Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>
 Take profit ahead of 3Q: at ¥6,020, Money Forward has effectively reached our ¥6,030 DCF value. </li>
<li>
Strong results largely anticipated: HIRAC boosts headline EBITDA, while a guidance raise is increasingly priced into ~5x FY26E sales. </li>
<li>
Risk/Reward has shifted: limited valuation cushion makes protecting gains ahead of a potentially noisy 3Q print prudent.</li>
</ul>



 Take profit ahead of 3Q: at ¥6,020, Money Forward has effectively reached our ¥6,030 DCF value. 

Strong results largely anticipated: HIRAC boosts headline EBITDA, while a guidance raise is increasingly priced into ~5x FY26E sales. 

Risk/Reward has shifted: limited valuation cushion makes protecting gains ahead of a potentially noisy 3Q print prudent.


Money Forward (3994 JP) | Take Profit Ahead of 3Q. The Price Has Caught Up.

<ul>
<li>Core SaaS execution remains excellent, with record organic customer additions, 36% Corporate ARR growth while corporate churn remained below expectations. </li>
<li>The guidance upgrade is less impressive than it appears, as much of the EBITDA uplift reflects Finance one-offs and transaction revenue rather than higher recurring SaaS expectations. </li>
<li>Given stock +30% since Q1 results, we would fade the raise. Valuation at 3.6x NFY EV/Sales no longer cheap</li>
</ul>


Core SaaS execution remains excellent, with record organic customer additions, 36% Corporate ARR growth while corporate churn remained below expectations. 
The guidance upgrade is less impressive than it appears, as much of the EBITDA uplift reflects Finance one-offs and transaction revenue rather than higher recurring SaaS expectations. 
Given stock +30% since Q1 results, we would fade the raise. Valuation at 3.6x NFY EV/Sales no longer cheap


Money Forward (3994) | 2Q26 Review - Core SaaS Strong, but the Guidance Upgrade Is Lower Quality

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.

<ul>
<li>Freee reported 1QFY06/2026 results today. 1Q revenues increased 32.1% YoY to ¥9.7bn with an Adj. OPM of ¥690m (vs ¥480m in 1QFY0/2025). Both revenue and GAAP OP beat consensus.</li>
<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> ’s shares had a sell-off following its 4QFY06/2025 earnings announcement which saw the company breaking away from its recent trend of consecutive quarterly operating profits.</li>
<li>As we highlighted in our previous insight, 4Q decline was only a temporary setback as the company’s profitability has bounced back and we expect earnings momentum to continue.</li>
</ul>


Freee reported 1QFY06/2026 results today. 1Q revenues increased 32.1% YoY to ¥9.7bn with an Adj. OPM of ¥690m (vs ¥480m in 1QFY0/2025). Both revenue and GAAP OP beat consensus.

Freee KK (4478 JP) ’s shares had a sell-off following its 4QFY06/2025 earnings announcement which saw the company breaking away from its recent trend of consecutive quarterly operating profits.
As we highlighted in our previous insight, 4Q decline was only a temporary setback as the company’s profitability has bounced back and we expect earnings momentum to continue.


2025 High Conviction – Freee: Earnings Recovery Is Underway

<ul>
<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 4Q and full-year FY06/2025 results last week which disappointed the market leading to a sell-off.</li>
<li>After reporting 3-consecutive quarters of Adj. OP, profitability dipped in 4Q due to higher advertising and D&amp;A costs. However, freee expects to return to profits in the current fiscal year. </li>
<li>Following 4Q results, premium over Money Forward has disappeared and Freee is currently trading at a huge discount to MF which seems unwarranted</li>
</ul>



Freee KK (4478 JP)  reported 4Q and full-year FY06/2025 results last week which disappointed the market leading to a sell-off.
After reporting 3-consecutive quarters of Adj. OP, profitability dipped in 4Q due to higher advertising and D&amp;A costs. However, freee expects to return to profits in the current fiscal year. 
Following 4Q results, premium over Money Forward has disappeared and Freee is currently trading at a huge discount to MF which seems unwarranted


2025 High Conviction - Freee: 4Q Setback Is Only Temporary

<ul>
<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 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

Japan

Money Forward, Inc. develops mobile application software. The Company produces automatic household account book softwares, household account book application softwares, and other products. Money Forward also provides personal financial management, cloud based accounting solutions, and other services.

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Money Forward (3994 JP)