TECMIRA HOLDINGS INC. Q4 FY2025 earnings call

Overall Financial Performance

• 2025 February full year revenue grew ~30% year-over-year to an all-time high, with all segments delivering revenue growth. Adjusted EBITDA increased ~3.3x year-over-year, driven by strong expansion of the high-depreciation game business.
• Operating income turned to a 91 million yen black ink profit, from a -122 million yen loss in the prior year. Lower net foreign exchange gains for the IoT & Device segment (from multi-year prior yen appreciation) allowed more profit to be recognized within operating income this period.
• Reported ordinary income of 102 million yen represented a nominal year-over-year decline, but this is due to the prior year having large one-off stock transfer gains; core business operating profit increased year-over-year. Net income landed negative due to 180 million yen in special losses from partner listed equity valuation declines and impairment on unprofitable business lines.

Life Design Segment Operational Updates

• The existing Crayon Shin-chan second game title exceeded 300,000 units sold globally, and has become a steady long-selling title. Package version launches are scheduled for H1 2025 (fiscal 2026) in North America (via Limited Run Games) and Europe (via Clear River Games), with ongoing marketing investment in the large Chinese game market.
• Launched a new indie game label IndieTech Games, to source high-quality indie titles, port them to consoles and release globally, leveraging existing distribution networks and knowhow from the Crayon Shin-chan franchise.
• Expanded HealthTech into two focused sub-areas: Wellness (preventive health for healthy consumers) and Medical Care (services for clinical care providers). Group company Wellmira is an official partner for the Osaka-Kansai Expo 2025, providing AI-powered health advice, and launched a new generative AI meal recognition feature for its consumer wellness app. The KarteConnect hospital DX platform launched for clinical use, and has been adopted by the Tsukame Clinic chain.
• Expanded X-Tech: Existing FinTech prepaid wallet technology is being used for regional smart city projects, including the TOTTEI KOBE app for the new GLION ARENA KOBE in Kobe. Acquired HRTech firm Retool at the end of 2024, adding two high-growth services: AI-powered automated recruiter HABUKU, and workforce visualization tool Retool, which will be consolidated starting Q1 FY2026.

AI & Cloud Segment Operational Updates

• Expanded RAG capabilities for enterprise AI chatbot OfficeBot to support all enterprise data formats. Plans to add AI Agent functionality in FY2026, to automatically collect and update internal corporate information.
• Launched AIdea Suite, a low-cost, fast-turnaround framework for custom enterprise AI solutions, to address growing demand for customized AI deployments alongside core off-the-shelf SaaS.
• Completed a full rebuild of the long-running cloud address book service, adding a new full-cloud version that stores no data on end-user devices for improved enterprise security, now serving over 2,300 client organizations.

IoT & Device Segment Operational Updates

• In-house aiwa consumer electronics brand entered its third year of operation, with steady growth in both retail consumer sales and B2B applications (digital signage, education). It recently entered the Chromebook market via a partnership with Google.
• Moving from a single-source manufacturing model based entirely in Shenzhen, China to a diversified global supply chain with production split across China, India and Vietnam, in response to geopolitical risks and US tariff policy changes. The new model will keep high-secrecy and industrial products in-house, while using a fabless model for commodity production to reduce costs. The transition will incur upfront restructuring costs in FY2026.

Balance Sheet and Capital Return

• Total assets increased 460 million yen year-over-year to 10.572 billion yen, driven by higher CVC investment and M&A-related securities holdings. Despite negative net income, adjusted EBITDA grew strongly and operating cash flow remained positive, so the company maintained its planned 5 yen per share dividend.

For the 2025 February full year: Total consolidated revenue hit an all-time high of 11.165 billion yen, up 28% year-over-year, with all segments growing revenue.

1. Life Design Segment: Full year revenue of 3.149 billion yen, accounting for ~28.2% of total company revenue. The segment delivered an 88 million yen operating profit increase year-over-year: the game sub-segment contributed a 313 million yen profit gain, offset by 225 million yen in upfront investment costs for other sub-segments. The segment turned a net small black ink profit for the full year after previously being unprofitable.
2. AI & Cloud Segment: The segment delivered a 41 million yen net profit increase year-over-year. Core SaaS products (OfficeBot AI chatbot, cloud address book) grew revenue for consecutive quarters, and reached profitability in Q4. While the full segment remained unprofitable for the full year, it saw a 91 million yen profit improvement compared to the prior year, with the solutions sub-segment turning profitable with a 19 million yen year-over-year gain.
3. IoT & Device Segment: This segment delivered the largest absolute revenue growth, recovering strongly from multi-year COVID-19 disruptions. Increased production volume and higher profitability at its Shenzhen, China manufacturing base drove gains, partially offset by higher selling, general and administrative expenses for management system expansion. The segment's Q4 revenue decline was driven by extended Chinese New Year factory shutdowns that reduced ODM shipments, while in-house aiwa brand sales remained steady due to pre-built inventory.

• For the 2026 February full year (FY2026), management guides for total consolidated revenue of 115 billion yen, 3% year-over-year growth, and ordinary income of 200 million yen, net income of 100 million yen, and ROE of 1.6%. The company will maintain its dividend at 5 yen per share.
• Life Design Segment revenue is guided to 29 billion yen, an 8% year-over-year decline, as no new major game releases are planned for FY2026 (development is focused on polishing new titles for launch post-FY2026, aligned with the Nintendo Switch 2 launch cycle). Despite this, segment profit is guided to increase from 77 million yen to 184 million yen, driven by full profitability of non-game X-Tech sub-segments.
• AI & Cloud Segment revenue is guided to grow 7% year-over-year, with profit expected to double, as core SaaS moves into the profit expansion phase after reaching profitability in Q4 FY2025.
• IoT & Device Segment revenue is guided to grow, but profit is expected to decline by ~100 million yen, driven by upfront restructuring costs for the global supply chain diversification transition.
• Adjusted EBITDA is expected to decline slightly year-over-year due to the absence of new game releases, which have high depreciation that boosts EBITDA. Total corporate expenses will increase due to goodwill amortization from the recent Retool acquisition and ongoing AI investment.
• The 2027 FY full year mid-term target of 140 billion yen in total revenue and 14 billion yen in ordinary income is maintained. Management expects the target to be achievable by transitioning to a stable multi-segment growth model, with game contributing a steady ~3 billion yen annual profit from 2027 onward, and all non-game segments reaching stable profitability.

• Geopolitical and trade risk: The existing China-based single-source manufacturing model for IoT & Device is exposed to US tariff policy changes and broader China-related supply chain risks. The planned supply chain diversification will incur material one-time restructuring costs in FY2026, and carries execution risk for the transition.
• Upfront investment risk: Higher-than-planned upfront investment in Life Design non-game businesses and AI R&D caused FY2025 ordinary income to come in below the prior guidance, and continued heavy investment could lead to further misses if new business lines do not scale as expected.
• Demand uncertainty for new game releases: The company has delayed new major game launches to post-FY2026 to align with the Nintendo Switch 2 launch, so revenue growth from new games will not contribute to FY2026 results, and market acceptance of the new console and upcoming titles is uncertain.
• Valuation and impairment risk: The company holds partner listed equity and goodwill from recent M&A, which could lead to further special losses if asset values decline or acquired businesses underperform expectations.

No Q&A section was included in the provided earning call transcript.