Yappli,Inc. Q1 FY2025 earnings call

Overall Financial Performance

• Total quarterly revenue was 1.43 billion yen, up 6.9% YoY, with management noting softness from the professional services segment.
• Operating profit hit 223 million yen, with an operating margin of 15.6%, both marking new all-time record highs, delivering year-over-year growth in both revenue and profit.
• Gross profit margin improved sharply QoQ to 67.5%, bringing total gross profit to 967 million yen. Improvements came from cost efficiency gains in server costs (supported by yen appreciation and internal structural optimization) and outsourcing costs.
• Key operating KPIs: Average monthly usage fee increased 4.8% YoY, driven by successful upselling of core Yappli products and cross-selling of Yappli CRM; 12-month trailing average churn remained very low at 0.77%, below the 0.8% threshold, improving YoY; LTV/CAC ratio improved from 4.6x to 4.8x QoQ, maintaining a healthy range between 4x and 6x.

Shareholder Return

• Yappri will initiate its first dividend this fiscal year, with a planned semi-annual dividend structure: 6 yen per share for the interim period and 6 yen per share for the year-end, totaling 12 yen per share annually.
• Based on the projected full-year net profit of 830 million yen, the planned payout ratio is approximately 20%; based on the closing price of 718 yen as of April 30, the projected dividend yield is approximately 1.7%, which is competitive relative to the Growth Market average.
• Management will prioritize growth investment while increasing shareholder returns in line with profit growth going forward.

Product Updates

• Continued platform improvements to add value and strengthen competitiveness across the full product portfolio: Enhanced app navigation functionality, released requested comment features for Yappli UNITE, and updated the advanced RFM analysis tool for Yappli CRM to improve analytical capabilities.

Business Milestones

• Yappli UNITE, launched nearly two years ago, surpassed 100 client companies, with adoption by major Japanese firms including ANA, KIRIN, JR West, and TBS, used to improve employee engagement. Management views this segment as having very high long-term growth potential and will continue increasing investment.
• Multiple notable client wins were secured in the quarter, including Carl Hansen & Søn Japan for Yappli for Marketing, and JR West, Ando Hazama, and the Mitsubishi Electric Labor Union for Yappli UNITE.

Cost and Headwind Management

• Advertising expense came in 10 million yen below quarterly budget at 164 million yen, due to timing misalignment of online ad placement and trade show schedules; management maintains its strategy of shifting investment toward lead-generation focused advertising (trade shows, online ads) that drives near-term bookings, which was initiated in late 2024.
• Headcount reached 271 full-time employees, a net increase of 3 from the prior quarter end. Strong hiring in the prior quarter allowed the company to fill planned full-year headcount targets ahead of schedule, so hiring will be controlled to avoid exceeding the full-year plan of ~280 employees. Year-over-year personnel expense increased approximately 10% as the company resumed growth-focused hiring after years of optimization to improve productivity.
• R&D investment is increasing to support new product development and new business building, while sales and marketing cost share has been reduced to below 30% of total operating expenses.

1. Platform segment: Revenue reached 1.197 billion yen, growing steadily YoY, accounting for 83.7% of total quarterly revenue. Annual Recurring Revenue (ARR) for the overall platform business hit 4.827 billion yen, up 11.1% YoY. Total contracted apps across all solutions reached 896, up 6.0% YoY. By solution: Yappli for Marketing (retail store-facing apps) accounts for 65% of total contracted app count, saw a net decrease of 3 apps QoQ; Yappli UNITE (employee-facing apps) reached 101 contracted apps, passing the 100-app milestone with a net increase of 3 apps QoQ, now used by over 500,000 employees; Other solutions (led by media apps) saw strong QoQ growth. 2. Professional Services segment: Total revenue declined YoY. While app marketing services grew in both volume and average pricing, production support services saw declines in both project count and average pricing, driving the overall segment decline. This segment weakness was the main cause of softer-than-expected top-line growth for the quarter.

Management confirmed that all full-year 2025 fiscal year performance metrics remain on track or ahead of plan: revenue is at 23.1% of the full-year target (on-track), while operating profit, net profit, and adjusted EBITDA are all approximately 30% through their full-year targets, outperforming plan. No upward or downward revisions to prior full-year guidance were announced.

• The Yappli for Marketing retail store app segment is facing maturing market conditions and intensifying competition, leading to weak net additions in the quarter, requiring product feature improvements to reignite growth.
• Yappli UNITE's net app growth was softer than expected in the quarter, even as it passed the 100-app milestone, requiring continued investment to drive stronger expansion.
• The professional services segment's production support line is facing near-term weakness in project count and pricing, dragging down overall top-line growth.

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