ASMARQ Co.,Ltd. Q4 FY2025 earnings call

• Core Business Quality Improvements

  • Total number of client companies decreased slightly to 1,119, driven by lower spot orders from low average-order research firms and advertising agencies, but average order value rose to 691 thousand yen (from 680 thousand yen in FY2024) to a new all-time high, reflecting deeper, higher-value direct relationships with strategic focus on corporate clients.
  • Marginal profit ratio improved to 67.6% (from 67.2% in FY2024), maintained at a high level via effective control of panel procurement and outsourcing costs, creating operating leverage that will drive sharp profit growth once top-line growth recovers.

• Balance Sheet and Financial Health

  • As of FY2025 end, total assets were 2.526 billion yen, total liabilities 933 million yen, net assets 1.6 billion yen, with zero outstanding borrowings. Equity ratio is 62.6%, indicating a healthy financial position. Cash and deposits total 1.41 billion yen, with up to 2 billion yen of available capital planned for future M&A activity.
  • EPS was 174.9 yen, ROE was 12.7%, entering a temporary adjustment phase after last year's higher levels; the company targets returning to 200 yen EPS and 20% ROE over the medium term.

• New Business Entry via M&A

  • On January 14, 2026, Asmark acquired shares of Lean Nishikata to make it a wholly owned subsidiary, marking entry into the data analysis business as a new core growth pillar. Lean Nishikata is a data science and advanced analytics firm that generated 150 million yen in revenue with no dedicated sales staff pre-acquisition.
  • Three Asmark employees are currently training with Lean Nishikata's leadership to build in-house data analysis expertise, with plans to combine Asmark's existing sales force and client base with Lean Nishikata's technical capabilities to accelerate growth. The domestic data analysis market is projected to grow to 880 billion yen (twice current size) by 2028, larger than the domestic marketing research market (~280 billion yen).

• 2026 November Full Year Priorities

  • 1. Deepen client relationships in the core research business: Prioritize new client acquisition and account penetration for corporate clients, the core growth driver for domestic research.
  • 1. Strengthen overseas research: Become a Japan-led Asian market research partner, leveraging the company's reputation for high-quality, fast service to expand in the 10-20x larger global market, targeting double-digit growth for the global segment.
  • 1. Launch the data analysis business in partnership with the new subsidiary, leveraging overlapping existing marketing research clients for cross-selling.
  • 1. Expand brand awareness and growth for the HR Tech business under the "Humap" brand, targeting 1 billion yen in revenue over the medium term.
  • 1. Pursue M&A and alliances: Target deals that complement the company's core strengths and capabilities, with ongoing discussions with multiple potential targets currently.

• Key Investment Areas for FY2026

  • Human capital and organizational strengthening: Allocate sufficient headcount to all three core growth businesses (marketing research, HR Tech, data analysis).
  • M&A and strategic alliances: Accelerate execution of complementary deals to open new growth opportunities.
  • System automation and digital transformation: Leverage AI to automate research operations for the core marketing research business, breaking the traditional labor-intensive model where revenue growth requires proportional headcount growth, to drive both revenue expansion and margin improvement; this initiative is currently progressing smoothly.

For the 2025 November full year (Asmark standalone):

1. Marketing Research Business: 4.1616 billion yen in revenue, 95.8% of total revenue contribution, a 4.7% year-over-year decrease. Within the segment: the automobile and related products sub-segment saw a 49 million yen year-over-year revenue increase (over 200% growth) driven by expanded transactions with two domestic automakers; the beverage and consumer goods sub-segment also saw increased orders from multiple manufacturers; the research firm and advertising agency sub-segment continued to see order declines, an industry-wide trend. Net research saw a slight year-over-year increase, while all other services were nearly flat. Global research growth slowed to 1.3% year-over-year as focus was shifted to domestic research recovery.
2. HR Tech Business: 185.4 million yen in revenue, 4.2% of total revenue contribution, a 3.6% year-over-year increase. The segment's sales force expanded from 3 to 6 employees, with a planned increase to 7 to target double-digit growth.

Consolidated results: Total full year revenue was 4.416 billion yen, a 1.2% year-over-year increase (a new all-time high despite the small gain); marginal profit was 2.983 billion yen, a 1.7% year-over-year increase; operating profit was 280 million yen, a 22.2% year-over-year decrease, falling short of initial plan. In Q4 (Sep-Nov 2025), revenue rose 7.6% year-over-year and operating profit rose 79.2% year-over-year, both hitting new all-time quarterly highs, showing early positive results from sales organizational restructuring.

• For the 2026 November full year, the company guides total revenue of 4.7 billion yen, a 6.4% year-over-year increase:
  • Marketing research business: 4.35 billion yen in revenue, 2.5% year-over-year growth
  • HR Tech business: 200 million yen in revenue, 14.9% year-over-year growth
  • New Data Analysis business: 150 million yen in planned revenue (from the newly acquired Lean Nishikata)
• Operating profit is guided at 200 million yen, a 28.6% decrease from FY2025's 280 million yen; ordinary profit is guided at 210 million yen, down from 289 million yen in FY2025. The planned decline in profit is a deliberate strategic choice to invest in future growth, with 267 million yen of increased spending allocated to sales headcount expansion and data analysis talent recruitment and training, plus additional system development costs. The company maintains outsourcing cost ratio at prior year levels, with existing cost control and internalization efforts potentially creating upside to profit if they outperform.
• The company positions FY2026 as an investment year for long-term growth: the temporary slowdown in profit growth is described as a crouch before a jump, with all investment outcomes expected to start reflecting in financial results starting from FY2027 (November full year).
• Dividend guidance: A 1 yen increase in full year dividend to 78 yen per share (38 yen interim, 40 yen year-end), despite the planned decline in profit. The company maintains a target total payout ratio of 30% or higher, supported by ample cash and internal reserves to sustain stable shareholder returns.
• Medium-term strategy: The company is currently developing a formal medium-term management plan, which will be announced in the near future. The plan is expected to outline a recovery to profit growth starting from FY2027, with the data analysis business established as the second core growth pillar alongside marketing research. The company targets 10% or higher annual growth for the core marketing research business, and 1 billion yen in revenue for both HR Tech and data analysis over the medium term, with M&A expected to accelerate non-linear growth.

• The domestic marketing research industry overall has hit a plateau with slow growth, creating a headwind for the core business, and competition is increasingly polarizing between leading and smaller players.
• Declining demand from research firms and advertising agencies (the company's traditional client base) is a structural industry trend, and there is risk that the shift to direct corporate client relationships may take longer than expected to fully offset this decline.
• The new data analysis business is a new line of business for Asmark, and there is execution risk related to integrating the acquired company's capabilities, building in-house expertise, and achieving projected growth targets.
• The planned heavy investment in headcount and new business development in FY2026 may not deliver the expected growth outcomes in future periods, leading to sustained lower profitability than projected.

Q: Sales to research firms and advertising agencies were sluggish last fiscal year. Is this trend structural, and when do you expect it to bottom out?

A: The decline in panel rental demand from research firms is an industry-wide trend, and we view it as a structural change to some extent. At the same time, our focused push to expand direct transactions with end corporate clients has resulted in corporate client sales hitting an all-time high, now accounting for 46% of our sales mix. We expect that the declining demand from research firms and advertising agencies will be offset by growing sales to corporate clients, and the Q4 recovery we have already seen supports this expectation.

Q: Why are you increasing the dividend despite planning a decline in profit this year, and what is your future dividend policy?

A: This year's profit decline is a deliberate strategic choice for future growth, it is a temporary situation, and our business foundation remains solid. We believe it would be wrong to pause shareholder returns due to this temporary profit fluctuation, so we decided to implement a 1 yen increase. Our basic dividend policy is to maintain a total payout ratio of 30% or higher. Even though the payout ratio will rise temporarily this year, we have ample cash, so we plan to continue delivering stable dividends going forward, supported by our strong internal reserves and cash flow.

Q: You mentioned you are drafting a medium-term management plan. When will it be announced, and what can you share about targets and scale?

A: We are still reviewing the details of the medium-term plan, so we would like to refrain from commenting on whether it will be announced in the near future or sharing specific details at this point. As a general outline, we expect FY2026 to be the profit bottom, with a V-shaped recovery starting next fiscal year, and we are building the plan around establishing the data analysis business as a second core pillar alongside the marketing research business. Please wait for our formal announcement for specific targets.