Performance trends of Clear＜2998＞

Performance trend for the year ending March 2024.

In the consolidated results for the fiscal year ending March 2024, sales were JPY 2.1044 billion (+28.0% YoY), gross profit was JPY 356.2 billion (+61.4% YoY), operating profit was JPY 98.0 billion (+79.1% YoY), ordinary profit was JPY 94.1 billion (+89.7% YoY), and net income attributable to parent company shareholders was JPY 64.7 billion (+92.6% YoY). Sales showed an increase of almost 30% YoY, and all profits achieved significant growth. In particular, the gross profit, which is a KPI heavily emphasized by CREAL <2998>, showed a significant increase of over 60% YoY, exceeding the growth rate of sales. This was mainly due to the shift from bulk sales to individual sales in CREAL, which greatly improved profit margins, as well as the nearly two-fold increase in transaction volume of CREAL PRO. As a result, even with proactive growth investments such as advertising and personnel expenses, all profits showed significant growth. With regards to KPIs, the cumulative number of investors was 63,879 (+56.3% YoY) and the cumulative GMV was JPY 476.2 billion (+72.8% YoY), showing steady progress.

2. Service Performance Trends

CREAL had sales of JPY 1.0974 billion (+7.3% YoY) and gross profit of JPY 143.7 billion (+48.9% YoY). Previously, we had set our business plan assuming bulk sales of multiple properties that would be redeemed by real estate funds invested by institutional investors. However, due to the generally sluggish activity of foreign real estate funds, we revised our sales plan and decided to sell properties individually. As a result, the gross profit margin increased to 13.1% (+3.7 points YoY), leading to a significant increase in gross profit that surpassed the growth rate of sales.

CREAL PRO had sales of JPY 0.2582 billion (+87.0% YoY) and gross profit of JPY 1.272 billion (+82.8% YoY). Asset management fees for funds that included multiple domestic residences for overseas institutional investors, brokerage fees for properties for high-net-worth individual investors, and sales of properties held by the company contributed significantly to the substantial increase in revenue and profit. CREAL PRO's coverage of large properties has also accelerated due to CREAL's increased exposure in news sites and institutional magazines.

CREAL PB had sales of JPY 0.7163 billion (+56.5% YoY) and gross profit of JPY 63.7 billion (+50.7% YoY). By effectively utilizing DX in sales methods, the number of sales of used one-room apartments (residences) in central Tokyo increased significantly, achieving a significant increase in revenue and profit that demonstrated the high demand for real estate investments. However, CREAL PB's gross profit margin decreased from 9.2% to 8.9% due to intense competition, and we believe that it is becoming increasingly difficult to procure properties of excellent quality in prime locations.

3. KPI Trends

As mentioned earlier, CREAL's gross profit is comprised of GMV x Take Rate. Among these, Take Rate consists of a fixed fee comprised of composition fees, operational fees, and redemption fees, as well as a variable fee comprised of profit sharing from capital gains on externally sold funds. The Take Rate has been set at 8-10% based on past performance. While GMV is based on the value at procurement (at the time of fund conclusion), sales revenue and gross profit for CREAL are recorded at the time of settlement of transactions (at the time of property sales), causing a lag of about one year for most funds from GMV agreement to gross profit recognition. Therefore, GMV is an important KPI that shows the scale of CREAL's service and is a leading indicator for gross profit. On the other hand, gross profit for CREAL PB is calculated by multiplying sales revenue by profit margin, and for CREAL PRO, most of the sales revenue becomes gross profit due to its fee-based business. CREAL, our main product, accounts for 40.3% of our gross profit and contributes significantly to our profit growth. As such, we place particular emphasis on GMV and the number of investors, as well as repeat investment rate, gross profit, and other KPIs.

The KPI that the company places particular emphasis on, GMV, has grown significantly to JPY 476.2 billion (+72.8% YoY) (acquired GMV for March 2024 was JPY 20.07 billion), and the cumulative number of investors, an important element underlying GMV, has also grown significantly to 63,879 (+56.3% YoY).

One of the important indicators in regard to GMV is the repeat investment rate for investors, which is called CREAL. It decreased 1.3 points compared to the same quarter last year to 88.5%, but still remained at a high level. Considering that the repeat investment rate depends on the investment ratio of new investors, it may decrease depending on the situation of acquisition campaigns for new investors. Nonetheless, the investment ratio by existing investors remains high, and it can be said that the acquisition of new investors is going well.

※ The percentage of investment amount of investors who have investment results in the past year to the GMV for the corresponding quarter.

Furthermore, CREAL has a revenue structure similar to a stable stackable type model, close to SaaS, as it has succeeded in acquiring users with a high loyalty who reinvested the same or more amount into the new fund even after fund operation ended. It is expected that the partnership with SBI Holdings will further strengthen and enable growth of GMV and the cumulative number of investors, resulting in a significant expansion of the loop of reinvestment plus new investment. We see CREAL as a service that encompasses both growth and stability, and as a growth driver for the entire company's business, it has high growth potential.

(Writer: FISCO analyst Tomoichi Murase)