MFS, Inc. 2Q Earnings Flash
INVASE buy-and-resell model gains traction with 3x revenue growth; focus shifts to completion of MogeCheck's performance-based fee transition and return to profitability in H2
Key Positives From The Results
The INVASE business successfully pivoted from a brokerage to a buy-and-resell model, driving segment revenue up +1,056.0% YoY. Contract volume rose +121.0% YoY to 336 deals, confirming quantitative expansion, with December achieving a record-high monthly revenue. Even after adjusting for gross-up effects, revenue doubled, up +113.3% on a like-for-like basis.
- INVASE achieved its first-ever quarterly operating income (JPY 32M) on a standalone 2Q basis; H1 cumulative operating income of JPY 28M also in the black
- MogeCheck traffic grew +34.2% YoY to 3.88M visits, with registered users up +14.6% to 62K, confirming continued expansion of the customer base
- Advertising cost discipline narrowed MogeCheck's loss significantly from an initial estimate of JPY 250M to JPY 77M; CPA held at an efficient JPY 12,276
- Capital and business alliance with Zenkoku Hosho (funding of ~JPY 270M completed January 2026) lays the groundwork for advanced mortgage screening and channel expansion
- Rental property management service launched in December, establishing an end-to-end platform spanning sourcing, sales, and property management
Key Concerns From The Results
The MogeCheck business saw financial institutions curtail online advertising spend amid rising rates, compounded by the transition from referral-based to performance-based (loan execution) fees, resulting in revenue of JPY 559M (−37.7% YoY) and a segment loss of JPY 76M — a swing to red. Gross profit margin plunged from 85.2% to 26.7% (−58.5pt YoY), as the INVASE business's shift in COGS structure weighed heavily on consolidated margins.
- Consolidated operating loss of JPY 48M (vs. JPY 52M profit in the year-ago period); net loss of JPY 54M — a swing to loss
- The INVASE buy-and-resell model required a JPY 832M build-up of real estate held for sale, driving operating cash outflow to JPY 885M
- Equity ratio declined from 87.7% to 73.9%; interest-bearing debt rose from zero at prior FYE to JPY 523M
- MogeCheck revenue per mortgage application fell to JPY 16,853 due to the fee model change (vs. JPY 23,261 in the prior quarter)
- INVASE voucher-based customer acquisitions dropped −47.6% YoY, flagging channel contraction risk from the model transition
Focus Areas / Items To Monitor Going Forward
- Timing of full transition to MogeCheck's performance-based fee model and the pace of revenue recovery from 3Q onward. While management accounting suggests a profitable trajectory, the timing of GAAP-basis profitability will be the key swing factor for full-year plan achievement
- INVASE's inventory turnover for real estate held for sale and the risk management framework. With JPY 914M in inventory at end-December, potential write-down risk from real estate market fluctuations warrants attention
- Concrete timeline for expanding MogeCheck referral channels through the Zenkoku Hosho alliance and progress in leveraging the network of 700+ partner financial institutions
- Actual loan execution rates under the performance-based fee model (currently assumed at 12%) and initiatives to improve conversion
- Plans to expand the number of banks offering preferential rates (currently four) and the status of negotiations with financial institutions on execution-based pricing
- Target inventory levels and property turnover periods for the INVASE business
- Specific milestones for the joint research initiative with Zenkoku Hosho and expected timing of revenue contribution
- Launch timing and revenue model for licensing MogeCheck's AI engine to AI agents in other industries
- Concrete schedule for geographic expansion of INVASE's investment coverage (from central Tokyo to regional cities)
- Financing costs for property sourcing under the buy-and-resell model and plans to expand credit facilities
- Whether interim milestones have been set toward Vision 2030 targets (MogeCheck revenue JPY 20B, INVASE revenue JPY 5B)
- Profitability of resuming Flat 35 customer acquisition and cannibalization risk with variable-rate products
- Development progress and differentiation factors for the real estate investment AI agent
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 3,250M | +187.4% |
| Cost of Goods Sold | JPY 2,383M | +1,323.4% |
| Gross Profit | JPY 867M | −10.0% |
| SG&A | JPY 915M | +0.5% |
| Operating Income | JPY −48M | - |
| Recurring Profit | JPY −43M | - |
| Net Income Attributable to Owners of Parent Company (Interim) | JPY −54M | - |
| EPS | JPY −5.96 | - |
| Gross Profit Margin | 26.7% | −58.5pt YoY |
| Operating Income Margin | −1.5% | −6.1pt YoY |
Performance By Business Segment
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| MogeCheck | JPY 559M | −37.7% | JPY −76M | - | −13.7% |
| INVASE | JPY 2,691M | +1,056.0% | JPY 28M | - | 1.1% |
| └ INVASE (After Gross-Up Adjustment) | JPY 496M | +113.3% | JPY 28M | - | 5.8% |
| Total | JPY 3,250M | +187.4% | JPY −48M | - | −1.5% |
- INVASE: Revenue +1,056.0% YoY (+113.3% after gross-up adjustment). The buy-and-resell pivot drove contract volume to 336 deals (+121.0% YoY). Earnings were fueled by sourcing and selling undervalued properties using CAPM (AI pricing model)
- INVASE Rental Management Service: Launched December 2025. Establishes an end-to-end service spanning sourcing, sales, and property management, initiating the build-out of a recurring revenue base
- MogeCheck: Revenue −37.7% YoY with a segment loss of JPY 76M. In addition to financial institutions curtailing online ad spend, the shift to performance-based fees deferred revenue recognition by 3–6 months. However, on a management accounting basis (assuming a 12% loan execution rate), the business is tracking toward profitability
Progress Versus Full-Year Guidance
Revenue progress toward the full-year plan appears elevated at 86.0%, but this is largely driven by gross-up effects from the INVASE buy-and-resell model. After adjusting for gross-up, effective revenue progress stands at only 40.0%. MogeCheck has achieved just 37.3% of its full-year revenue target of JPY 1,500M, indicating a heavily H2-weighted profile. Management has maintained full-year guidance, targeting consolidated operating income of JPY 195M premised on a return to profitability for MogeCheck and sustained profitability for INVASE in H2.
| Item | Value (H1 Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 3,250M | JPY 3,779M | 86.0% |
| └ After Gross-Up Adjustment | JPY 1,056M | JPY 2,640M | 40.0% |
| Operating Income | JPY −48M | JPY 195M | - |
| Recurring Profit | JPY −43M | JPY 186M | - |
| Net Income | JPY −54M | JPY 146M | - |
- MogeCheck mortgage applications tend to increase in early spring (January–March) alongside peak homebuying demand. Under the performance-based fee model, a 3–6 month lag to loan execution means revenue is expected to be concentrated in H2
- INVASE is exposed to seasonal patterns in real estate transactions (fiscal year-end demand), though the buy-and-resell model may gradually smooth out inventory turnover
Changes To Guidance
No change to full-year guidance. Forecasts published alongside the 1Q earnings release on November 13, 2025 have been maintained.
Commentary On Shareholder Returns
The FY2026/6 dividend forecast remains at JPY 0.00 for both interim and year-end (no dividend). No change.
Financial Position
The shift to the buy-and-resell model drove a sharp increase in real estate held for sale and the emergence of bank borrowings. The company has transitioned from a virtually debt-free balance sheet at prior FYE, but Zenkoku Hosho's third-party allotment (~JPY 270M, paid in January 2026) has reinforced the capital base. The equity ratio remains at a solid 73.9%.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Deposits | JPY 1,433M | −JPY 388M vs. prior FYE (−21.3%) |
| Real Estate Held for Sale | JPY 914M | +JPY 832M vs. prior FYE |
| Total Current Assets | JPY 2,637M | +JPY 394M vs. prior FYE |
| Total Assets | JPY 2,973M | +JPY 436M vs. prior FYE |
| Interest-Bearing Debt | JPY 523M | Newly incurred from zero at prior FYE |
| └ Short-Term Borrowings | JPY 150M | - |
| └ Current Portion of Long-Term Debt | JPY 107M | - |
| └ Long-Term Debt | JPY 266M | - |
| Shareholders' Equity | JPY 2,197M | −JPY 28M vs. prior FYE |
| EBITDA | JPY −33M | Operating income JPY −48M + depreciation JPY 14M (our estimate) |
News Released Alongside The Earnings Announcement
None
Major Announcements During The Quarter
- 2025/11/20Entered a capital and business alliance with Zenkoku Hosho Inc., raising ~JPY 270M via third-party allotment. The partnership targets joint research on AI-powered advanced loan screening and broader adoption of MogeCheck Notice Regarding Capital and Business Alliance with Zenkoku Hosho Inc., Issuance of New Shares Through Third-Party Allotment, Reduction of Stated Capital and Capital Reserve, and Change in Major Shareholders
Large-Shareholding Filings / Material Proposals Over The Past Year
- Zenkoku Hosho: 0% → 10.00% (2026/01/08) — Strategic investment / capital and business alliance. Subscribed to 1,019.6K newly issued shares via third-party allotment. Two-year lock-up agreement in place
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