internet infinity INC. Q4 FY2025 earnings call

Company Overview & Mission

• Corporate mission is to solve challenges in Japan's super-aging society through innovation, to build a healthy future where all generations can thrive actively and safely. As of May 2025 after acquiring Cent Works, the group has 5 consolidated subsidiaries.
• The company operates across B2C and B2B healthcare/elder care segments, targeting from severely impaired elderly, to lightly impaired elderly, to caregiver family members, with services including in-home care, recreation gym services for the elderly (Record Book), assistive device rental/sales and home renovation, work-care balance support, web solutions, and newly added DX solutions for mid-sized elder care providers.

2025 March Period Operational Highlights

• The Record Book business reached a stable growth phase after separating into a new operating structure in April 2024. Total user count grew steadily, with 13 new stores opened (1 more than prior period), reaching 236 total stores nationwide as of period end.
• Unprofitable Record Book direct stores closed in the prior period, leading to improved profitability for the direct store segment this period. Franchise royalty income grew with expanding store count.
• In Active Life, assistive device rental and sales grew steadily in line with plan. Structural reform at acquired Shohiko Giken is progressing after a 42 million yen goodwill impairment in Q3, with profitability improving gradually.
• For Web Solutions, the small business-focused work-care balance service "Wakaru Kaigo Biz Light" was launched in response to the 2025 Child Care and Family Care Leave Law revision, and has seen strong inbound inquiries. Deployment to subsidiary groups of existing major clients (including Hitachi Group, Itochu Group, Tokyo Gas Group) grew significantly, and medical solutions projects initiated in the prior period converted to orders this period, driving growth for that sub-segment.
• The company completed the acquisition of Cent Works on April 1, 2025, adding a core insurance claims (receipt) software product to the new DX Solutions segment, and is currently focused on post-merger integration (PMI).

Long-Term Growth Strategy

• After 10 years of focused investment in the Record Book business (to address the 2025 problem of aging population and rising social security costs), the company will now shift to targeted investment in DX Solutions to address the 2040 problem of severe healthcare and elder care labor shortages.
• Existing businesses (Record Book, Active Life, In-home Services) will deliver stable growth, with cross-selling and upselling synergies between segments to drive incremental growth. In-home services will expand through geographic expansion and selective M&A.
• The newly renamed DX Solutions segment will target high growth focused on mid-sized elder care providers, aiming to improve on-site productivity through software and operational support.
• M&A policy: Targets adjacent businesses that deliver synergies for existing growth, and businesses that contribute to solving the 2040 problem for new initiatives. For existing business investments, requires positive post-goodwill amortization profit, with transaction valuations capped at 3-7x EBITDA depending on segment. For new DX business, will actively pursue opportunities that accelerate development even for early-stage startups.

1. Healthcare Solutions Segment: Revenue of 3.554 billion yen, operating profit of 0.525 billion yen, with both revenue and profit increasing in line with plan

• Record Book sub-segment: Revenue increased 28 million yen year-over-year, operating profit increased 90 million yen year-over-year. Direct stores saw a slight revenue increase and operating profit of 115 million yen (improved significantly after closing unprofitable locations in prior period). Franchise locations saw increased revenue from growing store count and royalty income, but reported a profit decline due to large allocated depreciation expense for the new ROMS core insurance billing system (the overall Record Book sub-segment still saw net profit growth);
• Active Life sub-segment: Both revenue and operating profit increased year-over-year;

1. Web Solutions (to be renamed DX Solutions from FY2026 March): Revenue saw a slight increase, but operating profit declined year-over-year. Silver marketing revenue decreased after a large high-margin project in the prior period with no equivalent large project this period, while medical solution revenue increased;
2. In-home Services Segment: Revenue increased 62 million yen year-over-year, operating profit was flat year-over-year. Outpatient care revenue increased 22 million yen, but profit was flat due to initial relocation costs for the Kankei Sha Funabashi day service center. Home-visit care saw slight revenue growth but a profit decline, driven by increased hiring and labor costs after wage hikes for helpers and initial costs for opening a new location in Funabashi. Home-visit care management and facility care performed in line with plan;
3. Adjustments (mostly corporate headquarter costs): Costs decreased 67 million yen year-over-year due to the elimination of prior period headquarter relocation costs and unutilized M&A reserve expenses. Total company revenue was 5.161 billion yen (+4.1% YoY), operating profit was 0.401 billion yen (+74.2% YoY), ordinary profit was 0.411 billion yen (+51.6% YoY), net income was 0.255 billion yen (+95.3% YoY)

• For FY2026 (ending March 2026), the company forecasts total revenue of 6.007 billion yen (+16.4% YoY), driven primarily by the full-year consolidation of Cent Works. Operating profit is forecast at 0.53 billion yen (+32.4% YoY), ordinary profit at 0.534 billion yen (+30% YoY), and net income at 0.31 billion yen (+21.6% YoY), all delivering double-digit profit growth;
• Segment forecasts: Record Book franchise revenue will grow 42 million yen YoY, and operating profit will grow 105 million yen YoY as the parallel operation of old and new ROMS systems ends, eliminating duplicated software license costs and driving margin expansion. Active Life will see a 168 million yen revenue decline due to Shohiko Giken structural reform, but operating profit will increase 53 million yen as restructuring cuts low-margin business and improves efficiency;
• Dividend policy: The company raised the consolidated payout ratio target to 25% to strengthen shareholder returns. The FY2025 year-end dividend was revised up to 12 yen per share (from a prior 10 yen forecast) after stronger than expected performance, and the FY2026 dividend is forecast at 15 yen per share, a 3 yen increase from FY2025. A new shareholder benefit program was introduced, including 2,000 yen in QUO card for holders of 100+ shares, and a one-year free subscription to Wakaru Kaigo Biz for shareholders holding shares for more than 1 year;
• Three-year medium-term management plan (FY2025-FY2027, ending March 2026-March 2028) targets FY2028 revenue of 7.39 billion yen, operating profit of 0.98 billion yen, net income of 0.57 billion yen, operating margin of 13.3%, ROE of 22%, and EPS of 108 yen. The company aims to achieve these targets ahead of schedule, and the addition of Cent Works already puts revenue above the initial medium-term plan, with operating profit tracking in line with initial plan.

• Japan's super-aging society creates persistent structural labor shortages in the elder care sector, which has already pressured profitability for home-visit care this period due to higher recruitment and labor costs, and could constrain growth for the company's operating segments if not addressed;
• Structural reform at acquired Shohiko Giken has required goodwill impairment, and full profitability improvement from restructuring depends on successful execution of operational changes, with continued execution risk;
• The new DX Solutions business relies on successful post-merger integration of Cent Works and market adoption of its core software product, with uncertain timelines for revenue and profit scaling;
• The parallel run of new and old core systems for Record Book has created temporary duplicated costs that pressured franchise profitability this period, though this is expected to resolve in the next fiscal year.

Q: How will the acquisition of Cent Works accelerate the DX Solutions business, and what are the specific plans going forward? / A: The company targets mid-sized elder care providers, a segment that faces growing operational complexity as it adds locations, leading to burdensome administrative work that pulls skilled care workers away from direct patient care. Large providers typically build internal systems, while small providers do not need complex enterprise-level solutions, so mid-sized providers are an underserved market that faces the same operational pains Internet Infinity experienced as it grew. / A: With Cent Works' core insurance receipt software, the company will separate core direct care work from non-core administrative work, letting skilled care staff focus on patient care while the company uses software, systems integration, and business process outsourcing to streamline non-core work. The core software will connect to third-party tools (including HR/accounting systems and on-site recording software) to eliminate redundant data entry, improving overall productivity for clients. The company will grow by offering the core software as an entry point to expand into additional support services, or offering consulting services first to lead into software adoption.