Global Information,Inc. Q4 FY2024 earnings call

Company Overview and Core Business

• Global Information operates as a comprehensive market information provider with 5 global locations and partnerships with over 200 research firms globally, operating an asset-light business model that orders third-party research reports after receiving customer orders, holding no physical inventory. The newly introduced shareholder benefit program has driven a large increase in total shareholder count.
• The company's 3-year new mid-term management plan "GII Vision 2027" has been launched, with the core theme of evolving into a comprehensive market information provider to meet increasingly diversified customer information needs beyond core market research report sales.

2024 Full-Year Consolidated Financial Performance

• Total consolidated revenue was 2.749 billion yen, a 5.8% year-over-year decline, with operating profit of 0.438 billion yen, a 16.8% year-over-year decline.
• Gross margin improved slightly from 46.2% to 47.5% due to successful supplier cost reduction efforts, so gross profit decline (43 million yen) was far smaller than the revenue decline. Selling, general and administrative expenses (SG&A) increased by 45 million yen year-over-year, driven by 28 million yen in higher personnel costs for future-focused hiring and 17 million yen in higher promotion expenses.
• The balance sheet remains healthy: cash and cash equivalents increased by 269 million yen year-over-year, and equity ratio stands at 78%.

GII Vision 2027 Key Focus Areas

• Focus on Commissioned Research Business: Added dedicated full-time commissioned research sales staff to deliver faster, more comprehensive customer support, continue developing new supplier partners to handle the growing volume of high-difficulty, high-value niche research requests, and upsell commissioned research to customers who initially purchase standard market research reports.
• Expand Sales of AI-Powered Market Research Products: Expand the product lineup of AI-integrated market research offerings, with a specific focus on custom-tailored systems built on the company's existing Rover AI software for which the company has already received multiple customer inquiries.
• Strengthen Customer Acquisition Capabilities: Speed up creation of new product pages for the company's website to improve search engine presence, implement a full website redesign to improve user experience and trust, leverage the large historical customer database for more proactive outreach, and increase the frequency of co-hosted webinars and seminars with supplier partners to boost brand awareness and customer acquisition.
• Promote AI-Driven Internal Data Utilization: Use AI to surface unlisted product information from the internal database in customer search results to reduce opportunity loss, develop AI tools to support sales teams in product selection, and use AI to speed up creation of new product pages to expand the available product lineup faster.
• Invest in New Business: Actively explore potential acquisitions of market research or marketing research firms in the company's existing business adjacencies, and evaluate potential entry into new adjacent business areas via M&A to utilize excess internal capital.
• Talent Acquisition and Development: Prioritize recruiting and training next-generation leadership, as human capital is the company's core asset, and improve internal education and training systems.
• Drive Profit Contribution from Subsidiary Gibtech: Gibtech operates two core businesses: LPWA ZETA standard communication IoT devices for smart city, smart factory and smart building applications, and the AiMeet paperless digital exhibition DX tool purchased from a system developer and resold to exhibition organizers. Gibtech targets achieving 6 million yen in operating profit (return to profitability) in 2025, growing to 176 million yen in revenue and 40 million yen in operating profit by the 2027 mid-term plan final year.

Shareholder Return

• The company maintains a policy of balancing continuous stable dividends with internal retention for long-term growth, targeting a 6%+ DOE and 40%+ payout ratio.

1. Market and Technology Trend Information Provision Segment: 2024 full-year revenue was 2.696 billion yen, accounting for 98.3% of total consolidated revenue. This segment's sub-components: (1) Market research reports: 7.8% year-over-year revenue decline, driven by accelerated yen depreciation in H2 2024 reducing domestic sales and prolonged economic downturn at the Korean branch reducing overseas sales; (2) Custom commissioned research: 10.2% year-over-year revenue growth, supported by increased order volume and several high-value custom projects; (3) Annual information services: 1.8% year-over-year revenue decline (near flat), with domestic order volume down offset partially by slight growth at overseas branches including Taiwan; (4) International conferences and exhibitions: 54.9% year-over-year revenue growth, as participant numbers for domestically held events continued recovering post-pandemic, though its contribution to total revenue remains small. By region within this segment: Japan accounts for 75% of revenue, with 4.8% year-over-year domestic decline; Taiwan delivered 3.3% year-over-year growth; South Korea saw a 20.1% year-over-year decline due to prolonged domestic economic and political instability. 2. Other (IoT-related) Segment (operated by subsidiary Gibtech): 2024 full-year revenue was 0.047 billion yen, accounting for 1.7% of total consolidated revenue. Revenue grew year-over-year, driven by increased adoption of LPWA IoT devices for local government smart city projects and growing adoption of the AiMeet exhibition DX tool, particularly in H2 2024.

• 2025 Full-Year Consolidated Guidance: Expects 10% year-over-year revenue growth to 3.025 billion yen, and 9.4% year-over-year operating profit growth to 0.479 billion yen, with projected net profit of 0.33 billion yen.
• 2025 Segment Guidance: Expects the Market and Technology Trend Information Provision Segment to grow revenue by 9.2% year-over-year (249 million yen increase). The IoT-related segment (Gibtech) expects 58.3% year-over-year revenue growth (27 million yen increase), driven by growth in smart city IoT device orders and expanded adoption of AiMeet (including cross-event rollout from existing customers and new customer acquisition).
• Mid-Term Plan Targets (2025-2027): Expects 8.6% average annual revenue growth over the 3-year plan period, reaching 3.524 billion yen in total revenue and 0.58 billion yen in operating profit (16.4% operating margin) by the 2027 final year.
• Dividend Guidance: Maintains a full-year 60 yen per share common dividend for 2025, and will maintain the 60 yen per share dividend through the entire mid-term plan period. The existing shareholder benefit program (2,000 yen QUO card for shareholders holding 200+ shares) will continue.

• High business concentration risk: Core market research report sales account for approximately 85% of total revenue, leaving the company highly dependent on a single business line.
• Intensifying competitive pressure: Partner overseas research firms increasingly use AI translation to build Japanese-language websites and sell directly to Japanese end customers, leading to intensified search engine competition for customer traffic. Growing adoption of generative AI for in-house market research also poses a substitution threat to the company's core market research report offerings.
• Geopolitical and macroeconomic uncertainty: Prolonged geopolitical instability (including the Russia-Ukraine conflict) and the post-election policy environment under the new U.S. administration have increased global market uncertainty, and ongoing political and economic instability in South Korea has led to large revenue declines at the Korean branch with unclear near-term improvement.
• Currency risk: Accelerated yen depreciation has reduced domestic customer demand for the company's USD-denominated imported research products, driving a year-over-year revenue decline in core market research report sales.

Q: What are the growth targets and profitability outlook for Gibtech's AiMeet business? / A: Gibtech targets hitting 6 million yen in operating profit (full profitability) in 2025, with mid-term targets of 176 million yen in total subsidiary revenue and 40 million yen in operating profit by 2027. Growth will come from both cross-event expansion to existing customers and new customer acquisition for the AiMeet DX tool, alongside steady growth in LPWA IoT device sales to smart city projects and TOPPAN.

Q: What is the outlook for SG&A expenses over the next several years? / A: SG&A will see controlled growth in the near term as the company invests in hiring for future growth, digital transformation (including website redesign and AI tool development), and marketing to support the new mid-term plan priorities. Investments are focused on driving long-term revenue growth rather than near-term margin expansion.

Q: What impact do you expect from the inauguration of U.S. President Trump, and how will the company adapt? / A: Trump's inauguration adds additional macroeconomic and geopolitical uncertainty globally, which has further increased customer demand for niche, customized market research to navigate volatile market conditions. This aligns with the company's strategic shift to prioritize high-value commissioned research and expand AI-powered offerings to meet these growing diversified needs. The company will continue relying on growth from Japanese and Taiwanese branches to offset ongoing weakness in South Korea.