FreeBit Co.,Ltd. Q4 FY2025 earnings call

Long-Term Strategy and Mid-Term Plan

• Freebit operates a 10-year plan from 2021 to 2030 split into three mid-term plans: the completed seed-stage SiLK VISION 2024, the current implementation-stage SiLK VISION 2027 (2024 May - 2027 April), and the final global growth-stage SiLK VISION 2030.
• The core goal of SiLK VISION 2027 is to complete a 3-year category change from a pure-play communications company to a "5G/web3/AI implementation company born from telecommunications", anchored by the core value proposition of "location of trust" for decentralized internet infrastructure.
• Capital allocation under SiLK VISION 2027 has been updated: 14 billion yen total cash-in from business operations over 3 years, with 11 billion yen allocated to growth investment (M&A, business development, GigaPrize acquisition debt repayment), ~3 billion yen to shareholder returns, and ~1.5 billion yen to human capital and internal reserves.
• Targets for the final 2027 April year of SiLK VISION 2027 are 63-70 billion yen in total revenue and 8 billion yen in operating profit.

Key Strategic Transactions

• Completed a business and capital alliance with SoftBank, and completed the 100% acquisition and de-listing of GigaPrize, bringing the entire group under unified management for the first time. The 2026 April year is themed "One freebit" focused on integrating group operations, building unified procurement, sales, and R&D frameworks, and restructuring the business to prioritize growth areas.
• The SoftBank alliance has five core objectives: (1) joint R&D and commercial validation of core web3 technologies to enable a shift from centralized to decentralized internet; (2) joint development of 5G IoT applications combining SoftBank's network assets, Freebit's IoT/decentralization technology, and Alps Alpine's sensor/actuator capabilities; (3) joint development and commercialization of safe and secure smartphone services, building on Freebit's existing TONE platform that now works across all docomo devices via the TONE IN initiative; (4) using SoftBank's competitively priced fixed lines for GigaPrize's multi-family ISP service to improve differentiation; (5) co-selling bundled fixed/mobile services targeting 150,000 new multi-family units annually to increase added value.

Technology and New Business Developments

• Developed an edge-based generative AI LLM that runs locally on smartphones, differing from cloud-based AI by operating offline, keeping all user data on-device, and utilizing unused smartphone resources to lower power consumption and CO2 emissions. This technology is being applied to improve harmful content detection for TONE Mobile's safe smartphone offering and to simplify user interaction for decentralized services.
• Launched TONE IN, making full TONE functionality available on all docomo devices, opening up vastly expanded distribution for the platform.
• Started a joint research project with Fujita Medical University Group to develop a patient-centric web3 personal health record (PHR) infrastructure. Completed a successful proof-of-concept for a decentralized system that delivers patient medical data directly to their smartphone (no data stored on cloud servers) to enable seamless regional care coordination, with very high user satisfaction. The next phase will integrate edge LLM for simplified data explanation and My Number authentication.
• Partnered on a first creator economy project with Dean Fujioka's global fan community FamBam, providing IT platform development including web3 technology to support global creator fan communities.

1. 5G Infrastructure Support Business: Reported operating profit of 1.405 billion yen, a 13% decrease year-over-year. Sales grew driven by expanding adoption of the "freebit MVNO Pack" package and new direct-to-enterprise sales initiatives, but profit was pulled down by one-time network equipment renewal costs and increased shared expenses for personnel as the first year of SiLK VISION 2027.
2. 5G Lifestyle Support Business: Reported operating profit of 3.545 billion yen, a 26.3% increase year-over-year. This segment was the main driver of overall group profit growth, supported by solid controlled customer acquisition costs for the TONE business and steady growth in the 5G Homestyle multi-family ISP service, which reached 1,342,000 total provided units (an increase of 132,000 units from the prior year end).
3. Enterprise & Creator 5G DX Support Business: Reported operating profit of 954 million yen, a 14% decrease year-over-year. Affiliate business saw solid growth in overseas expansion, but profit was impacted by aggressive pre-launch promotional spending in Q4 for growth initiatives.

• For the 2026 April full fiscal year, management guidance is 60 billion yen in total revenue (an 8.9% increase year-over-year), 6.1 billion yen in operating profit (a 3.7% increase year-over-year), 5.77 billion yen in ordinary profit (a 10.3% increase year-over-year), and 3.5 billion yen in net income attributable to parent company shareholders (a 27.3% increase year-over-year).
• The planned annual dividend per share for 2026 April year is 41 yen, which meets the company's commitment of a 25% total payout ratio (the actual payout ratio is 25.5%), beating the prior minimum commitment of 30 yen per share.
• The company maintains its target of increasing the total shareholder return payout ratio to 30% by the 2027 April final year of SiLK VISION 2027, in line with prior guidance.
• The SiLK VISION 2027 end target of 63-70 billion yen revenue and 8 billion yen operating profit is maintained, with 2026 April on track to deliver 7-10% annual average growth in line with plan.

• There are one-time costs associated with the GigaPrize 100% acquisition and SoftBank alliance that reduced reported 2025 April net income; while these are one-time, the integration process requires significant management focus and operational restructuring in 2026 April.
• The 2025 April Q4 saw aggressive pre-spending on new growth drivers (data center relocation, web3 projects, overseas affiliate expansion, platform expansion) which reduced Q4 profit, and these investments may take longer than expected to generate returns.
• The 132,000 unit increase for 5G Homestyle was slightly lower than planned due to delayed construction activity pushing some additions into the 2026 April year, creating near-term pressure on revenue growth.
• The category transition to web3/AI is a multi-year strategic shift that requires sustained investment, and there is no guarantee that new products and services will achieve market adoption or meet growth targets.

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