Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Q1 delivered strong beat: sales +40% YoY, EBITDA +395%, margins +13.6ppts, driven by SaaS growth, fintech reclassification, and continued discipline across advertising and personnel costs</li>
<li>Adjusted EBITDA reached ¥2.7bn, ~30% of full-year guide; AI-driven productivity gains cited; unchanged guidance but increases confidence, likely driving positive revisions and near-term share price support</li>
<li>AI Vision 2026 targets ¥15bn ARR by 2030; however SaaS multiple compressed sharply, requiring execution and accelerated growth to justify re-rating amid sector-wide uncertainty around AI impact</li>
</ul>


Q1 delivered strong beat: sales +40% YoY, EBITDA +395%, margins +13.6ppts, driven by SaaS growth, fintech reclassification, and continued discipline across advertising and personnel costs
Adjusted EBITDA reached ¥2.7bn, ~30% of full-year guide; AI-driven productivity gains cited; unchanged guidance but increases confidence, likely driving positive revisions and near-term share price support
AI Vision 2026 targets ¥15bn ARR by 2030; however SaaS multiple compressed sharply, requiring execution and accelerated growth to justify re-rating amid sector-wide uncertainty around AI impact


Money Forward (3994) | Strong Beat, AI Optionality Emerging

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

<ul>
<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

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)

Money Forward (3994) | Strong Beat, AI Optionality Emerging

Strong Q1 performance driven by SaaS growth; AI-driven productivity gains boost confidence for future growth and share price support; execution...

Mark Chadwick

2025 High Conviction – Freee: Earnings Recovery Is Underway

Freee's 1Q earnings affirm that 4QFY06/2025 setback was only temporary with revenues up 32.1% YoY and strong profits that beat consensus. We...

Shifara Samsudeen, FCMA, CGMA

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

After reporting 3-consecutive quarters of Adj. OP, freee's profitability dipped in 4Q leading to a sell-off. Freee is currently trading at a...

Shifara Samsudeen, FCMA, CGMA

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

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

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Money Forward (3994) | Strong Beat, AI Optionality Emerging

​Strong Q1 performance driven by SaaS growth; AI-driven productivity gains boost confidence for future growth and share price support; execution...

Mark Chadwick

2025 High Conviction – Freee: Earnings Recovery Is Underway

​Freee's 1Q earnings affirm that 4QFY06/2025 setback was only temporary with revenues up 32.1% YoY and strong profits that beat consensus. We...

Shifara Samsudeen, FCMA, CGMA

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

After reporting 3-consecutive quarters of Adj. OP, freee's profitability dipped in 4Q leading to a sell-off. Freee is currently trading at a...

Shifara Samsudeen, FCMA, CGMA

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

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

Strong Q1 performance driven by SaaS growth; AI-driven productivity gains boost confidence for future growth and share price support; execution...

Freee's 1Q earnings affirm that 4QFY06/2025 setback was only temporary with revenues up 32.1% YoY and strong profits that beat consensus. We...

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...