WILLs Inc. Q3 FY2025 earnings call

• Overall Financial Performance • Consolidated revenue hit 4.367 billion yen, reaching 111.6% of the initial full-year plan, and 120.5% of the prior year same period. Consolidated operating profit hit 941 million yen, reaching 118.5% of the initial plan and 121.1% of the prior year same period. • Standalone revenue hit 4.193 billion yen (112.7% of plan), standalone operating profit hit 1.023 billion yen (116.3% of plan). All revenue and profit lines grew year-over-year, with both consolidated and standalone results performing strongly. • Pay raises and aggressive hiring for business expansion pushed up personnel costs, but concurrent cost-cutting efforts meant operating profit came in above initial plan for both consolidated and standalone results.

• Customer Growth • Premium Yutai Club (Premium Shareholder Benefit Club) saw 10 new net client companies added from the end of the prior period, reaching a total of 106 companies. Growth was driven by strong demand for shareholder management digital transformation from large corporations and firms facing liquidity challenges, offsetting cancellations from firms with performance concerns and those delisted via take-private transactions. • IR-navi client count also saw steady growth.

• Balance Sheet Highlights • Current assets reached 3.516 billion yen (105.6% year-over-year), with notes receivable, accounts receivable and contract assets growing 145.3% year-over-year to 549 million yen, primarily driven by higher quarterly revenue. • Intangible fixed assets reached 869 million yen (130.4% year-over-year), with growth driven by increases in software and capitalized software in progress. • Current liabilities reached 2.256 billion yen (107.5% year-over-year), with accounts payable growing 185.9% year-over-year to 769 million yen, primarily driven by higher procurement volumes matching higher revenue.

• New Product Development • Wills co-developed an AI-powered stock price simulation tool with HEROZ Inc. for use in the client proposal stage. The tool uses deep learning on historical implementation data from Premium Yutai Club client firms and market data to produce high-precision simulations of the impact of shareholder benefit programs on stock price, liquidity, and shareholder count based on a firm's specific shareholder structure and market conditions. It can now quantitatively identify the most effective program strategy for prospective clients.

1. Shareholder Management Platform Business: Revenue of 4.189 billion yen, 122.0% of the prior year same period. It accounts for 95.9% of total consolidated revenue. 2. Sustainability Solutions: Revenue was 93.5% of the prior year same period. It is shifting toward large-scale integrated reporting projects, and full-year results are expected to be roughly in line with the prior year. 3. Advertising Business: Revenue of 183 million yen, 92.9% of the prior year same period, accounting for 4.2% of total consolidated revenue.

• Management reaffirmed its original full-year guidance, with no changes to the full-year revenue and profit outlook from the initial plan.
• Consolidated revenue full-year plan is 5.58 billion yen, and the 3Q cumulative progress rate is 78.3%. Standalone revenue full-year plan is 5.324 billion yen, with a 3Q cumulative progress rate of 78.8%.
• Sustainability Solutions full-year revenue is still expected to be roughly flat year-over-year, despite the year-to-date revenue decline caused by the shift to large-scale projects that has pushed more revenue recognition into the second half of the fiscal year.

• There has been some customer churn from firms with performance concerns and firms delisted via TOB (take-over bid) transactions that have exited the public market.
• The shift of Sustainability Solutions to larger integrated reporting projects has changed the revenue recognition profile, with more revenue weighted to the second half of the fiscal year which has reduced year-to-date 3Q revenue compared to the prior year.
• Rising personnel costs from base pay increases and aggressive hiring to support business expansion have created upward pressure on operating costs.

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