Kubell (4448) Q3 2024 earnings summary

Executive summary

• Revenue for the nine months ended September 30, 2024 rose 34% YoY to JPY6,184mn, with a turnaround to profitability at all levels, including net income of JPY135mn compared to a loss of JPY675mn a year earlier.

• The main Chatwork segment drove growth, with net revenue up 35.2% and segment profit of JPY174mn, reversing a prior-year loss.

• EBITDA and operating profit exceeded previous forecasts due to cost controls and price revisions.

• The security segment saw revenue decline 29.9% and profit fall 73.5%, and will be discontinued by year-end 2024.

• Paying IDs rose by 14,000 quarter-over-quarter, with churn rates trending downward and ARPU up 17.3% YoY.

Financial highlights

• Q3 revenue: JPY2,189mn (+29.6% YoY, +6.3% QoQ); Chatwork segment revenue: JPY2,157mn (+30.7% YoY).

• EBITDA for the nine months was JPY611mn, compared to negative JPY226mn in the prior year.

• Operating profit reached JPY184mn, reversing a loss of JPY670mn YoY.

• Gross profit increased 45.4% YoY, and gross margin improved by 7.8 points to 71.2%.

• Net income: JPY110mn (+60.9% QoQ); basic EPS for nine months: JPY3.30 (vs. -JPY16.84 prior year).

Outlook and guidance

• FY2024 revenue forecast revised to JPY8,430mn (+30% YoY); EBITDA forecast at JPY761mn, operating profit at JPY35mn.

• Gross profit to JPY5,821mn (+40.2% YoY); net loss narrowing to JPY58mn.

• Temporary operating loss expected next quarter due to non-cash share-based payment expenses; EBITDA unaffected.

• Medium-term plan targets JPY15bn revenue and 10-15% EBITDA margin by FY2026, with 30%+ CAGR in revenue.

• Management expects operating income to exceed the upper end of previous guidance, driven by ARPU growth and expansion of peripheral services.