Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

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<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee KK (4478 JP)</a> reported 3QFY06/2025 results today. Revenue for the quarter was marginally below consensus despite increasing 27% YoY, while GAAP OP beat consensus by a huge margin.</li>
<li>Due to the tax filing season, freee’s S&amp;M costs tends to be higher during 3Q which led to slightly lower Adj. OP during the quarter. Price revisions have improved ARPU.</li>
<li>Freee’s share price has been up more than 40% YTD, strengthening profitability and its solid business model vs <a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> mean there is further upside.</li>
</ul>



Freee KK (4478 JP) reported 3QFY06/2025 results today. Revenue for the quarter was marginally below consensus despite increasing 27% YoY, while GAAP OP beat consensus by a huge margin.
Due to the tax filing season, freee’s S&amp;M costs tends to be higher during 3Q which led to slightly lower Adj. OP during the quarter. Price revisions have improved ARPU.
Freee’s share price has been up more than 40% YTD, strengthening profitability and its solid business model vs Money Forward (3994 JP) mean there is further upside.


High Conviction 2025 - Freee: Robust Business Model Supports Stable Margins; Further Upside Ahead

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<li>
<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee KK (4478 JP)</a> reported 2QFY06/2025 results on Friday which beat consensus estimates. The company also reported a second consecutive quarter of operating profits in 2Q.</li>
<li>Despite cutting down significantly on selling and marketing, freee has managed to maintain growth. The company also has revised upwards its OP guidance and expects positive adj. free cashflows.</li>
<li>Though freee’s share price has moved up 35% YTD, strengthening profitability and its solid business model vs <a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> should further drive share price up.</li>
</ul>



Freee KK (4478 JP) reported 2QFY06/2025 results on Friday which beat consensus estimates. The company also reported a second consecutive quarter of operating profits in 2Q.
Despite cutting down significantly on selling and marketing, freee has managed to maintain growth. The company also has revised upwards its OP guidance and expects positive adj. free cashflows.
Though freee’s share price has moved up 35% YTD, strengthening profitability and its solid business model vs Money Forward (3994 JP) should further drive share price up.


High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance

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<li>
<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee KK (4478 JP)</a> offers cloud-based online accounting and HR/Payroll software to small and medium businesses (SMBs) in Japan. The company operates a subscription-based revenue model.</li>
<li>Freee reported its first-ever profits recently and we expect continued improvement in freee’s profitability driven by its strong business model vs MF whose business model has started to breakdown.</li>
<li>Freee’s current valuation multiples are cheap and there is significant upside to the current share price, hence we recommend making an entry.</li>
</ul>



Freee KK (4478 JP) offers cloud-based online accounting and HR/Payroll software to small and medium businesses (SMBs) in Japan. The company operates a subscription-based revenue model.
Freee reported its first-ever profits recently and we expect continued improvement in freee’s profitability driven by its strong business model vs MF whose business model has started to breakdown.
Freee’s current valuation multiples are cheap and there is significant upside to the current share price, hence we recommend making an entry.


2025 High Conviction: Freee KK – Becoming Free From Losses; Significant Upside

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<li>
<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee KK (4478 JP)</a> reported 1QFY06/2025 results which saw the company generating its first-ever Adj. operating profit, earlier than we expected.</li>
<li>The company has begun capitalising its software assets (decline in R&amp;D costs as % of revenue) and this coupled with fall in S&amp;M costs have contributed to profits.</li>
<li>The corporate paying customers surpassed more than 200k for the first time and we expect freee’s earnings to continue to improve going forward.</li>
</ul>



Freee KK (4478 JP) reported 1QFY06/2025 results which saw the company generating its first-ever Adj. operating profit, earlier than we expected.
The company has begun capitalising its software assets (decline in R&amp;D costs as % of revenue) and this coupled with fall in S&amp;M costs have contributed to profits.
The corporate paying customers surpassed more than 200k for the first time and we expect freee’s earnings to continue to improve going forward.


Freee 1Q: Turns Profitable Sooner Than We Expected

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<li>
<a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a><a href="https://www.smartkarma.com/entities/moneta-money-bank-as-91531fc9-8a67-43d7-8182-cf45abd5ebca" target="_blank" data-smartkarma-citation="entities:28372:1" rel="noopener"></a> MF’s recent earnings was no surprise to us as we continued to highlight that the company’s business model is far inferior to its counterpart freee. </li>
<li>The last 2-3 quarterly results have made that discrepancy clear and MF’s non-BO SaaS businesses are only dead weight and have helped conceal weaknesses of its business model.</li>
<li>MF’s share price is down 19.3% YTD and think the market has finally come to terms that MF is losing ground whereas freee has managed to turn around its profitability.</li>
</ul>



Money Forward (3994 JP) MF’s recent earnings was no surprise to us as we continued to highlight that the company’s business model is far inferior to its counterpart freee. 
The last 2-3 quarterly results have made that discrepancy clear and MF’s non-BO SaaS businesses are only dead weight and have helped conceal weaknesses of its business model.
MF’s share price is down 19.3% YTD and think the market has finally come to terms that MF is losing ground whereas freee has managed to turn around its profitability.


Money Forward: Business Model Begins to Breakdown

Japan

freee K.K. develops software products. The Company produces cloud based accounting softwares, automatic online accounting systems, and other products. freee provides its services throughout Japan.

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Freee KK (4478 JP)

High Conviction 2025 - Freee: Robust Business Model Supports Stable Margins; Further Upside Ahead

freee reported strong results with profits. As we expected, seasonally higher S&M spending for tax filing led to drop in profits. Share price is up...

Shifara Samsudeen, FCMA, CGMA

High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance

freee's 2Q earnings were strong with upward revision to OP guidance. Share price has been up 35% YTD driven by its strengthening profitability...

Shifara Samsudeen, FCMA, CGMA

2025 High Conviction: Freee KK – Becoming Free From Losses; Significant Upside

Freee has proved that its business model is solid vs Money Forward by beginning to make profits without compromising on growth. freee's shares are...

Shifara Samsudeen, FCMA, CGMA

Freee 1Q: Turns Profitable Sooner Than We Expected

The key highlight of freee's 1Q results was the first-ever Adj. operating profits for the company, earlier than we expected. The Corporate Paying...

Shifara Samsudeen, FCMA, CGMA

Money Forward: Business Model Begins to Breakdown

Money Forward's recent earnings was no surprise to us and it highlights its inferior business model compared to freee, with non-BO SaaS businesses...

Shifara Samsudeen, FCMA, CGMA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

High Conviction 2025 - Freee: Robust Business Model Supports Stable Margins; Further Upside Ahead

freee reported strong results with profits. As we expected, seasonally higher S&M spending for tax filing led to drop in profits. Share price is up...

Shifara Samsudeen, FCMA, CGMA

High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance

freee's 2Q earnings were strong with upward revision to OP guidance. Share price has been up 35% YTD driven by its strengthening profitability...

Shifara Samsudeen, FCMA, CGMA

2025 High Conviction: Freee KK – Becoming Free From Losses; Significant Upside

Freee has proved that its business model is solid vs Money Forward by beginning to make profits without compromising on growth. freee's shares are...

Shifara Samsudeen, FCMA, CGMA

Freee 1Q: Turns Profitable Sooner Than We Expected

The key highlight of freee's 1Q results was the first-ever Adj. operating profits for the company, earlier than we expected. The Corporate Paying...

Shifara Samsudeen, FCMA, CGMA

Money Forward: Business Model Begins to Breakdown

​Money Forward's recent earnings was no surprise to us and it highlights its inferior business model compared to freee, with non-BO SaaS businesses...

Shifara Samsudeen, FCMA, CGMA

Money Forward's recent earnings was no surprise to us and it highlights its inferior business model compared to freee, with non-BO SaaS businesses...