ULURU.CO.,LTD. Q2 FY2026 earnings call

• Corporate Vision & Strategic Positioning

  • Core mission: Solve labor shortage issues in Japan, which is projected to lose 1,600 million working-age people by 2040, by expanding access to underutilized labor pools (e.g., housewives, seniors, people with disabilities) and driving productivity improvements via AI/DX.
  • Growth strategy: Build multiple No.1 services in niche markets that large incumbents have ignored, rather than competing directly for large mainstream markets; all new products are developed in-house, with M&A and minority investments (via ULURU IMPACT BASE) used to accelerate growth.
  • Core core business NJSS operates in the 27 trillion yen annual Japanese public tender market, which is underpenetrated (only 1 of 10 existing companies participate in public tenders), creating large room for growth. It is also recession-resistant, as public spending tends to increase during downturns to stimulate the economy.

• NJSS Operational Updates

  • NJSS is a subscription SaaS that aggregates public tender information from ~9,000 government agencies, with a database of 20 million cumulative tender and winning bid records. The service has high barriers to entry because past bid data is removed from public websites within weeks, and cannot be replicated by new entrants.
  • NJSS uses a low-cost data collection model that combines AI crawling for most information, with remote crowdworkers handling hard-to-automate tasks (e.g., digitizing scanned handwritten documents), eliminating fixed overhead from in-house teams and enabling 91% gross margins.
  • Current paid contracts: 7,158 as of September 2025. ARPU growth is driven by three factors: price increases for new contracts, reduced discounting due to expanded sales and customer success teams, and cross-selling of adjacent services (GoSTEP, bid qualification management portal, bid consulting BPO).
  • New adjacent growth: Chose inflection point to expand into the high-potential municipal DX market, leveraging existing relationships with local governments and data assets to develop DX tools for public procurement processes and build a marketplace connecting municipalities with DX vendors. The market has massive potential: a 10% productivity improvement for 3.4 million public servants would generate 2.5 trillion yen in annual economic gains.

• Other Business Updates

  • fondesk: A telephone answering SaaS launched in 2019 that grew 10x during the COVID remote work trend, now with 5,885 paid contracts and 1.1 billion yen in ARR. It is currently in a strategic investment phase, and recently launched a low-cost automated IVR product to target small businesses, avoiding generative AI in IVR to guarantee response accuracy.
  • BPO: The company's original business, currently focused on AI training data preparation and new CSer BPO that provides customer success outsourcing for other SaaS companies, leveraging ULURU's operational experience.

For the FY26/3 2Q cumulative period, segment performance is as follows:

1. NJSS: Revenue of 1.812 billion yen, up 16.8% year-over-year, contributing 52.7% of total cumulative revenue. It is the company's core high-margin segment with a 5-year average gross margin of 91% and 3.5 billion yen in ARR.
2. fondesk: Revenue of 555 million yen, up 16.1% year-over-year, contributing 16.1% of total cumulative revenue. It currently has 1.1 billion yen in ARR.
3. Photo Business (えんフォト): Revenue of 373 million yen, up 12.6% year-over-year, contributing 10.8% of total cumulative revenue.
4. BPO Business: Revenue of 688 million yen, up 3.3% year-over-year, contributing 20.0% of total cumulative revenue. The low growth rate is attributed to timing fluctuations in contracted projects, not a structural slowdown.

Total cumulative company revenue is 3.441 billion yen, up 13.2% year-over-year.

• Maintains the medium-term target of 20%+ CAGR for revenue and EBITDA.
• Maintains the FY26/3 full-year EBITDA guidance range of 1.05 billion yen to 1.2 billion yen. EBITDA progress through 2Q is 24.9%, which is well ahead of the prior year's 17.4% pace, putting the company on track to hit the full-year target.
• Confirms shareholder return policy: targets a 15%+ payout ratio, with a progressive dividend policy that does not cut absolute dividend amounts per year.
• Expects to continue annual price increases for NJSS aligned with service value improvements, and will optimize ARPU by balancing price increases against contract volume growth to maximize total revenue.
• The company's cash reserve is currently held to fund future growth initiatives: organic new business development and M&A, not earmarked for share buybacks at this stage pending further analysis of the impact of recent stock split on share liquidity.

• New large competitors could theoretically enter the NJSS market, but the 17 years of accumulated historical bid data creates a very high barrier to entry that new entrants cannot replicate.
• Too rapid price increases for NJSS could lead to higher customer churn, so management is carefully balancing price growth and contract volume growth to find an optimal balance.
• Lower-than-expected growth in non-core segments could put pressure on achieving the 20% overall medium-term CAGR target, though management notes existing growth from NJSS and emerging growth from fondesk will offset this, and M&A will be used to maintain overall growth targets.
• Current share liquidity is relatively low, which is a near-term priority that the company is addressing via a recent stock split, and will evaluate further shareholder return actions after assessing the split's impact.

Q: Why is EBITDA guidance lower than the 2024/3 period despite faster sales growth, and what is the investment thesis for higher current spending? / A: The 1.517 billion yen EBITDA achieved in 2024/3 was the result of aggressive cost cutting (holding back hiring and marketing spending) to hit the final year target of the prior mid-term plan, which was not sustainable long-term. The lower current guidance reflects planned investments in organizational building, including increased hiring to reduce overwork on core teams and expanded R&D for future growth, which is a necessary investment for sustainable long-term growth rather than a reflection of weak performance. If the company hits the upper end of the guidance range, EBITDA will still grow 20% year-over-year.

Q: What is the positioning of the acquired nSearch service relative to core NJSS, and what synergies have been achieved? / A: nSearch is positioned as a lower-cost alternative to NJSS, with only crawler-collected data and no customer support, serving price-sensitive customers. It acts as a funnel: nSearch customers can upgrade to full-service NJSS as their needs grow, and it provides a lower-tier option for customers that cannot afford full NJSS pricing. The acquisition was synergistic, and the nSearch engineering team has been integrated into the NJSS development team to improve core product capabilities. The acquisition has been absorbed successfully as of April 2025.

Q: Will the company pursue B2C new business expansion in the future? / A: While B2C is not ruled out completely, the company has deep expertise and existing customer networks in B2B, and B2C requires much larger upfront marketing investment with higher risk. The company will prioritize opportunities that leverage its existing core strengths, which are concentrated in B2B, so B2C is not a near-term priority.

Q: What explains NJSS's low churn rate (below 1.5%), and what drives high customer satisfaction? / A: Low churn is driven by two core factors: expanded customer success teams that proactively onboard new customers, with active follow-up to help customers use the tool effectively, and dedicated training seminars for first-time tender participants, 60% of new customers are new to tendering. Second, the product's core strength is unmatched data comprehensiveness from the human + AI collection model, plus expanded support for end-to-end bid workflow (e.g., qualification management) that makes the service a critical tool for customers that rely on public tender for revenue.