ASMARQ Co.,Ltd. Q2 FY2025 earnings call

Core Operational Restructuring for Domestic Research Recovery

• New sales leadership has refocused the previously inward-facing sales organization on client engagement, increased individual discretion to boost employee engagement, and achieved zero sales departures over the past several months (ending the prior trend of consistent turnover) to create a stable team for the second half.
• A two-pillar second half sales strategy to reverse the domestic research slowdown: 1) Rebuild and deepen client coverage: expand enterprise client sales while adding a dedicated sales team for underperforming research firm and advertising agency segments, and increase total sales headcount to drive recovery. 2) Overhaul sales productivity and proposal quality: fix uneven win rates across salespeople with in-house upskilling programs for less experienced staff; strengthen cross-departmental collaboration between sales and field research teams to improve customer satisfaction and repeat business, and now can accommodate nearly all short-turnaround requests that were often rejected one year prior.

Growth Initiatives for New/Existing Segments

• Global business: Will expand the dedicated sales team from 1 to 3 people and restore backup domestic sales coverage to rebuild the sales pipeline and return to double-digit growth by Q3.
• HR Tech: Will continue investing in events and digital advertising to improve brand awareness (as the company is primarily known as a research firm) and drive new client acquisition.

Strategic Partnership & Innovation

• Announced a strategic business alliance with Lean Nishikata Co., Ltd., a boutique data analytics firm specializing in data infrastructure, machine learning/AI development, and predictive analytics. The partnership combines Asmark's consumer research hypothesis-building with Lean Nishikata's fact-based data analysis to deliver end-to-end support for enterprise clients from product development to initiative impact verification, creating a competitive differentiation that pure research or pure analytics firms cannot match. Three Asmark employees are currently undergoing on-the-job data analyst training at the partner firm, with an eye toward deeper collaboration in the future.
• Filed a patent for generative AI-powered technology that automates the full process of converting text-based survey requests to formatted web surveys, including question classification and complex response branching logic. Built on over 40,000 annual hours of accumulated operational data that creates a unique competitive moat, the technology is projected to cut manual work time by 70% and reduce human error by 90%, driving major cost and lead time improvements. The company plans to first fully utilize the technology internally, then offer limited access to partner firms, and eventually launch it as a SaaS platform for the broader industry to build a new stable, high-margin revenue pillar.

Financial Position

• As of the end of May 2025, total assets were 2.545 billion yen, total liabilities were 0.948 billion yen, net assets were ~1.6 billion yen, with an equity ratio of 62.3% (healthy). The company maintains approximately 1.5 billion yen in cash and equivalents, and has capacity to access up to ~2 billion yen in total acquisition funding for future M&A opportunities.

1. Marketing Research (MR) (domestic core research) business: Accounts for 96.8% of total company revenue. Revenue decreased 6.9% year-over-year. The 6-month cumulative revenue through the first half was 2.385 billion yen, a 0.7% year-over-year decrease. Within this segment, the automotive and food industries saw sales growth from new client acquisition, while sales to research firms and advertising agencies remained sluggish; demand for net research from enterprise clients grew, while orders from research firms/agencies (particularly recruitments and qualitative interviews) declined. Average project unit prices remain at high levels, and the margin rate stayed at a high level thanks to reduced outsourcing costs. 2. HR Tech business: Accounts for 3.2% of total company revenue. Revenue increased 20.1% year-over-year, driven by growing leads and new clients from seminars and marketing events. 3. Global/overseas research business: Revenue increased 0.7% year-over-year (a sharp slowdown from previous double-digit growth), due to an over-centralized transition to a dedicated sales team that created excess workload for the single initial dedicated salesperson.

• The positive impact of the sales restructuring is expected to materialize in late Q3 (August to September 2025). Management maintains the view that full-year profit targets can be achieved through a second half recovery, though the level of full achievement has some remaining uncertainty. As of July 2025, inquiries and quote submissions have exceeded the prior year level after being stuck at 90% of the prior year for the first half, which management sees as a positive early sign of recovery. The company targets to fully recover sales growth in the 2025 November full year and exceed the prior year's full year performance. All 5 of the year's initial strategic priorities are progressing as planned: research client deepening, global expansion strengthening, HR Tech awareness building, DX acceleration, and M&A/alliance development, with ongoing parallel discussions with multiple potential M&A targets.

• The first half performance missed the original plan, driven by a 6.3% sales decrease in the core domestic research business that offset positive contributions from lower outsourcing costs and recently acquired group companies. Sales have only recently started to exceed prior year levels after seven months of relationship repair efforts, and there is remaining uncertainty about the speed and magnitude of the second half recovery. The global business's transition to a dedicated sales team caused an unexpected near-term slowdown due to over-centralization and understaffing, which must be corrected through additional hiring in the second half. The core domestic research industry remains structurally labor-intensive and prone to human error, which the new generative AI technology aims to address but this benefit will be realized gradually over time.

Q: The company has named HR Tech a key growth driver, and with first half results missing budget, what is the likelihood of hitting full year targets, and what is the recovery strategy? / A: Historically, Asmark earns higher profits in the first half, so the first half miss makes a strong second half performance necessary. The company has spent seven months rebuilding client relationships after a period of prioritizing efficiency that created distance between the firm and its clients. As of July, inquiries and quote volume have finally exceeded prior year levels, and the company can forecast sales approximately two months in advance based on this pipeline. Management expects recovery to accelerate from August to September, and is targeting to exceed last year's full year performance, relying on fundamental client-focused work rather than aggressive special measures, with the entire company aligned to deliver on this goal.