AMBITION DX HOLDINGS Co.,Ltd. Q2 FY2025 earnings call

Overall Financial Performance

• Consolidated revenue grew 31.3% year-over-year to 25.138 billion yen, and operating profit grew 82.4% year-over-year to 1.806 billion yen, hitting an all-time interim high. Operating profit reached 51.2% of the full-year plan.
• The company has delivered exponential growth over 10 years post-IPO: full-year 2025 planned revenue is 8x the IPO level, and planned operating profit is 20x the IPO level. Current ROE is 30.6%, projected to rise to 37.2% for the full year, outperforming most peers in the sector.

Key Operational Milestones

• Received management outsourcing for Panasonic's appliance-subscription rental service noiful, launched 24/7 AI-powered property recommendation for renters, and entered a strategic partnership with rent guarantee leader Casa to digitize application processes, improving customer convenience.
• Opened a new Osaka base, expanding the company's geographic footprint from the Tokyo metropolitan area to the Kansai and Chubu regions, driving an increase in managed units and strong leasing performance.

Strategic Direction

• DX Strategy: The company pursues "offensive DX" to build BI infrastructure and strengthen competitiveness, and "defensive DX" to restructure workflows and transform business processes. It has developed a full suite of in-house DX products including the flagship AMBITION Cloud, blockchain-powered e-contract system AMBITION Sign, resident support service AMBITION Me, listing workflow tool Rakutec, and matching app Rumcon. The company has commenced development of a next-generation core system for rental management to address industry changes, with plans to commercialize the system after completion. The goal is to build a full-platform digital ecosystem that enables end-to-end digital service delivery and creates new revenue streams.
• M&A Strategy: The company follows a strategy of "discontinuous growth via M&A + DX", aiming to expand the Ambition Economic Zone by integrating real estate DX, tech firms, real estate-related firms, and payment functions. Past M&A has successfully expanded management units, business scope, and adjacent service areas, and the company will continue combining M&A and DX to drive synergies and increase enterprise value.
• ESG Initiatives: The company advances paperless operations via DX to reduce environmental impact, shortened contract lead times via tech innovation, and prioritizes employee growth and safe, healthy working practices.

Dividend

• A dividend of 105.00 yen per share is planned for the current term, including a special commemorative dividend for the company's 10th listing anniversary, bringing payout ratio above 30% and a dividend yield of 5.1% based on the end-January 2025 share price.

1. 賃貸DXプロパティマネジメント事業 (Rental DX Property Management Business): Sales of 10.312 billion yen, operating profit of 1.01 billion yen, reaching all-time interim highs. Total managed units grew to 26,763 units with 15,167 sub-lease units, and occupancy hit 97.1%, well above industry average. It accounts for ~41% of total consolidated revenue, forming the company's core stock-type revenue base.
2. 賃貸DX賃貸仲介事業 (Rental DX Rental Agency Business): Operates 17 locations across two group companies. Operating profit improved year-over-year, and the segment is projected to reach profitability in the January-March peak season.
3. 売買DXインベスト事業 (Trading DX Investment Business): Sales grew 67% year-over-year to 2 billion yen (operating profit contribution not separately disclosed). Units sold increased 10% year-over-year, driven by strong completion of new condominium sales by subsidiary Veritas Investment, and successful acquisition of premium properties in Tokyo for the buy-resell business. It is the company's core flow-type revenue business, accounting for a balanced ~40% of total consolidated revenue.
4. インキュベーション事業 (Incubation Business): No investment exits in the reporting quarter. The segment focuses on investments in DX-related startups, with 6 portfolio companies already publicly listed, and one new investment completed in the current term.
5. その他事業 (Other Businesses): Profit is improving. Recent group addition DRAFT has strong performance in utility brokerage and residential storage battery sales; HOPE, the company's small-sum short-term insurance subsidiary, launched data and payment integration with Casa, and contracted with an increasing number of third-party property management firms via partnerships with industry players like Ierabu Group.

• Full-year 2025 (June term) guidance is maintained at over 50 billion yen in revenue and 3.5 billion yen in operating profit, representing ~30% year-over-year growth. Despite stronger-than-planned interim progress, management has no plans to revise full-year targets at this point.
• The company has already implemented substantial upward revisions to its medium-term management plan: 2025 June term operating profit target was raised from the initial 2.3 billion yen to 3.5 billion yen, and the 2026 June term operating profit target was raised from 3.0 billion yen to 4.2 billion yen. Management reaffirmed that the revised medium-term targets remain on track with no further changes at this time.

Management did not explicitly disclose material operational risks or failures in the provided transcript. The company notes rising construction costs and growing competition in the buy-resell segment, but states it is able to maintain stable property acquisition and profit margins via its established distribution network. Interest rate increases are also noted, but management judges the impact on the company's borrowing and business to be limited.

Q: What is Ambition DX's core M&A strategy, target sectors, and allocated investment capacity? / A: M&A is prioritized to expand the business portfolio, increase market share, improve technological competitiveness, and boost group-wide operational efficiency via synergy with existing businesses. Primary targets are IT firms with strong engineering teams, and the company is currently evaluating opportunities in rental management and construction-related sectors. Investment size is determined based on the company's financial position and fundraising conditions, with screening focused on corporate culture fit, expected synergy, financial health, and business growth prospects.

Q: How does the company compete against specialized rental DX competitors, and what is its core competitive advantage? / A: The company's key advantage is in-house core system development, an approach that differs from most competitors. It leverages custom-built systems and accumulated operational data to deliver granular, customer-aligned services that boost satisfaction and create differentiation. The company also continuously incorporates on-the-ground operational feedback into regular system updates, a capability competitors cannot easily replicate.

Q: How is the company responding to rising construction costs and increased competition in the buy-resell segment, and will it shift its business focus? / A: While more firms have entered the buy-resell space, the company's existing proprietary real estate distribution network allows it to stably source properties. It achieves consistent profitability via appropriate pricing, so it maintains a solid market position despite increased competition. The company has no plans for a large-scale shift to buy-resell; it will keep new condominium development as its core trading business and flexibly adjust buy-resell volume based on market conditions, and judges the impact of rising interest rates on its business to be limited.

Q: Is the company planning to reduce dividends after the current term's special commemorative dividend? What is the long-term dividend policy? / A: The long-term dividend policy after the current term has not been finalized as of this call. Management confirms that it will continue to consider comprehensive factors including business performance and financial position to improve shareholder returns going forward.