AZOOM CO.,LTD Q4 FY2025 earnings call

• Past Mid-Term Plan Review (FY2022-FY2025): All annual results slightly exceeded plan targets. In the final FY2025, contracted monthly parking spots exceeded 35,000, beating the plan target of 30,000. All operational KPIs grew steadily.
• New 5-Year Mid-Term Plan (FY2026-FY2030) Strategic Direction: Focuses on deepening the core parking sublease business to accelerate organic growth and expand recurring stock revenue. The core priority is accelerating the acquisition of available idle parking spots to gain market share quickly.
• Market Size and Growth Potential: AZoom estimates that there are approximately 600,000 available idle parking spots in target regions across Japan (out of 3.55 million total legally mandated mechanical parking spots nationwide), and the company's current national market share is only around 1%, so there is large room for growth. The 2030 FY target of 120,000 contracted spots is achievable given the market size.
• SYNAPSE AI Initiative: The in-house AI platform SYNAPSE is under development to improve leasing operation productivity. The goal is to cut the workload of pure leasing business to 1/3 by the end of FY2026, and cut overall business workload by ~50%, achieving approximately 2x overall productivity improvement and 3x productivity improvement for pure leasing work. SYNAPSE works by supporting employee work: creating proposals automatically, with employees retaining final approval, leveraging the company's cumulative historical data to improve analysis and decision-making. Efficiency gains from SYNAPSE will free up employees to shift to owner-facing acquisition work, accelerating contracted spot growth.
• FY2026 Positioning: FY2026 is positioned as an investment phase. The company plans to grow headcount by 25% (including large-scale new graduate hiring in April) and expand office space, bringing upfront cost increases, but these investments will drive long-term growth.

1. Idle Asset Utilization Business (Parking Sublease Core Business): Reached over 35,000 contracted parking spots, with an operating occupancy rate of 92.9%. Q4 FY2025 revenue was 3.386 billion yen. Annual recurring revenue (ARR) hit 13.6 billion yen as of Q4 end. Inquiry volume exceeded 400,000 for the full year, a new record, driven by the newly established marketing department. The subsidiary Teppei's monthly parking rent guarantee service reached 22,000 guarantee contracts, growing steadily. Smart space reservation system contracted projects performed well and contributed to gross profit. Total company-wide revenue for FY2025 was 13.4 billion yen, operating profit was 2.6 billion yen, and net profit attributable to parent shareholders was 1.8 billion yen. YoY operating profit growth came from 2.15 billion yen in incremental rental income, 1.59 billion yen in incremental rent payments to parking lot owners, and over 0.4 billion yen in incremental fee income.
2. Visualization Business: Achieved a full-year net profit. Generative AI-powered rendering stock revenue grew steadily, with good growth momentum. This business accounted for a smaller share of total company revenue.

• FY2026 (Current Fiscal Year) Guidance: Forecasts revenue of 17 billion yen (+26% YoY), operating profit of 3.15 billion yen (+21% YoY), and net profit attributable to parent shareholders of 1.8 billion yen (+20% YoY). The slower-than-historical profit growth is intentional, due to the upfront investment in headcount and expansion. The total amount of upfront investment in FY2026 is approximately 0.25 billion yen (the difference between the expected 3.4 billion yen operating profit without accelerated investment and the 3.15 billion yen forecast).
• New 5-Year Mid-Term Plan (FY2026-FY2030) Targets: 2030 FY targets are revenue of 50 billion yen, operating profit of 12.5 billion yen, ROE of 40%, and contracted parking spots over 120,000. Forecasts a compound annual growth rate (CAGR) of 30% for revenue and 37% CAGR for operating profit over the 5-year period, driven by economies of scale and SYNAPSE-driven productivity gains that will improve operating margin.
• Dividend Guidance: Changed dividend policy to maintain a 20%+ dividend on equity (DOE). Annual dividend per share is set at 126 yen. Given current 30% ROE, payout ratio will be ~70% in the near term, and will gradually decline to ~50% as ROE improves back to above 40%.
• ROE Outlook: ROE fell to the 30% range in FY2025 due to capital increase from the Prime Market transfer, but is expected to gradually return to above 40% over the plan period.

No explicit major operational or financial risks were discussed in the available transcript content.

Q: Why is AZoom accelerating profit growth and market share expansion faster than before? / A: Management estimates 600,000 available idle parking spots exist in Japan, and the company wants to secure these spots quickly. Acquiring unclaimed new spots first is more profitable than replacing competitors, because the parking business has high switching costs, and first-mover advantage creates long-term profitability. Replacement requires offering higher rent than incumbents, which lowers margin. Securing spots early creates a sustainable competitive advantage.

Q: What is the basis for the 3x productivity improvement target from SYNAPSE? / A: The 3x target applies only to pure leasing operations, calculated by aggregating projected time savings across individual work steps after implementing AI and system improvements. For overall company operations, the final target is approximately 2x productivity improvement, after accounting for non-leasing work. The target comes from 9 months of internal testing that confirmed the efficiency gains are achievable.

Q: Does reaching 120,000 contracted spots require doubling sales headcount, meaning limited net productivity gain? / A: Owner acquisition work relies on in-person relationship building that will remain labor-intensive even as AI improves. Productivity improvements from SYNAPSE will eliminate work in back-office and leasing processing, freeing up existing and new headcount to reallocate to owner acquisition, which allows accelerating contracted spot growth without proportional overall headcount increases.

Q: What is the split between replacement of competitors and new unclaimed parking spots, and how do margins differ? / A: Currently 20-30% of new contracted spots are competitor replacements, with the remainder new unclaimed spots. Replacements require offering higher rent than the incumbent, but per-spot gross margin is still higher than average because the spot is already active. However, new unclaimed spots deliver far higher overall margins, so the company prioritizes acquiring new unclaimed spots first.