Money Forward, a Japanese financial technology company, hosted its FY11/24 3Q Financial Results Briefings Call on October 15, 2024. The company presented a positive outlook for the quarter, highlighting strong performance across several key metrics, including steady progress in sales and EBITDA, continued quarterly EBITDA surplus, and robust growth in its SaaS business.
Strong Overall Performance
Money Forward demonstrated solid overall performance in Q3, with both net sales and EBITDA showing good progress towards achieving the full-year forecast. Notably, the company maintained a quarterly EBITDA surplus, reinforcing its financial stability. This positive momentum was attributed to strong growth in both the Home and Business domains, particularly in the SaaS business.
Consolidated Sales and EBITDA Performance
Consolidated sales for Q3 reached JPY 9.81 billion, marking a 31% increase year-on-year (YoY). This growth was primarily driven by the Business domain, which saw a 35% YoY increase in net sales. However, it is important to note that Q3 sales were slightly lower compared to the previous quarter due to the absence of proceeds from the sale of HIRAC FUND, a venture capital business, which was recorded in the previous quarter. Excluding this one-time impact, consolidated net sales continued to show an upward trend.
EBITDA for Q3 stood at JPY 410 million, with a gross profit of JPY 6.53 billion. The company highlighted the positive trend in EBITDA margin, which has improved significantly from approximately -30% in 2022 to nearly 20% in the previous year. The management expressed confidence in achieving a 10–15% improvement in EBITDA margin this year and continuing this positive trajectory in the future.
SaaS Business: A Key Growth Driver
The SaaS business emerged as a key growth driver for Money Forward, with SaaS ARR reaching JPY 27.96 billion, representing a 32% YoY increase. This growth was entirely organic, driven by strong performance in both corporate and individual user segments. The Business domain witnessed a 35% YoY growth in corporate ARR, while the individual user segment recorded a 41% YoY growth. This positive momentum is a testament to the company’s strategy of focusing on product development and customer acquisition in the SaaS space.
However, the “Money Forward X” segment, focusing on subscription services with financial institutions, experienced flat growth compared to the previous quarter. This was attributed to challenges in joint sales with regional banks due to the prevailing environment of rising interest rates. The company expressed its determination to overcome these challenges by leveraging various strategies and measures to restore growth in this segment.
Key Initiatives and Future Outlook
Money Forward outlined several key initiatives aimed at further strengthening its market position and driving future growth. These initiatives include:
- Enhancing user experience through continuous feature updates: The company is committed to enhancing user experience by introducing new features and improving existing ones. This includes leveraging generative AI to automate tasks, integrating with external services like tax filing software, and providing enhanced data visualization and reporting features.
- Expanding to companies with more than 300 employees: Money Forward is actively expanding its customer base to include larger enterprises. The company is achieving this by developing features tailored to the needs of larger companies, accumulating knowledge in the mid-sized companies’ space, and providing dedicated customer support for new and existing users.
- Deploying a composable ERP model with flexibility and scalability: Money Forward is focusing on providing a flexible and scalable ERP solution that can be easily integrated with existing systems. This approach allows customers to implement individual functions as needed and gradually add new ones, reducing the burden of implementation and allowing for greater flexibility.
- Reorganization of financing services to bolster SaaS and Fintech strategies: To further accelerate its SaaS x Fintech strategy, Money Forward announced a reorganization of its financing services. This restructuring aims to consolidate its financing services under Money Forward Kessai, Inc., while sales and marketing efforts will be handled by Money Forward. This move is expected to streamline operations and enhance customer reach.
Partnership with Sumitomo Mitsui Card (SMCC)
Money Forward highlighted its strategic partnership with Sumitomo Mitsui Card (SMCC) in the home business. The company has established a joint venture with SMCC, combining its popular personal financial management service, Money Forward ME, with SMBC Group’s financial services, including Olive and V Point. This partnership is expected to create a more personalized and convenient financial service for users and enhance Money Forward’s presence in the personal finance market.
Financial Outlook
The company reiterated its full-year outlook for FY11/24, expecting an advertising to sales ratio of 15–17% and a 10–15% improvement in EBITDA margin compared to FY11/23. Money Forward also emphasized its medium to long-term target of achieving over JPY100 billion in sales and over JPY30 billion in EBITDA by 2028.
Overall, Money Forward presented a positive outlook for Q3 FY11/24, highlighting strong performance in key areas, including its core SaaS business and strategic partnerships. The company’s continuous focus on innovation, customer acquisition, and operational efficiency positions it well for sustained growth in the rapidly evolving fintech landscape.