Mogecheck Pro shifts the model toward recurring revenue originated by real estate agents; next focus is launching CAPS owner-occupier brokerage and systematizing INVASE sourcing

Summary

In 1Q FY6/27, lower advertising spend and SEO gains kept the Mogecheck business profitable. At the company level, operating income swung to a profit from a loss a year earlier. Management noted that with interest rates back, banks now compete on funding, and it expects online banks to keep cutting ad spend. Because 80–90% of mortgage decisions originate with real estate agents, the company is pivoting back to offline channels. Mogecheck Pro, released on October 29, is designed to shift the model from transactional to recurring revenue. INVASE posted a loss on inventory valuation write-downs. The company plans to systematize sourcing using CAPS and to launch owner-occupier brokerage around December, diversifying its revenue base.

Key Points

• Management Strategy and Market View
  • Rising rates have shifted banks' competitive focus to deposit gathering. Management believes branchless online banks face higher funding costs, eroding the competitiveness of their mortgage products and prompting ad spend cuts
  • With 80–90% of mortgages originating with real estate agents, the company is pivoting back to offline channels. It plans to provide agents with credit analytics logic, including loan approval probabilities
  • Management expects the policy rate to reach 2% between April 2027 and March 2028, with at least two more hikes. It sees the current operating environment persisting for at least six months to a year
  • The company aims to reduce reliance on online banks by expanding its partner lender network to include megabanks and regional banks. A product lineup tailored to regions and customer needs should diversify revenue sources
• Current Business Progress and Drivers
  • Mogecheck swung to a profit from a loss a year earlier. Efficient ad deployment and the booking of loan-execution fees carried over from the prior quarter both contributed
  • The company consistently holds the top ad slot for key search terms and ranks first or second in organic search. It is also cited by AI tools such as ChatGPT, so management does not expect a significant deterioration in ad efficiency
  • INVASE's write-downs stemmed from forced sales of unsold properties under the company's three-month holding rule. Properties acquired at a discount as tenanted units were sold at similarly discounted prices
  • Cooling demand for Tokyo Bay-area tower condos drove larger-than-expected price declines for large, less popular units. Losses on highly liquid smaller units were limited to JPY 0.5M–1M each
• Key Strategic Initiatives and Inflection Points
  • Mogecheck Pro was released on October 29 and had been adopted by 170 companies as of November 11. Agents were previously directed to the general consumer version; the product has been redesigned specifically for agents, with additional input fields
  • Automated loan proposal generation, a paid feature at competitors, is offered free of charge. Longer term, the company aims to enable one-click applications through direct agent–lender connectivity and API integration
  • CAPS has approximately 4,000 users. The company hired a top salesperson from a major brokerage and will launch owner-occupier brokerage around next week. It is also considering matching owners and prospective buyers within the same condominium building
  • INVASE completed its web–app integration on October 14, driving an increase in customer-initiated meeting bookings. Its loan referral business for agents without partner lenders is also expanding

Outlook and Strategy

• Full-year guidance is unchanged at revenue of JPY 10,241M and operating income of JPY 371M, with 1Q operating income progress at 19.6%. The plan already factors in a 2Q loss at Mogecheck, with a return to profit in the 3Q peak season to meet the full-year budget
• Mogecheck Pro revenue is not included in the budget, and monetization timing is undetermined. Management will disclose once the pace of revenue contribution becomes clear
• Management expects the shift to a recurring revenue model to take a year or possibly longer. The online consumer business will continue while referrals via real estate agents are built up
• CAPS targets a December 1 launch of owner-occupier brokerage, with an aim to bring it forward. The plan is to enable transactions within CAPS by 4Q, covering both owner-occupier and investment properties
• Management acknowledged that the company does not yet meet the JPY 10B market capitalization criterion taking effect in 2030. Speaking generally, it said the threshold should come within reach if operating income grows to around JPY 700M
• Profit accumulation is the top priority for maintaining the listing, and management continuously reviews Standard Market requirements. Alternatives including M&A involve counterparties and cannot be discussed at this stage

Positive Factors

• Company-wide advertising expenses fell to JPY 92M from JPY 210M a year earlier, less than half, yet the company remained profitable. This demonstrates a customer acquisition base that does not depend on advertising
• Mogecheck's ROAS reached 459%, and its margin (unit price minus CPA) remains at a record high. The company has secured a competitive edge in online customer acquisition
• INVASE contract volume has recovered from the dip caused by changes in bank underwriting criteria in 3Q FY6/26. Alongside sales and brokerage, the proprietary loan referral business is supporting volume
• CAPS ranked No. 1 in valuation accuracy in a third-party survey, with an error rate (MER) in the 6% range. It provides five years of price, rent, and cap rate trends free of charge, serving as a lead-generation engine for owner-occupier brokerage
• Mogecheck's market share is only about 0.77%, and about 3.2% of online applications, leaving substantial room for growth. New mortgage lending remains stable at JPY 22T in FY2024

Concerns and Risks

• The decline in 1Q loan application volume will directly reduce 2Q loan-execution fees. Mogecheck faces a challenging earnings environment until the 3Q peak season
• Buyers are holding back on high-end condominiums, particularly in the Tokyo Bay area. Weaker owner-occupier demand from rising rates is spilling over into tenanted property prices
• CAPS valuations are trend-based estimates and may diverge from dealer buyback prices or rapid shifts in supply and demand. Improving sourcing accuracy remains a challenge
• Real estate for sale declined from JPY 1.32B at end-June to JPY 0.98B at end-September. Balancing inventory build-up against cash on hand and asset efficiency remains an ongoing issue
• User behavior of applying via Mogecheck Pro proposals is not yet established. Adoption may take time and require feature improvements
• The gap to the JPY 10B market capitalization criterion is wide. Investors will be scrutinizing the reliability of profit growth and the specifics of the capital policy

Performance Highlights

Revenue was JPY 2,491M (+76.9%); excluding gross-up, revenue was JPY 536M (-0.8%). Operating income was JPY 72M, recurring profit JPY 70M, and quarterly net income JPY 68M, a turnaround from an operating loss of JPY 9M a year earlier. Gross profit margin fell from 31.4% to 17.5% due to the expansion of the property sales model. However, the SG&A ratio improved from 32.2% to 14.6%, securing profitability.

Segment Performance

• Mogecheck Loan Applications: 9,021 (-32.5% YoY)
• Mogecheck Revenue per Loan Application: JPY 29,561 (+10.5% QoQ)
• Mogecheck CPA: JPY 6,441 (-50.4% YoY)
• Mogecheck Advertising-to-Revenue Ratio: 21.8% (55.9% in the prior-year period)
• Mogecheck Cumulative Registered Members: +111K YoY (as of September 2026)
• Mogecheck Pro Adopting Companies: 170 (as of November 11, 2026)
• INVASE Contracts: 187 (+61.2% YoY, this report's estimate)
• INVASE Advertising-to-Revenue Ratio: 12.7% (-1.3pt YoY)
• Full-Time Employees: 80 (+9.6% YoY, this report's estimate)

Q&A List

• Q

  What is meant by a 2Q loss in the Mogecheck business?

  A

  As Shiozawa is absent, I will briefly explain our interest rate outlook. There are various factors, but rates are currently on an upward trend. Inflation persists, real wages are positive, and the economy is not slowing. We monitor BOJ news daily, and multiple hikes are expected this year and next. The factors supporting continued easing are as described in the materials. In mortgages, the spread between fixed and variable rates has widened to a record, and variable rates remain popular. Specifically, variable rates are in the low 1% range and fixed rates around 4%. We expect the policy rate to reach 2% between April 2027 and March 2028. A December hike is currently being discussed, but we expect at least two more. Turning to your question, the Mogecheck business posted a profit of about JPY 80M this quarter. We do not expect the profit to expand that much over the first half. We expect the impact of this quarter's decline in loan applications to show up in 2Q. Conditions will remain tough until the 3Q peak season, which is why we expect a loss in 2Q.

• Q

  What factors will drive a recovery in the Mogecheck business?

  A

  Outside of peak season, it comes down to developing new lender partnerships and expanding Mogecheck Pro. We do not expect the interest rate environment to change significantly in three or six months. We ourselves need to change, so we will first develop lender partnerships and then expand Mogecheck Pro to drive volume. Increasing the number of monetization levers is our management strategy.

• Q

  Please explain Mogecheck Pro again.

  A

  Let me start with the traditional mortgage process. When a user visits a real estate agent, the agent introduces partner lenders. Roughly speaking, the agent judges by gut feel that a customer is likely to be approved and hands over several application forms. The user applies on paper to three or four banks, each of which conducts its own screening. As a result, lenders must accept every mortgage application that comes in, and users must apply on paper for loans they may not get. With Mogecheck Pro, the agent simply enters the details on the spot and can explain which lenders the customer is likely to be approved by, and with what probability. Users avoid unnecessary applications and can choose and apply from the proposals they receive. The system makes things easier for agents, users, and lenders alike. Previously, we directed agents to use the consumer version of Mogecheck. That did contribute to volume, but it was not a tool built for agents. We therefore stripped out features to improve readability and added input fields, creating a system agents find compelling. We believe this will drive adoption among agents and help us win deals.

• Q

  CAPS reports a median valuation error of around 6% relative to listing prices. For the properties on which INVASE booked write-downs this quarter, did the write-down exceed 6% of book value?

  A

  Some did and some did not. Property prices are set by supply and demand. As you have seen, demand for Bay-area tower condos has cooled, and the large, less popular units we held fell more than initially expected. In contrast, losses on smaller, highly liquid units were limited, and we sold them at losses on the order of JPY 1M or JPY 0.5M.

• Q

  Where the write-down exceeded that level, was CAPS used to reassess prices at acquisition or during the holding period? If not, why not?

  A

  We do use CAPS.

• Q

  If it was used, is it possible that the CAPS valuation error was larger than expected when comparing the appraised value at the time of write-down with the expected sale price at the same point?

  A

  We certainly use it, but as I mentioned, prices are largely determined by supply and demand. CAPS estimates the listing price at a given point, but it is calculated using historical trends. As a result, there can be some divergence from the price at which a dealer would buy at that moment, or the price at which an individual would buy if it were cut far enough. (Nakayamada) To add, the CAPS model is built on asking price and sale price data. The properties INVASE acquires are mostly family-type units. They trade as tenanted properties while occupied and are sold to owner-occupiers once the tenant leaves. The same property trades in different price ranges as an owner-occupier unit versus a tenanted unit. Tenanted properties are bought by investors and therefore trade at a modest discount. INVASE's service is to acquire discounted properties for investors to buy. Once the tenant later leaves, the investor sells to an owner-occupier and realizes a capital gain. We have a rule of holding inventory for only three months, and unsold properties are sold off mandatorily. In those cases, properties bought as tenanted units are resold as tenanted units. Even if CAPS shows them as undervalued, we have to sell them at the discounted price. In addition, as rising rates cool owner-occupier demand, tenanted property prices are naturally affected too. We believe the recent drop in demand from rising rates, in other words more cautious buyer behavior, led to this quarter's losses.

• Q

  What is the status of real estate for sale on the balance sheet?

  A

  Real estate for sale stood at JPY 1.32B at end-June 2026 and JPY 0.98B at end-September 2026, a decline of just over JPY 300M. The appropriate level is hard to define. The balance sheet amount varies with the same number of units depending on whether smaller or very high-priced properties are selling well. Our aim is to stock about two months' worth of sales volume, or somewhat more, so we can offer customers the best-matched properties.

• Q

  What is your sourcing policy going forward?

  A

  Naturally, we will acquire discounted, on-trend properties we identify. However, we will weigh this holistically against the balance sheet and cash on hand. As Nakayamada partly mentioned, we cannot hold unlimited inventory, and we must of course grow our cash. Our job is to invest in the business, recover that capital, and grow it, so we will not commit everything to real estate for sale.

• Q

  Please explain again how CAPS will be monetized.

  A

  Brokerage commissions from owner-occupier transactions will be the monetization source. Some CAPS users register as owners to learn what their property is worth. Others register as prospective buyers to check whether the price of a property they are considering is fair. In large buildings such as tower condos, both owners and prospective buyers exist within the same building. CAPS monetizes by capturing these needs and providing brokerage services as an expert, ensuring safe and swift transactions in exchange for a commission.

• Q

  Against the JPY 10B market capitalization criterion that takes effect in 2030, your current market cap of about JPY 2.9B is less than 30% of the required level. Based on current shares outstanding, meeting the criterion requires a share price of about JPY 970, roughly 3.5x the current level. Meanwhile, this year's operating income forecast is JPY 371M, and 1Q operating margin was only about 2.9%. By when, and at what operating income growth rate, do you plan to reach a JPY 10B market cap? Please provide specific numerical targets.

  A

  It is difficult to provide specific numerical targets. Generally speaking, a company with 30–40% profit growth commands a P/E of 15–20x. Net income of JPY 500M at a 20x P/E translates back to operating income of roughly JPY 700M. If we reach JPY 700M in operating income, we believe the threshold would be met, combined with the growth achieved along the way.

• Q

  How does management view its responsibility for the large gap between the current market cap and the listing maintenance criterion? And what capital policy will you pursue to close the gap?

  A

  We are aware of it. This is a transitional measure, and we believe we should meet the criterion by 2030. Capital policy matters, but profit comes first. We believe accumulated profit will be reflected in the share price. Executing the initiatives I described one by one to grow profit and lift the share price is the most direct path.

• Q

  If you conclude that meeting the JPY 10B criterion is difficult, by when will you consider and decide on alternatives, such as moving to the Standard Market or M&A? As a shareholder, I want a concrete management plan for maintaining the listing, not just a stated commitment to enhancing corporate value.

  A

  We constantly review the requirements for moving to the Standard Market. However, we cannot say now whether we will do so or by when we will decide. We understand M&A could be an alternative, but it involves counterparties, and we cannot discuss undecided matters here. Our approach is to grow profit toward the JPY 10B target. The path to higher profit runs through initiatives at each service: Mogecheck, INVASE, and CAPS. We believe the only way forward is to deliver on these, first meeting this year's budget, then announcing and meeting next year's budget, building step by step. Some matters we can disclose and some we cannot, hence this answer.

• Q

  How will you win owner-occupier brokerage deals through CAPS?

  A

  CAPS launched in July, added features in October, and is now used by several thousand people. Until now, we had no team to handle owner-occupier brokerage, so we could not act. This month, a high-performing broker finally joined. He will reach out to existing users, connect through online meetings and similar channels, understand their needs, and convert them into transactions. Many users want to know market value, but that is different from wanting to sell or buy right away. We need to keep providing information over the long term so we can deliver our service properly when the right moment comes. We plan to keep growing the CAPS user base. Whether 1% or 2% of users end up transacting, we want to capture actual buying and selling activity appropriately and expand our brokerage service.

• Q

  When will Mogecheck Pro monetization start contributing?

  A

  Frankly, we do not know yet. Adoption is progressing, so we expect monetization to follow, but it is not in the budget. We will disclose once the pace of monetization becomes clear. For now, real estate agents are steadily adopting it. However, even if users know Mogecheck, applying via a Mogecheck Pro proposal is a new experience, and we do not expect it to go smoothly right away. We will address this alongside feature improvements.

• Q

  Has the market environment changed?

  A

  With interest rates back, competition for deposits has intensified and online banks' product competitiveness has declined. We do not expect this to change immediately. It depends on how long the rate-hiking cycle lasts, but we expect it to continue for at least another six months to a year. We therefore do not see the current environment changing soon. At the same time, lenders are competing on products, devising various measures and launching diverse offerings. Rather than relying solely on online banks, we want to offer products from many lenders, including megabanks and regional banks. Our goal is to grow revenue by listing region- and need-specific products on Mogecheck, giving users a wide range of choices. To that end, we are currently focused on expanding our partner lender network.