timeline to improve MiiS drugstore distribution rate (currently 6%)
- FX hedging policy at Matsumura Shoten and target EC revenue mix
- Post-type-approval sales strategy for MOVE.eBike and response to the evolving competitive landscape
- Brand Partner segment headcount plan: hiring targets, attrition rates, and remedial measures
- Full-year landing outlook on a GAAP operating income and recurring profit basis (not adjusted EBITDA)
- Current assessment of net D/E ratio versus the target range of 1.5–2.0x, and remaining incremental borrowing capacity
- Sufficiency of the M&A pipeline for next fiscal year onward, and goodwill impairment testing policy
- Concrete timeline and initial investment scale for overseas expansion (global rollout)
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 2,822M | +34.7% |
| └ Brand Produce | JPY 1,928M | +118.3% |
| └ Brand Partner | JPY 894M | -26.3% |
| Gross Profit | JPY 1,438M | +25.7% |
| Gross Profit Margin | 51.0% | -2.9pt YoY |
| SG&A | JPY 1,677M | +50.7% |
| Operating Income | JPY -238M | ― |
| Recurring Profit | JPY -266M | ― |
| Net Income Attributable to Owners of Parent Company | JPY -190M | ― |
| EPS | JPY -63.54 | ― |
| Adjusted EBITDA | JPY -50M | ― |
| Adjusted Net Income | JPY -41M | ― |
| Depreciation & Amortization | JPY 34M | +92.1% |
| Goodwill Amortization | JPY 103M | +183.3% |
Revenue maintained strong momentum at +34.7% YoY, driven by M&A-related consolidation of Kanarabo and HaD as well as organic growth in existing MiiS brands. However, SG&A growth of +50.7% outpaced gross profit growth (+25.7%), widening the operating loss. The surge in goodwill amortization (from JPY 36M to JPY 103M) is structurally depressing GAAP-basis earnings.
Performance By Business Segment
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Brand Produce Business (Consolidated) | JPY 2,822M | +34.7% | JPY -238M | ― | ― |
- MiiS (Oral Care): Standalone 3Q revenue of JPY 227M (+22% QoQ). Third-party EC customer count surged +80.2% QoQ. Successful coordination of marketplace sales events with major influencer campaigns drove record-high revenue
- Kanarabo (Fujiko/b idol Cosmetics): Contributed JPY 297M in standalone 3Q consolidated revenue. 68% stake acquired on October 31, 2025; full-scale EC operations launched with injection of digital marketing know-how
- Matsumura Shoten (Loco Nail, Apparel & Accessories): Stable at JPY 200M in standalone 3Q. Color backpacks performed well, while shoulder bags and wallets roughly doubled YoY on Christmas demand
- Brand Partner (BtoB Solutions): Cumulative 3Q revenue of JPY 894M (-26.3% YoY). Challenges persist in securing sales headcount and service pricing competitiveness. Management plans to sharpen focus on the "Food" vertical to improve the business structure
- MOVE.eBike (Electric-Assist Bicycles): Standalone 3Q revenue of JPY 58M (-33% QoQ). New customer acquisitions temporarily declined due to internal ad delivery system issues and intensifying competition. Pursuing differentiation through type approval certification
Progress Versus Full-Year Guidance
3Q cumulative revenue of JPY 2,822M represents 63.1% progress toward full-year guidance of JPY 4,470M. Given the March-weighted revenue structure (new product launches and BtoB fiscal year-end deal concentration), standalone 4Q revenue of JPY 1,648M is required, contingent on a full-quarter Kanarabo contribution and spring sales campaign performance. Adjusted EBITDA stands at JPY -50M cumulatively through 3Q against a full-year plan of JPY 350M, requiring JPY 400M generation in standalone 4Q.
| Item | Value (3Q Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 2,822M | JPY 4,470M | 63.1% |
| Adjusted EBITDA | JPY -50M | JPY 350M | ― |
| Adjusted Net Income | JPY -41M | JPY 218M | ― |
- The Brand Produce area exhibits a "March-weighted" revenue structure, with revenue and profit peaking in March (spring new product launches)
- The Brand Partner area tends to see large deals concentrated in March as clients execute fiscal year-end budget spend
Changes To Guidance
No change from the full-year guidance published on November 14, 2025. Revenue of JPY 4,470M (+49.7% YoY), adjusted EBITDA of JPY 350M (+48.9% YoY), and adjusted net income of JPY 218M (+37.1% YoY) maintained. Note that GAAP-basis full-year forecasts for operating income, recurring profit, and net income attributable to owners of parent are not disclosed; adjusted EBITDA and adjusted net income are the only disclosed metrics.
Commentary On Shareholder Returns
The FY2026/3 annual dividend forecast remains unchanged at JPY 0.00/share. The policy of prioritizing growth investments (M&A, brand portfolio expansion) is maintained.
Financial Position
Rapid expansion of both assets and liabilities through M&A activity is prominent. Goodwill of JPY 2,460M accounts for 42.7% of total assets, while interest-bearing debt increased from JPY 1,987M at prior FY-end to JPY 3,752M. The equity ratio has declined to 17.6%, making leverage management a key priority going forward.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Deposits | JPY 748M | +37.5% vs. prior FY-end |
| Total Assets | JPY 5,765M | +62.2% vs. prior FY-end |
| └ Total Current Assets | JPY 2,496M | +34.5% vs. prior FY-end |
| └ Total Non-Current Assets | JPY 3,256M | +93.8% vs. prior FY-end |
| Goodwill | JPY 2,460M | +222.6% vs. prior FY-end |
| Shareholders' Equity | JPY 1,012M | -13.0% vs. prior FY-end |
| Total Interest-Bearing Debt | JPY 3,752M | +88.8% vs. prior FY-end |
| └ Short-Term Borrowings | JPY 844M | +283.9% vs. prior FY-end |
| └ Current Portion of Long-Term Debt | JPY 520M | +67.5% vs. prior FY-end |
| └ Bonds (Current + Non-Current) | JPY 240M | -11.1% vs. prior FY-end |
| └ Long-Term Debt | JPY 2,136M | +80.6% vs. prior FY-end |
| EBITDA (Our Estimate) | JPY -101M | Operating income -238 + D&A 34 + Goodwill amortization 103 |
News Released Alongside The Earnings Announcement
- 2026/02/10MiiS's swallowable mouthwash "mm flora*Bubble" surpassed cumulative sales of 20,000 units approximately two months after launch. New "Muscat Mint" flavor to be released on February 25 Cumulative sales exceed 20,000 units approximately 2 months after launch! Swallowable mouthwash "mm flora*Bubble" new flavor "Muscat Mint" to be released on February 25!
Major Announcements During The Quarter
- 2025/11/14HaD (bialne mail-order business) disclosed net assets of JPY 24M and total assets of JPY 97M Update on Disclosed Matter: Acquisition of HaD Inc. Shares by Consolidated Subsidiary (Making It a Sub-subsidiary)
- 2025/12/23Entered into a JPY 300M term loan with financial covenants to fund the Kanarabo acquisition Notice Regarding Execution of Committed Term Loan Agreement with Financial Covenants
- 2026/01/09Shinobu Igari appointed as advisor to WinC, bolstering brand development capabilities Hair & Makeup Artist Shinobu Igari Appointed as Advisor to WinC, a Subsidiary of MUSCAT GROUP Inc.
- 2026/01/22WinC acquired distribution rights for WHOMEE, initiating rebranding MUSCAT GROUP Subsidiary WinC Acquires Distribution Rights for Cosmetics Brand "WHOMEE," Commencing Brand Rebranding Under New Structure
- 2026/02/10mm flora*Bubble new flavor announcement; distribution expanded to EC marketplaces and Loft Cumulative sales exceed 20,000 units approximately 2 months after launch! Swallowable mouthwash "mm flora*Bubble" new flavor "Muscat Mint" to be released on February 25!
Large-Shareholding Filings / Material Proposals Over The Past Year
As of September 30, 2025, the largest shareholder is Representative Director Ryo Okubo with a 35.08% stake. As a newly listed growth stock (IPO in June 2024), the company is classified as a small-cap with 3,033,020 shares outstanding and a market capitalization of approximately JPY 2.7B.
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