AnyMind Group Inc. Q1 FY2025 earnings call

• Overall 1Q Financial Performance

  • Total revenue: 12.643 billion yen (+20% YoY)
  • Total gross profit: 4.859 billion yen (+26% YoY)
  • Operating profit: 298 million yen (-16% YoY), remained profitable in the typical low season Q1
  • Adjusted EBITDA: 726 million yen (+8% YoY)
  • Progress against full-year revised forecast: 23% for revenue and gross profit, 17% for operating profit, outperforming prior year progress rates

• Geographic Revenue Base

  • Gross profit split: 49% Japan/Korea, 39% Southeast Asia, 12% Greater China/India
  • Southeast Asia delivered +42% YoY gross profit growth, leading regional expansion

• Corporate-Focused Growth Strategy

  • Core strategic priority remains expanding corporate client solutions, aiming to become Asia's No.1 corporate support provider
  • Marketing: Strengthen generative AI-powered SNS analysis and influencer recommendation to boost competitiveness
  • EC: Expand hybrid AI+traditional live commerce models, acquire new cross-border EC brands, enhance support capabilities, cross-sell e-gift solutions, and offer AI agent implementation support
  • Strengthen regional cross-functional sales to deepen collaboration with large clients and expand cross-selling between business lines

• Stabilizing Partner Growth Business

  • Expand creator support into new areas including content production (short dramas) and creator production to reduce reliance on short-form video ad revenue sharing
  • Prioritize high-margin mobile app publisher support for publisher growth, and expand casual game in-house development and publishing support services

• Generative AI Transformation

  • Full-company AI transformation led by a dedicated CEO report team, pursuing two core goals: internal business automation/efficiency, and client-facing AI agent development
  • AI has been rolled out across sales, project delivery, and back-office processes in Japan, with approximately 40% efficiency improvement identified in targeted processes, now being expanded to all global locations with over 100 AI projects in progress

• Capital Return and Shareholder Policy

  • Approved expansion of the existing share repurchase program, with the planned repurchase representing approximately 2.1% of total outstanding shares
  • Approved initiation of the company's first ever dividend: a 2 yen per share year-end dividend for FY2025, with a commitment to maintain stable dividends alongside ongoing growth investment

1. Marketing Business: Contributed 45% of total gross profit. Reported +21% YoY gross profit growth, driven by influencer marketing, with solid performance across Japan/Korea (+19% YoY) and Southeast Asia (+23% YoY). The company was certified as a top partner for RED (Xiaohongshu), leading to steady growth in influencer marketing projects targeting the Chinese market from across Asia.
2. D2C/EC Business: Contributed 20% of total gross profit. Achieved +37% YoY gross profit growth overall, with corporate-focused EC support growing +53% YoY and creator D2C growing +22% YoY. Southeast Asia led growth, with recent acquisitions in the region performing well, and overall gross profit margin improved due to margin gains in creator D2C and large corporate EC markets in Japan and Indonesia. The company acquired Vibula (a top live commerce player in Vietnam) and was certified as TikTok Shop Prime Partner in Thailand, strengthening its regional social commerce capabilities.
3. Partner Growth Business: Contributed 34% of total gross profit. Achieved +25% YoY gross profit growth overall. Creator-focused growth shifted from rapid expansion to stable growth following industry-wide changes, while publisher-focused growth saw slowing growth due to falling web ad unit prices, with the company shifting focus to mobile app publisher support.

• Full-year FY2025 guidance was revised downward: full-year revenue was cut by 9.5 billion yen (-14.7%), and full-year gross profit was cut by 2.5 billion yen (-10.5%). All downward revision is concentrated in the Partner Growth (creator-focused) segment, with no impact to the core marketing and EC businesses which maintain prior growth forecasts.
• Post-revision, the average annual growth rate for 2023-2025 remains strong at +29% for revenue and gross profit, and +53% for operating profit. Marketing business is projected to grow +26% CAGR, EC +54% CAGR, and Partner Growth +19% CAGR.
• The 2027 mid-term target (105 billion yen total revenue, 38.5 billion yen total gross profit) is unchanged. Management estimates that after accounting for planned M&A and AI-driven efficiency gains, the remaining gap to target is only 5.6% of revenue and 1.7% of gross profit, which is easily covered by organic growth, with upside potential if M&A and efficiency progress exceed expectations.
• M&A is assumed to proceed at a pace of 3 deals per year starting in 2026, with each deal projected to contribute an average 1 billion yen in revenue, 300 million yen in gross profit, and 70 million yen in operating profit.
• Operating profit margin is targeted to reach 6%+ within the mid-term period, with a scenario of reaching 10%+ earlier if AI-driven structural reform progresses faster than expected.

• Short-form video industry changes: Global platform adjustments caused short-form video revenue per unit to drop to ~1/4 of prior levels in March 2025, with no recovery seen through April 2025. This has led to lower creator revenue, reduced creator content output, and pressured earnings for the creator-focused segment of Partner Growth.
• Foreign exchange risk: A revised stronger yen assumption (full-year average 145.3 yen/USD vs. prior 149.25 yen) reduced projected yen-denominated revenue and gross profit. A 281 million yen foreign currency valuation loss on USD-denominated assets is already incorporated into guidance for the first half of FY2025.
• Within Partner Growth publisher support: Low-margin web media support is underperforming, leading to lower overall revenue projections for the segment despite strength in high-margin mobile app support.
• Geopolitical and trade risk: While U.S. tariff policy has no direct impact due to limited U.S. market exposure, indirect risks from broader global economic slowdown are being monitored. Management views increased intra-Asian trade activity amid global trade friction as a net opportunity for the company, given its pan-Asian infrastructure.

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