SYLA Reports First-Half 2024 Financial and Operational Results

Rhea-AI Summary

SYLA Technologies Co., (NASDAQ: SYT), operator of Japan's largest membership real estate crowd-funding platform, Rimawari-kun, reported its interim financial results for H1 2024. Key highlights include:

- 13% revenue increase to ¥10,564,041 thousand ($65.7 million)
- Gross profit decrease to ¥1,944,954 thousand ($12.1 million)
- Net loss of ¥67,257 thousand ($0.4 million)
- Cash and cash equivalents of ¥2,381,394 thousand ($14.8 million) as of June 30, 2024

The company saw increased real estate sales with 162 units sold, up from 110 in H1 2023. SYLA also announced a capital alliance with CUMICA , development of luxury residences, and expansion in the renewable energy sector. The company's crowdfunding platform, Rimawari-kun, surpassed ¥7.5 billion in GMV.

Positive

• 13% year-over-year revenue increase to ¥10,564,041 thousand ($65.7 million)
• Real estate sales increased by ¥4,595,491 thousand ($28.6 million)
• Number of units sold increased from 110 to 162 compared to H1 2023
• Solar power plant sales increased by ¥303,171 thousand ($1.9 million)
• Rimawari-kun's GMV surpassed ¥7.5 billion
• SYFORME series average occupancy rate reached 99.80% in H1 2024

Negative

• Gross profit decreased to ¥1,944,954 thousand ($12.1 million) from ¥2,340,856 thousand
• Net loss of ¥67,257 thousand ($0.4 million) compared to net income of ¥249,979 thousand in H1 2023
• Large-scale development site sales decreased by ¥3,527,071 thousand ($21.9 million)
• Higher interest expenses due to increased borrowings for real estate development and investments

Insights

Financial Analyst

The first-half 2024 results for SYLA Technologies present a mixed financial picture. While total revenues increased by 13% to ¥10.56 billion ($65.7 million), driven by higher real estate sales and solar power plant sales, the company reported a net loss of ¥67.26 million ($0.4 million) compared to a profit in the same period last year.

Key points to consider:

• Real estate sales volume increased significantly, with 162 units sold vs 110 in H1 2023
• Gross profit declined by 16.9% due to lower sales of high-margin large-scale development sites
• Operating expenses decreased, mainly due to reduced legal and professional fees post-IPO
• Higher interest expenses from increased borrowings impacted the bottom line
• The company maintains a solid cash position of ¥2.38 billion ($14.8 million)

The company's growth strategy, including M&A opportunities and partnerships like the one with CUMICA , shows potential for future expansion. However, investors should monitor the impact of higher interest expenses and the company's ability to improve profitability in the coming quarters.

Real Estate Expert

SYLA's performance in the real estate sector shows both strengths and challenges. The increase in unit sales from 110 to 162, along with two entire building sales, demonstrates strong demand for their properties. The SYFORME condominium series maintaining a 99.80% occupancy rate is particularly impressive in the current market.

The development of ultra-luxurious residences like THE SYLA SHIBUYA-TOMIGAYA and the completion of their first office building, SYLA TOYOCHO, indicate a strategic move towards higher-value properties. This could potentially lead to improved margins in future quarters.

However, the significant decrease in large-scale development site sales is a concern, as these typically offer higher profit margins. The company will need to balance its portfolio to maintain profitability.

The Rimawari-kun crowdfunding platform reaching ¥7.5 billion in GMV is a positive sign for their alternative financing model. This could provide a stable revenue stream and help fund future developments with potentially lower capital costs.

Tech Analyst

SYLA's tech initiatives show promise in diversifying their revenue streams and enhancing their core real estate business. The ietty AI rental brokerage service surpassing 400,000 members indicates strong adoption of their proptech solutions. This could lead to increased efficiency in property management and tenant acquisition.

The company's expansion into renewable energy through SYLA Solar is noteworthy. The launch of an on-site PPA (Power Purchase Agreement) business and alliances with companies like LIVE THE CREATIVE and ABILITY for hydrogen solutions demonstrate a forward-thinking approach to sustainable real estate development.

The absorption of a renewable data center company by SYLA Solar could create interesting synergies between real estate, renewable energy and data infrastructure. This move aligns with global trends towards green data centers and could position SYLA as an innovator in this space.

While these tech initiatives are promising, their financial impact is not yet clearly reflected in the current results. Investors should watch for signs of these investments translating into tangible revenue growth and improved operational efficiencies in future quarters.

TOKYO, Sept. 27, 2024 (GLOBE NEWSWIRE) -- SYLA Technologies Co., Ltd. (NASDAQ: SYT) (“SYLA” or “the Company”), operator of the largest membership real estate crowd-funding platform in Japan, Rimawari-kun, reported its interim financial results for the six months ended June 30, 2024.

Operational Highlights to Date in 2024:

	●	Entered into a capital and business alliance agreement with CUMICA CORPORATION (formerly RIBERESUTE CORPORATION) and became the largest shareholder.
	●	Subscribed to a third-party allotment of new shares issued by CUMICA CORPORATION (formerly RIBERESUTE CORPORATION).
	●	Announced mid-term revenue targets and a growth strategy centered on M&A.
	●	Announced an interim dividend of ¥100 per share (approximately $0.68 per share at August 20, 2024 exchange rate of $1.00 = ¥146.47; 1 share = 100 ADRs).
	●	Announced the development of an ultra-luxurious residence, THE SYLA SHIBUYA-TOMIGAYA.
	●	Completed construction of the Company’s first office building, SYLA TOYOCHO.
	●	Announced a ¥96 million gain on sale of investment securities.
	●	The membership of an online AI rental brokerage service, ietty, surpassed 400,000.
	●	The average occupancy rate for the SYFORME series of original brand condominiums in the first half of 2024 was 99.80%.
	●	Rimawari-kun’s gross merchandise volume (total amount raised by Rimawari-kun, hereinafter “GMV”) surpassed ¥7.5 billion (approximately $46.61 million based on an exchange rate of $1.00 = ¥160.88 on June 28, 2024).
	●	Subsidiary SYLA Solar announced issuance of series 1 bond of ¥50 million.
	●	Subsidiary SYLA Solar announced a comprehensive business alliance with LIVE THE CREATIVE Inc.
	●	Subsidiary SYLA Solar announced a business alliance with ABILITY LTD., a supplier of hydrogen cartridges.
	●	Subsidiary SYLA Solar launched on-site PPA business.

Management Commentary

“We achieved a 13% revenue increase for the first half of 2024 compared to the same period in 2023,” said Chairman, Founder, and CEO Hiroyuki Sugimoto. “Our growth strategy is delivering solid results, creating a positive impact across the entire business. We also anticipate the completion of nine new projects in the second half of 2024, which we expect will boost our gross profit.

Additionally, through the third-party allotment of new shares issued by CUMICA CORPORATION, our partnership is further strengthened, enhancing synergies with our development business in the coming fiscal year and beyond. Meanwhile, our real estate crowdfunding business continues to perform well, with steady growth in GMV (gross merchandise volume).

As part of our ongoing growth strategy, we will actively seek M&A opportunities to expand our market presence and enhance competitiveness. We remain committed to staying on track with our second-half progress, achieving diversified growth.”  

First-Half 2024 Financial Results:

Results compare the six months ended June 30, 2024, to the six months ended June 30, 2023, unless otherwise indicated. Results below are for SYLA Technologies Co., Ltd. on a consolidated basis.

	●	Total revenues for the six months ended June 30, 2024, increased to ¥10,564,041 thousand ($65.7 million based on an exchange rate of $1.00 = ¥160.88 on June 30, 2024, hereinafter the same) from ¥9,318,404 thousand ($57.9 million) for the six months ended June 30, 2023. The increase was attributable to an increase of ¥4,595,491 thousand ($28.6 million) in real estate sales, with 162 units sold during the six months ended June 30, 2024, compared to 110 units during the six months ended June 30, 2023, as well as the sales of two entire buildings. On the other hand, sales of large-scale development sites decreased by ¥3,527,071 thousand ($21.9 million). In the renewable energy sector, solar power plant sales increased by ¥303,171 thousand ($1.9 million). On July 1, 2024, SYLA Solar absorbed renewable data center company (SYLA Biotech Co., Ltd.) to further grow its business and enhance corporate value by leveraging internal resources and sales channels.
	●	Gross profit decreased to ¥1,944,954 thousand ($12.1 million) for the six months ended June 30, 2024, from ¥2,340,856 thousand ($14.6 million) for the six months ended June 30, 2023. Despite an increase in the number of units and buildings sold, this was offset by a decline in large-scale development site sales that reduced our gross profit.
	●	Total operating expenses decreased to ¥1,750,353 thousand ($10.9 million) for the six months ended June 30, 2024, from ¥1,906,117 thousand ($11.8 million) for the six months ended June 30, 2023. The decrease mainly consists of a ¥295,729 thousand ($1.8 million) decrease in legal and professional expenses and consulting fees including the costs for IPO to NASDAQ as well as listing maintenance costs, including audit expenses and legal fees for compliance with disclosure requirements and related matters. This decrease is offset by an increase of ¥84,648 thousand ($0.5 million) in personnel expenses due to hiring for future business expansion.
	●	Net loss attributable to SYLA Technologies Co., Ltd. was ¥67,257 thousand ($0.4 million) (¥255.99 ($1.59) per basic and diluted share) for the six months ended June 30, 2024, compared to net income attributable to SYLA Technologies Co., Ltd. of ¥249,979 thousand ($1.6 million) (¥1,002.63 ($6.23) per basic share and ¥834.02 ($5.18) per diluted share) for the six months ended June 30, 2023. Despite an increase of ¥96,162 thousand ($0.6 million) in gains from the sale of investment securities classified as other income, the net income decreased due to higher interest expenses resulting from increased borrowings for real estate development expenditures and investments aimed at business expansion.
	●	As of June 30, 2024, SYLA Technologies Co., Ltd. had ¥2,381,394 thousand ($14.8 million) in cash and cash equivalents.

About SYLA Technologies Co., Ltd.

Headquartered in Tokyo, Japan, SYLA Technologies Co., Ltd. (NASDAQ: SYT) (“SYLA” or “the Company”) owns and operates the largest membership real estate crowd-funding platform in Japan, Rimawari-kun, which targets individuals, corporate and institutional investors, as well as high net worth individuals. SYLA’s mission is to democratize real estate investment around the world through technology and asset management through the Rimawari-kun platform. SYLA is engaged in the overall investment condominium business, including planning, development, construction, sales, rental management, building management, repair work, and the sale of properties. Additional information about the Company’s products and services is available at https://syla-tech.jp/en.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act and other securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements. For example, the Company is using forward-looking statements when it discusses the expected gross proceeds and the closing of the offering. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements. For a more detailed description of the risks and uncertainties affecting the Company, reference is made to the Company’s reports filed from time to time with the Securities and Exchange Commission (“SEC”), including, but not limited to, the risks detailed in the Company’s annual report on Form 20-F, filed with the SEC on May 15, 2024. Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release.

Contact Information

SYLA Technologies Investor Relations Contact :

Gateway Group, Inc.
John Yi and Steven Shinmachi
SYLA@gateway-grp.com
(949) 574-3860

SYLA Technologies Company Contact :

Takeshi Fuchiwaki
Director, Chief Growth Officer
irpr@syla.jp

SYLA TECHNOLOGIES CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Japanese Yen (“JPY”), except for share data)

		June 30,				December 31,
		2024				2023
ASSETS
Current assets
Cash and cash equivalents			2,381,394				4,017,311
Restricted cash			455,330				569,469
Term deposits			288,741				233,505
Short-term investments			-				89,482
Accounts receivable, net			141,935				162,690
Inventories, net			25,001,539				16,849,935
Prepaid expenses, net			441,241				357,104
Other current assets, net			182,518				304,271
Total current assets			28,892,698				22,583,767
Non-current assets
Restricted cash, non-current			2,667				25,180
Long-term deposits			70,557				9,300
Long-term investments, net			2,642,748				490,437
Property, plant and equipment, net			11,635,956				11,889,701
Solar power systems, net			582,751				476,778
Intangible assets, net			127,325				133,226
Goodwill			730,776				730,776
Operating lease right-of-use assets			2,293,147				2,409,255
Finance lease right-of-use assets			11,004				11,980
Other assets, net			1,393,372				1,324,027
Total non-current assets			19,490,303				17,500,660
TOTAL ASSETS			48,383,001				40,084,427
LIABILITIES AND EQUITY
Current liabilities
Accounts payable			322,650				559,420
Accrued liabilities			163,185				277,425
Short-term loans			2,378,800				1,692,599
Current portion of long-term loans			9,443,778				7,243,022
Current portion of long-term bonds			88,454				107,601
Deferred revenue			50,427				165,262
Income tax payables			182,423				466,872
Operating lease liabilities, current			412,049				433,725
Finance lease liabilities, current			3,647				4,158
Other current liabilities			776,069				1,047,016
Total current liabilities			13,821,482				11,997,100
Non-current liabilities
Long-term loans			20,579,315				14,308,136
Long-term bonds			113,228				97,549
Operating lease liabilities, non-current			1,849,266				1,958,689
Finance lease liabilities, non-current			7,571				8,040
Other liabilities			516,746				534,228
Total non-current liabilities			23,066,126				16,906,642
TOTAL LIABILITIES			36,887,608				28,903,742
EQUITY
Capital stock (900,000 shares authorized, 265,543 and 260,891 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively, with no stated value)			114,001				100,000
Capital surplus			5,078,338				4,988,126
Treasury stock, at cost (357 and 142 shares as of June 30, 2024 and December 31, 2023, respectively)			(22,828)				(13,631)
Retained earnings			3,299,652				3,413,644
Total SYLA Technologies Co., Ltd.’s equity			8,469,163				8,488,139
Noncontrolling interests			3,026,230				2,692,546
TOTAL EQUITY			11,495,393				11,180,685
TOTAL LIABILITIES AND EQUITY			48,383,001				40,084,427

SYLA TECHNOLOGIES CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of JPY, except for share and per share data)

		For the Six Months Ended June 30,
		2024				2023
Revenues, net			10,564,041				9,318,404
Cost of revenues			(8,619,087)				(6,977,548)
Gross profit			1,944,954				2,340,856
Operating expenses
Selling, general and administrative expenses			(1,750,353)				(1,906,117)
Total operating expenses			(1,750,353)				(1,906,117)
Income from continuing operations			194,601				434,739
Other income (expenses)
Other income			242,122				254,350
Income (loss) from equity method investments			41,134				(449)
Other expenses			(384,115)				(241,732)
Total other income (expenses)			(100,859)				12,169
Income from continuing operations before income taxes			93,742				446,908
Income tax expense			(127,573)				(149,060)
Net income (loss) from continuing operations			(33,831)				297,848
Loss from discontinued operations, net of income taxes			-				(6,742)
Net income (loss)			(33,831)				291,106
Less: net income from continuing operations attributable to noncontrolling interests			33,426				41,127
Net income (loss) attributable to SYLA Technologies Co., Ltd.			(67,257)				249,979
Net income (loss) from continuing operations per share:
- Basic			(255.99)				1,029.68
- Diluted			(255.99)				856.51
Loss from discontinued operations per share:
- Basic			-				(27.04)
- Diluted			-				(22.49)
Net income (loss) attributable to SYLA Technologies Co., Ltd. per share:
- Basic			(255.99)				1,002.63
- Diluted			(255.99)				834.02
Weighted average shares used in calculating basic and diluted net income (loss) per share:
- Basic			262,736				249,323
- Diluted			262,736				299,730

FAQ

What was SYLA Technologies' (SYT) revenue for the first half of 2024?

SYLA Technologies (SYT) reported total revenues of ¥10,564,041 thousand ($65.7 million) for the first half of 2024, representing a 13% increase compared to the same period in 2023.

How many real estate units did SYLA Technologies (SYT) sell in H1 2024?

SYLA Technologies (SYT) sold 162 real estate units during the six months ended June 30, 2024, compared to 110 units during the same period in 2023.

What was the Gross Merchandise Volume (GMV) of SYLA's Rimawari-kun platform in H1 2024?

Rimawari-kun's Gross Merchandise Volume (GMV) surpassed ¥7.5 billion (approximately $46.61 million) in the first half of 2024.

Did SYLA Technologies (SYT) report a profit or loss for H1 2024?

SYLA Technologies (SYT) reported a net loss of ¥67,257 thousand ($0.4 million) for the six months ended June 30, 2024.

What was the occupancy rate for SYLA's SYFORME series condominiums in H1 2024?

The average occupancy rate for the SYFORME series of original brand condominiums in the first half of 2024 was 99.80%.