Ateam Holdings Co.,Ltd. Q4 FY2025 earnings call

• Prime Market Listing Maintenance • Confirmed compliance with Tokyo Stock Exchange Prime Market listing maintenance standards after multi-year efforts; the 10 billion yen (100亿円) floating market capitalization requirement was met, reaching 13.9 billion yen (139億円) up from 8.1 billion yen (81億円) in 2023 • Key initiatives to achieve compliance included executing growth strategy, increasing floating market capitalization, expanding shareholder returns, strengthening corporate governance, and enhancing IR activities • Newly established a shareholder benefit system to improve investment attractiveness and stock liquidity; completed a share repurchase and cancellation in July 2025

• Strategic Shifts for Mid-Term Management Plan (FY2025-FY2028) • Corporate Strategy: Expanding from core BtoBtoC and BtoC areas into the BtoB space, offering the company's existing digital marketing expertise to clients for customer acquisition support and operational efficiency improvement • Growth Strategy: Continuing to prioritize inorganic growth via M&A, executed in partnership with Advantage Partners, to drive PER growth • Financial Strategy: Shifting to a leveraged balance sheet strategy; the company was previously unlevered due to lack of large investment opportunities, and will now borrow to fund M&A growth investments, creating a positive cycle of profit generation, while optimizing leverage and returning excess capital to reduce cost of capital • Organizational Strategy: Strengthening holding company-based monitoring of business units to support WACC reduction

• Operational & Financial Results • Full year consolidated net sales totaled 23.917 billion yen (239億1,700万円), flat year-over-year and 95.7% of management forecast • Adjusted EBITDA totaled 1.719 billion yen (17億1,900万円), up 232.2% year-over-year and 114.6% of management forecast • Ordinary profit totaled 1.585 billion yen (15億8,500万円), up 260.3% year-over-year and 122.0% of forecast • Net income totaled 1.036 billion yen (10億3,600万円), up 108.7% year-over-year and 103.6% of forecast • Profit growth was driven by strengthened management and optimized business portfolio, including divestment of unprofitable/non-core businesses and acquisition of new high-potential businesses • Adjusted EBITDA is defined as EBITDA (operating profit plus goodwill amortization and depreciation) adjusted to remove one-time M&A-related costs and crypto asset-related valuation/accrual impacts from Paddle's BitWalk app, to reflect core operating profitability • Q4 FY2025 saw a year-over-year and sequential decline in adjusted EBITDA, driven by planned strategic pre-investment for FY2026 including increased talent investment (bonuses, paid stock options) and advertising/business development spending

• Shareholder Return Policy • Mid-term target: Total shareholder return of 4 billion yen (40億円) to 5 billion yen (50億円) over FY2025-FY2028, with an average total payout ratio of 100% • Introduced a progressive dividend policy, committing to maintain or increase dividends annually • FY2025 full year dividend: 22 yen per share, total dividend payout of 410 million yen (4億1,000万円); adding 1.472 billion yen (14億7,200万円) in share repurchases, total FY2025 shareholder return reached 1.882 billion yen (18億8,200万円), for a total payout ratio of 181.6% • FY2026: Changed to semi-annual dividend payments (interim + final), with a full year dividend increase to 28 yen per share (14 yen interim dividend)

1. Digital Marketing Business: Full year revenue was 101% of the prior year, adjusted EBITDA was 159.5% of the prior year. Growth was driven by contributions from newly acquired companies via M&A, and strong performance of the used car purchase comparison site and moving price comparison site businesses. In Q4 FY2025, revenue grew 5.3% year-over-year, with a sequential decline from Q3 which is seasonally the peak period for moving-related services.
2. Entertainment Business: Full year revenue was 95.4% of the prior year. Revenue decline was limited to a small drop, as contracting development revenue from collaborative projects with strong IP-holding companies offset declining sales of existing game titles. Adjusted EBITDA turned positive for the full year. As of FY2025, approximately 20% of the segment's revenue comes from collaborative projects, with an upward trend since FY2024. The segment continues to focus on cost control for existing titles and steady execution of collaborations to maintain stable profits.

• FY2026 (August 2025 - July 2026) consolidated guidance: Net sales of 24.5 billion yen (245億円), adjusted EBITDA of 1.5 billion yen (15億円), ordinary profit of 0.9 billion yen (9億円), net income of 0.6 billion yen (6億円)
• The forecast is deliberately conservative, reflecting a year-on-year expected decline in profit, primarily due to the closure of one large collaboration project in the Entertainment segment, which has been subtracted from the base forecast
• Management notes that upside potential exists: FY2026 is framed as a year of foundation-building for the mid-term plan, with ongoing new M&A activity and initiatives to improve profitability of existing services via marketing and feature improvements
• The mid-term management plan target of 4 billion yen (40億円) adjusted EBITDA by the end of FY2028 remains in place, with management seeing strong progress from FY2025 results and positioned for renewed growth

• Crypto asset price volatility creates mismatched impacts between operating profit and ordinary profit due to required accrual accounting for BitWalk points redeemable for crypto, creating volatility in reported earnings that adjusted EBITDA is designed to offset
• The domestic mobile game market is highly competitive, creating high barriers for new original IP entry, which requires the company to focus on collaborative development with existing strong IP holders
• EBITDA volatility is possible in the Entertainment segment depending on new collaboration project win rates after the reallocation of staff and development budget from the closed project
• The D2C business requires front-loaded advertising investment in FY2026 that will not contribute to revenue until FY2027, creating near-term pressure on margins even if expected to pay off over time

Q: Which areas of existing business will see increased active investment in FY2026? / A: Management identifies the automotive-related (used car appraisal/purchase comparison site) business within Digital Marketing, plus the D2C business, as areas that will see increased marketing and business investment. D2C investment began in Q4 FY2025, with investment payback expected within roughly six months. While some costs are front-loaded ahead of FY2027 revenue contributions, management does not expect the business to fall into full-year red ink, and expects sustained long-term growth.

Q: What are the main drivers of the expected year-over-year profit decline in FY2026's guidance? / A: First, the large crypto asset valuation gain that boosted FY2025 ordinary profit is not projected to recur; the guidance assumes no change in crypto prices from the end of FY2025, eliminating this one-time boost. Second, FY2025 included one-time gains from business divestment and sales of investment securities that are not expected to repeat in FY2026, creating a base comparison effect that reduces projected net income.

Q: What is the segment breakdown of the projected FY2026 adjusted EBITDA, and what are the expected trends? / A: Management does not publicly disclose the formal segment-level breakdown of the full-year forecast. For trends, the Digital Marketing segment is not expected to see a year-over-year decline. The Entertainment segment does expect a decline due to the closure of one collaboration project from external factors. Management noted that personnel and development costs from the closed project will be reallocated to other new projects, so final results may vary based on future new project wins.

Q: What is Ateam's outlook for the game market and its development strategy going forward? / A: Management views the domestic mobile game market as extremely competitive with very high barriers to new entry, but sees the global overall game market continuing to expand. The company's development strategy focuses on multi-device deployment using engines like Unreal Engine, rather than mobile-only development, while retaining the core strategic focus on collaborative development with partners that own strong existing IP (such as the prior collaboration with Sanrio), rather than pursuing high-risk original IP development.