[Note] Frequently Asked Questions and Answers from Investors (Q3 Fiscal Year Ending November 2025)
Thank you very much for your continued interest in our business activities.
Regarding the Q3 financial results for the fiscal year ending November 2025, announced on Tuesday, October 7, 2025, we have compiled and published the following main questions and answers received from institutional investor meetings and inquiries from shareholders and investors, from the perspective of fair disclosure.
Please note that we have added or revised the content without compromising the intent of the questions received, for the purpose of deepening your understanding. Also, please be aware that the answers provided are based on our judgment and views at the time of disclosure and may differ from actual results due to future events.
Q. What is the background behind the further increase in the sales growth rate in the Q3 financial results?
A. As shown in the image below, the sales growth rate in Q3 was +27.2% YoY, which is an acceleration from +19.0% in Q1 and +24.9% in Q2.
This is due to the steady growth of all our businesses: the note business, the note pro business, and new businesses (TALES IP development business), but the expansion of GMV in our core note business is driving this growth.
One of the reasons for the GMV expansion is the effect of the spread of generative AI. In addition to the increase in creators and content due to the spread of generative AI, there are also effects such as improved matching accuracy between content and readers and increased traffic from AI searches, which are having a positive impact on both content creation and subscription/purchasing.
In addition to this, the network effect of the platform is also a factor. Our 'growth model' (see the figure below), which is our basic policy for platform expansion, is functioning, and the number of note creators and content posts is growing at a high level. As content increases, opportunities for users to encounter paid content and make purchases increase. This creates a virtuous cycle that leads to GMV and, consequently, sales growth.
Q. Do you expect the acceleration of sales growth to continue in the future?
A. I believe the spread of generative AI is a trend that will continue, and since the network effect of the platform strengthens as it grows in scale, we believe that sales growth at a relatively high growth rate will continue.
As shown in the figure below, we have previously stated that we aim for a sales growth rate of around 20-30% from the fiscal year ending November 2025 onwards through the growth of the note business, note pro business, and new businesses. We intend to continue working to maintain and further increase this high growth rate by further growing each business.
Q. It seems that cost reduction is progressing; what are the details and background?
A. Cost of sales and SG&A expenses basically increase as the business scale expands, but we are making various efforts to suppress the rate of increase as much as possible.
In Q3, management of communication expenses led to cost reductions, and outsourcing costs were suppressed by promoting the use of AI in operations. In addition, recruitment-related expenses decreased because we changed to a policy of selective hiring in the second half of the year, following significant hiring in the first half.
Q. What is the outlook for the next fiscal year? Which business will be the growth driver?
A. We will refrain from commenting at this time as we plan to disclose specific earnings forecasts at the time of the full-year financial results announcement, but we aim to increase sales and profits by focusing on the four growth drivers shown in the figure below.
Among the four growth drivers, we are particularly focusing on the IP development business and hope to make it our third pillar after the note business and note pro business as soon as possible. However, since we expect the core note business to continue to achieve a high growth rate, the note business is expected to drive our performance.
Q. You mentioned that you will strengthen M&A and business alliances next fiscal year; what kind of companies are you considering for M&A?
A. We are working on the expansion of the note ecosystem, as shown in the figure below, as our growth strategy. Therefore, we are considering a wide range of M&A, business partnerships, and alliances with major companies that will lead to the expansion of the note ecosystem.
Specific examples include companies with CtoC services that can see synergies with note, and companies that own or develop IP. However, our existing businesses are also growing steadily, and M&A is not essential for growth, so we intend to carefully select companies that we believe can demonstrate synergy.
Q. Does note's strong SEO stem from its capital and business alliance with Google?
A. While we received an investment from Google in January 2025, we are not receiving any preferential treatment because of it; we understand that our site is evaluated based on standard SEO criteria.
It is said that SEO prioritizes expertise and high credibility. We believe note's SEO is strong because it gathers a large volume of high-quality articles.
Q. It is said that web behavior is shifting from Google search to AI search. How does this affect note?
A. Because note has strong SEO, some suggest that a shift from Google search to AI search might reduce traffic to our site. However, in reality, we recognize that note is strong not only in SEO but also in AI search, and our competitive advantage is actually increasing compared to other web pages.
According to research (*), features of articles that are selected by AI and read by users include content that is explored in depth based on the writer's experience and expertise, and articles that are easy to read, structured with headings and tables of contents, and have organized information. Because these features match note, note tends to gain more traffic via generative AI compared to other sites. We believe this could lead to a trend where people think, 'I should post on note to get my content read.'
* We have published a research report demonstrating note's superiority in acquiring traffic from generative AI and search. Please check this as well.
Q. Is there a risk that the spread of generative AI will lead to an increase in low-quality content?
A. We recognize that as generative AI makes content creation more efficient, there is a risk that some people will try to mass-produce content regardless of its quality.
On the other hand, generative AI also has positive effects, such as improving the quality of content and increasing the productivity of creators who produce high-quality content. This means there is an increasing need to establish mechanisms to ensure that high-quality content reaches the people who need it, regardless of whether generative AI is used.
To maintain the health of our platform, we have long been using AI to check and patrol content.
If we find content that appears to be mechanically mass-posted using generative AI, we control it, such as by reducing its display frequency on note.
As we expect content to continue to increase, we will strengthen our mechanisms to manage vast amounts of content, improve the accuracy of content quality checks, and deliver it to the optimal readers.
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