Zig-Zag (340A) FY2026 Full-Year Earnings Deep Dive Report

Zig-Zag (Securities Code: 340A) achieved record-high sales in its full-year results for the fiscal year ending May 2026, with key performance indicators (KPIs) showing steady progress. However, the company plans strategic upfront investments for the next fiscal year, which are expected to temporarily reduce profit margins. This report provides a detailed analysis of the company's financial results, growth strategy, and future outlook.

I. FY2026 Full-Year Earnings Highlights and Factor Analysis

For the full fiscal year ending May 2026, sales reached 1.50 billion JPY (YoY +6%) , marking a new record high. However, operating profit was 290 million JPY (YoY -10%) and net profit was 230 million JPY (YoY -19%) , indicating a decline in profitability compared to the previous year. This was primarily attributed to external factors such as a temporary decline in consumer sentiment due to changes in US tariff policies, rising crude oil prices due to geopolitical tensions in the Middle East, and the impact of DDP (Delivered Duty Paid) handling. Sales progress rate was 92%, and operating profit progress rate was 88%.

Looking at regional sales trends, overseas sales accounted for 95% of the total, primarily driven by Asia and North America. While North America experienced a temporary slowdown due to US tariff policy changes, the Asian region maintained robust growth.

Key KPIs, including Monthly Active Shops (1,335, YoY +22%) and Monthly Repeat Customers (6,306, YoY +6%) , both showed continuous year-over-year growth, indicating an expanding business foundation.

Historical trends in sales and operating profit are shown in the following graph: This graph illustrates continuous sales growth alongside fluctuations in operating profit . The company was affected by external factors from Q4 FY2025 to Q2 FY2026, but showed a recovery trend in Q3 and Q4. Specifically, sales in Q4 FY2026 reached 410 million JPY, a new record high, with a 19% increase year-over-year . Operating profit also maintained strong profitability at 80 million JPY.

The trends of key KPIs also demonstrate continuous growth. This slide clearly shows the steady increase in both Monthly Repeat Customers and Monthly Active Shops . The growth in repeat customers suggests improved customer loyalty and ongoing revenue contributions, while the increase in active shops indicates that more businesses are adopting the company's services, expanding the platform's scale. The growth of these KPIs is considered a significant driver for future sales growth.

II. Revenue Structure and KPI Linkage

Zig-Zag's revenue is primarily composed of Gross Merchandise Value (GMV) and take rate (commission rate) . To grow GMV, the company emphasizes increasing the number of fans for shops, expanding the number of shops engaged in overseas sales, and boosting repeat customers and active shops.

Detailed GMV analysis reveals that while North America slowed due to US tariff policies, Asia grew robustly by +7% year-over-year . By shop category, ANIME&TOYS_GAMES experienced a temporary decline, but this is viewed as a temporary impact with underlying demand in specific entertainment sectors remaining solid.

In terms of cost structure, the ratio of advertising and promotional expenses to sales is very low at 4%. This suggests efficient customer acquisition due to existing overseas access . Payment processing fees fluctuate in line with sales, while personnel expenses have increased due to investments in product development and strengthening management systems. Cost of goods sold is structured to become more efficient with increased sales volume.

III. Growth Strategy and Market Opportunities

Zig-Zag's vision is to " create fans worldwide ," aiming not just to sell goods overseas but to "comfortably connect" customers and shops globally. To achieve this vision, the company provides services structured in three layers: "Function," "Emotion," and "Action."

The markets targeted by the company are substantial and possess high growth potential:

• Market for foreigners who "want to buy but can't" from Japanese EC : Estimated at approximately 880 billion JPY and growing annually.
• Cross-border EC market : Projected to grow eightfold in 10 years, with increasing purchasing power from overseas, particularly as income levels rise in Asia.
• Inbound tourism market : With a government target of 60 million visitors by 2030, inbound consumption is expected to continue expanding, with in-trip consumption projected to reach 15 trillion JPY by 2030.

To capture these vast market opportunities, the company is pursuing a growth strategy centered on three pillars: " Pre-trip enhancement," "In-trip enhancement," and "Post-trip aggregation ." Specifically, it is advancing initiatives such as shop acquisition support, strategic support for data utilization and Shop Success, creation of offline and online touchpoints, AI-driven operation enhancement, and establishment of a robust personnel system.

WorldShopping BIZ has established a unique positioning by enabling Japanese EC sites to handle overseas sales without needing to develop new systems, thereby offering sales opportunities that are not directly comparable to other solutions.

IV. FY2027 Business Plan and Mid-to-Long Term Roadmap

For the fiscal year ending May 2027, the company forecasts sales of 1.80 billion JPY (YoY +20%) . However, operating profit is projected at 212 million JPY (YoY -27%) , with an operating profit margin of 12% , indicating a temporary decline in profitability. This is attributed to aggressive strategic upfront investments aimed at future growth.

Details of the next fiscal year's business plan are as follows: This slide indicates significant sales growth projected for FY2027, but with a planned temporary decrease in operating profit . This profit reduction is due to strategic upfront investments, including strengthening existing businesses and new initiatives by the Taiwan subsidiary. These investments are expected to contribute to profits in subsequent periods, reflecting a decision made with a view toward medium-to-long-term growth.

Specific upfront investment initiatives include continued efforts to improve shop acquisition capabilities, agile implementation of inbound support models and Taiwan-centric strategies, and new initiatives by the fully operational Taiwan subsidiary in addition to investments in existing businesses.

As part of its mid-to-long-term roadmap, the company will start with proof-of-concept in Taiwan , aiming for expansion into North America and Europe in the short to medium term, focusing on the inbound tourism market. Long-term, the goal is to build a global platform connecting shops and customers worldwide.

Particularly in strengthening cross-border EC support for the Taiwan market, the company established a Taiwan subsidiary in May, holding local pop-up events and promoting OMO (Online Merges with Offline) strategies. This aims to drive Japanese brands' entry into Taiwan and expand EC sales. Furthermore, Zig-Zag Taiwan has commenced business collaboration with W2 Corporation, establishing a comprehensive support system for Japanese companies expanding into Taiwan and Asia.

Conclusion

Zig-Zag achieved record-high sales in FY2026, with key KPIs continuing to grow steadily. While external factors temporarily impacted profits, a recovery trend was observed in the most recent quarter. For FY2027, strategic upfront investments for future growth are expected to temporarily reduce profit margins, which is positioned as an aggressive management decision aimed at medium-to-long-term growth. Against the backdrop of vast market opportunities, the company's strategy focuses on global expansion starting from Taiwan and strengthening pre-trip, in-trip, and post-trip services to achieve sustainable growth. The effectiveness of future upfront investments and the progress of the mid-to-long-term roadmap will be key areas to watch.