SNS marketing support drives revenue growth, while gross profit growth trails sales growth

Revenue from the SNS marketing support business in the interim period was ¥1,242 million, up 16.3% year on year. At the end of the first quarter, revenue was already ¥644 million, up 13.1% year on year, indicating that revenue growth accelerated through the first half. The business accounted for approximately 64.9% of total revenue of ¥1,915 million, making SNS advertising and SNS operations consulting the main drivers of the current earnings recovery.

However, gross profit from the business was ¥317 million, up 4.9% year on year, below the 16.3% increase in revenue. Gross profit margin was approximately 25.5% based on a simple calculation. Since company-wide gross profit rose 27.6% year on year to ¥729 million, the key question for the SNS marketing support business is whether its project mix, outsourcing costs, personnel expenses and advertising media costs are suppressing margins.

The company attributes the revenue increase to the rollout of new SNS operations methods and expansion of its customer base. Supplementary materials disclose 128 clients, a 70% AI utilization rate for operations and a 2026 target annual ARPU of ¥31.918 million, but do not disclose actual ARPU, the revenue breakdown between existing and new customers, or retention and churn rates per customer. In the next results, it will be necessary to distinguish whether the increase in customers is accompanied by higher prices or merely reflects an increase in the number of projects.

The earnings release provides revenue by business category, but does not show operating profit or contribution profit for the SNS marketing support business. In the third quarter, it will be necessary to check not only whether revenue can maintain double-digit year-on-year growth, but also the gross profit margin, outsourcing and production-related costs, actual ARPU and updated client numbers, to determine whether growth is translating into profit.