CAREERLINK CO.,LTD. Q4 FY2025 earnings call

• Overall Financial Performance • Consolidated revenue for FY2025 March ended at 40.397 billion yen (92.3% of prior year period), operating profit at 2.693 billion yen (82.1% of prior year period), ordinary profit at 2.7 billion yen (82.3% of prior year period), and net income attributable to parent company shareholders at 1.829 billion yen (83.1% of prior year period). The overall decline was driven by wrap-up of large temporary government projects and deliberate decision to skip bidding on low-margin contracts. • Free cash flow reached 2.58 billion yen, with ending cash and cash equivalents balance of 10.724 billion yen. Total assets stood at 19.878 billion yen, net assets at 14.912 billion yen.

• Operational KPIs • Average core talent headcount was 386 in FY2025 March, with targeted hiring of specialized professionals in process building and IT and upskilling of existing staff; the company plans to maintain this headcount level in FY2026 March. Total BPO project count reached 211. • The share of long-term (12+ month) BPO contracts with local governments increased 54% year-over-year, showing improving revenue stability. Private sector BPO revenue was flat year-over-year as new client gains offset completion of large existing projects.

• Strategic Direction • Management is driving transformation of the company's business portfolio, with a focus on expanding geographic coverage and service offerings for local government clients, and growing private sector BPO. The company plans to actively invest for long-term sustainable growth and keeps M&A and strategic alliances as potential inorganic growth options.

1. Office-related HR Services: Revenue of 32.582 billion yen (88.8% of prior year period), segment profit of 2.398 billion yen (80.5% of prior year period), contributing 80.6% of total consolidated revenue. Within this segment: BPO-related services expanded the number of partner local governments to 195, but revenue declined due to completion and scaling down of My Number and large welfare benefit projects; CRM-related services won multiple new mid-sized call center contracts but was offset by completion of prior large and spot projects; General office services saw growth from new local government economic stimulus and new NISA-related contracts, but was offset by completion of My Number delivery work. 2. Manufacturing HR Services: Revenue of 7.531 billion yen (110.5% of prior year period), segment profit of 256 million yen (100.6% of prior year period), contributing 18.6% of total consolidated revenue. Growth was driven by increased orders from existing clients and new client acquisition across food processing and manufacturing processing divisions, but profit stayed flat due to higher personnel and hiring costs for expansion. 3. Other Businesses (including car fleet management): Revenue of 283 million yen (97.9% of prior year period), segment profit of 38 million yen (86.9% of prior year period), contributing 0.8% of total consolidated revenue. Revenue was flat year-over-year, but profit declined due to additional headcount to comply with new overtime cap regulations implemented in April 2024.

• FY2026 March Full Year Guidance: Management expects a return to revenue growth, with a small net profit increase, while prioritizing sustained growth and long-term profit improvement, and balancing active investment with shareholder return capacity. Specific targets: 42.545 billion yen total revenue (+5.3% year-over-year), 2.706 billion yen operating profit (+0.5% year-over-year), 2.703 billion yen ordinary profit (+0.1% year-over-year), and 1.848 billion yen net income (+1% year-over-year). Segment-level targets: 34.16 billion yen for office-related HR services (+4.8% year-over-year), 8.129 billion yen for manufacturing HR services (+7.9% year-over-year). Profit is expected to be concentrated in the second half due to upfront project setup costs being recorded in the first half.
• Mid-term Management Plan (through FY2028 March): The plan is based on organic growth and accounts for expected trial-and-error from aggressive expansion investments. It targets a 5% annual average revenue growth rate and 4% annual average operating profit growth rate across the 3-year period. Segment-level growth targets: 5% annual average growth for office-related HR services, 6% annual average growth for manufacturing HR services. The plan targets growth in line with the industry average 9.6% annual growth rate from FY2020 February through FY2028 March.
• Shareholder Return Guidance: The company maintains a stable dividend policy, with a planned FY2026 March end dividend of 120 yen per share (77.1% payout ratio), and plans to keep the 120 yen per share dividend throughout the mid-term plan period, as baseline profit growth is expected. The existing shareholder dividend program remains unchanged.

• Revenue and profit pressure from the completion and scaling down of large temporary government projects (including My Number delivery and large economic stimulus/welfare benefit projects) negatively impacted current period results, and near-term transition to sustained new project growth creates execution uncertainty. • Ongoing expansion plans require increased upfront investment in personnel, IT/DX, and new client acquisition, which could compress near-term margins even as it supports long-term growth. • New labor regulations (such as the 2024 overtime cap for the automotive management business) require additional headcount investment, leading to downward pressure on segment profit.

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