ASMARQ Co.,Ltd. Q1 FY2025 earnings call

• Core Strategic Priorities
  • The company's 2025 full-year strategy focuses on re-strengthening domestic research, while also prioritizing expansion of global research, growth of the HR Tech segment, DX acceleration, and M&A / alliance activity, targeting double-digit growth in both revenue and operating profit
  • The company is in a short-term adjustment phase following full-year restructuring of the domestic sales organization, but management expects this restructuring to strengthen long-term growth foundations
• Operational Progress on Strategic Priorities
  • Domestic Research Reinvigoration: A new centralized Research Division will launch on May 1 to restructure the previous siloed division into a customer-centric organization focused on medium-term structural growth rather than short-term optimization. A dedicated industry team for research firms and advertising agencies will also launch in May to reverse segment revenue declines in these two client groups.
  • Global Research Expansion: The segment delivered 24% year-over-year revenue growth in Q1, driven by expanded cross-selling of global research services to existing domestic clients. The company added one dedicated full-time global sales employee this term, and will add two more via mid-career hiring in May to bring the dedicated global sales team to 3 employees total.
  • HR Tech Growth: HR Tech delivered double-digit growth in Q1, driven by regular online seminars and active exhibition at major industry events in Tokyo and Osaka to generate new lead conversion. The company will continue investment in brand awareness building for this segment.
  • DX Acceleration: A CIO-led project team for internal operational efficiency improvement is in late-stage testing of AI and automation tools to improve long-term profitability, and results will be shared publicly soon.
  • M&A and Alliances: The company acquired shares in research firm 販売促進研究所 in December 2024, and is currently progressing multiple simultaneous M&A and partnership discussions, with accelerated deal timelines post-IPO due to increased inbound opportunities.
• Financial Position
  • As of end of February 2025, total assets stood at 2.386 billion yen, total liabilities at 885 million yen, and net assets at approximately 1.5 billion yen. The company holds zero outstanding debt, maintains a 62.2% equity ratio, and holds 1.3 billion yen in cash and cash equivalents, with total available capacity of approximately 2 billion yen for future M&A activity including potential additional borrowing.

1. Marketing Research (core domestic research) segment: Revenue of 1.097 billion yen, 5.0% year-over-year decrease, contributing 96.4% of total segment revenue. Within the segment, automotive and related industries grew over 400% year-over-year (+26 million yen), and the consulting industry grew 112.9% year-over-year (+12 million yen), while research firms decreased 91 million yen and advertising agencies decreased 36 million yen year-over-year. Net online research revenue grew 20 million yen year-over-year, while qualitative interviews and recruiting services contracted out from third-party research firms declined. Global research (a sub-segment of marketing research) grew 23.9% year-over-year. 2. HR Tech segment: Revenue of 41 million yen, 11.4% year-over-year increase, contributing 3.6% of total segment revenue. Consolidated total company revenue: 1.215 billion yen, 1.9% year-over-year increase; operating profit of 114 million yen, 31.1% year-over-year decrease; margin profit of 820 million yen, 3.6% year-over-year increase.

• Management maintains that the full-year profit target is achievable, and expects Q1 weakness to be recovered starting from the second quarter, with a return to growth in the second half of the full year
• Management expects the organizational restructuring of the core domestic research business and new dedicated sales initiatives for underperforming client verticals to reverse Q1 revenue declines in the second half of the year
• No upward or downward revision to the full-year target was announced in the available transcript, and management reaffirms confidence in meeting full-year recovery targets

• Core domestic marketing research revenue has slowed, driven by large year-over-year revenue declines from research firm and advertising agency clients, which created a net 53 million yen year-over-year decline in standalone domestic revenue that outweighed cost savings from improved outsourcing efficiency
• Short-term profit is pressured by 32 million yen in increased SG&A (including salary increases for staff), which alongside the domestic revenue decline drove the 31% year-over-year drop in Q1 operating profit
• The restructuring of the domestic sales organization has created a short-term adjustment period that contributed to Q1 weak performance, though management expects this to resolve in the second half of the year

The provided transcript cuts off before the full question-and-answer section is published, so no complete exchanges are available to summarize.