ENVALITH
フリー株式会社 logo

freee K.K.

4478・Growth Market・Information & Communication

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フリー株式会社 logo
freee K.K.4478

Business

freee K.K. operates under the mission "Making small businesses the star of the show," providing an integrated cloud ERP for sole proprietors and corporations with 1,000 or fewer employees. Its core products are freee Kaikei (freee Accounting), released in 2013, and freee Jinji Roumu (freee HR), released in 2014. Building on its accounting and HR foundation, the company has expanded its product lineup to include freee Sign (e-signatures), freee Hanbai (sales management), freee Card Unlimited (financial services), and others. As of the end of FY2025 (ended June 2025), the company had 606,533 paying subscriber companies and ARR of ¥34,393 million, establishing itself as the market leader in the cloud accounting and HR software market.

Business Model

The company employs a stock-type revenue model in which subscription (recurring billing) revenue accounts for over 90% of sales. Its structure grows ARR along two axes: expanding the number of paying customer companies and raising ARPU (average revenue per user). The average monthly churn rate for FY2025 (ended June 2025) remained low at approximately 1.1%, with new customer acquisition channels via accounting firms and cross-selling to existing customers driving revenue expansion.

Company Strengths

At the end of FY2025 (ended June 2025), ARR stood at ¥34,393 million (up 31.8% year on year), the number of paying subscriber companies reached 606,533 (up 13.9% year on year), and ARPU was ¥56,704 (up 15.8% year on year), with user base expansion and unit price growth progressing simultaneously. Compared with the end of FY2021 (ended June 2021), ARR has expanded approximately 3.1-fold, and compounding growth continues.

freee Kaikei (freee Accounting) adopts an integrated design that unifies upstream processes such as invoice issuance, workflow, and expense settlement. Because data is centrally consolidated, unlike single-function software, switching costs are high, and the average monthly churn rate in FY2025 (ended June 2025) remained low at approximately 1.1%. The subscription revenue ratio has also been maintained at over 90%.

Having recorded operating losses through FY2024 (ended June 2024), the company turned profitable in FY2025 (ended June 2025) with operating profit of ¥610 million and adjusted operating profit of ¥1,885 million. The gross profit margin reached 82.2% (gross profit of ¥27,361 million divided by revenue of ¥33,270 million), while adjusted selling, general and administrative expenses were reduced from ¥28,554 million in the previous fiscal year to ¥25,475 million.

ENVALITH's Perspective

Cumulative sales for the first three quarters of FY2026 (ending June 2026) reached ¥30,843 million (up 29.3% YoY), maintaining high growth, while operating profit fell sharply to ¥622 million (down 47.4% YoY), ordinary profit to ¥357 million (down 65.5% YoY), and quarterly net profit attributable to owners of the parent to ¥328 million (down 67.5% YoY). Adjusted operating profit also declined YoY to ¥1,797 million (down 15.0%), and it warrants close attention that growth investments (expanded software investment, with a sharp rise in depreciation expense from ¥169 million in the same period last year to ¥727 million this period) and rising costs associated with the expansion of financial services are squeezing profits.

The full-year forecast of ¥41,930 million in sales (up 26.0% YoY) and ¥2,520 million in adjusted operating profit (up 33.7% YoY) remains unchanged from the upward revision announced on February 12, 2026. Cumulative sales for the first three quarters represent progress of approximately 73.6% against the full-year forecast, which is generally on track. However, progress on adjusted operating profit stands at only approximately 71.3%, premised on a concentration of profit in the fourth quarter (the busy season for final tax returns). The success of customer acquisition measures targeting sole proprietors during the final tax return season (such as the Input Omakase Plan and the freee Shinkoku app) will be a key variable for achieving the full-year target.

Due to the expansion of the credit card business (advance payments of ¥6,375 million, up ¥2,392 million from the end of the previous fiscal year) and the factoring business (purchased receivables of ¥1,534 million, newly recorded from zero at the end of the previous fiscal year), short-term borrowings have swelled to ¥12,950 million (up ¥3,350 million from the end of the previous fiscal year). Additionally, the allowance for doubtful accounts within current assets has surged to ¥1,059 million (from ¥34 million at the end of the previous fiscal year), raising concerns about the emergence of credit risk associated with the expansion of financial services. As a subsequent event, a reduction of capital without consideration (from ¥27,890 million to ¥12,890 million) is planned, aimed at securing flexibility in capital policy, but this change in financial structure warrants continued attention.

Growth Strategy

Sustained growth is being pursued across four axes: expansion of the user base, ARPU improvement, financial services, and AI utilization

Strengthening new customer acquisition channels via accounting firms, and rolling out measures to acquire sole proprietors during the tax filing season (such as the Nyuryoku Omakase Plan). As of the end of Q3 FY2026 (ending June 2026), the number reached 712,265 (up 13.6% year on year), continuing to expand.

Promoting cross-selling of freee Card Unlimited, factoring, freee Jinji Roumu (freee HR), and other services to the existing customer base. ARPU maintained an upward trend, reaching ¥59,647 (up 8.5% year on year), driving growth in Platform ARR (up 23.2%).

Expanding the credit card business (advances of ¥6,375 million) and the factoring business (purchased receivables of ¥1,534 million). Financial services also contribute to the expansion of transaction ARR, but credit risk management, including the sharp increase in allowance for doubtful accounts (¥1,059 million), remains a challenge.

Released the Nyuryoku Omakase Plan, which uses AI and operators to handle data entry and journal entries on customers' behalf, as well as "freee Kakutei Shinkoku" (freee Tax Filing), a ChatGPT app leveraging over 10,000 consultation cases from tax accountants. Aiming to improve customer operational efficiency and differentiate products through the introduction of AI features.

Pursuing diversification of the customer base and higher unit prices through the expansion of industry-specific solutions, including the launch of freee for Iryo (freee for Medical) for medical corporations and the resolution to acquire Logikura, a cloud logistics platform for retail and distribution, via M&A.

Last updated: July 17, 2026