Ateam Holdings Co.,Ltd. Q3 FY2025 earnings call

Corporate Update

• The company changed its name from Ateam Inc. to Ateam Holdings Inc. in April 2025, and this is the first earnings briefing since the name change.
• The company has completed portfolio optimization initiatives, exited the period of profit stagnation, and entered a new phase of re-growth.
• A new adjusted EBITDA metric has been introduced to better reflect core business profitability, which adjusts for one-time M&A costs and accounting impacts from crypto asset-related activities to remove non-operating volatility.

Portfolio Optimization & Portfolio Management

• The company categorizes its businesses by growth rate and profitability to actively manage its portfolio. Low-growth, low-profitability businesses in the turnaround category are targeted for carve-out, while resources are reallocated to high-growth, high-profitability driver businesses.
• Two low-performing businesses have been carved out: end-of-life planning portal "Lifedot" was sold to Kamakura Shimpo, and insurance brokerage/portal business "Navinavi Hoken" (operated by Ateam Finery Inc.) is scheduled for share transfer to Sasuke Financial Lab.
• The company completed 4 acquisitions in the past 12 months: microCMS (leading Japanese headless CMS provider), Paddle (developer of a step-to-earn crypto rewards app), WCA (web-focused advertising agency), and Strainer (operator of economic media outlet "Strainer" and financial database "Finboard").

Segment-Specific Strategic Updates

• Digital Marketing: Growth was driven by strong performance in automotive and moving-related business lines, with year-over-year and quarter-over-quarter growth. Acquired companies have contributed to revenue growth, and cost optimization focused on prioritizing profit has delivered improved adjusted EBITDA alongside revenue growth.
• Entertainment: Existing self-developed titles are in a downward trend, but this has been offset by newly secured partnership projects, maintaining stable revenue and profit. The segment is shifting its strategy from self-developed titles to partnership projects to reduce volatility. Partnership contracts typically involve shared development costs and future revenue sharing, creating upside potential for successful launches. The segment will continue focusing on partnering with popular Japanese IP for global expansion, maintaining stable profits and keeping the business profitable while reducing risk.

For the FY2025 Q3 accounting period (February 2025 - April 2025):

1. Digital Marketing segment: Revenue of 5.454 billion yen, adjusted EBITDA of 0.795 billion yen. This segment accounts for approximately 84.8% of total Q3 revenue.
2. Entertainment segment: Revenue of 0.974 billion yen, adjusted EBITDA of 0.09 billion yen. This segment accounts for approximately 15.2% of total Q3 revenue. Total company Q3 revenue is 6.429 billion yen, with total adjusted EBITDA of 0.701 billion yen.

• Management upwardly revised the full-year FY2025 consolidated earnings guidance:
  • Adjusted EBITDA was raised from 1.35 billion yen to 1.5 billion yen
  • Ordinary profit was raised from 1.0 billion yen to 1.3 billion yen
  • Net income was raised from 0.56 billion yen to 1.0 billion yen
• Full year dividend guidance is maintained at 22 yen per share.
• Through the first 3 quarters of FY2025, cumulative performance is 71.9% of full-year revenue guidance, 94.2% of adjusted EBITDA guidance, 97.5% of ordinary profit guidance, and 102.8% of net income guidance.
• M&A will continue to be a core growth driver going forward, with target sectors including web marketing consulting/agency, digital marketing/sales enablement SaaS, customer referral media, and software development SES businesses.

• The company has historically faced profit volatility from the entertainment segment's reliance on self-developed IP, which the current strategic shift to partnership projects is designed to mitigate.
• Crypto asset price volatility creates accounting impacts on reported operating and ordinary profit for Paddle, although adjusted EBITDA is constructed to eliminate this volatility and it does not impact core business operations.
• Low growth and low profitability in non-core legacy businesses created portfolio drag that required active carve-out actions to resolve.

Only two core questions were visible in the provided partial transcript, as follows:

Q: What is the cause of the slight year-over-year decline in cumulative 9-month consolidated revenue, and why did management leave the full-year revenue forecast unchanged despite this?

A: The question was stated but the full management answer was cut off in the provided transcript. No complete response was captured.

Q: What is the current progress toward maintaining compliance with the Tokyo Stock Exchange Prime Market listing requirements?

A: The question was stated but the full management answer was cut off in the provided transcript. No complete response was captured.