Record-High Revenue and Profit in FY'24
Mercari, Inc. (4385.T), a leading online marketplace operator, has announced a significant milestone with record-high consolidated revenue and core operating profit for the fiscal year 2024. The company's CEO, Shintaro Yamada, and CFO, Sayaka Eda, reported a 9% increase in revenue compared to the previous year, alongside a core operating profit of JPY 18.8 billion.
Fintech and Marketplace Performance
While Mercari's marketplace growth faced challenges, particularly in the US market, the company's fintech sector experienced rapid expansion. This segment, including services like Crypto, is a bright spot, contributing significantly to Mercari's profitability. The fintech business is projected to achieve a core operating profit of over JPY 3 billion in fiscal year 2025.
Strategic Growth Plans
Mercari is setting ambitious targets for itself, aiming for double-digit revenue growth over the next three years. Among the new services, Mercard and Mercari Hallo have shown promising growth, enhancing the company's service offerings. Mercari's FY'25 financial forecasts anticipate revenues between JPY 200 billion to JPY 210 billion and a core operating profit ranging from JPY 22 billion to JPY 25 billion.
Challenges in the US Market
The US operations have been a sticking point due to external factors impacting growth and GMV (Gross Merchandise Value). In response, Mercari has undergone restructuring, which included layoffs and reduced executive compensation. Despite these hurdles, the company is optimistic about breaking even in the US by FY'25.
Focus on Fintech and Innovation
Mercari's fintech business, including a successful Crypto service with over 2.2 million accounts, is a key area of focus. The credit business is also booming, with a 60% increase year-on-year, reaching a credit balance of JPY 130.1 billion. Mercari plans to continue investing in user acquisition and feature additions to bolster this segment's growth.
Outlook and Financial Strategy
Looking ahead, Mercari plans to expand by leveraging existing businesses and services, with a goal of improving their operating margin to between 37% and 42%. The company is prioritizing its financial foundation, opting not to pay dividends currently, instead focusing on diversifying debt financing and securing nonrecourse loans.
Investment Considerations
For investors, Mercari's market capitalization stands at $2.3 billion, and its P/E Ratio of 25.58 suggests a premium valuation, albeit with strong growth prospects. Despite a recent 13.96% drop in stock price, Mercari's robust gross profit margin of 69.22% underscores its potential for long-term growth.
Overall, Mercari's strategic focus on expanding its fintech and marketplace services, coupled with innovative initiatives, positions it well for continued growth. Investors may find opportunities amid short-term market fluctuations, considering Mercari's long-term potential.
