Nihon Enterprise Co.,Ltd. Q4 FY2025 earnings call

Organizational and Governance Updates

• Starting in June 2025, the company launched a new leadership structure with founder Ueda as Chairman and CEO, two new Managing Directors, and two new outside directors to strengthen governance.
• The sales organization was restructured into two specialized divisions: a Consumer Sales Headquarters focused on to-C business and a Corporate Sales Headquarters focused on to-B business to strengthen sales capabilities.

Creation Business Operational Highlights

• Content Services: Added 6 new characters to the Speak Lab for スゴ得 English education content launched in September 2024, added new games to existing long-running casual game and new game pack offerings. Aggressive advertising investment is driving V-shaped recovery in monthly subscription content in Q4, with management focused on further promotion optimization, retention improvement, and content upgrades. Carrier alliance expansion, content enhancement, and new title launches are driving growth in flat-rate carrier content.
• Business Support Services: Launched content support for KDDI's Ponta Pass membership retention after completing a successful proof of concept. Procurement support service Profair grew its customer base of large corporations and national/public universities through referrals and inquiries. Launched a new catalog gift service for consumer EC platform Inaseri Market targeting corporate use. Expanded partner development for ATIS traffic information, successfully launched deformed interactive maps at a major media station, and is working to expand adoption across media, public transport, logistics, and construction clients. The company's proprietary RPA kitting tool Kitting-One is positioned as a core growth offering, with a focus on expanding sales through custom tool development for client needs.
• Renewable Energy: Benefited from favorable weather, generation volume reached 6x the group's own electricity consumption (up from 4.4x in the prior year), with management targeting contributions to regional revitalization alongside power sales.

Solution Business Operational Highlights

• System Development Services: Completed delivery of high-profile projects including a My Number Card personal authentication system and media application, leverages in-house content development capabilities to accept diverse development projects, and is expanding AI-powered services including an AI image analysis parking exit time display system for commercial facilities. Management is focused on deepening existing client relationships and expanding new client acquisition.
• Business Support Services: Launched new financial sector业务 support supporting communication carrier financial system risk management, focused on enhancing service capabilities through investment in skilled IT personnel, and is expanding operations nationwide centered on communication carrier clients.
• Other Services: Launched a capsule toy limited novelty promotion to drive membership growth for スゴ得 content, with in-house end-to-end delivery from planning to production to drive users from analog promotions to digital content. Used device data erasure and resale services are growing, with a focus on expanding sales to national mobile phone retailers and supporting corporate asset monetization of unused devices.

Overall company consolidated revenue for the fiscal year ended May 2025 was 4.442 billion yen, a 5.4% decrease year-over-year. Operating profit was 67 million yen, a 74.4% decrease year-over-year.

1. Creation Business Segment: Total revenue of 1.799 billion yen, up 1.1% year-over-year, accounting for 40.5% of total company revenue.

   • Content Services: Revenue of 1.054 billion yen, up 11.3% year-over-year. Growth was driven by strengthened promotion for monthly subscription content and strong growth in carrier flat-rate content.
   • Business Support Services: Revenue of 684 million yen, down 11.8% year-over-year. High-margin traffic information and kitting tool license sales increased, but this was offset by declines in low-margin kitting outsourcing services and EC/ASP services.
   • Renewable Energy: Revenue of 60 million yen, up 5.8% year-over-year. Favorable weather at the Yamaguchi Prefecture solar power plant drove a small increase.

2. Solution Business Segment: Total revenue of 2.642 billion yen, down 9.4% year-over-year, accounting for 59.5% of total company revenue.

   • System Development Services: Revenue of 1.916 billion yen, down 14.2% year-over-year. Growth in operation maintenance and lab-based development was offset by delayed recovery in contracted development and support following the completion of a large project.
   • Business Support Services: Revenue of 649 million yen, up 16.3% year-over-year. Growth was driven by strong demand for skilled IT personnel supporting client digital transformation (DX).
   • Other Services: Revenue of 76 million yen, down 37.4% year-over-year. The decline was caused by the lapping of a prior-year special demand for solution-related equipment, partially offset by growth in glass coating agent sales.

• For the fiscal year ending May 2026, management forecasts total revenue of 5.33 billion yen (20% year-over-year growth), operating profit of 240 million yen (253.9% year-over-year growth), ordinary profit of 250 million yen (179.7% year-over-year growth), and net income attributable to parent company shareholders of 155 million yen (614.5% year-over-year growth).
• The dividend forecast for the fiscal year ending May 2026 is maintained at 3 yen per share, consistent with the planned dividend for the fiscal year ended May 2025.
• Management's core priority for the coming fiscal year is to deliver solid growth across content services, business support services, and system development services to achieve a full recovery in financial performance.

• System development business faces continued uncertainty around the recovery of contracted development demand following the completion of a large-scale prior project, which creates downside risk to revenue if new project acquisition does not meet expectations.
• Aggressive upfront advertising investment for monthly subscription content creates near-term profit pressure, and carries risk if member acquisition and retention do not meet targets to generate expected long-term returns.
• Other services face volatility from one-off special demand events, with the prior year's large equipment special demand having already lapped and no replacement guaranteed in the coming fiscal year.

No questions and answers section is included in the provided transcript.