Kanamic Network Co.,LTD Q2 FY2025 earnings call

Overall Consolidated Performance

• Total consolidated revenue: 2.661 billion yen, 108.8% year-over-year, 100.4% above forecast
• EBITDA: 964 million yen, 114.2% year-over-year, 109.6% above forecast
• Operating profit: 764 million yen, 114.3% year-over-year, exceeding both budget and prior year results
• Key user KPIs: Paid user IDs over 200,000 (121.7% YoY), free user IDs over 100,000 (116.4% YoY), service deployed in 1,395 regions (102.6% YoY), deployed at over 50,000 facilities (15-16% market share of all nursing care facilities in Japan)
• URBAN FIT24 has 23 stores (104.5% YoY)

Core Business Milestones

• Kanamic Cloud Service became the only private company to receive certification for the newly deregulated home-visit nursing care support fee II system. The certification allows care managers to serve 5 additional patients per person, creating significant revenue upside for client facilities, and gives Kanamic a unique competitive advantage over other vendors. The company also passed the V4 vendor test for care plan data linkage interoperability.
• The newly acquired The World Management obtained certification as a partner for SAP's GROW with SAP program, expanding its service capability from only serving SMEs to now serving mid-sized and large enterprise clients with SAP S/4HANA, delivering early synergy from the M&A.
• A new URBAN FIT24 directly operated store opened near Iidabashi Station in Tokyo, bringing the total to 4 Tokyo locations. URBAN FIT24 is the only 24-hour gym in Japan certified as a designated exercise therapy facility, which qualifies members for medical expense tax deductions, and has an average membership 1.5x higher than major competing 24-hour gym chains.
• Kanamic opened a new Hokkaido sales office, expanding its domestic sales footprint to 7 regional locations. It also launched a partnership with Trylight Group's Care Data Connect to simplify IoT sensor connectivity for nursing care facilities, reducing integration work and improving operational efficiency for clients.

Long-Term Strategy

• The company operates 3 core business pillars focused on DX across the full healthcare lifecycle from childbirth to end-of-life: medical/nursing care cloud services, consumer health DX, and startup/DX solution development, with synergies from integrating front-end user solutions and back-end enterprise IT.
• M&A strategy focuses on expanding the company's portfolio across healthcare IT and physical healthcare services, with a core focus on DX for medical, nursing care, and health sectors. The company entered overseas expansion in 2025 as planned, aligned with its 2030 Vision.
• URBAN FIT24 targets 100 total stores by the 2030 September term, focused on differentiated medical fitness locations in partnership with medical corporations. The business model has achieved profitability even when opening new directly operated stores, with 30% profit margins in non-opening periods.
• Kanamic holds a patent for its 2-layer cloud platform architecture, integrating point solutions for individual facilities (layer 1) and regional information sharing across care providers (layer 2), which reduces coordination costs and creates platform network effects.

1. Medical and Nursing Care Cloud Platform: Revenue grew 114.7% year-over-year. The sequential quarterly decline is explained by the expiration of one-time special demand for initial fees tied to online medical insurance claims and online eligibility confirmation from prior quarters, with high-margin monthly recurring stock revenue growing steadily.
2. Healthy Life Extension (URBAN FIT24): Revenue was 89.8% of the prior year period, due to the absence of new franchise store openings (which generated franchise fees and equipment wholesale revenue in the prior year). Despite opening 2 new directly operated stores this quarter, segment profit grew 389.9% year-over-year, driven by strong growth in direct-to-consumer membership.
3. Solution Development (Ruby Development and The World Management): Revenue grew 117.3% year-over-year, and segment profit grew 130.3% year-over-year. The newly acquired Singapore-based The World Management has contributed profit exceeding its goodwill as early as this quarter, with its results consolidated starting this quarter.

• Full-year 2025 September term guidance is maintained at 5.6 billion yen in revenue, 2 billion yen in EBITDA, and 1.6 billion yen in operating profit, reflecting the company's expectation of continued steady full-year growth after a strong first half performance.
• A full-year dividend of 7.5 yen per share is maintained, consistent with the company's policy of a 30%+ payout ratio and ongoing dividend increases.
• The company reaffirms its long-term target of 100 URBAN FIT24 stores by the 2030 September term, and continues to target expansion of market share for its core cloud platform in the growing Japanese nursing care IT market.

The provided transcript does not contain any explicit discussion of operational risks, business risks, or material operational failures.

Q: Why does the medical and nursing cloud platform revenue look like it declined quarter-over-quarter? Isn't that a sign of slowing growth?

A: The apparent quarter-over-quarter decline comes from temporary one-time special demand. Prior quarters (previous year Q4 and this year Q1) had large up-front initial fees tied to regulatory changes for online medical insurance claims and eligibility checks. That special demand has now ended, and the business has returned to its normal high-margin monthly recurring revenue model which is still growing steadily. There is no underlying slowdown in core growth.

Q: What value does the Ruby Development subsidiary add to Kanamic's overall business?

A: Ruby is a highly productive development language that is overwhelmingly popular with startups for fast product development, and many major Japanese technology companies also use Ruby for core systems. Having a dedicated Ruby-specialized development team in the group lets Kanamic meet strong market demand for Ruby development, and supports the company's startup support and new product development initiatives.

Q: What competitive advantage does Kanamic's new certification for home-visit nursing care support fee II create?

A: Kanamic is the only private company that has obtained this certification, after deregulation opened the program from a single government-provided solution to private vendors. This certification lets client facilities increase their revenue significantly by allowing each care manager to take on 5 additional patients, which can add 1 million to 1.5 million yen in revenue per care manager. No other competing private vendor has this certification, which creates a clear unique selling point for Kanamic's platform.