freee K.K. (4478) Q1 2025 earnings summary

Executive summary

• Achieved first-ever quarterly break-even with adjusted operating profit of JPY 480MM in Q1 FY2025.6, reversing a prior year loss, driven by revenue growth, customer base expansion, and resumed software capitalization.

• Corporate segment reached 200k paying customers and ARR exceeded JPY 20Bn, supported by strong accounting firm channel momentum.

• ARR for Platform business increased 28.1% YoY to JPY 27.9Bn, with paying customers up 19.4% to 547,145 and ARPU up 7.3% to JPY 51,105.

• Pricing revision for corporate customers progressing well, with churn lower than expected and positive impact on ARR.

• Net profit attributable to owners was JPY 169MM; basic EPS improved to JPY 2.90 from a loss of JPY 39.49 YoY.

Financial highlights

• Q1 FY2025.6 revenue rose 29.0% YoY to JPY 7,376MM; ARR reached JPY 27.9Bn, up 28.1% YoY.

• Gross profit was JPY 6,096MM with a gross margin of 82.7%.

• Adjusted operating profit margin improved by 40.0 pts YoY to 6.5%.

• Ordinary profit was JPY 163MM, compared to a JPY 2,126MM loss in the same quarter last year.

• Number of paying customers grew 19.4% YoY to 547K; ARPU increased 7.3% YoY to JPY 51.1K.

Outlook and guidance

• FY2025.6 revenue expected to grow 30.0% YoY to JPY 33,060MM.

• Adjusted operating profit for FY2025 is projected between JPY 1MM and JPY 1,000MM, with a margin of 0.0% to 3.0%.

• Adjusted free cash flow expected to reach break-even in FY2025.6, shifting to cash generation from operations.

• No dividend is planned for FY2025.

• Long-term targets: gross margin 80–85%, adjusted OP margin 20–30%, and revenue over JPY 50Bn by FY2027.6.