Asahi Net,Inc. Q4 FY2025 earnings call

Overall Financial and Operational Performance

• Achieved 13 consecutive years of record revenue and record operating profit for FY2025 March, exceeding the previously upward revised full-year guidance.
• Strong balance sheet: Total assets 14.787 billion yen, net assets 13.091 billion yen, equity ratio 88.5%, ROE has exceeded the 5-6% cost of equity for the last three fiscal years, meeting the 10%+ target ROE goal.

ISP ASAHI Net Operational Highlights

• FTTH connection contracts grew 28,000 YoY to 498,000; mobile contracts decreased 1,000 YoY to 47,000; churn maintained at a low 0.66%.
• Strengthened member acquisition across NTT, Web, and large corporate channels, leading to higher contract growth than historical averages. The company has won multiple top provider satisfaction awards for 11 consecutive years.
• Growth in corporate demand for fixed IP addresses for remote access to IoT devices, with IPv4 fixed IP now supported on IPoE.

VNE v6 Connect Operational Highlights

• Revenue growth was driven primarily by increased per-line traffic from media consumption and online gaming, with one partner termination having minimal impact.
• Completed network architecture adjustments to limit cost growth while supporting higher traffic volumes.

manaba Education Service Operational Highlights

• Developed new features aligned with Japan's education DX push, including integration with third-party education tools (Turnitin, Zoom), learning activity logging, and active learning support functions to reduce churn and expand customer base.

Cost and Investment Updates

• Continued multi-year core system renewal, with partial rollouts in Q3 and Q4 FY2025 leading to higher depreciation and outsourcing costs; total capital expenditure for FY2025 was in line with planning.
• Costs increased due to inflation-driven higher personnel, rent, and software expenses, plus increased marketing spend for new member acquisition.

1. ISP ASAHI Net: Total revenue of 9.578 billion yen, up 8.1% YoY (an increase of 714 million yen) driven by FTTH connection growth and fixed IP address option renewal price adjustments. Breakdown: Other FTTH services +590 million yen, Mansion All-unit Subscription Plan +85 million yen, Hikari Collaboration +60 million yen, mobile (LTE/WiMAX) +4 million yen (LTE +19 million yen, WiMAX -15 million yen), narrowband legacy services -37 million yen.
2. VNE v6 Connect: Total revenue of 2.161 billion yen, up 9.2% YoY (an increase of 182 million yen), driven by higher traffic volume per line and increased lines from partner carriers. One partner terminated the contract, which had a negligible impact on full-year revenue.
3. Education support service manaba: Total revenue of 577 million yen, down 3.8% YoY (a decrease of 22 million yen), due to the termination of contracts with 5 universities at the end of the prior fiscal year. As of March 2025, contract IDs totaled 768,000 (down 22,000 YoY), with 88 client universities (down 5 YoY).
4. Other internet-related services: Total revenue of 761 million yen, down 1.6% YoY. Total company revenue for FY2025 March was 13.078 billion yen, up 7.1% YoY (an increase of 861 million yen), marking the 13th consecutive year of record revenue and hitting 101.4% of the February 2025 upward revised guidance. Operating profit was 2.345 billion yen (17.9% margin), up 19.3% YoY (an increase of 380 million yen), hitting 102% of the revised guidance. Net income attributable to shareholders was 1.752 billion yen, up 35.9% YoY.

• Overall strategic direction for FY2026 March: Build tangible revenue growth across ISP, VNE, and manaba segments. Management projects all three segments will deliver year-over-year revenue growth.
• Top-line guidance: Total revenue of 13.5 billion yen, +3.2% YoY (an increase of 421 million yen).
• Profit guidance: Operating profit of 2.35 billion yen, +0.2% YoY (an increase of 4 million yen); ordinary profit of 2.37 billion yen, +0.2% YoY; net income of 1.659 billion yen.
• Capital expenditure guidance: 2 billion yen, with the majority allocated to ongoing core system renewal (final rollout planned for Q3 FY2026), plus steady network and server refresh spending in line with historical levels.
• EBITDA guidance: 3.45 billion yen, with an EBITDA margin of 25.6%.
• Dividend guidance: Annual dividend of 25.00 yen per share (12.50 yen interim, 12.50 yen year-end), representing a sequential increase from FY2025's 24.50 yen annual dividend. The company maintains a target payout ratio of 40-50% and a policy of stable dividend payments while retaining capital for future growth.
• Segment specific growth plans: 1) ISP: Grow FTTH and LTE mobile contracts via continued channel strengthening; 2) VNE: Maintain partner relationships and pursue new partnerships while managing traffic growth costs; 3) manaba: Expand client and contract growth via product improvements aligned with education DX demands.

• WiMAX mobile service has seen continued weak new subscriber growth, leading to consecutive years of revenue decline.
• The manaba education service faced churn from 5 university clients in the prior fiscal year, resulting in a year-over-year revenue decline for FY2025, with ongoing churn risk as educational institutions evaluate LMS providers.
• Ongoing core system renewal is increasing depreciation, outsourcing, and other operating costs, which will pressure profit margins in FY2026.
• Inflation is driving sustained increases in personnel, rent, and software costs, which could pressure margins if revenue growth does not offset higher expenses.
• VNE v6 Connect relies on a small base of 10 partner carriers; the 2025 partner termination had minimal impact, but future partner terminations could negatively affect revenue.

The provided transcript does not include a question and answer section, so there are no exchanges to summarize.