Collabos Corporation Q4 FY2025 earnings call

• Overall Financial Results for FY2025 March (full year):

  • Total company revenue was 1.906 billion yen, down 247 million yen year-over-year, as legacy service revenue declines offset growth from new AI services.
  • Operating profit reached 75 million yen, up 369 million yen year-over-year, turning net positive after company-wide cost reduction initiatives.
  • Ordinary profit was 102 million yen (up 379 million yen YoY) including 26 million yen in damage compensation received for system development.
  • Net income was 144 million yen, after booking 26 million yen in extraordinary loss for software asset impairment and 64 million yen in extraordinary gain from affiliate share sale.
  • Free cash flow turned positive, with ending cash balance of 1.307 billion yen.

• Cost Improvement Initiatives:

  • Reallocated management resources and overhauled cost structure ahead of original schedule, cutting total cost of sales by 434 million yen and SG&A by 182 million yen.
  • Largest savings came from outsourcing costs, with a 200 million yen year-over-year reduction from automating @nyplace maintenance and internalizing work.
  • Additional savings from fixed cost cuts via data center/network optimization, price renegotiation, sales price normalization, and variable cost control.

• Product Updates and Operational Milestones:

  • AI marketing system UZ received a major version update in April 2025, adding Gemini integration for automatic content generation from voice data, improved file support, and privacy controls, expanding VoC analysis accessibility beyond call centers.
  • AI customer analysis tool GOLDEN LIST received a major version update in December 2024, improving processing capacity for large datasets, usability, and security, now serving over 100 clients across multiple industries.
  • VLOOM and GROWCE were adopted as a bundled solution by major human resources recruiting firm Spool Link, improving calling efficiency by 2x and reducing unnecessary outreach.
  • Collabos obtained the "Excellent Telecommunications Operator" certification in October 2024, demonstrating compliance with anti-fraud standards and increasing customer trust.

• Mid-term Management Plan Progress (Year 2):

  • Completed the planned cost structure reform as an add-on to original growth targets.
  • For @nyplace stable growth: delivered version updates for customer self-service tools, optimized infrastructure, and improved gross margin.

1. Legacy Existing Services Segment (@nyplace, COLLABOS PHONE): Total revenue decreased 380 million yen year-over-year in FY2026 March guidance, following a 247 million yen year-over-year revenue decline in FY2025 March to contribute the majority of total company revenue of 1.906 billion yen. The decline was driven by large BPO customer business downsizing, enterprise-wide cost cutting at existing clients, and reduced contracted seat counts. @nyplace's gross margin improved 4.9% year-over-year in FY2025 March after cost optimization. 2. New Proprietary AI/DX Services Segment (VLOOM, UZ, GOLDEN LIST, GROWCE): VLOOM generated 57 million yen in revenue for FY2025 March, up 148% year-over-year. For FY2026 March, the combined segment is projected to grow revenue by 140 million yen year-over-year, and will reach ~20% of total company revenue contribution.

• For FY2026 March, Collabos forecasts total revenue will decline year-over-year as legacy service revenue declines outpace new service growth, with an overall temporary revenue decrease.
• The new proprietary AI/DX services segment is projected to grow 140 million yen year-over-year, and will reach approximately 20% of total company revenue, as the company enters a critical period to establish a new revenue base to replace @nyplace.
• Operating profit is forecast at 21 million yen, down from 75 million yen in FY2025 March, as the revenue decline is partially offset by ongoing cost optimization.
• Management expects the multi-year revenue decline trend to broadly bottom out in FY2026 March, with growing order intake in AI/DX/VoC growth segments pointing to emerging bottoming-out momentum.
• Management will promptly disclose any necessary adjustments to guidance if material changes are required.
• Five key strategic initiatives are targeted to hit guidance and drive future growth: stronger cross-service integration, DX/efficiency cross-selling to existing legacy clients, enhanced online customer acquisition, ongoing service improvement aligned with market needs, and industry-tailored sales expansion.

• Large BPO client business downsizing and broad enterprise cost cutting have driven larger-than-expected revenue declines in the legacy @nyplace and COLLABOS PHONE segments, which will lead to an overall temporary revenue decline in FY2026 March.
• The full transition to the new proprietary AI service revenue base is still in progress, and current growth of new services is not yet large enough to offset the ongoing revenue decline from legacy services.
• The Q&A section includes a listed question about failure to meet Tokyo Stock Exchange listing maintenance requirements, no further details are provided in the available transcript.

Q: What is the main driver of the sharp revenue decline for the legacy @nyplace segment? Is it tied to an overall industry-wide reduction in Japanese call center volumes? / A: The available full transcript only includes the start of this question, with no published management answer in the provided document. The partial question confirms that the decline is material, aligning with management's earlier note that large client contractions drove the segment drop.

Q: Can you share the current status of the company's free cash flow? / A: Free cash flow improved to a positive balance in FY2025 March, driven by 208 million yen in net cash from operating activities and 31 million yen in net cash from investing activities (which includes proceeds from the affiliate share sale that offset new product development spending). The company ended the period with a healthy cash balance of 1.307 billion yen. No additional negative cash flow pressures were noted.

Q: How is AI adoption progressing at Japanese call centers, and where does Collabos see current market demand? / A: There is strong and growing demand for AI-powered tools that improve call center efficiency, particularly for voice recognition, VoC analysis, and outbound prospecting. Demand is also growing for flexible, cloud-based solutions that support remote and overseas office operations, which has benefited VLOOM's growth. Collabos is positioned to capture this shift with its integrated cross-service AI product lineup.

Q: Why was a special loss booked in the period, and what is the context for the impairment? / A: The 26 million yen special loss corresponds to impairment of software assets for older legacy products, aligned with the company's strategic shift to focus on new AI-focused proprietary services, and the overall cost structure optimization drive.