Dependence on sales agencies and the impact on acquisition volume and commissions

「The company has continued to streamline its relationship with the specified agency, and the agency’s share of revenue from the restaurant support services business has already declined to approximately 0.5%. In addition, as the company is improving sales productivity, signs of a sustained increase in restaurant support services revenue are beginning to emerge, particularly in the direct sales channel.」

「The company has continued to streamline its relationship with the specified agency, and the agency’s share of revenue from the restaurant support services business has already declined to approximately 0.7%. In particular, signs of a sustained increase in restaurant support services revenue are beginning to emerge in the direct sales channel.」

「Under these circumstances, the number of Omise Members under the fixed-price and usage-based plans in the food-service support business increased from 7,003 to 7,155 during the interim accounting period from October 2024 to March 2025, as the Company made progress in removing stores acquired through certain agencies that had continued to have high cancellation rates.」

「The company has continued to streamline its relationship with the specified agency, and the agency’s share of revenue from the restaurant support services business has already declined to approximately 4%. In addition, revenue from the restaurant support services business excluding the specified agency has continued to trend upward on a net basis, and the company has continued measures to improve LTV (*), including increasing the sales mix of higher-priced products. Signs of a net increase in revenue from the restaurant support services business are therefore beginning to emerge.」

「The revenue mix attributable to that agency within FRM has already declined to just under 10%. In addition, revenue from FRM excluding the specified agency increased by approximately 15% year on year in the fourth quarter of the current fiscal year, and the company has continued measures to improve LTV, including increasing the sales mix of higher-priced products. Signs of a net increase in FRM business revenue are therefore beginning to emerge.」

「As a result, revenue from the FRM business, including the specified agency, has continued to decline because of that agency’s high churn rate. However, revenue has continued to trend upward on a net basis in the priority agency and direct sales channels, excluding that agency, since the current fiscal year.」

「With respect to cancellations, irregular cancellations due to restaurant closures and other factors occurred among trial contracts for large corporate customers, including izakaya chains, and certain agencies had high cancellation rates. As a result, the number of participating restaurants declined by 262 from the end of the previous fiscal year to the end of the first-quarter accounting period, to 6,659.」

「Although sales of the Takeout Plan temporarily increased during the COVID-19 pandemic, its churn rate has recently remained high compared with other plans. We plan to improve productivity in the agency channel by curbing sales of the Takeout Plan, increasing the sales mix of plans with higher LTV (*), and reviewing our relationships with certain agencies whose churn rates are higher than those of other agencies.」

「As a result of this impact, the average number of newly participating stores per month under the Fixed Store Membership Plan was 327 during the third-quarter cumulative period from October 2021 to June 2022, which remained below the normal level of 500.」

「Although the number of new participating stores gradually increased from October through December following the lifting of the state of emergency at the end of September 2021, restaurants’ willingness to invest in promotions declined after the Priority Preventive Measures to Prevent the Spread of Disease were reapplied in January 2022, causing the number of new participating stores to trend downward again. As a result, the average number of newly participating stores per month was 321 during the second-quarter cumulative period from October 2021 to March 2022.」

「For FRM (short for Fan Relationship Management), the average number of newly participating stores per month was 329 during the first-quarter cumulative period from October to December 2021. Given that the average number of new participating stores in a normal period is approximately 500 per month, this indicates that restaurants’ willingness to invest in promotions was still recovering, as the outlook for COVID-19 remained uncertain.」

「For FRM, the number of new participating restaurants was inevitably affected from January 2021 onward by repeated declarations of a state of emergency and priority preventive measures, resulting in a monthly average of approximately 392 new participating restaurants during the fiscal year.」

「For FRM, the repeated declarations of a state of emergency and priority preventive measures had a certain impact on the number of new participating restaurants during the second-quarter accounting period and the current third-quarter accounting period.」

「Although the state of emergency declared in January 2021 had a certain impact on the number of new participating paying restaurants during the second-quarter accounting period, the monthly average number of new participating restaurants was approximately 470 during the cumulative second-quarter period from October 2020 to March 2021.」

「FRM, short for Fan Relationship Management, saw the monthly average number of newly acquired paying restaurants fall to approximately 300 from May to June 2020, during the previous fiscal year, due to sales agencies suspending operations and other effects of COVID-19, based on sales activity in April and May 2020. However, acquisition recovered steadily from July onward, reaching a monthly average of approximately 630 during the cumulative first-quarter period from October to December 2020.」

「If sales agencies scale back or withdraw from handling the company's FRM services for business reasons, causing the acquisition of paying restaurants to slow, or if the company is forced to increase the commission rates it pays sales agencies to maintain and acquire paying restaurants, this will affect the company's business, results of operations and financial position.」