[Jimotii] 2024 fiscal year 3rd quarter earnings conference transcript Vol.1 continuation

I will explain what points are considered competitive advantages from the perspective of those who post information about Jimotii. Essentially, the most important competitive advantage is the ability to post information for free. The intermediary services that require fees at the time of product payment are optional, and by using paid advertising products, targeting can be conducted, leading to higher advertising effectiveness.

Ultimately, it is important to create a regional information platform that enhances the matching of those who are posting information with those who are searching for it, as this significantly increases the chances of encountering what is needed locally. The information handled ranges from a distance of 5 minutes walking to about 1 hour by autos. In particular, I aim to grow the service to better match resources of people or items that are needed immediately close to home.

I will explain the overview of the advertising strategy. By increasing clients for in-house advertisements that match user search intent (e.g., reuse, used autos, job offers, a-reit etf, etc.), the primary goal is to significantly raise advertising unit prices.

The base of this is strategy (2). It is considered an important strategy to switch from third-party delivery to our own ad platform. Until last year, third-party delivery ads were predominant, but now strategy (2) focuses on increasing the ratio of in-house ads while enhancing their relevance to user search intent in a two-pronged approach.

The results of representative categories and CPM ratios show that most categories have about double the CPM. This indicates that it is definitely possible to achieve a CPM that is about twice that of third-party delivery rates, with some reaching as high as 4.5 times. Increasing the ratio of ads that align with the context of Jimotii is considered a crucial factor for revenue improvement.

Compared to the previous quarter, there is a clear indication that acquisitions in the reuse sector are quite possible. From Q4 onward, it is intended to focus on acquiring clients in the reuse sector. In the reuse sector, there is a strong potential for proposals involving high-unit prices and annual contracts, making growth in this area quite exciting.

I will explain the strategy for real services.

The value provided by Jimoty Spot involves first establishing a true circular system, thereby reducing environmental impact. However, it tends to become a system lacking sustainability that does not easily align with business. The goal is to create a system that can achieve both economic growth while building this true circular system.

Jimoty Spot's main handled commodity etf are usually those without a purchase price, which is considered the most important. Many companies in the usual recycling business emphasize handling high-value luxury goods. However, Jimoty Spot believes it is crucial to create a model that can properly reuse even items that normally do not have a purchase price and generate profits. Currently, about 95% of incoming items can be reused through CtoC, achieving a total reuse rate of approximately 99%. Through corporate alliances and overseas exports, it is possible to approach nearly 100% for over 95% of the items. Therefore, providing total solutions including upcycling and overseas exports is considered extremely important, not just stopping at 95% reuse in sales directed to consumers from Jimoty Spot. If Jimoty Spot is to reuse as a regional platform, the aim is to achieve and maintain a 99% probability of reuse. Additionally, hiring local personnel, silver generation individuals, and actively employing people with disabilities are considered very important, and it is desired to contribute to the regional economy from this perspective.

The vision that Jimoty Spot aims for is to grow into a comprehensive consultation service that is taken for granted, existing in all municipalities. The goal is to reach a state where it is present in all 1,700 municipalities in japan.

From the perspective of profitability, the aim is to ensure presence in 255 locations with a population of over 0.1 million. At the same time, it is thought that it is necessary to develop a model that can also work in towns with smaller populations and ensure proper revenue generation, and tests are currently ongoing.

Moreover, while the premise is to establish a system centered on mutual reuse, Jimoty Spot aims to become a comprehensive contact point where various everyday problems can be resolved, similar to a regional concierge service. It is with such aspiration that expansion of stores is planned.

Regarding the achievements in partnerships with municipalities, as of November 1, agreements have been concluded with 194 municipalities. Inbound inquiries have been significant, and hopes to establish agreements have been expressed. Among them, for 6 municipalities and 7 stores, the opening of reuse spots, Jimoty Spot, has been completed. A system has been established to generate revenue by reusing items instead of discarding usable ones.

To reiterate, let me add more about the service flow and characteristics of Jimoty Spot. Regarding incoming items, announcements are made by municipalities, and through websites or public relations publications for oversized waste, they guide people to Jimoty Spot. The collection of items is made possible with significant cooperation from municipalities. Users who originally disposed of oversized waste have increasingly become willing to bring in usable items to Jimoty Spot instead of throwing them away. Those items transferred to Jimoty Spot are then listed on Jimoty for sale or transfer, achieving a reuse rate of 99%.

The medium-sized store model is represented by the photos of Jimoty Spot Kawasaki Sugitama store. The Kawasaki Sugitama store, opened in April 2024, has successfully established a representative model for medium-sized stores. Various test cases and model cases conducted here are expected to be expanded nationwide.

Regarding the development concept of Jimotii Spot, I believe step 1 has been established. The monetization of bringing unwanted items from home to Jimotii Spot, taking them in, and selling them has been successfully achieved. Next, steps 2 and 3 are being validated simultaneously. For example, it involves collecting items that cannot be transported out of the house. Many elderly individuals visit Jimotii Spot. Many people have large items at home that are difficult to bring here, and they are inquiring about the possibility of buying, rather than just transferring these items if a price can be offered. I am thinking of providing a total solution at this spot, including not only the form of drop-off sales and pickup sales, but also collection and purchase in steps 2 and 3.

In the future, I would like to accelerate the speed of expansion, and we are considering opening stores at 250 locations in cities with a population of 0.1 million. This concludes my explanation of the earnings conference for the third quarter of the December 2024 fiscal year.

■ Jimotii Host

Now, let's move on to the Q&A session. If you have any questions, please enter them in the Q&A section at the bottom of the screen. Please be aware that similar questions may be summarized and answered together.

■ Jimotii Kato

Now, I would like to start the Q&A session. The first question is regarding the current status and future outlook of the operation of our in-house advertisements. As I mentioned earlier, our in-house advertisements are currently successfully increasing market share. The unit price is also growing compared to third-party advertisements, so we want to expand further in the areas of focus, such as reuse, used autos, a-reit etf, and job recruitment.

Next, you inquired about the current status and prospects of the FC expansion of Jimotii Spot.

■ Jimotii Kato

This discussion is not limited to the FC development of Jimoty Spot, but also includes directly operated stores. I mentioned earlier that there are plans for further expansion towards the end of this term, and the model has become quite solid. For the next fiscal year and beyond, the intention is to accelerate the rate of expansion, focusing primarily on directly operated stores.

Of course, the situation for FC development is also quite promising, with numerous clients and companies expressing interest in joint development as FCs. It will be important to redefine the areas for opening directly operated stores and developing FC stores, planning for expansion accordingly. In any case, it is believed that the speed of store development can be significantly increased compared to this fiscal year, and this will be a very important point in the global strategy.

■ Jimotii Host

Now that the questions seem to have been gathered, the Q&A session will be concluded. If there are any inquiries, please contact our IR office. This concludes the earnings conference for the third quarter of the fiscal year ending December 2024. A survey will be displayed after the session ends, so please respond as it will help with future operations. Thank you for watching during your busy schedules today.