Institution for a Global Society Corporation Q4 FY2025 earnings call

2025 Fiscal Year (Full Year) Outcome

• IGS missed its original full-year targets due to unforeseen product development challenges and market environment shifts, but successfully met all targets after the February 2025 forecast revision, and has started the 2026 fiscal year on solid footing.
• Product development failures stemmed from outsourced development to India that failed to meet quality and delivery requirements, preventing the launch of planned new HR services, which was the main driver of missed original targets.

Core Operational Improvement Initiatives

• Product stability: Shift from offshore outsourcing to full in-house product development to ensure reliable service delivery, addressing the prior year's core operational failure.
• Cost efficiency: Comprehensive cost review focused on the Platform/Web3 business team to improve operational efficiency after the underperformance of the prior business model.
• Human capital strengthening: Invest in upskilling sales teams to meet the high service requirements of IGS's core customer base (large enterprise clients for HR, school educators for education).
• Capital strengthening: Actively evaluating capital strengthening options to reinforce the company's financial base for stable long-term service delivery.

Segment-Specific Operational Progress

• HR Business: Core strengths in generative AI-powered competency assessment and blockchain-enabled training/consulting for corporate DX are gaining market traction. The company will prioritize expanding its core 360-degree employee competency visibility service, and capture growing demand for corporate digital reskilling through new technical advisory services for generative AI and blockchain. High customer retention creates strong upside for upselling to restore average revenue per customer to prior levels.
• Education Business: Growing demand for non-cognitive skill development amid AI-driven shifts in education is driving adoption of IGS's Ai GROW assessment tool. JTB co-developed J's GROW for measuring pre/post-trip competency growth is expanding its school footprint. The segment has strong international inbound interest, with ongoing international comparison projects with ADB and ERIA, and a planned joint expansion of Ai GROW to international markets including Colombia with Yamaha. IGS secured a METI Global South feasibility study contract for Indian network development, and the 2025 Inquiry/School Administration Reform Support Grant, establishing a national customer base across all Japanese prefectures.
• Platform/Web3 Business: The segment is undergoing a strategic pivot from consumer-facing job search services to high-margin enterprise blockchain consulting, leveraging IGS's unique accumulated expertise. IGS holds unique advantages: the CEO is the only Japanese fellow at the Ethereum Foundation, with an established global network in crypto/blockchain, and the company is pursuing patents for cutting-edge technologies including zero-knowledge proofs and secure computation. The company has already received large new consulting engagements, and will accelerate partnerships with external research institutions, universities, and enterprises. IGS maintains its Initial Exchange Offering rights for the ONGAESHI blockchain project via a continuing partnership with Singapore-based BE Company for long-term global development.

Overall 2025 March fiscal year full year consolidated net sales hit 602 million yen (0.602 billion yen), in line with the February revised forecast. The company reported a net loss of 9 million yen, which was slightly better than the revised plan. 1. HR Business: Revenue fell sharply year-over-year due to unmet launch plans for new services and lower-than-target participation in a supported research consortium. The segment slightly beat the February revised revenue target. Customer retention rose from 61% to 66%, indicating no broad customer attrition. 2. Education Business: Revenue was slightly below the original plan due to delayed receipt of some government subsidies, but it met the revised forecast and overall operations progressed as expected. Ai GROW was adopted by 463 schools across all 47 prefectures of Japan by the end of the period. 3. Platform/Web3 Business: Revenue was 3 million yen (0.003 billion yen) below the revised forecast, which the company attributes entirely to exchange rate movements, and results were otherwise in line with plan. The segment's prior free learning-to-job placement model underperformed expectations due to market changes from national reskilling subsidy programs.

• For the 2026 March fiscal year, IGS guides a V-shaped revenue recovery to 830 million yen (0.83 billion yen), a 37.7% increase year-over-year, and targets a net profit of 63 million yen (0.063 billion yen), returning to full-year profitability.
• HR Business is guided to 370 million yen (0.37 billion yen) in revenue, a 55.3% year-over-year increase, reversing the prior year's one-time revenue decline from delayed product launches.
• Education Business is guided to 350 million yen (0.35 billion yen) in revenue, a 13.4% year-over-year increase, with steady stable growth expected consistent with the segment's recurring, sticky customer base.
• Platform/Web3 Business is guided to 110 million yen (0.11 billion yen) in revenue, driven by the new consulting-focused business model.
• Mid-Term Guidance & Strategy:
  • HR Business: Transition from primarily flow-based project consulting to a mixed flow-stock model centered on accumulated individual competency data for long-term recurring global growth.
  • Education Business: Diversify and expand revenue via expansion to new markets (preschool/kindergarten, emerging international markets) and new services (AI-powered teaching support for educators).
  • Platform/Web3 Business: Achieve steady revenue growth via high-margin blockchain consulting, leveraging the segment's unique technical and patent positioning that few Japanese competitors can match.
  • Global Expansion: Prioritize expansion of the non-cognitive competency-based next-generation talent/education model to high-potential Global South markets, starting with India and Vietnam (both have very large youth populations compared to Japan), leveraging existing government contracts and local networks.

• Offshore outsourcing product development risk: Prior reliance on Indian third-party development led to unmet quality and delivery targets, prevented planned service launches, and caused significant revenue shortfalls in the HR business. IGS has mitigated this via a shift to in-house development, but delivery risk remains during the transition.
• Market competition risk: The Japanese job placement/transition support market became oversaturated (red ocean) after the introduction of national reskilling subsidy programs, which rendered IGS's original free learning-to-placement model unviable and led to the segment's underperformance.
• Market volatility risk: Platform/Web3 business performance is exposed to shifts in global cryptocurrency regulatory environment and market sentiment; while current US policy has created positive tailwinds, future adverse shifts could impact growth prospects.
• Revenue concentration risk: The education business relies in part on government subsidies and public grants, which can be delayed or changed, leading to revenue deviations from plan.

Only the topic of the Q&A section (capital strengthening) is disclosed in the provided transcript, with no full text of specific exchanges included. The most relevant high-impact strategic discussions are covered in the guidance and operational highlights sections above.