SOLIZE Holdings Corporation Q4 FY2024 earnings call

• Company Overview & Core Positioning • SOLIZE was founded in 1990, has over 2,100 employees, operates 5 branches in Japan and 5 overseas locations (adding Thailand and Canada in 2025 to existing US, India, and China sites), and focuses on innovating digital manufacturing. • The company combines hands-on engineering/manufacturing practical capabilities (built since founding) with consulting-led transformation capabilities (added in the 2000s), serving primarily automotive manufacturing clients (80% of revenue, with relationships with all 8 Japanese automotive OEMs and major global suppliers) plus top players in other manufacturing and construction industries. • Strong demand growth for contracted engineering services: automotive clients are shifting focus to in-house software development, creating high demand for capable external partners to take on full hardware development projects, which SOLIZE meets by combining full project delivery with process streamlining and productivity improvement solutions.

• 2024 Fiscal Year Financial Results • Total revenue hit 22.713 billion yen, up 13.1% year-over-year (YOY), marking three consecutive years of record high revenue; Q4 2024 revenue exceeded 6 billion yen for the first time in a single quarter, with a compound annual growth rate (CAGR) of over 10% since 2022. • Gross profit reached 6.449 billion yen, up 17% YOY, achieving a record high even after a 7% average wage increase and rising input costs, demonstrating improving profitability. • Operating income was 0.455 billion yen, down nearly 50% YOY, driven by intentional higher-than-planned accelerated front-loaded investments starting August 2024. Net income was 0.254 billion yen. • Investments totaled 7% of revenue (2 percentage points above the 5% baseline target set at the February 2024 IPO), covering R&D, recruitment, capital expenditures, and CVC. The largest investment share went to expanded recruiting capacity and hiring costs amid highly competitive labor markets, with additional spending for M&A due diligence, new technology R&D, and industry events.

• Key Strategic Initiatives • The company will transition to a holding company structure on July 1, 2025, splitting operations into the three core business segments listed above. The structure enables autonomous decision-making and independent profit reinvestment for each segment, while the holding company focuses on accelerating growth via investment strategy and human capital strategy. • Global expansion: SOLIZE is prioritizing growth in India (benefiting from booming motorization), added a new Thailand location to cover the fast-growing Southeast Asian market, and launched a new Canada location (in addition to existing US operations) to access the North American advanced technology market, with a mid-term goal of rapid overseas revenue growth. • CVC investment strategy: The company invests in Japan, North America, and Asian startups to access new technologies and domains. For example, via an investment in university VC firm WERU, SOLIZE gained access to Stanford-born top-10 US startup MDC, and provides engineering support for MDC's medical device prototyping, combining capital investment with capability sharing to accelerate startup growth rather than only targeting capital gains. • Human resources strategy: The company targets 500 annual new hires by the late 2020s, up from a 150 annual baseline earlier in the decade, hitting 300 new hires in 2024, with a 350 to 400 new hire target for 2025. The strategy also focuses on raising unit rates for staffing services and getting new hires billable as quickly as possible. • Shareholder return: SOLIZE initiated dividends in its first year as a public company, raising dividends from 44 yen (2023) to 47 yen (2024), with a planned increase to 55 yen for 2025.

1. Engineering & Manufacturing: This is the company's core segment, contributing 70% to 80% of total consolidated revenue. It focuses on volume expansion, unit price growth, engineer recruitment and training, global expansion, and accelerating additive manufacturing (AM) business including new distribution partnerships for Italian 3D printer manufacturers. 2. Consulting & Engineering: This segment leverages the company's transformation capabilities to meet strong demand for automotive industry digital transformation (DX) amid the sector's historic shift. It prioritizes strengthened recruitment, integration of in-house developed AI products as a new growth pillar, and expansion into high-value-added areas including automotive control model-based development and cybersecurity support. 3. Business Incubation: This segment focuses on spinning out and growing new startup-style businesses. Its first spin-out, STELAQ (a software business incubated for 3 years), has grown to over 200 employees and became an independent company in January 2025. Going forward, the segment will operate as a core business unit and advance external partnerships including corporate venture capital (CVC) activities.

• For the 2025 December fiscal year, SOLIZE guides revenue in the 27 billion yen range, representing approximately 19% YOY growth, and targets operating income of 0.5 billion yen, representing an increase over 2024's result.
• Medium-term (next 3 years) guidance targets 40 billion yen in total revenue, with an annual average growth rate of over 20% starting from 2025, up from 10-13% annual growth through 2024, with acceleration driven by M&A funded by IPO proceeds.
• Long-term guidance targets 100 billion yen in total revenue by 2033, building on the company's core digital manufacturing capabilities to expand into new domains and address social challenges.

• Intense competition for engineering talent in the current market environment requires higher-than-planned investment in recruitment to support growth plans.
• Planned growth depends on successful execution of M&A and new market expansion, which carry inherent execution and integration risks.
• The company's heavy exposure to the automotive industry means it faces ongoing risks from structural shifts and demand volatility in the global automotive sector.

No full question-and-answer section was included in the provided earnings call transcript.