GMO Pepabo, Inc.
3633・Standard Market・Information & Communication
Business
GMO Pepabo, under its mission to "increase humanity's output," operates three businesses—Domain & Rental Server (Hosting) Business, EC Support Business, and Handmade Business—and is listed on the TSE Standard Market. The company provides low-cost, high-functionality web services such as "Lolipop!", "MuuMuu Domain", "Colorme Shop", "SUZURI", and "minne" to a broad customer base ranging from individual creators to small and medium-sized enterprises. As a consolidated subsidiary of the GMO Internet Group, it has built a solid brand in the internet infrastructure domain since its founding in 2003. In September 2025, it transferred its Financial Support Business (FREENANCE), clarifying its focus on the three core businesses.
Business Model
The core Hosting Business generates recurring, stock-type revenue through monthly and annual subscription fees for rental servers and domains, with low churn producing stable cash flow. The EC Support Business combines the monthly-fee Colorme Shop with SUZURI, which operates on a merchandise sales distribution-fee model. In the Handmade Business, minne employs a hybrid model of distribution fees and subscriptions (minne PLUS). The company adopts a structure that reallocates stable earnings toward new businesses and AI investment.
Company Strengths
The Hosting Business achieved a segment profit margin of 30.7% (net sales of ¥6,206 million, profit of ¥1,904 million). Recurring revenue from monthly subscriptions with a low churn rate generates stable cash flow, and operating cash flow for FY2025 secured ¥1,443 million.
Following the August 2024 price revision for Lolipop!, ARPU rose to ¥543 (up 3.8% year on year). Colorme Shop also saw continued migration toward higher-priced premium plans, with ARPU for monthly paid plans reaching ¥6,901 (up 18.1% year on year).
At SUZURI, operational efficiency improvements and reduced promotion costs achieved through AI utilization expanded EC Support Business segment profit to ¥962 million (up 21.0% year on year). The in-house research organization "Paperboy Research Institute" has implemented LLM and vector search technologies in minne and SUZURI, contributing to service differentiation.
ENVALITH's Perspective
Performance Trend
Over the past five fiscal periods, revenue peaked at ¥11,880 million in FY2021, then declined to ¥10,531 million in FY2022, before flattening out in the ¥10,900 million range thereafter. In FY2023, the company fell into the red with an operating loss of ¥341 million and a net loss of ¥629 million, but performance recovered from FY2024 onward, improving to operating profit of ¥933 million and net profit of ¥878 million in FY2025. In Q1 of FY2026 (ending December 2026), revenue was ¥2,614 million (down 4.8% year on year) and operating profit was ¥255 million (down 23.8% year on year), representing a decline from the prior year, but this was due to the deconsolidation of the Financial Support Business and the impact of a one-time gain in the same period of the previous year. The full-year forecast remains unchanged at revenue of ¥11,000 million and operating profit of ¥1,050 million, and the underlying strength of the core business is on an improving trend.
Growth Strategy
Enhancing the value of the recurring revenue base and making strategic investments in new AI-driven services
In January 2026, the company implemented a price revision for "Lolipop!", achieving a customer unit price of ¥558 (up 4.3% year on year). The decline in the number of contracts was offset by the rise in unit price, resulting in year-on-year increases in both segment revenue and profit. The company is pursuing continuous price optimization and plan restructuring to maximize revenue.
Anticipating a world premised on the use of AI agents, the company has begun investing in new AI-related services built on the "Lolipop!" platform. Related expenses have increased since the first quarter of FY2026 (ending December 2026), but the high profit margin of the Hosting Business is absorbing this investment. The aim is to achieve medium- to long-term differentiation and acquire new customers.
The company is promoting a shift in contracts toward higher-priced plans such as the "Premium Plan," and the customer unit price for monthly paid plans rose to ¥7,375 (up 13.0% year on year). Although the number of contracts declined to 47,504 (down 4.1% from the end of the same period the previous year), the shift toward a higher-margin revenue mix is progressing.
Through the ad-viewing-linked billing "support feature" launched in July 2025, the number of creators/brands expanded to 970,000 (up 3.8% from the end of the same period the previous year). However, the gross merchandise value (GMV) declined 18.9% year on year in the first quarter of FY2026 (ending December 2026), and it remains a challenge whether the revenue contribution from the new feature can offset the decline in GMV.
New services such as GMO Sokuresu AI and Alive Studio posted revenue of ¥20 million, up 724.7% year on year. While the segment recorded a loss of ¥38 million, reflecting the current stage of upfront investment, the company is developing new business areas in a manner consistent with the group strategy of providing new AI-driven services.
Last updated: July 17, 2026