HIMACS,Ltd. Q4 FY2025 earnings call

Corporate Strategic Direction

• Target: Become an enterprise that consistently provides technology capabilities underpinned by implementation strength centered on digital technology, and grow sustainably with customers as a best partner
• Mid-term strategic plan "NEXT C4" core priorities:
  • Expand core contracted development business: Maintain 30% revenue share for non-financial segments and end-user transactions; increase DX project revenue share to 25%
  • Invest in human capital: Establish a dedicated DX technology department, increase the number of DX engineers and DX-related qualified technical personnel; continue investment to increase project leader headcount; expand development personnel including business partners
  • Actively explore capital alliances and M&A to support further business expansion

FY2025 Operational Achievements

• Business portfolio: Maintained the 30% revenue share target for non-financial and end-user transactions; DX projects reached 4.394 billion yen in revenue, accounting for 24.3% of total revenue, with order backlog up 30.8% year-over-year
• Generative AI application: Rolled out proprietary generative AI service "Jishanavi"; integrated it into the internal "Information Systems BOT" to handle employee internal system inquiries, with over 90% of inquiries resolved automatically, improving company-wide productivity; currently conducting pilot tests of applying Jishanavi to upstream processes of system development
• Human capital investment: Implemented a company-wide average 7.5% increase in monthly salary starting April 2025; expanded incentive programs for technical certification, with cumulative DX-related certifications reaching 288, an increase of 31 year-over-year
• Sustainability: Won EcoVadis Bronze Medal (awarded to top 35% of rated enterprises) for the second consecutive year; maintained CDP C recognition level; purchased FIT non-fossil certificates in FY2025, achieving an 83% CO2 emission reduction from the base year

Order Performance

• Total order backlog increased 8.3% year-over-year, led by System Maintenance Service; order backlog grew across financial, end-user, and DX project categories

1. System Solution Service (SSS): Revenue of 6.833 billion yen, up 918 million yen year-over-year, driven by expanded DX projects for banking, insurance, and credit services. This segment accounts for approximately 37.8% of total consolidated revenue. 2. System Maintenance Service (SMS): Revenue of 11.233 billion yen, down 208 million yen year-over-year. While DX projects centered on credit services expanded, some existing projects for securities and distribution segments concluded. This segment accounts for approximately 62.2% of total consolidated revenue. 3. By customer channel: Transactions through SIers increased 4.6% year-over-year, accounting for 70.4% of total revenue; end-user transactions increased 2.9% year-over-year, accounting for 29.6% of total revenue. Total consolidated revenue for the full year was 18.066 billion yen, up 4.1% year-over-year; operating profit was 1.807 billion yen, up 5.1% year-over-year, with an operating margin of 10%.

Management revised downward the full-year FY2026 (ending March 2026) consolidated performance guidance from the original plan, as the final year of the current mid-term management plan:

• Revenue revised down from 20.6 billion yen to 20 billion yen
• Operating profit forecast set at 1.82 billion yen, with operating margin revised down from 10% to 9.1%, partially due to the impact of the salary increase
• Forecast earnings per share is 107.40 yen
• Revenue composition forecast: 68% from financial segments, 32% from non-financial segments. Financial segments expect growth in security-related projects for banks, exchange-related projects for securities, and reconstruction/consolidation DX projects for insurance; non-financial segments expect growth from new end-user transactions and new modernization projects
• Dividend policy: Maintains target 40% consolidated payout ratio for stable, appropriate shareholder returns. FY2025 full-year dividend set at 45 yen per share, a 1.5 yen increase year-over-year; FY2026 dividend planned at 46 yen per share, a 1 yen increase, marking the fifth consecutive year of dividend increases, with a forecast payout ratio of 42.8%

No explicit discussion of material operational risks or failures was included in the available transcript. The only negative factors noted were internal cost pressures: rising outsourcing unit prices, higher personnel costs, increased spending on human capital investment and infrastructure development, and higher SG&A from personnel costs and security enhancements, which partially offset operating profit growth in FY2025.

No Question and Answer section was included in the provided earning call transcript.