SERAKU Co.,Ltd. Q4 FY2025 earnings call

• Overall 2025 Full-Year Financial Performance

  • Consolidated revenue reached 24.776 billion yen, with year-over-year revenue growth driven by rising project unit prices, expansion of the DX domain, and sustained high engineer utilization
  • Consolidated operating profit reached 2.55 billion yen, with year-over-year profit growth driven by reduced recruitment, training, and idle engineer costs from expanded business partner utilization
  • Both revenue and operating profit met the full-year guidance
  • Over 2,000 business partners are now registered on the company's IT talent platform, with steady growth in project matching between partner engineers and company projects
  • DX domain revenue share held steady year-over-year at over 30% of total company revenue, with growth outpacing company average driven by strong demand for Salesforce and COMPANY operation and adoption support
  • High value-added projects increased due to focused investment in engineer skill development and sales activities

• Strategic Transformation and Mid-Term Direction

  • The company's core strategic goal is maximizing medium- to long-term profit, building on its large, steadily growing traditional SI base to actively invest in high-margin, high-growth areas including DX, proprietary services, and AI services
  • The company is in the

Serac operates three reporting segments: 1. Digital Integration Segment (covers SI and DX domains): Revenue reached 23.881 billion yen, operating profit reached 2.611 billion yen, achieving year-over-year revenue and profit growth even with advance investments for future growth. This segment accounts for approximately 96.4% of total company revenue. 2. Midori Cloud Segment (supports DX for agriculture and livestock): No specific absolute financials were disclosed in the transcript, but its core new offering Rakuraku Shukka has achieved adoption across multiple agricultural cooperative associations (JA), with growing pipeline of potential adopters. 3. Mechanical Design Engineering Segment (focuses on hardware domain): No specific absolute financials or revenue contribution figures were disclosed in the transcript.

• 2026 August Fiscal Year: Management maintains an upward growth target, projecting 27.4 billion yen in revenue and 2.85 billion yen in operating profit, representing continued revenue and profit growth in a stable demand environment
  • 17.4 yen per share dividend is planned for 2026 August Fiscal Year, consisting of 16.9 yen in performance-linked dividend plus a 0.5 yen increase from share buyback and cancellation
  • Transformation to an AI service company is structured in phases: the current 2026 fiscal year is the Phase 1 foundation building period, focusing on AI service development and AI talent cultivation. 3 to 5 years from now, the company will complete the shift from labor-intensive services to AI-centric high value-added services across both SI and DX domains
  • The company will update its mid-term growth vision after it finishes assessing demand changes driven by AI adoption, with an update planned once the assessment is complete
  • Growth targets for Midori Cloud: near-term target of 70 million annual distribution labels for Rakuraku Shukka, with longer-term plans to expand services to post-harvest processes and apply the solution to non-agricultural distribution such as fisheries
  • Management confirms an active M&A strategy, targeting companies with high business affinity where Serac's sales, recruitment, and training capabilities can drive significant expansion, with positive early results from 2024 acquisitions of AND Think and Mind

• AI-driven structural changes in demand for IT services are expected, which may require adjustments to the company's existing business model and mid-term growth plans. Management has acknowledged this uncertainty and is conducting a full assessment before updating its mid-term vision, but the scale and pace of demand shifts remain unquantified in the current period.
  • The shift to high value-added AI-centric services requires large upfront investment in talent development and product R&D, which may create short-term margin pressure before the transformation delivers profitability improvements.
  • Revenue and profit growth for the new Midori Cloud Rakuraku Shukka business is dependent on growing adoption across agricultural cooperatives and expansion into adjacent verticals, which faces market adoption risk.

No question and answer section is included in the provided transcript.