Capital Asset Planning,Inc. Q4 FY2025 earnings call

Core Financial Performance

• Total revenue hit 9.689 billion yen, an all-time high for the company, with 18.5% year-over-year growth
• Operating profit reached 0.53 billion yen, up 78.4% year-over-year, the second-highest profit level after 2019
• Net profit attributable to parent company shareholders hit 0.401 billion yen, up 156.3% year-over-year, driven in part by tax credits from wage increases and higher R&D spending that lowered the effective tax rate
• Operating margin reached 5.5%, up from prior year, meeting the first-year target for the mid-term plan

Key Operational Milestones

• Delivered system development support for Sony Life's popular variable annuity product SOVANI, and secured multiple new contracts for variable insurance/annuity system development from other life insurers
• Completed development of an asset management platform for major megabanks and affiliated securities firms, with development continuing in future periods
• Launched the S-Bridge goal-based planning system for Shizuoka Bank, with both contracted development fees and ongoing usage-based billing
• Completed first-ever contracted development of an IFA-focused CRM, investment order support, and portfolio analysis system for a mid-tier securities firm, expanding the company's product scope for securities clients
• Partnered with Elith, a startup from the University of Tokyo's Matsuo Laboratory, to develop an AI-OCR solution that reads paper financial statements to streamline unlisted stock valuation for inheritance tax purposes, which was launched and recognized as revenue in FY2025
• Is developing a generative AI tool that automatically generates inheritance and business succession planning proposal documents, with a launch to a life insurer scheduled for FY2026
• Established a 51% owned joint venture Trust Engine with SoftBI (Taiwan's leading wealth management platform provider with 80% market share in discretionary investment systems), which completed development of an integrated CRM, portfolio management, and financial planning platform for Japanese IFAs
• Established 100% owned subsidiary Wealth Engine to launch family office services focused on business succession, inheritance, and asset management for high-net-worth clients
• The company was ranked in the IDC FinTech Rankings 2025 TOP 100

Mid-Term Strategy Progress

• The 2025-2027 mid-term plan's first year (FY2025) exceeded all targets: revenue hit 9.6 billion yen against a 8.7 billion yen target, operating margin hit 5.5% against a 5.1% target, ROE hit 11.6% against an 8% target, and payout ratio hit 25.7% against a 20-50% target range
• Core strategic priorities are deepening the existing life insurance client base, reforming the business portfolio to grow bank/securities revenue, shifting from labor-heavy contracted development to higher-margin usage-based and fee-based recurring revenue businesses

By client segment:

1. Life insurance companies: 8.1 billion yen in revenue, contributing 83.7% of total revenue, grew from 6.9 billion yen in the prior year. Growth was driven by CRM system rebuilds and system development for new variable savings product launches tied to the new NISA policy.
2. Banks, securities firms, FP/accounting firms: Combined 1.589 billion yen in revenue, contributing 16.3% of total revenue. This segment grew year-over-year, outpacing prior growth expectations but grew more slowly than the life insurance segment in absolute terms.

By service type:

1. Contracted development: 91.1 billion yen in revenue, contributing 94.1% of total revenue, up from 92.9% in the prior year. Growth came from higher-than-expected contracted revenue for wealth management platforms and regional bank goal-based planning projects.
2. Usage-based subscription: Share of total revenue declined slightly year-over-year as contracted development grew faster.
3. Consulting: Remains a small, minor contributor to total revenue.

• For FY2026 (Sep 2026), management guides for 10.3 billion yen in total revenue, 2.53 billion yen in gross profit (19.2% year-over-year growth), 0.63 billion yen in operating profit (which would exceed the 2019 record of 0.625 billion yen), and 0.41 billion yen in net profit attributable to parent company shareholders
• For the final year of the mid-term plan (FY2027, Sep 2027), management maintains its existing target of 11.0 billion yen in total revenue, 1.0 billion yen in operating profit, 9% operating margin, and 13% ROE
• Key priorities for FY2026 are: 1) use generative AI to improve development efficiency and reduce labor requirements for contracted projects, 2) launch the Trust Engine IFA platform to grow recurring usage-based revenue, 3) formally enter the family office business for high-net-worth clients, building on the company's existing strengths in inheritance and succession planning, via alliances with tax corporations to integrate tax and asset management services

• Industry-wide competition for skilled programmer talent is intense, forcing the company to raise base salaries and pay special bonuses to retain staff, increasing labor costs
• Growth remains heavily concentrated in the life insurance segment, which makes up over 80% of total revenue, so the company is exposed to slowdowns in life insurance system investment
• The shift to higher-margin recurring revenue business is still in early stages, and the new family office and IFA platform businesses have not yet generated meaningful revenue, so their ability to meet growth and margin targets is unproven

The provided transcript does not include a question and answer section, so no exchanges can be summarized.