GRID Inc. Q4 FY2025 earnings call

• Overall Financial Performance

  • 2025 June fiscal year achieved 5 consecutive years of revenue and profit growth, with total revenue up 25% YoY to 2.063 billion yen, operating profit up 17.1% YoY to 428 million yen, ordinary profit up 24.6% YoY to 428 million yen, and net profit of 298 million yen (the net profit decline from prior year came from the elimination of carried-over losses triggering new corporate tax expenses and a large reduction in deferred tax assets).
  • Operating profit margin hit 20.8%, maintaining solid profitability above 20%.
  • Total order value and ending order backlog both grew more than 30% YoY, with ending order backlog exceeding 1.4 billion yen to support future revenue recognition.

• Customer Base & Operational Productivity

  • The number of customers with annual transaction value exceeding 10 million yen is steadily increasing, and average revenue per customer across core service segments is now around 55 million yen, up from prior year. Both total customer count and core segment customer count increased.
  • Revenue per AI engineer has grown year-over-year, driven by headcount expansion and productivity improvements. The firm will gradually shift to a revenue structure less dependent on engineer headcount by improving productivity and diversifying revenue models.

• Profit Driver Analysis

  • The 62 million yen YoY increase in operating profit came from a 300 million yen increase in flow-type revenue and a 100 million yen increase in stock-type revenue, which outpaced cost increases from headcount expansion, software expenses, outsourcing, sales team expansion and hiring.

By business domain: 1. Power & Energy Segment: Revenue share exceeds 50% of total revenue, and remains the core growth driver of the firm. 2. Urban Transportation & Smart City Segment: Absolute revenue is expected to grow in the next fiscal year as a key strategic growth area. By revenue model type: 1. Flow-type AI Revenue: 1.5 billion yen in 2025 June fiscal year, up from 1.251 billion yen in the prior year (a 243 million yen increase). 2. Stock-type AI Revenue: Exceeded 500 million yen in 2025 June fiscal year, up more than 100 million yen from the prior year. For the upcoming 2026 June fiscal year: 1. AI-related business is planned at 2.37 billion yen in revenue. 2. Storage power plant development-related business is planned at over 700 million yen in revenue, combining for total planned revenue of 3.1 billion yen.

• Total revenue for the 2026 June fiscal year is targeted at 3.1 billion yen, representing 50% YoY growth, a strong upward growth target from the prior year's 25% growth.
• Gross profit is planned to increase by more than 400 million yen YoY, with gross profit growing alongside revenue expansion.
• Operating profit is guided to a slight increase to 450 million yen from the prior year's 428 million yen, as the firm plans to invest heavily in business expansion including team expansion and office relocation costs.
• AI-related revenue is increasingly stabilized, with relatively even distribution across quarters. Storage power plant revenue is concentrated in Q4, aligned with scheduled battery delivery timing, so full-year 2026 June fiscal year revenue breakdown by quarter is planned as 566 million yen (Q1), 706 million yen (Q2), 671 million yen (Q3), and over 1 billion yen (Q4).
• The firm maintains a baseline growth target of 20-30% for AI-related business, and has intentionally adjusted this year's AI revenue growth rate to front-load order acquisition in the first half and reallocate second half activity to pipeline development for future fiscal years.

• No explicit major operational or market risks were discussed in the available transcript.

Q: What is the business model for the storage power plant business, and what are its profitability characteristics compared to AI business? / A: The business has two revenue pillars: a "develop & sell" model where GRID develops projects and sells them to long-term operators, and an ongoing 10-20 year revenue stream of operation fees for managing charge/discharge market activities. The storage business has much lower gross margin than AI, which has gross margin above 70%: storage is expected to deliver 20-30% gross margin, with construction, battery and equipment costs counted as outsourced expenses.

Q: What size can the storage power plant business reach in the next 2-3 years? / A: GRID holds a large backlog of permitted projects, and individual projects range from 500 million to 600 million yen for medium voltage, to 2-3 billion yen for extra-high voltage. The 2026 June fiscal year is the first full year of operation, focused on delivering a small number of projects reliably to set up scaling for future years. Even 1-2 projects can immediately generate 500 million to 1 billion yen in annual revenue, with large upside from the existing project backlog.

Q: What is GRID's core competitive advantage in storage power plant business, and what is its long-term strategic direction? / A: GRID's unique advantage is end-to-end capability covering both physical storage development and AI-powered operation algorithm development, a combination very few market players offer, and it holds a large portfolio of development permits from multi-year application work. GRID does not plan to specialize only in operation: it aims to build a diversified business combining physical assets and AI software, as the firm believes long-term growth will come from integrating software control with real-world energy assets.

Q: Why is AI-related revenue growth planned to slow in the upcoming fiscal year? / A: The slower planned growth is intentional strategic adjustment, not a market slowdown. GRID aims for sustainable 20-30% annual growth long-term, so it is accelerating its push to front-load order closing in the first half of the fiscal year, and reallocate all second half activity to developing pipeline for future fiscal years, rather than pushing for aggressive single-year growth.