Mercari, Inc. Financial Report Analysis – Net Profit Growth: 4.4%

Date of Report: November 5, 2024

Reporting Period: Three months ended September 30, 2024

Business Description

Mercari, Inc. operates an online marketplace app that allows users to buy and sell items in Japan (Marketplace) and the US. The company also has a Fintech segment that provides payment, finance, and cryptoasset-related services in Japan.

Business Segments

• Marketplace: Operation of a marketplace app in Japan and the US.
• Fintech: Payment, finance, and cryptoasset-related business in Japan.

Geographic Footprint

The company operates primarily in Japan and the United States.

Industry Position

Mercari is a significant player in the online marketplace industry, competing with other major e-commerce platforms. The company is working on returning to a growth trajectory in the US market and maintaining steady growth in Japan.

Revenue Streams

Mercari’s revenue streams include transaction fees from its marketplace operations and interest revenue from its Fintech services.

Financial Analysis

Income Statement

For the three months ended September 30, 2024, Mercari reported revenue of ¥44,924 million, a slight increase of 1.5% year-on-year. The operating profit was ¥4,347 million, a decrease of 2.9% year-on-year. Net profit attributable to owners of the parent was ¥2,933 million, up 4.4% year-on-year.

Balance Sheet

As of September 30, 2024, total assets were ¥484,669 million, a decrease from ¥501,773 million as of June 30, 2024. Total equity increased to ¥74,585 million from ¥72,145 million.

Cash Flow Statement

Cash and cash equivalents decreased by ¥29,854 million to ¥162,143 million as of September 30, 2024. Cash used in operating activities amounted to ¥8,718 million, and cash used in financing activities amounted to ¥18,413 million.

Key Findings

Strengths

• Steady growth in the Japan marketplace and Fintech segments.
• Increased net profit attributable to owners of the parent by 4.4% year-on-year.

Risks

• Decreased revenue and segment loss in the US market.
• Significant decrease in cash and cash equivalents.

Special Activities

Mercari is focusing on AI/LLM-based UI/UX innovations and strengthening high-price categories in its marketplace. The company is also expanding its Fintech operations with initiatives like payment installment plans to increase credit use.

Investment Recommendations

For Current Investors

Hold your stock. The company shows positive signs of growth in the Japan market and is taking strategic steps to improve its profitability despite challenges in the US market.

For Potential Investors

Consider investing cautiously. The company’s strong performance in Japan and strategic initiatives in Fintech are promising, but be mindful of the challenges in the US market and the decrease in cash reserves.

Disclaimer

The recommendations provided are based on the financial report for the three months ended September 30, 2024. Investors should consider their own financial situation and consult with a financial advisor before making any investment decisions.