Yappli,Inc. Q4 FY2024 earnings call

• CEO Summary & Core Transformation

  • Over 2023-2024, Yappli completed a major corporate restructuring to improve profitability and productivity, which delivered results with 2024 marking the first full-year net profit since the company's IPO.
  • Yappli's mission is to become the infrastructure for mobile digital transformation (DX) by enabling enterprises to build apps via its no-code platform, with over 34 million monthly active users across its platform.
  • Yappli has held the #1 market share in Japan's fully no-code app platform category for three consecutive years per independent third-party research.

• Product Strategy

  • Existing product enhancement priorities: (1) Further improved design and UX flexibility, (2) Leverage accumulated user data for analytics and product development, (3) Strengthen third-party system integrations to increase product value, (4) Integrate AI functionality into core products.
  • AI integration has already begun: AI-assisted push notification copy generation and AI-powered app benchmark scoring have been launched, with plans to expand AI use to professional services (app marketing and design) to improve productivity.
  • Accelerate multi-product expansion: Yappli CRM now supports email and SMS outreach to add non-app customer touchpoints, and new web product Yappli WebX is in development for 2025 launch, enabling integrated app + web experiences for clients.

• Solution Strategy

  • CX Segment (mature market): Uses segmented go-to-market: account-based marketing (ABM) for enterprise clients (focused on replacement of legacy apps and high-value consulting), and efficient targeted marketing for the 6,000-addressable mid-market client segment.
  • EX Segment (early-stage growth market): Focuses on demonstrating the effectiveness of EX apps in improving employee engagement and reducing turnover, with a near-term focus on the 4,600 large listed enterprise clients that have high existing awareness of human capital management challenges, before expanding to the mid-market. Yappli completed multiple high-profile enterprise EX launches in 2024 including SBI Holdings and TBS Television.

• GTM & Human Capital Strategy

  • End-to-end GTM process: Marketing > new sales > customer success drives expansion, including cross-selling EX solutions to existing CX clients and upselling higher-value add-on features, with successful use cases already emerging.
  • Human capital investment prioritizes three pillars: individual career growth, organizational capability building for middle managers, and corporate culture building, including the use of Yappli's own internal EX app to improve internal communication reach and engagement.

Yappli operates with two core product segments and two revenue categories: 1. Platform Revenue (recurring): This consists of system usage fees for Yappli and Yappli CRM, which scales with the number of client apps. Annual Recurring Revenue (ARR) reached 4.74 billion yen in 2024, growing steadily quarter-over-quarter. CX (Customer Experience) solutions account for approximately 70% of total platform revenue, with a total of 587 Yappli for Marketing apps (2 net new apps added in Q4). EX (Employee Experience) solutions (Yappli UNITE) had 98 total apps, adding 6 net new apps in Q4, gradually growing its share of total app count. 2. Professional Services Revenue (project-based): This includes app development support and post-launch growth consulting (app marketing). Full year 2024 professional services revenue grew 15.5% YoY, outpacing overall company revenue growth. In Q4 2024, professional services revenue was 250 million yen, down from 300 million yen in Q3 due to typical project timing variability.

• For the 2025 December fiscal year, Yappli targets 6.2 billion yen in total revenue (12.5% YoY growth), 750 million yen in operating profit (36% YoY growth), 830 million yen in net profit, and 810 million yen in adjusted EBITDA (including stock-based compensation). The company switched from a range guidance to a fixed point guidance this year to reflect a focus on delivering predictable growth.
  • The long-term target remains to exceed 1 billion yen in adjusted EBITDA by the end of 2026, on track for achievement with 2025 guidance consistent with this trajectory.
  • 2025 planned personnel cost is 2.15 billion yen (10% YoY growth), with total full-time headcount targeted to reach ~280 by year-end, resuming moderate growth after three years of cost control.
  • 2025 planned advertising and promotion expense is 750 million yen, with 700 million yen allocated to lead generation (the highest level in recent years) and 50 million yen to mass marketing (the lowest level in recent years), shifting to a higher efficiency-focused strategy after completing initial EX brand awareness building. Spending will be adjusted flexibly based on 2025 performance, with even 1.8-190 million yen allocated per quarter.
  • Yappli's long-term strategic goal is to maintain double-digit growth in both revenue and profit annually, balancing growth and profitability after completing its transition from an investment-first phase to a profit-generating phase.

• Rising costs: Persistent yen depreciation has increased server costs, and rising engineering labor costs have pushed up cost of goods sold, reducing full year 2024 gross margin by 3 percentage points to 66%. Q4 2024 gross margin fell further to 63.6% due to one-time items including special bonuses and seasonal cost increases.
  • Gross margin impact: The lower gross margin pulled down LTV/CAC ratio to 4.6x from prior levels, though it remains within Yappli's target 4-6x range with no material concern.
  • Professional services revenue volatility: Flow-based professional services revenue can vary quarter-to-quarter based on project timing, leading to sequential revenue fluctuations that do not reflect underlying business performance.
  • Competitive pressure: While Yappli holds the leading market share in the no-code app platform space, sustained investment in product development is required to maintain competitive positioning.

No question and answer section was included in the provided transcript.