eWeLL Co.,Ltd. Q2 FY2025 earnings call

• Core Business & Market Context

  • eWeLL operates in Japan's home healthcare visiting nursing space, providing the specialized electronic medical record platform iBow. Japan's national policy pushes a shift from hospital-based to home-based care to reduce healthcare costs amid rapid aging, driving 10% annual growth in the number of visiting nursing stations (18,743 total stations as of April 2025, 8.8% average annual growth since 2012).
  • iBow uses a win-win subscription + per-visit pricing model: ¥18,000 monthly base fee + ¥100 per visit, aligning eWeLL's growth with client station growth and reducing churn.
  • As of 2Q 2025, eWeLL holds a 17.5% market share of all Japanese visiting nursing stations, up 1.3pp year-over-year, with 3,286 total contracted stations (17.3% YoY growth).

• 2Q 2025 Core Operational Results

  • Total 2Q revenue of 1.603 billion yen (+33% YoY, +2.5% vs guidance); total 2Q operating profit of 788 million yen (+49.2% YoY, +15.4% vs guidance), with 52.8% full-year operating profit progress achieved in H1.
  • Average monthly customer per-station price of ¥86,400 (+10.8% YoY), driven by growth in BPaaS and AI add-on services.
  • Revenue churn rate of 0.24%, down from 0.27% YoY, driven by strengthened customer success, quarterly engagement surveys to identify at-risk clients, and differentiated AI services that boost customer engagement.
  • 97 total employees as of 2Q end, with hiring for BPaaS and development roles pushed to H2; priority hiring focuses on customer success, product development, and support to support multi-product strategy.

• New Product Launch: AI Visit Scheduling & Routing

  • Launched July 24, 2025, with a free trial extended to end-December 2025 (changed from original 2025 mid-year charging plan) to maximize adoption. The product solves the complex scheduling problem for mid-to-large stations, where average monthly possible scheduling combinations exceed 1.3 trillion, consuming massive management time.
  • 8% of existing iBow clients signed up for the free trial within two weeks of launch, with particularly strong interest from mid-to-large stations (the core volume segment of the market aligned with national policy pushing for station scale-up). 5% of multi-station large corporate clients have signed up, requiring customized consulting-led sales.

1. Cloud Service: 1.603 billion yen total 2Q revenue, 1.387 billion yen from cloud services, representing 86.5% of total revenue. This reflects a 29% year-over-year increase, with 13% quarter-over-quarter growth from Q1. Key growth drivers include new large client onboarding (Tsukui), strong new contracts for AI services, and record-high sales for the mandatory training service. 2Q cumulative gross margin for the full company is 79.2%, with cloud gross margin expected to decline to planned levels in H2 as development and maintenance costs increase. 2. BPaaS: 202 million yen 2Q revenue, representing 12.6% of total revenue. This reflects a 75.2% year-over-year increase, with 2Q cumulative gross margin of 62.4%, up from prior periods on improved productivity. Management targets a long-term 60% gross margin for BPaaS, and projects BPaaS will reach 15% of total revenue by FY2027.

• Full-year revenue and profit guidance is maintained at original planned levels, despite H1 outperformance. Downward revision to H2 operating profit guidance from the original 811 million yen to 705 million yen, driven by accelerated growth investment in H2.
• Core H2 investment priorities are: 1) Extended free trial for AI Visit Scheduling & Routing to maximize long-term adoption, sacrificing near-term revenue for future growth; 2) Increased personnel and hiring investment to strengthen product capability and customer satisfaction; 3) Increased sales promotion investment to build awareness for AI Visit Scheduling & Routing, including refreshed marketing content and case studies; 4) Additional one-time costs for Tokyo office relocation and new product development.
• Management expects that current accelerated investment will drive higher than originally planned customer average selling price growth from next fiscal year onward, with updated mid-term targets to be disclosed in February 2026.
• BPaaS is projected to grow to 15% of total revenue by FY2027, with gross profit share remaining slightly below 15% over that period.

• Industry-wide risk: Visiting nursing has a high closure rate: ~1,200 stations close annually even as 2,400 new open, and business closure is the single largest driver of eWeLL churn, representing ~60% of annual cancellations.
• Churn risk: Half of remaining churn comes from switching to cheaper competing products, particularly among smaller stations, requiring ongoing investment in customer success and differentiated service to retain clients.
• Industry structural risk: Japan faces a structural shortage of visiting nurses, increasing operational pressure on stations and reliance on efficiency tools, but also creates market demand for eWeLL's products.
• Labor risk: Rising overall labor costs in Japan, though management notes its focus on efficient small-team operations and high employee retention mitigates this risk.

Q: What are eWeLL's key competitive advantages against rival providers? / A: eWeLL cites three core competitive advantages. First, iBow is purpose-built exclusively for visiting nursing, unlike generalist systems that entered the space from other adjacent healthcare segments, so it better supports operational efficiency and governance compliance that larger stations prioritize. Second, eWeLL is the only provider that offers a full one-stop suite of visiting nursing operation tools, including core EMR, claim processing, BPaaS back-office support, attendance management, and mandatory training, all fully integrated on the iBow platform. Third, eWeLL has a unique proprietary dataset of chronic care medical data accumulated in iBow since 2014, which enables unique AI-powered products like AI-generated care plans that competitors cannot replicate.

Q: What is the current adoption and performance of the AI Care Plan & Report product? / A: The product generated 25 million yen in 2Q revenue, reaching 42 million yen in cumulative H1 revenue. It uses the same per-visit usage-based pricing model as core iBow, creating a scalable recurring revenue stream. As of end-June, the product has over 1,000 contracted clients, representing over 32% of all existing iBow clients, with roughly 80% of new iBow clients adding the product at signup, showing strong ongoing adoption traction.

Q: What is eWeLL's approach to M&A? / A: Management says M&A will be considered flexibly as a tool to fill gaps in capability or business scope, with no specific deals currently under discussion. The company prioritizes small to mid-sized deals in the ~several billion yen range, focused on healthcare businesses that can generate clear synergy with eWeLL's existing home care platform business.

Q: How does eWeLL align product development with customer needs? / A: eWeLL maintains a direct-to-customer model with no third-party agency sales, so all customer feedback flows directly to internal teams. The BPaaS team uses iBow and its add-ons daily alongside clients, and provides continuous feedback to the product development team. In-house customer support also collects customer input and shares it directly with development, creating an organizational structure that ensures product roadmaps match on-the-ground user needs.