freee K.K. (4478) Q4 2024 earnings summary

Executive summary

• FY2024.6 revenue reached JPY25.4Bn, up 32.3% YoY, in line with guidance, driven by strong Mid segment growth and customer acquisition via accounting firms.

• Paying customers exceeded 530K, with 532,637 at year-end, up 18.1% YoY.

• Investments in growth and profitability were balanced, with improved cross-selling and product lineup.

• Adjusted operating loss improved to JPY7,562MM, above guidance, with a positive trend expected to continue into FY2025.6.

Financial highlights

• Annual Recurring Revenue (ARR) rose 26.8% YoY to JPY26.0Bn; Corporate segment ARR up 30.1% YoY.

• Gross profit was JPY20,991MM with a margin of 82.5%.

• Adjusted operating profit margin improved by 7.7 pts YoY to -29.7%.

• Subscription revenue accounted for over 90% of total revenue.

• Churn rate remained low at 1.2% overall and 0.6% for corporates.

Outlook and guidance

• FY2025.6 revenue is projected to grow 30% YoY to JPY33.06Bn.

• Adjusted operating profit margin expected to reach break even or up to 3% for the full year.

• Adjusted free cash flows are expected to be positive for the full year, with seasonality in cash flows.

• SG&A as a percentage of revenue is expected to improve, with headcount rising to 1,800–1,900.