G-NEXT Inc. Q4 FY2025 earnings call

• Business Overview & Strategic Transformation

  • The company operates a single Stakeholder DX Platform business, with core products including the core cloud platform Discoveriez, generative AI offering Discoveriez AI, customer co-creation project SRM Design Lab, and the in-development Discoveriez Credit Database for customer harassment and credit information management. It adopted a plug-in architecture to reduce implementation time and costs, while covering end-to-end services from strategic planning to operation improvement.
  • The new management team launched corporate restructuring 8 months ago, after 4 consecutive years of losses following the company's 2021 listing, and is targeting sustained profitability starting from FY2026 (March 2026).

• Operational Progress

  • Discoveriez has seen recovering order intake, with 2 new enterprise client deals in the manufacturing, wholesale and retail sectors and 1 replacement deal secured in Q4. Price increases for existing clients are in progress to improve profitability, and legacy voice recognition tool BizVoice is being migrated to Discoveriez AI.
  • Discoveriez AI was officially launched as an option for Discoveriez, and is a mandatory component of all new proposals; migration of legacy clients is accelerating, with use cases expanding from customer success to marketing and executive decision support.
  • SRM Design Lab continues to grow, expanding its scope to include hardware business inquiries, becoming a new revenue pillar complementary to Discoveriez.
  • On cost management: server costs were reduced by an average of 600 thousand to 700 thousand yen per month in Q4; organizational restructuring and workforce reallocation is underway to prepare for FY2026 profitability; price increase initiatives implemented from April 2025 are expected to deliver profit improvements in FY2026; accelerated cloud migration of Discoveriez is expected to generate over 100 million yen in additional revenue from FY2026 onward.

• New Partnerships & Business Updates

  • New client implementations completed in Q4 include Mitsubishi Shokuhin, Ishii Shokuhin, and DMM, with multiple new deals secured for future delivery. It has formed new partnerships with Synergy Marketing, SoftFront Japan, and Singaporean fintech firms ONFET and OIO to develop the Discoveriez Credit Database.

ジーネクスト reports a single operating segment: Stakeholder DX Platform Business. Full year FY2025 total revenue was 691.6 million yen, up 13.2% year-over-year. Q4 FY2025 revenue was 221.8 million yen, up 3.1% quarter-over-quarter. Cloud revenue accounts for 63.6% of total revenue, with cumulative monthly cloud sales growth of 12.6% year-over-year. Stock revenue totaled 408 million yen, representing 76.2% of total revenue. SRM Design Lab (SRM) projects, a key growth sub-segment, grew 28.6% year-over-year and led overall revenue growth. The 12-month average monthly churn rate for Discoveriez was 0.36%, maintaining a low stable level.

• The new 3-year mid-term management plan (FY2026 - FY2028) targets full year profitability in FY2026, growing to 2.5 billion yen in revenue and 900 million yen in operating profit by FY2028, with a long-term target of sustained market capitalization over 10 billion yen after 2030.
• The company plans to expand along 3 core business lines: Discoveriez software business, SRM-centered solution business, and hardware/AI data center support business, positioning existing business for stable profit, growth business for top-line expansion, and new business for discontinuous growth.
• FY2026 (March 2026) guidance targets approximately 50% year-over-year revenue growth and achieving full year operating profitability. Key updated KPIs include: 40-50% annual revenue growth, target churn rate of 0.8% (down from previous 1%), and minimum 40% stock revenue ratio.
• The company expects the cloud migration of Discoveriez to generate over 100 million yen in additional revenue starting from FY2026.
• The company announced the completed acquisition of the business of Model Case Inc., which operates the foreign monitor service Japan Spark, will launch integrated inbound Voice of Customer solutions starting June 2025, as a new growth driver.

• The company has carried consecutive operating losses since FY2022 (March 2022), and has a Going Concern (GC) note attached to its financial statements due to accumulated negative operating cash flow, despite recent capital injections resolving immediate funding uncertainty.
• Past turmoil caused by the founder led to a GC note, which created credit uncertainty that delayed Discoveriez order intake, with residual credit concerns still impacting business.
• The company holds over 1 billion yen in accumulated deficit, and its current medium-term profitability targets have been criticized for low profitability, which creates pressure on management to deliver faster growth.
• Higher than expected procurement costs for SRM projects, taken on to offset slow Discoveriez order intake, weighed on full year FY2025 profit relative to initial guidance.

Q: When does management expect to resolve the Going Concern (GC) note? / A: The GC note will be removed only when the company achieves sustained positive operating profit and positive operating cash flow. Management believes the fastest path to removing the note is to deliver profitability in FY2026, and will disclose clear progress updates as results improve through the period.

Q: What is the company's overall plan to eliminate the conditions that required the GC note? / A: Management is executing full corporate restructuring, including exiting unprofitable projects, improving Discoveriez product quality, investing in new business areas, restructuring the workforce and organization. It is also entering new business areas adjacent to its core legacy operations to improve profitability and increase shareholder value, such as AI and data center solutions, combining Discoveriez with advanced technology, and integrated hardware-software solutions. The company sees opportunities for new revenue because its existing client base includes many manufacturers, retailers, and call centers that have natural demand for hardware-related solutions.

Q: What is the strategic rationale for acquiring the Model Case business? / A: The acquisition of the Japan Spark foreign monitor business from Model Case will allow G-Next to create new integrated inbound Voice of Customer solution offerings, enabling the company to win new clients and deliver more added value to existing customers. The business is expected to contribute to sustained profitability as a new growth driver, with full operations starting after the transfer is completed on June 1.