Net revenue growth held up at +24.2%; the payback on front-loaded mass-marketing spend and 4Q profit recognition are the key swing factors for hitting the JPY 10B full-year business profit target

Key Positives From The 3Q Results

Net revenue of JPY 38.5B (+24.2% YoY) sustained high growth. Despite booking roughly JPY 1.5B of mass-marketing spend from the start of the year, 3Q standalone business profit still rose +6.7%. The US business is now consistently profitable and ITANDI's ARR expansion provided further earnings support.

• Net revenue of JPY 38,529M (+24.2% YoY) and revenue of JPY 211,627M (+24.8% YoY), with both transaction volume and gross profit expanding
• US Marketplace posted 3Q standalone net revenue of JPY 1,520M (+160.8%) and business profit of JPY 169M, remaining in the black (vs. a JPY 188M loss a year earlier)
• ITANDI ARR reached JPY 5,976M (+25%), with lifeline services up +64% and SaaS customer count at 6,072 companies (+22%). The trailing 12-month average churn rate remained low at 0.43%
• RENOSY Subscription delivered 3Q standalone net revenue of JPY 1,132M (+17.7%) and business profit of JPY 574M (+28.1%). Contract count reached 40,905 (+32%), crossing the 40,000-unit mark
• The SPC Securities group was consolidated into the RENOSY segment from 3Q, with asset management contributing JPY 68M of business profit as a new revenue stream

Key Concerns From The 3Q Results

Cumulative business profit of JPY 5,722M (-3.6% YoY) declined. Mass-marketing spend and headquarters consolidation costs were the main one-off drivers. However, operating cash flow of -JPY 9,104M on inventory build and the sharp rise in interest-bearing debt warrant attention on funding costs in a rising rate environment.

• Cumulative core business margin fell to 14.9% (vs. 19.1% a year earlier). Our estimate; business profit divided by net revenue
• Operating cash flow was -JPY 9,104M (vs. +JPY 6,642M a year earlier), driven mainly by a -JPY 13,507M increase in inventories
• Bonds and borrowings rose to JPY 38,764M, +72.4% versus the prior year-end, while the ratio of equity attributable to owners of the parent fell to 31.8% (from 37.4% at the prior year-end)
• Finance costs rose to JPY 934M (+26.8% YoY). Investment loan rates at partner financial institutions are trending gradually higher
• The external environment is shifting: Tokyo secondhand condominium transaction volumes are down YoY, inventory has risen for five consecutive months, and the transaction price per square meter fell for the first time in 73 months

Focus Areas / Items To Monitor Going Forward

• Execution of the plan to curb 4Q advertising spend versus prior years. Achieving the JPY 10B full-year business profit target (57.2% progress) hinges on profit recovery once mass-marketing spend rolls off
• The pace of working down JPY 25,189M of inventory. Management describes this as a strategic and temporary build ahead of 4Q and to accelerate the fractionalized-investment business alongside the SPC Securities group, and expects normalization from next fiscal year
• ITANDI's full-year core business margin target of 17.4% (vs. 20.8% actual in FY25). The balance between front-loaded implementation/CS staffing costs and productivity gains

Key Financial Highlights

(3Q cumulative consolidated, November 1, 2025 – July 31, 2026)

Net revenue follows the company's definition (gross profit of the RENOSY Marketplace business plus revenue from ITANDI, other businesses and adjustments). EPS reflects an increase in the weighted average share count to 41,051k shares (from 39,353k a year earlier).

Performance By Business Segment

The RENOSY Marketplace business posted external revenue +25.3% and business profit +14.3%, delivering both top- and bottom-line growth. ITANDI accelerated to +23.7% net revenue growth on a 3Q standalone basis, but cumulative business profit rose only +1.8% due to the drag from 1Q.

Segment Performance Table (3Q cumulative consolidated, external revenue basis)

Given the buy-renovate-resell model, RENOSY's revenue effectively equals transaction volume, so the reported margin does not reflect underlying profitability. For the RENOSY domestic marketplace, the core business margin on a net revenue basis (30.4% in 3Q standalone) is the meaningful metric. Adjustments include -JPY 5,906M of corporate costs and -JPY 337M of amortization of intangibles identified through business combinations and acquisition-related expenses.

Progress Versus Full-Year Guidance

Net revenue is at 68.9% of the full-year plan, tracking in line with the company's disclosed progress in the prior two years (FY24 50%, FY25 46% at the 2Q mark); 69% at 3Q is consistent with the usual seasonal pattern. Business profit progress stands at just 57.2%, but excluding the mass-marketing spend booked from the start of the year (approximately JPY 1.5B) and the headquarters consolidation cost booked in 1Q (JPY 177M), management calculates adjusted progress at roughly 74% (versus a 75% average over the prior two years). Full-year guidance is maintained, premised on advertising spend being curbed in 4Q relative to prior years.

• Net revenue and business profit tend to concentrate in 4Q. In FY25, 4Q standalone accounted for JPY 13,222M of net revenue and JPY 1,335M of business profit
• Advertising spend has historically been concentrated in 4Q, but this year it was booked from the start of the fiscal year. The plan calls for 4Q spend to be curbed versus prior years

Changes To Guidance

No revision to full-year consolidated guidance. Revenue of JPY 323,000M, net revenue of JPY 55,900M, business profit of JPY 10,000M, and profit attributable to owners of parent of JPY 5,460M are all maintained. As the final year of Medium-Term Management Plan 2026, management reiterates its commitment to achieving both consolidated and business-level targets.

Commentary On Shareholder Returns

The FY10/2026 annual dividend forecast is unchanged at JPY 13.00 as a year-end dividend (versus JPY 8.00 actual in the prior year), with no revision to the dividend forecast. The record date for AGM voting rights and the year-end dividend has been changed from October 31 to November 30, and the company plans to hold its AGM in February each year going forward. There is no new policy disclosed on share buybacks; treasury shares stood at 855 at period-end.

Financial Position

Total assets and interest-bearing debt both expanded on the SPC Securities group acquisition and the strategic inventory build, pushing the ratio of equity attributable to owners of the parent down to 31.8%. Liquidity on hand remains at JPY 29.0B, and leverage is still within a manageable range.

Key Figures

Company materials (detailed balance sheet) disclose interest-bearing debt of JPY 39,325M. The table above is our estimate based on bonds and borrowings as reported in the earnings release.

Leverage Metrics

Disclosures Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• Baillie Gifford & Co.: 11.12%→12.12% (2026/02/16) - Holdings in client assets under discretionary investment management contracts; no material proposal actions
  Amendment Report No.9
• Ryo Higuchi / GGA LLC (joint holders): 37.07%→36.71% (2026/02/09) - Off-market disposal following GGA's exercise of a transfer option. Holding purpose is stable ownership for management participation
  Amendment Report No.55
• Ryo Higuchi / GGA LLC (joint holders): 36.71%→36.71% (2026/03/24) - Filed due to a change of address of a large shareholder; no change in ownership ratio
  Amendment Report No.56
• Ryo Higuchi / GGA LLC (joint holders): 36.71% (2026/06/04) - Amendment Report No.57 filed on June 3, 2026 was withdrawn and corrected on the grounds that no filing obligation was triggered
  Amendment Report No.57 and Withdrawal/Correction
• No large-shareholding filings aimed at shareholder proposals or material proposal actions were identified over the past year