Makuake,Inc. Hits Medium-Term Plan Targets a Year Early; Shifts to Project Owner-Based KPIs and the PDG Cycle in Pursuit of Recurring Growth

Summary

FY9/26 revenue rose to JPY 5,944M (+29.9%) and operating income to JPY 881M (+97.2%), both record highs since the company's founding. The company hit its current medium-term plan targets for FY9/27, revenue of JPY 5.2B and operating income of JPY 700M, a year ahead of schedule. Management noted that results included a boost from ultra-large projects of more than JPY 1B (a low double-digit multiple of JPY 100M). It cautioned that treating the headline figures as underlying earnings power would be optimistic. The company has changed its primary KPI from a project-based to a project owner-based measure. Building recurring revenue through the PDG cycle will be the top priority of the new medium-term plan.

Key Points (Earnings Takeaways and Growth Initiatives)

• Management Strategy and Market View
  • The company positions the PDG cycle, which links Plan, Debut and Growth, as a new distribution model not offered by the major e-commerce marketplaces.
  • It aims to move beyond one-off relationships that end after a single debut. The goal is to contribute continuously to the growth of its clients' product businesses.
  • The weak yen and high raw material costs persist, but management judges the direct impact to be minor. Consumers remain cost-conscious overall, yet they are still willing to spend on products that improve their daily lives.
  • Ad placement agency revenue is booked on a gross basis, which dilutes gross margin. Management prioritizes growth in absolute gross profit and operating income over margin percentages.
• Recent Business Progress and Drivers
  • 4Q GMV was the second-highest quarterly level on record. Management attributed this mainly to its ability to win strong home appliance/gadget projects on a consistent basis.
  • 3Q included ultra-large projects of around JPY 900M and JPY 600M. Even after these dropped off in 4Q, large projects held up average project size, and management highlighted improved repeatability in winning such deals.
  • In 4Q, a recovery in take rate and growth in ad placement agency revenue limited the revenue decline relative to the QoQ drop in GMV.
  • 4Q operating income came in slightly ahead of plan. The company channeled spending into one-off personnel costs such as bonuses, offline events and experimental brand advertising.
• Key Strategic Initiatives and Changes
  • The primary KPI is shifting from active projects × average project size to number of project owners × GMV per project owner. Longer term, the company aims to evaluate LTV based on the number of companies using the PDG cycle.
  • The company will pay its first-ever dividend: a year-end dividend of JPY 14 per share (JPY 178M in total). The policy uses DOE of 3% as a benchmark and targets ROE above the mid-10% range over the medium term.
  • The board approved a share buyback of up to 510,739 shares or JPY 600M. Management described buybacks as an option it may exercise flexibly going forward, for example when the share price diverges from intrinsic value.
  • Under the co-CEO structure, Mr. Kiuchi is slated to become President following the December 17 AGM. Mr. Nakayama will commit to completing the PDG cycle, with a focus on the Growth domain.

Outlook and Strategy

• FY9/27 company guidance is presented as ranges: GMV of JPY 23,000–26,800M, revenue of JPY 6,000–7,000M and operating income of JPY 800–1,000M.
• Management views even the low-end GMV of JPY 23B as solid underlying growth once the upside from ultra-large projects is stripped out.
• The top of the range assumes the company wins large projects in focus categories, builds up volume in lower-ticket categories and secures repeat business from project owners.
• To expand the project owner base, the company will roll out know-how developed in home appliances/gadgets to other categories. It will also streamline listing preparation to improve the profitability of lower-ticket projects.
• To raise GMV per project owner, the company will standardize end-to-end support. This runs from pre-launch sales planning through to post-campaign transition to Makuake STORE.
• The new medium-term plan covering FY9/27–FY9/29 is due to be released within the calendar year. It will set out earnings targets, PDG rollout and KPIs, and a corporate value enhancement policy including capital policy.

Positive Factors

• Full-year GMV reached JPY 22,980M (+30.2%). GMV, revenue and operating income all exceeded initial plans, marking a second consecutive year of strong top- and bottom-line growth.
• 4Q ad placement agency revenue was JPY 357M (+58.0% YoY, our estimate). The service is improving results for project owners while driving revenue growth.
• 4Q support purchase value per project owner rose to JPY 4.024M (+25.4% YoY, our estimate), driving GMV growth.
• The platform has become an established launchpad for new products from major domestic and overseas companies, including XGIMI, HUAWEI, LG, Kirin and Kyocera.
• The hands-on pop-up "Sawareru Makuake" drew 24,792 visitors, roughly 500% of plan versus an initial expectation of several thousand. This confirms room to expand offline touchpoints.
• Membership reached 3,625,434 (+11.9%), reflecting continued growth in the supporter base.

Concerns and Risks

• The business remains dependent on individual projects. Results swing significantly depending on whether a project brings in JPY 200M or JPY 1B, and management itself acknowledged the difficulty of forecasting.
• Overseas brands account for a large share of large home appliance/gadget projects. Listing activity is therefore exposed to FX and geopolitical developments.
• Unexpected security responses, such as the PHP-related vulnerability, could delay new feature development and the expansion of lower-ticket categories.
• Retention metrics weakened. The project owner repeat rate fell to 60.3% (-2.2pt) and the repeat support purchase rate to 71.7% (-4.5pt).
• Continued upfront investment, mainly in development personnel costs, means FY9/27 operating income guidance includes a decline of -9.3% at the low end.
• 4Q gross profit margin fell to 70.1%, down 2.3pt QoQ (our estimate), as ad placement agency revenue accounted for a higher share of the mix.

Performance Highlights

FY9/26 revenue was JPY 5,944M (+29.9%), operating income JPY 881M (+97.2%) and net income JPY 798M (+96.1%), achieving the medium-term plan targets one year early. On a standalone basis, 4Q revenue was JPY 1,552M (+26.4%) and operating income JPY 37M (+38.2%). SG&A was JPY 1,050M (+19.5%). Operating income declined QoQ due to roughly JPY 80M in one-off personnel costs and upfront investment.

Segment Performance

• 4Q GMV: JPY 5,965M (+27.8% YoY)
• 4Q Monthly Active Projects: 1,044 (-2.9% YoY)
• 4Q Monthly Average Project Size: JPY 1.83M (+30.2% YoY)
• 4Q Monthly Support Purchase Value: JPY 1,917M (+26.5% YoY)
• 4Q Take Rate: 28.6% (29.0% in the Prior-Year Period)
• 4Q Project Owners: 1,427 Accounts (+1.2% YoY, Our Estimate)
• 4Q New Project Launches: 1,384 (-2.7% YoY)
• 4Q Unique Visitors: 10,952,052 (+9.2% YoY)
• 4Q Number of Support Purchases: 296,075 (-7.2% YoY)

Q&A List

• Q

  You are targeting ROE above the mid-10% range using DOE of 3% as a benchmark. Is it fair to assume you will raise ROE efficiently through both profit growth and buybacks, and that DPS will therefore rise at a rapid pace for the time being?

  A

  Since we use DOE of 3% as the benchmark, we do not expect dividends to rise at quite such a rapid pace. That said, your thinking is very close to ours. Our base case is not only to optimize capital efficiency through shareholder returns, but also to strengthen the earning power of the business and grow profits accordingly. Buybacks will likely come at times when the share price diverges from intrinsic value. Having executed one for the first time, conducting buybacks at appropriate times is now among our options.

• Q

  Will the medium-term plan to be released at year-end give some indication of that pace?

  A

  We believe the medium-term plan will be able to provide a certain sense of it.

• Q

  Last year, operating income came in at JPY 800M against guidance of JPY 400M, even with increased upfront investment. This year's guidance is a range, but the upper end of JPY 1B versus the lower end of JPY 800M still looks conservative. Even if the guidance is more constructive than in prior years, are you still taking a conservative view on the emergence of large projects?

  A

  As I explained earlier, the structure is still active projects × average project size. We simply cannot predict whether a given project will bring in JPY 100M, JPY 200M, JPY 500M or even JPY 1B. One such project would be manageable, but if several emerge, results rise sharply; if none do, growth is more modest. To be candid, forecasting remains difficult. This structure will persist, but we want to dilute its impact by completing the PDG cycle. If more project owners stay with us, sell a single product for longer, or use our debut platform for multiple products in succession, volatility should fall below current levels. Completing that shift in the next medium-term plan is management's top priority. Please understand that, at present, there is still a gap between where we are and that goal.

• Q

  What does a change of President signify at a time when you have positive results to report? Only the planned change has been disclosed. Shouldn't you communicate its purpose and the new President's ambitions early? Perhaps you did not see it as a major event since the co-CEO structure continues, but I think this should be communicated as well.

  A

  We have run the co-CEO structure for two years since FY2025, and we are proud of how well it has worked. Over that time, some of our roles began to overlap. In fact, for the past two years, Mr. Kiuchi, the incoming President, has led execution across the company and driven our results. We therefore decided to hand him the role and title of President at this point, and I will devote somewhat less time and resources to that area. As a Representative Director with representative authority, I will continue to bear overall responsibility for management. Within that, I will focus on completing the PDG cycle framework. With Makuake, we have established a solid position in the pre-market (primary launch) distribution space. Next, I want to apply this founder's spirit to a broader market, namely the distribution structure as a whole, and complete the PDG cycle. In particular, building the general retail portion of Growth into a unique distribution channel is a top medium- to long-term priority for us, and I want to deepen my commitment there. We decided on this change of President to sharpen our areas of focus and divide roles accordingly. The new President has not yet taken office and will be formally appointed at the December 17 AGM. For that reason, we have deliberately refrained from major communications at this stage. We apologize if this has caused some concern or given an impression of weakness. We judged that the right time to communicate is a little later and have kept a low profile for now. Please look forward to what comes from December onward.

• Q

  Why do you need to acquire new projects in lower-ticket categories?

  A

  We debate the term "lower-ticket categories" internally as well. It refers to categories such as fashion accessories and food, where the likelihood of selling JPY 100M or JPY 1B right away is lower than in, say, home appliances. For users to enjoy the platform, stay engaged and want to return, we believe we need a diverse, wide-ranging product mix. Personally, the products I buy most repeatedly are food, mail-order sweets and alcoholic beverages. These are extremely important for keeping users engaged and entertained. We also went through a period of sustained losses, and turning the business around required selection and concentration, which led us first to higher-ticket categories. However, user retention and repeat visits also require lower-ticket categories. Our core mission, and the reason we were founded, is to create a place where new things can take flight and challenges are rewarded across a broad range of categories, not just a few. We believe the time has come when we can pursue that.

• Q

  How will you go about acquiring new lower-ticket projects?

  A

  We need to make it easier for project owners to list. We will also use AI and other tools in our own operations to deliver support more efficiently and at higher quality. Combining these two will increase the time and quality we can dedicate to each project owner. In this way, we want to expand lower-ticket categories and make Makuake a diverse, rich and engaging marketplace.

• Q

  Are there any downsides to increasing lower-ticket categories?

  A

  As a business, whether the economics work is important, and I believe that is the point of your question. To address it, we will pair a more listing-friendly environment for project owners with AI-driven improvements in support efficiency and quality.

• Q

  You noted that the ultra-large projects from 3Q dropped off. Why did 4Q average project size decline only 2.8% from 3Q?

  A

  The ultra-large projects did drop off, but fairly large projects continued to come in. As I mentioned, our ability to generate such projects has become highly repeatable. In 3Q, we had projects that sold JPY 900M and JPY 600M, while in 4Q we were able to grow large projects solidly. While none reached ultra-large scale, we lifted the overall level. You can think of it as improved repeatability in winning large projects.

• Q

  The low end of FY9/27 GMV guidance is JPY 23B. Excluding ultra-large projects, what level of growth are you assuming?

  A

  We will refrain from disclosing the specific size of FY9/26's ultra-large projects, but we estimate they contributed more than JPY 1B (a low double-digit multiple of JPY 100M). If you count them on the screen, you can see that projects of JPY 500M, JPY 600M and JPY 400M came one after another. As I said earlier, it is difficult to build projects of that scale into guidance; we can only factor in projects of up to around JPY 100M–200M. Netting that out, we estimate the upside from ultra-large projects amounted to more than JPY 1B (a low double-digit multiple of JPY 100M). Accordingly, we view even the low end of JPY 23B as reflecting substantial growth in underlying terms.