Revenue reached JPY 4.1B with robust +38% YoY growth, driven by accelerating M&A-led expansion of proprietary brand portfolio; however, restructuring charges pushed operating profit into the red — focus shifts to the path back to profitability and a return to the growth trajectory next fiscal year

Key Positives From The Results

The consolidation of Kanarabo (Fujiko/b idol), HaD (bialne), and a full-year contribution from Matsumura Shoten drove revenue to JPY 4,129M, up +38.3% YoY. Proprietary brand revenue doubled to JPY 2,266M (+125.5% YoY), marking meaningful progress in the qualitative transformation of the business portfolio. Adjusted net income of JPY 310M (+95.0% YoY) was secured by booking gains on the divestiture of unprofitable operations, striking a balance between restructuring and profit generation — a noteworthy achievement.

• Proprietary Brand Revenue
  of JPY 2,266M (+125.5% YoY): H2 Fujiko revenue of JPY 538M was the key driver, broadening the earnings base across the brand portfolio
• PMI-Driven E-Commerce Growth
  : Fujiko EC revenue +48.6%, Matsumura Shoten EC revenue +538.6%, validating the repeatability of the "acquire and grow" brand development model
• Decisive Exit From Unprofitable Operations
  : Booked JPY 304M in goodwill impairment on the RiLi casting business and JPY 645M gain on the sale of Rice Curry LS, eliminating future risk overhangs
• Organic Growth Signals
  : bialne subscription retention rate at 94.8%; MiiS new product "mm flora*Bubble" surpassed 20,000 cumulative units within two months of launch
• Governance Upgrade
  : Transition to a holding company structure strengthened group governance and established a framework enabling autonomous management at each subsidiary

Key Concerns From The Results

Operating loss of JPY -399M (vs. operating income of JPY 88M in the prior year) represented a sharp deterioration in profitability. Gross margin declined to 53.6% (-0.7pt YoY), pressured by rising raw material/logistics costs and FX volatility. SG&A ballooned to JPY 2,612M (+70.2% YoY), primarily due to M&A-related expenses and higher corporate overhead, though the line between one-off and structural cost increases remains unclear and warrants caution.

• Operating Cash Flow
  of JPY -673M (vs. JPY -407M prior year) marks a second consecutive year of negative OCF — restoring cash generation is an urgent priority
• Goodwill Balance
  surged to JPY 2,311M (+JPY 1,549M YoY), now representing 40.9% of total assets, amplifying risk associated with the M&A-dependent growth model
• Equity Ratio
  deteriorated to 19.2% (from 32.7%), with interest-bearing debt rising to JPY 3,541M (+JPY 1,553M YoY) — financial leverage has expanded rapidly
• Kanarabo Retail Channels
  : Sales at variety stores and other key channels underperformed initial plans amid intensifying competition and shifting consumer behavior
• Deferred Tax Asset Reversal
  of JPY 205M stemmed from the restructuring of intra-group profit flows following the holding company transition — stability of future tax effects requires close monitoring

Focus Areas / Items To Monitor Going Forward

• Achievability of the FY2027 revenue plan of JPY 6,602M (+59.9%), driven by the full-year consolidation of Kanarabo. Key variables include normalization of return rates in Fujiko/b idol's retail channels and the revenue contribution from the new "Pore-Smoothing Cream" product
• The FY2027 operating income target of JPY 50M presumes a return to profitability at the business level. Monitor progress on gross margin improvement and advertising spend optimization to absorb ~JPY 500M in holding company management costs and ~JPY 200M in goodwill amortization
• Under VISION2029, the mid-term plan targets revenue of JPY 15B and operating income of JPY 1.5B by FY2029. Assess whether executing 2–5 M&A deals annually while maintaining PMI quality is realistic, with particular attention to goodwill impairment risk management

Key Financial Highlights

Revenue achieved 100.7% of the revised guidance of JPY 4,100M. Operating loss came in at JPY -399M, a JPY 40M improvement versus the revised forecast of JPY -439M. Adjusted net income was JPY 310M versus the revised forecast of JPY 334M (achievement rate 92.8%). Extraordinary gains included JPY 710M in gains on the sale of shares in affiliates, while extraordinary losses comprised JPY 304M in impairment losses, JPY 26M in business withdrawal losses, and JPY 30M in expenses related to the corporate name change. The key driver behind the wider net loss was JPY 111M in deferred income tax adjustments (reversal of deferred tax assets).

Performance By Business Segment

Progress Versus Full-Year Guidance

Full-year results came in largely in line with the revised plan, with revenue at 100.7% of target. Operating loss improved to JPY -399M versus the revised forecast of JPY -439M. Adjusted net income of JPY 310M fell slightly short of the revised forecast of JPY 334M (achievement rate 92.8%), though the completion of the unprofitable business cleanup can be viewed as laying the foundation for earnings recovery from next fiscal year onward.

• The Proprietary Brand segment tends to see elevated revenue in Q3 (Oct–Dec) driven by the year-end holiday season (MiiS Q3: JPY 207M; Fujiko revenue concentrated in H2 including Q3)
• The Other New Business segment (SNS marketing support) tends to see higher order volume in Q3 as clients accelerate fiscal year-end budget deployment

Changes To Guidance

Next fiscal year's guidance calls for +59.9% revenue growth, primarily driven by the full-year consolidation of Kanarabo. Operating income is expected to turn profitable at JPY 50M, though this remains a razor-thin margin. A key focus will be the recovery to adjusted EBITDA of JPY 324M. No guidance was provided for recurring profit or net income.

• Revenue: JPY 6,602M (+59.9%)
• Operating Income: JPY 50M (return to profitability)
• Adjusted EBITDA: JPY 324M (return to profitability)
• Adjusted Net Income: JPY 128M (-58.7%)

Commentary On Shareholder Returns

Annual dividend for FY2026 is JPY 0.00 (unchanged from the prior year). Annual dividend for FY2027 (forecast) is also JPY 0.00. No mention of changes to dividend payout ratio or share buyback policies. The company continues to prioritize growth investments (M&A).

Financial Position

Total assets expanded +58.9% YoY to JPY 5,648M, driven by goodwill additions and increased borrowings associated with M&A activity. The equity ratio deteriorated from 32.7% to 19.2%, reflecting a rapid increase in financial leverage. Retained earnings fell to JPY -267M, turning negative.

News Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• ULTIMATE CLASSIC INVESTMENT LLC: 0% → 11.03% (2026/03/05) — Pure investment. Respects current management's strategic direction and supports long-term corporate value enhancement
• Ryo Okubo (CEO): 36.84% → 37.46% (2025/08/07) — Pure investment (including stock options; 220,000 shares pledged as collateral under a loan agreement with Tokai Tokyo Securities)