Capital Asset Planning,Inc. Q1 FY2026 earnings call

• Company Overview & Core Positioning

  • The company was founded in 1990, listed on the Tokyo Stock Exchange Standard market, with a mission to deliver lifelong financial security from birth to old age and smooth inheritance via digital technology. Its purpose is to create financial wellness through the integration of FinTech and IT, and its vision is to become an innovator in financial services and asset management, including operating as a financial services player directly.
  • The company serves 30 out of 41 domestic life insurance companies (23 active current clients), plus major banks, leading securities firms, and multiple IFA firms, with established partnerships with Money Forward.
  • The company was ranked 50-100 in the IDC Fintech Rankings 2025 Top 100, and it is the only Japanese company included in the ranking.

• Core Competitive Strengths

  • Long-standing proven development track record with major domestic financial institutions, paired with highly specialized in-house talent: the company employs programmers capable of handling cutting-edge technology including cloud, big data, and generative AI, plus in-house certified public accountants, tax attorneys, and certified financial planners. All programmers are required to obtain financial planning qualifications after joining, building a team with combined expertise in finance, tax, and technology.
  • Active generative AI development initiatives:
    1. LibelliS: a generative AI-powered system for checking life insurance solicitation documents to ensure compliance with FSA standards and company-specific requirements, which drastically reduces manual work that previously required 100 staff per new product.
    2. Partnership with Elith (a startup from the University of Tokyo Matsuo Lab): AI-OCR powered financial statement reading for efficient valuation of unlisted and own company shares, already delivered to multiple life insurance clients.
    3. In-development generative AI-powered inheritance and asset succession proposal system, scheduled for commercial launch in April 2026, which will automatically generate plain-language proposals covering inheritance tax preparation, asset division, tax reduction, and asset management.

• 5 Strategic Priorities for Mid-Term Management Plan

  1. Deepen existing client需求 with life insurance companies: supporting carriers' strategic shift to asset-building products to compete with new NISA offerings from banks and securities firms.
  2. Business portfolio reform: expand the share of revenue from the bank and securities segment to reduce over-reliance on life insurance clients.
  3. Enter the family office business via 100% owned subsidiary Wealth Engine.
  4. Shift from custom project-based development to recurring revenue stock business by developing a new platform for IFA and securities firms.
  5. Actively pursue expansion into overseas markets.

• Business Portfolio Reform Progress

  • The company established Trust Engine, a 51% owned joint venture with Taiwan's SoftBI (which holds 80% market share for discretionary investment system in Taiwan), to localize and customize SoftBI's system for Japanese financial regulation, with a phased launch starting from spring 2026.
  • The joint venture will provide IFA platform services with usage-based pricing, transitioning the company from time-and-materials custom development to recurring revenue.

For the 2025 September full year, the company reported total consolidated sales of 9.689 billion yen, operating profit of 0.53 billion yen, and net profit attributable to parent company shareholders of 0.401 billion yen. Approximately 85% of total revenue currently comes from the Life Insurance segment, which provides custom system development for insurance companies' new asset-building products, system licenses, and consulting. The remaining 15% of revenue comes from the Bank & Securities segment, which includes wealth management system development, IFA platform solutions, and licensed system sales, and this segment has a profit rate approximately 10 percentage points higher than the Life Insurance segment. The third segment, Asset Management, is a new business line currently in pre-launch preparation via the company's fully-owned subsidiary Wealth Engine, and has not yet generated material revenue.

• Full year 2026 September period revenue is forecast at 10.3 billion yen, which will mark the company's first time exceeding 10 billion yen in annual revenue.
• The mid-term management plan (running 2025 to 2027 September) targets 13% ROE and 1 billion yen operating profit for the final 2027 September period, with a total target revenue of 11 billion yen.
• Management expects that even if bank and securities revenue reaches only 30% of total revenue (below the planned 40% target), the 1 billion yen operating profit target will still be achievable due to the segment's higher profit margin, and targets a 9% overall operating profit margin by 2027.
• The company targets sustained annual average revenue growth of over 10%, which management views as fully achievable, and expects growth to continue for at least the next 3 fiscal years.
• For dividends, the company maintains its progressive dividend policy (no dividend cuts, with at least flat or increased dividends each year), targets a payout ratio between 20% and 50%, forecasts a full year 2026 September dividend of 19 yen per share (up from 18 yen per share in 2025), and expects continued dividend increases alongside forecast earnings growth.
• The seasonal concentration of revenue will gradually ease as the bank and securities segment grows, leading to more balanced quarterly earnings over time.

• Seasonal revenue volatility: the company uses percentage-of-completion revenue recognition, and new life insurance product launches are almost always scheduled for early April or early October, so delivery and acceptance are concentrated at the end of March and end of September, leading to weaker performance in Q1 and Q3, and concentrated revenue recognition in Q2 and Q4. This seasonal pattern is expected to persist for the foreseeable future even as gradual leveling occurs.
• Upward cost pressure: demand for programmers with combined expertise in tax and modern portfolio theory is extremely high in the current market, leading to expected increases in labor and outsourcing costs going forward. Management is addressing this via generative AI-powered programming automation, which is already in implementation.
• Industry competition: after 3 years of current favorable market conditions, management expects that only companies that can adapt to changing market conditions will survive and grow, requiring continuous digital transformation to match future market conditions.

Q: Could you explain the background and ownership attributes of your major shareholders, GK Fintech Management and SMBC Trust Bank?

A: GK Fintech Management is a 100% owned asset management company held by my eldest son, which owns 15.33% of the company's shares. The shares held by SMBC Trust Bank are part of a specific securities trust that holds shares I gifted to my three children via annual gifting over 15 years before the company's listing. In total, I hold just over 9%, my wife holds approximately 1.3%, and our combined family holding exceeds 37% to ensure management stability. Around 30% of total shares have already been transferred to the next generation as part of long-term inheritance planning.

Q: What drove the 18% year-over-year revenue growth in the 2025 September period?

A: Japanese life insurance companies are undergoing a major strategic shift to launch new asset-building products to adapt to the new NISA framework. Our major client Sony Life launched the variable annuity product SOVANI, which has exceeded 1 trillion yen in contract assets in just 2.5 years, making it one of only 11 domestic investment products to hit this milestone. Demand for the design and application system for this new product drove strong sales growth to Sony Life, and multiple other life insurance companies are also launching their own asset-building products, leading to more development projects for the company. We also delivered an asset management platform for a securities firm's financial product brokerage channel at the end of September 2025. Combined with growing demand for wealth management systems for salaried workers, business owners, and high-net-worth clients in the bank and securities segment, this drove the 18% year-over-year revenue increase.

Q: Is it correct that new product launches from life insurance companies directly lead to stronger order flow for your company?

A: That is exactly correct.

Q: Is there a seasonal factor behind the quarterly earnings volatility we see in your results?

A: Yes, we use the percentage-of-completion method for revenue recognition. Most life insurance new product launches are scheduled for early April or early October, so all work related to new product systems must be completed by the end of March and end of September, so delivery and acceptance are concentrated in these two periods. This means Q1 and Q3 tend to be relatively weak, while Q2 and Q4 see maximum operational utilization and concentrated revenue recognition. As we increase the share of revenue from the bank and securities segment, this trend will gradually moderate over time.

Q: Does this mean revenue will become more level as the bank and securities segment grows?

A: That is correct. Q1 was often a loss in previous years, but it was profitable in the last fiscal year, which is an early sign of leveling. That said, there was still a large gap between Q1 and Q2 performance last fiscal year, and we expect this seasonal pattern to continue for some time since most of our clients are still life insurance companies.

Q: How sustainable is the current growth trend for revenue and profit?

A: Looking at the life insurance segment, traditional protection products (death, hospital, long-term care) are in structural decline due to demographic changes, so carriers are all rushing to launch new asset-building products after the success of Sony Life's SOVANI. We expect this trend to continue for at least the next 3 fiscal years. For the bank and securities segment, we are already in the great inheritance era, as the baby boomer generation born 1946-1947 is already starting to pass away, which drives demand for inheritance tax planning, asset rebalancing, and system support for banks and securities firms serving high-net-worth clients, and this demand will continue to grow. IFA is a particularly high-growth area, as IFAs focus on client-centric service, and demand for integrated IFA platforms that include CRM, portfolio management, financial planning, inheritance tax calculation, and goal-based planning simulation is growing rapidly. We are currently developing these systems, which can be sold to both IFAs and securities firms, so as long as the great inheritance era continues, the opportunity for continued revenue and profit growth is strong. That said, demand for specialized programmers is extremely high, so we expect labor and outsourcing costs to rise, but we are already implementing generative AI automation for programming to offset this pressure and secure continued growth.

Q: Do you expect the business environment to remain favorable for the next 3 years?

A: Yes, it will remain favorable, but I also believe that only companies that can adapt to the external environment will survive and grow after 3 years, so we need to continue evolving our digital capabilities to match the future environment.

Q: Compared to high-growth peers like Finatext, your valuation multiple looks low. Do you see the same 40% annual growth potential for your company?

A: Finatext is a pioneer in Japan's asset management industry, building a user-friendly platform for IFAs in a BtoBtoC model, which we recognize is a strong strategy. We also see large growth potential in this market, so we established the Trust Engine joint venture with SoftBI of Taiwan to bring a proven platform to Japan, localized for Japanese regulation, to launch in spring 2026. This strategy is similar to Finatext's, and we will pursue usage-based recurring revenue rather than only one-time custom development. Our current PER is around 12x, compared to the average of ~20x for information technology companies on the TSE Standard market, so I think our growth potential is not fully priced in, and our strategy is not fully communicated to the market. While 40% annual growth like Finatext is unlikely given our different business mix, we see sustained annual growth above 10% as achievable.

Q: Is it correct that 2025 September revenue grew 18% year-over-year?

A: Yes, that is correct.

Q: What is the outlook for operating margin, and can you approach the double-digit margin levels that peers like Finatext achieve?

A: Our current life insurance business is mostly time-and-materials custom development, and we need to shift this to license-based and balance-based recurring revenue. The bank and securities segment already has a profit margin 10 percentage points higher than the life insurance segment, so growing this segment's revenue share will automatically lift our overall margin. We are also building the IFA platform to shift from custom development to license business, with one-time and recurring license fees that will increase revenue and improve margin. Because Japan has very high tax rates (top 55% for inheritance, gift, and income tax), building combined tax and asset management capability is critical to serving the high-net-worth market, and our in-house mix of tax/finance/technical expertise lets us deliver these systems as licenses and calculation libraries, so there is large room for margin improvement.

Q: Is this the typical high-margin, recurring revenue profile we see with license sales?

A: Exactly. To properly serve Japan's high-net-worth market you need both tax management and asset management capability, which almost no other providers have combined in-house, so we have a strong competitive position to deliver these systems and improve margins.

Q: How achievable is the 9% operating margin target in the mid-term plan?

A: Our mid-term plan targets 11 billion yen in revenue by 2027. Even if we only reach 30% revenue share for bank and securities (below the 40% plan), the higher margin of this segment means the 1 billion yen operating profit target is still achievable based on my internal analysis.

Q: Can you explain your new family office business in more detail, since it is different from your traditional system development model?

A: Family office business integrates asset succession, business succession, and asset management. Traditionally Japanese inheritance planning focused only on tax reduction, but going forward we expect it to follow the US/Europe model of integrating asset management, so our model for Japan is a fully integrated offering across all three areas. This business will be led by our 100% subsidiary Wealth Engine, which is currently applying for investment advisory and Type II Financial Instruments Business licenses from the Kanto Local Finance Bureau. Trust Engine is building the platform for this business, which will be used by Wealth Engine, other accounting firms, and IFAs. After obtaining the license, Wealth Engine will build and sell customized fund wrap products using the Trust Engine platform, and we will partner with tax attorney firms to provide a one-stop integrated service combining tax and asset management, creating a Japanese version of the US RIA and Swiss EAM model. Wealth Engine already hired experienced talent with 20 years of experience as an asset management analyst and compliance professional, so it is positioned to become our operating arm for this business, fulfilling our vision of becoming an asset management innovator. Japan is the only major developed market where family office is not a large established business, because complex Japanese tax rules create high barriers to entry. We are leveraging our combined tax and asset expertise to build this market, and once established, it is hard for new entrants to compete because of the specialized knowledge required, so we expect to maintain a strong competitive advantage.

Q: If you successfully enter this market, it will be hard for later entrants to catch up, so you will maintain a competitive advantage, correct?

A: That is exactly right. To run a multi-client family office business in Japan you need deep tax knowledge, plus asset management expertise for financial assets, real estate, and unlisted shares, plus understanding of how life insurance fits into inheritance tax planning. Most traditional accountants and tax attorneys do not have asset management expertise, so we are uniquely positioned with our in-house team of qualified experts to build this business.

Q: Can you explain your shareholder return policy?

A: We provide shareholder return via two channels: cash dividends and shareholder benefits. For 2025 September we paid a total 18 yen per share dividend (interim plus final), and for 2026 September we forecast a total 19 yen per share dividend (9.5 yen interim, 9.5 yen final). We have a progressive dividend policy, which means we will never cut dividends, we will at minimum hold dividends flat and increase them when possible. We target a payout ratio between 20% and 50%, and we are currently near the 20% level. We expect continued earnings growth so shareholders can expect continued dividend increases going forward. For shareholder benefits: shareholders holding 300+ shares for 1+ year get a 2,000 yen QUO card; 300+ shares held for 3+ years get a 3,000 yen QUO card; 1,000+ shares held for 1+ year get a 3,000 yen original catalog gift; 1,000+ shares held for 3+ years get a 3,000 yen catalog gift plus a 1,000 yen QUO card. We maintain both cash dividends and benefits as part of our shareholder return strategy, with the progressive dividend policy in place for the current fiscal year, so shareholders can expect dividend increases alongside expected earnings growth.