4293.T

• Overall FY2025 Results: Septeni Holdings achieved V-shaped recovery in profit with increased revenue and substantial profit growth. Full year consolidated revenue hit a new all-time high of 30.3 billion yen, up 7.2% year-over-year; Non-GAAP operating profit was 4.4 billion yen, up 38.1% year-over-year, and the Non-GAAP operating profit margin improved 3.3 percentage points year-over-year. Profit before tax to parent owners was approximately 3.5 billion yen, which missed the full-year forecast due to a 960 million yen impairment loss on the equity-method affiliated company Comisma Inc., but adjusted profit excluding this impairment loss recorded steady growth. The year-end dividend was maintained at 18 yen per share in line with the shareholder return policy. 4Q FY2025 consolidated revenue was 8 billion yen, up 8.4% year-over-year, and Non-GAAP operating profit was 1.55 billion yen, up 64.4% year-over-year.
• Focus & Synergy Strategy Review (FY2025):
  • Profitability and Productivity Improvement: Various initiatives to improve advertising effectiveness paid off, with revenue-to-sales ratio exceeding the prior year level in all four quarters of FY2025. The combination of generative AI-fueled top-line growth and hiring volume control achieved improved per-employee productivity compared to the prior year.
  • Generative AI Utilization: After company-wide rollout of generative AI tools in 2024, the technology has been integrated into advertising operation processes, used to deliver new customer solutions, and improve overall business efficiency, which drove improvements to profitability and productivity. The company will continue to advance generative AI utilization across the two pillars of customer value delivery and internal operational efficiency.
  • Synergy Creation Inside and Outside the Group: The company established new companies and formed alliances within the group to strengthen advertising operations and expand into sports/entertainment and corporate hometown tax donation support. Outside the group, the company formed alliances with partners that can create synergy by combining with Septeni's strengths and know-how, generating synergies through joint business development and solution delivery.
• Strategic Partnership Progress: The business partnership with Dentsu Group, now in its 7th year, delivered strong growth: in 4Q FY2025, there were 34 large clients (with quarterly transaction value over 100 million yen), and total sales from large clients grew ~1.6x year-over-year, with total partnership sales up 48.8% year-over-year, hitting a new all-time cumulative high. The company will continue to leverage the strengths of both groups to maximize customer value.
• Organizational and Headcount Management: Headcount saw a natural decrease in FY2025 due to controlled hiring. Starting after April 2026 new graduate hiring, the company will gradually resume mid-career hiring while prioritizing productivity.
• VISION 2030 and Medium-Term Management Plan (FY2026-2028):
  • Vision and Long-Term Target: Under the group mission of "Enliven the world through the entrepreneurship of every individual", Septeni launched VISION 2030 with the core focus of maximizing customer enterprise value, positioning the company as a "VALUE MAXIMIZER". The long-term target is to achieve 10 billion yen in both Non-GAAP operating profit and net profit attributable to parent owners by 2030, and become an enterprise that achieves both high growth and high shareholder returns. The FY2026-2028 medium-term plan is a key milestone toward this 2030 target.
  • 2026-2028 Core Strategies:
    1. Deepening Existing Core Businesses:
       • Marketing & Communication Business: Centered on the company's proprietary integrated marketing concept "MXONE", the company will advance talent development, solution development and delivery, expand capabilities into adjacent areas, strengthen external synergies to deepen customer integrated marketing support and drive business expansion. MXONE is a human-AI co-creation framework that solves siloed business problems to maximize customer business growth, and the company will continue to strengthen the MXONE brand and launch new solutions.
       • Direct Business: The company will leverage combined offline and digital expertise in the direct field to build new revenue models for the D2C sector and senior market, while continuing to develop D2C products and explore the corporate hometown tax donation business, to build a business that can share success experiences and know-how with client companies.
       • Data & Solution Business: The company will strengthen collaboration between engineer teams including offshore locations, develop DX solutions and form external partnerships to support customer productivity and efficiency improvement by maximizing marketing results. After spinning off from the internal development organization, the company has built an external sales model and sales organization, and will deliver steady growth during the medium-term plan to put the business on a clear growth trajectory.
    2. Exploring New Business Areas: Starting from 2026, the company will target commercialization of the HR technology field, building on its 35-year history in the human resources sector and internal human capital management expertise to address the market-wide labor shortage. The company will combine its customer acquisition know-how from digital marketing with its existing "HaKaSe" onboarding solution to create a new producer-style HR model that focuses on maximizing the value of a smaller talent pool, supporting clients across the entire hiring and retention process to improve hiring competitiveness and speed up new hire ramp-up. The company will evaluate other new exploration areas that can create synergy with core businesses and improve customer enterprise value on an ongoing basis.
    3. Strengthening Management Infrastructure:
       • Human Capital Enhancement: Based on the three pillars of democratization of entrepreneurship, digital HR utilization, and DEI promotion, the company will build an environment that maximizes employee entrepreneurship in the short term, and advance succession planning in the medium term. The newly established Human Resources Development Committee, launching in 2026, will focus on discovering and nurturing next-generation group leadership by providing early management experience opportunities to young talent, to maintain the company's "Keep Young" organizational culture with an average current employee age of 32.
       • Governance Strengthening: The company will advance governance from both offensive and defensive perspectives: strengthening capital cost and share price-aware management and strategic portfolio management as offensive governance, while enhancing compliance and human capital development as defensive governance. The company will maintain high levels of outside director (57% of the board) and outside auditor (75% of the audit board) ratios to maintain objective, transparent supervision.
       • Organizational Reform: Starting April 2026, the company will introduce a CxO executive system to clarify executive roles, accelerate cross-business synergy and collaboration, and enable faster coordination between business units and corporate functions. The 2026 executive team will start with 15 group executives, and the composition will be adjusted annually to adapt to market and business changes.
       • AI Strategy Promotion: Along the two pillars of customer value creation and internal business transformation, the company will pursue value co-creation through human-AI collaboration, and will establish a cross-company AI promotion committee in 2026 to speed up decision-making, reduce risk, standardize best practices across the group, and rebuild operations to prioritize AI utilization. The committee will start with establishing governance and AI guardrails, speed up implementation and testing, roll out successful use cases company-wide, and define and track AI talent development across four skill levels.
  • Capital Allocation (FY2026-2028): The company expects to allocate a minimum of 11.2 billion yen to shareholder dividends over the three years, maintaining the existing return policy of a 18 yen per share annual dividend floor, with a 50% payout ratio (based on net profit attributable to parent owners) as the lower bound if 50% of profit exceeds the 18 yen floor. Up to 25 billion yen will be allocated to growth investment: covering capability expansion for new business exploration, competitiveness enhancement for existing business deepening, and internal investment in AI, human capital, and internal infrastructure improvement.

• FY2026 Full Year Consolidated Guidance:
  • Revenue is forecast to be 32.4 billion yen, up 7% year-over-year, hitting a new all-time high. Non-GAAP operating profit is forecast to be 4.8 billion yen, up 8.7% year-over-year. Net profit attributable to parent owners is forecast to be 4.35 billion yen, up 24.6% year-over-year. The company targets continued revenue and profit growth by combining top-line growth from existing account expansion and new customer acquisition with productivity improvement including AI utilization.
  • The year-end dividend forecast is maintained at 18 yen per share, matching the FY2025 level, with an expected payout ratio of 85.8% based on a projected EPS of 20.97 yen.
• FY2026 Segment Guidance:
  • Marketing & Communication Business: Non-GAAP operating profit is forecast to be 6.4 billion yen, an increase of just under 17% year-over-year.
  • Direct Business: The segment will make advance investments to build new revenue models, so Non-GAAP operating profit is forecast to be 1.3 billion yen, flat year-over-year.
  • Data & Solution Business: In its second year since full commercialization, Non-GAAP operating profit is forecast to be 640 million yen, up 30% year-over-year. The group overall targets continued revenue and profit growth for FY2026.
• Medium-Term Guidance (FY2026-FY2028):
  • Based on FY2025 actual results, the company targets a compound annual growth rate of 6.5% for revenue, 13.2% for Non-GAAP operating profit, and 18.4% for net profit attributable to parent owners over the three years, with a target 3.3 percentage point improvement in ROE. The target is based on organic growth and does not include inorganic growth from M&A, so the company targets early achievement of double-digit ROE when including growth investments like M&A.
  • For FY2028, the company targets 6.4 billion yen in Non-GAAP operating profit, 5.8 billion yen in net profit attributable to parent owners, and 8.4% ROE, delivered primarily through organic growth.

1. Marketing & Communication Business (Full Year FY2025): Achieved revenue growth and profit growth after recovering from the impact of reduced transactions with some large clients, and met full-year performance targets. In 4Q FY2025 (October-December 2025), the segment recorded revenue of 5.7 billion yen, up 8.7% year-over-year, with Non-GAAP operating profit of 1.7 billion yen, up 20.3% year-over-year. The Non-GAAP operating profit margin improved 2.9 percentage points to 29.9% from the prior year period. Revenue contribution % for this segment is not explicitly stated in the transcript. 2. Direct Business (Full Year FY2025): Achieved substantial revenue and profit growth, with both revenue and Non-GAAP operating profit hitting new all-time highs. In 4Q FY2025, the segment recorded revenue of 1.7 billion yen and gross profit of approximately 990 million yen, both up 11% year-over-year. Non-GAAP operating profit grew 43% year-over-year, and the Non-GAAP operating profit margin improved to the highest level in the past 2 years, in the 24% range. Revenue contribution % for this segment is not explicitly stated in the transcript. 3. Data & Solution Business (Full Year FY2025): Slight revenue decrease due to a decline in the volume of some projects delivered in the prior year, while Non-GAAP operating profit was nearly flat year-over-year. In 4Q FY2025, the segment recorded Non-GAAP operating profit of approximately 130 million yen, up 4.2% year-over-year, as headcount optimization improved engineer utilization. The operating profit margin increased 1 percentage point to 16.6% year-over-year. Revenue contribution % for this segment is not explicitly stated in the transcript.

• Negative impact from reduced transactions with a small number of large clients that started in Q2 FY2025 will continue through Q1 FY2026, before clearing up starting in Q2 FY2026.
• The company recorded a 960 million yen impairment loss on its equity-method affiliated company Comisma Inc. in 4Q FY2025, which pushed full-year net profit attributable to parent owners below the original forecast. Investment gains from other equity-method investments (led by Dentsu Digital) remained solid despite this impairment.
• The digital marketing industry is facing growing customer demand complexity and sophistication driven by labor population decline, rapid technological evolution led by AI, and diversifying consumer behavior, which creates operational and competitive challenges if the company fails to adapt to changing market conditions.
• No other explicit operational failures or material risks are discussed in the provided transcript.

No question and answer section content is included in the provided earning call transcript.