MFS,Inc.

Business Details

An online intermediary service that proposes optimal home loans to prospective home buyers via web and smartphone apps. Based on a patented analysis of users' creditworthiness, the service calculates the probability of loan approval and supports application for screening. The revenue model is a flow-based business that receives fees from financial institutions and advertising agencies either at the time of screening application (referral fee) or at the time of loan execution (execution fee). Backed by strong relationships with partner financial institutions, the company continues to offer exclusive special interest rates, maintaining product competitiveness.

Recent Overview

Revenue recognition delay from the transition to the execution fee model continued, but a recovery trend emerged in the third quarter

At major partner financial institutions, the revenue model was progressively transitioned from "referral fee" (revenue recognized at the time of screening application) to "execution fee" (revenue recognized at the time of loan execution), causing revenue to decline significantly in the first and second quarters. However, in the third quarter, fee generation began to materialize, showing a recovery trend. Although user registrations declined 7.9% year on year to 95,301 due to reduced advertising expenditure, the number of customer acquisitions expanded 9.7% year on year to 5,985,015. Owing to the expansion of generative AI-powered services and the effectiveness of the pre-screening feature, the number of loan executions at partner financial institutions has steadily increased.

Key Products

Growth Drivers

• Recovery and stabilization of revenue following completion of the transition to the execution fee model (supported by a steady increase in loan executions)
• Maintenance of product competitiveness through continued acquisition of exclusive special interest rates backed by strong relationships with partner financial institutions
• Increase in loan executions through the use of MogeCheck Pre-screening (Real-time Screening)
• Achieving both quality and quantity in customer acquisition through the expansion of services such as the generative AI-powered AI Advisor and home loan diagnostic comments
• Growing user interest in the home loan market amid the continued transition to a full-fledged rising interest rate phase
• Strengthened customer acquisition through diverse channels including online advertising, media exposure, and affiliates
• Increase in screening applications through the expansion of the partner network, including affiliated real estate companies and insurance agencies

Risks

• Short-term profit pressure due to a delay in revenue recognition timing associated with the transition to the "execution fee" model (segment profit for the 9 months cumulative period declined 96.2% year on year to ¥15 million)
• The impact on medium- to long-term screening application volumes from the decline in user registrations (down 7.9% year on year) due to reduced advertising expenditure
• Risk of declining fee income due to financial institutions curbing advertising expenditure amid rising interest rates
• Possibility that the rate of revenue growth becomes smaller relative to the rate of increase in screening applications (due to fluctuations in fee per application)
• Risk of rising customer acquisition costs due to intensifying competition with rivals such as home loan comparison sites
• Risk of leakage or improper handling of confidential information, including personal credit information