Launch of CAPS Signals Shift from Flow-Based to Stock-Based Model; AI × Finance Three-Business Synergy Positioned as Next Growth Pillar

Summary

For FY06/2026, the company achieved revenue of JPY 8.3B (+2.8% vs. budget) and operating income of JPY 220M (+11.1% vs. budget), meeting budget targets and securing profitability for the second consecutive year. The INVASE segment achieved its first full-year profit following a complete transition to the buy-sell model, while the MogeCheck segment saw revenue decline 36.8% YoY as financial institutions continued to curtail online advertising spend—though profitability was maintained through a 50% reduction in CPA and improvement in ROAS to 476%. For FY06/2027, the company guides for a 67% increase in operating income, clearly articulating its strategic expansion from finance into owner-occupier real estate transactions, anchored by the new CAPS service.

Key Points (Earnings Highlights and Growth Initiatives)

• Management Strategy and Market Assessment
  • The era of positive interest rates has arrived; financial institutions are shifting from lending competition to deposit acquisition competition, driving a relative resurgence of brick-and-mortar banks
  • Inflation-driven real estate price appreciation, concentrated in urban centers, continues to provide a favorable tailwind for the INVASE segment
  • Anticipating the advent of AI agents, MFS plans to deploy MogeCheck functionality as MCP (Model Context Protocol), targeting customer referrals from external AI platforms
• Current Business Progress and Drivers
  • MogeCheck reduced advertising spend to roughly one-quarter of peak levels while increasing organic traffic through top SEO rankings (No. 1-2 for "mortgage rates"), achieving a 56% YoY reduction in CPA on a same-quarter basis
  • The INVASE segment fell short of full-year budget due to a mid-Q3 change in bank underwriting criteria that pushed certain transactions into later periods, but maintained profitability for three consecutive quarters
  • Of JPY 308M in net income, approximately JPY 95M reflects deferred tax asset recognition; operating income of JPY 220M is the more appropriate gauge of underlying earnings power
• Strategic Initiatives and Inflection Points
  • Launched CAPS, an AI-powered condominium valuation service, in July 2026—covering 145,000 buildings nationwide with industry-leading MER accuracy of ~6%, offered free of charge
  • Planned October 2026 integration of INVASE business functions between MFS and Condominium, Inc., with unified web/app expected to double monthly member registrations
  • MogeCheck Phase 4 targets one-click mortgage applications via API integration with financial institutions within the current fiscal year

Outlook and Strategy

• FY06/2027 guidance calls for revenue of JPY 10.2B (+23.1% YoY) and operating income of JPY 370M (+67.0% YoY). Both segments plan for H2-weighted earnings
• MogeCheck projects a slight revenue decline (JPY 1.2B) but operating income of JPY 200M (+23.7% YoY), maintaining an efficiency-focused marketing strategy
• INVASE projects revenue of JPY 9.0B (+27.9% YoY) and operating income of JPY 160M (+188.7% YoY), underpinned by sales team hiring and process standardization
• Owner-occupier brokerage to commence from Q3 onward leveraging CAPS, with in-platform buy-sell transactions targeted by Q4—however, no revenue contribution from new initiatives is embedded in guidance
• Three KPI targets set for the current fiscal year: MogeCheck adoption by 100 real estate companies, MCP deployment of diagnostic functionality, and JPY 30M/month in loan referral revenue
• No changes to the mid-term plan (Vision 2030); management maintains a disciplined execution-focused stance

Positive Factors

• MogeCheck CPA declined to JPY 5,617 (Q4), with ROAS of 476%, demonstrating structural improvement in unit economics. Ad spend ratio of 21.0% reached an all-time low
• INVASE buy-sell model generating stable monthly average gross profit of JPY 50M+ and monthly average loan referral fees of JPY 15M+
• CAPS achieved the No. 1 industry valuation accuracy rating in a third-party survey with MER of ~6%, establishing a clear differentiation advantage
• MogeCheck member registrations grew +121K vs. the same month prior year, with SEO-driven organic traffic serving as a stable lead generation platform
• Expanding demand for asset building under inflationary conditions and financial institutions' proactive investment lending stance provide tailwinds for INVASE
• Media exposure continues at an annualized pace of ~200 placements, underpinning brand awareness

Concerns

• Continued curtailment of advertising spend by online banks amid rising rates; MogeCheck revenue contracted 36.8% YoY and the declining trend persists
• INVASE buy-sell model involves high transaction values, and management acknowledges that deal slippage creates quarterly earnings volatility
• FY06/2027 earnings are heavily H2-weighted (INVASE operating income: JPY 12M in H1 vs. JPY 156M in H2), making H2 progress monitoring critical
• The probability of a risk scenario with policy rates exceeding 2.0% is increasing, warranting attention to broader mortgage market implications
• CAPS-driven owner-occupier brokerage remains at the conceptual stage with uncertain timing for revenue contribution; the real estate brokerage space is highly competitive
• MogeCheck market share remains small at 0.77%, with growth acceleration largely dependent on AI and API-driven initiatives

Performance Highlights

FY06/2026 consolidated revenue was JPY 8,317M (+185.0% YoY, largely driven by gross-up impact from the INVASE buy-sell model); on an ex-gross-up basis, revenue was JPY 2,295M (−21.4% YoY). Operating income came in at JPY 222M (+12.7% YoY), and net income at JPY 308M (+92.8% YoY, including JPY 95M from deferred tax asset recognition), meeting budget. The MogeCheck segment maintained full-year profitability, while the INVASE segment achieved its first-ever full-year profit.

Segment Performance

• MogeCheck screening applications (Q4): 13,279 (−10.9% YoY same quarter)
• MogeCheck screening application unit price (Q4): JPY 26,742 (stable at ~JPY 27,000 on a management accounting basis)
• MogeCheck CPA (Q4): JPY 5,617 (−56.4% YoY same quarter)
• MogeCheck ad spend ratio (Q4): 21.0% (all-time low)
• MogeCheck member registrations: +121K vs. same month prior year
• INVASE contracts (Q4): 194 (+108.6% YoY same quarter)
• INVASE ad spend ratio (Q4, adjusted): 10.7%
• INVASE member registrations: +7K vs. same month prior year
• Headcount (period-end): 80 (engineers & designers: 23, ~29% of total)

Q&A List

• Q: SEO effectiveness was mentioned several times in the presentation—could you explain what that actually means?
  A: Primarily, we rank at the top for high-volume search keywords such as "mortgage" or "mortgage rates." For "mortgage," we typically rank No. 2-3; for "mortgage rates," we compete for the No. 1-2 position. Monthly search volume is approximately 300,000, and ranking in the top three drives meaningful traffic. Since this traffic is acquired at zero cost, it has been a major contributor to the CPA reduction.
• Q: Is media exposure trending well?
  A: Media exposure remains strong, continuing at a pace of roughly 200 placements per year. The BOJ is widely expected to raise rates again around September or October, and we anticipate heightened media attention on mortgages around that time, generating a pipeline of interview opportunities.
• Q: Were there any unexpected developments in FY06/2026?
  A: Yes. First, the change in revenue recognition timing to the point of loan execution represented a significant deviation from assumptions when we published Vision 2030—it effectively altered the business model, making budget forecasting difficult and actual performance uncertain. That said, we estimated as aggressively as possible and were pleased to outperform those estimates. For INVASE, the mid-Q3 change in bank underwriting criteria was not anticipated. One-to-two-month settlement delays are common in real estate transactions, but when they occur on high-value properties, it causes meaningful revenue slippage and volatility in INVASE. The magnitude of that volatility was somewhat beyond expectations.
• Q: Has there been any progress or results from the Zenkoku Hosho partnership?
  A: We are not in a position to share specifics at this time, but we are actively exchanging ideas with Zenkoku Hosho on new schemes. We will announce developments as soon as we are able to, so please bear with us.
• Q: The Vision 2030 slide was removed from the deck—could you explain?
  A: Nothing has changed. The deck was simply too long, so we trimmed it. On the business plan, overall we expect 23% growth. INVASE focuses on process standardization, and MogeCheck on further AI and API integration. We are not contemplating any major changes to the plan at this point.
• Q: We noticed an increase in inventory on the balance sheet. Could this become a drag in the event of a sharp rate spike?
  A: In short, the impact would not be material. Part of the inventory is purchased with cash and part is financed, but borrowing rates are low at around 2%. Inventory turns over roughly every two to three months, so from a return perspective it is very well managed. If rates suddenly jumped to 5% that would be a different story, but under a gradual rate increase scenario, we do not expect inventory to be meaningfully impacted by rising rates.
• Q: What considerations or thoughts do you have around scaling the CAPS user base?
  A: Rather than investing heavily in a brute-force acquisition approach, we plan to leverage the existing visibility from MogeCheck and INVASE, supplemented by high-interest content derived from CAPS' proprietary analytics, to grow the user base organically. We aim to acquire at least several tens of thousands of users over the year, keeping costs as low as possible.
• Q: When did you start conceptualizing the CAPS business model? Was this always part of the long-term vision?
  A: The decision to target CAPS at owner-occupiers came together around the beginning of this year. We had already built a property pricing model within INVASE, but as our data scientists demonstrated they could produce exceptionally high-quality outputs, we concluded the model was robust enough for real-world application and decided to extend it beyond INVASE customers to all condominium buyers, including owner-occupiers. We have long been aware that mortgages sit at the very end of the transaction value chain and that MogeCheck is fundamentally a flow business. CAPS represents one solution to the challenge of growth being heavily influenced by external factors.
• Q: Will CAPS-based owner-occupier brokerage launch nationwide, or start with specific regions such as the Tokyo metropolitan area?
  A: Ultimately we envision a nationwide rollout, but near-term it will likely be concentrated in the Tokyo metro area. The several thousand users currently registered on CAPS are predominantly based in Tokyo or the greater Tokyo area, so the buy/sell demand that emerges will naturally center on properties in those regions.
• Q: Competitors appear to offer similar real estate services. What differentiates CAPS from existing platforms?
  A: Typical bulk-appraisal services provide a rough estimate, then collect personal information and funnel leads to multiple real estate brokerages, resulting in unsolicited calls. Valuations offered by brokerages themselves tend to come as wide ranges. CAPS covers 145,000 condominium buildings nationwide, leverages extensive data, and delivers pinpoint pricing at an MER of ~6%—single-digit accuracy. To our knowledge, no other service matches this. Additionally, we display five years of historical price and rent trends, enabling users to perform trend analysis. That is where our uniqueness lies.
• Q: You describe CAPS as a stock-type business—is it a subscription model with monthly membership fees?
  A: CAPS is entirely free to use. When we refer to a "stock business," we do not mean SaaS monetization. Rather, the concept is to use CAPS as a central hub to capture monetizable customers from both MogeCheck and INVASE, thereby increasing LTV. We are not launching a subscription-based service.
• Q: With AI and API integration for MogeCheck, is the ultimate vision that users can complete their entire mortgage application within MogeCheck, without being redirected to a bank's website as is currently the case?
  A: Exactly—that is the direction we are heading. Under Phase 4 of our AI roadmap, we are deepening API integration with financial institutions to enable mortgage applications directly on the MogeCheck platform. Our vision is a service where users can receive mortgage advice, submit applications, and ultimately complete execution—all within MogeCheck.

Q&A List

• Q: MogeCheck revenue is projected to decline slightly YoY in FY06/2027, and progress against Vision 2030 appears to be lagging. To what extent are the effects of this fiscal year's strategic initiatives reflected in the current guidance?
  A: New initiatives are not factored in at all. The real estate company partnership is still being piloted internally, and we will disclose revenue contribution estimates once we have visibility. Diagnostic functionality licensing to other AI platforms involves counterparties, so we have not embedded it meaningfully in the budget. CAPS-driven owner-occupier real estate transactions are also entirely excluded. This is an entirely new business, and given that real estate transactions only generate revenue upon settlement and delivery, the lead time makes meaningful in-year results uncertain—so we have not incorporated them into the business plan.
• Q: What percentage of current-year profits do you expect CAPS to generate in FY06/2027, or is it expected to operate at a loss during the ramp-up phase?
  A: We have not embedded any revenue contribution at this point. There are also no factors that would cause losses. CAPS was developed internally by our engineering team without significant external costs, so a loss scenario is not contemplated either.
• Q: What made the INVASE buy-sell model successful? Our understanding is that you previously exited a buy-sell approach—what was different this time?
  A: What we previously exited was the brokerage model. In brokerage, even when a customer wants a property, another buyer can step in first and the property is lost. The buy-sell model eliminates this bottleneck because we purchase inventory and sell it directly. Additionally, brokerage fees are capped at 3% of property value, whereas the buy-sell model can generate margins above 3% when properties are sourced at attractive prices. Two factors drove our success: first, we deliberately avoided studio apartments and instead targeted relatively higher-income clients with larger properties. Larger properties offer greater potential for attractive acquisition pricing, and higher-income clients are more likely to transact. We developed this thesis and executed against it, and it worked.