BRIDGE International Group Corp. Q3 FY2025 earnings call

• Business Model and Core Strengths

  • The company operates three segments supporting B2B sales growth transformation: Inside Sales Outsourcing, Process & Technology, and Corporate Training. The core Inside Sales Outsourcing business is a high-margin stock model that makes up 52% of total revenue, with the top 10 clients averaging 250 million yen in annual revenue, 58% of segment revenue from stock contracts, and an average 9-year contract retention period.
  • The three integrated segments build a strong combined customer base to support B2B sales growth, centered on large enterprise clients.

• Strategic Updates

  • The company completed its transition to a pure holding company structure on October 1, 2025, consolidating 4 operating companies under the parent holding to strengthen business expansion.
  • The company divested its 51.7% stake in subsidiary Total Support to the company's CEO on October 31, 2025, to reallocate management resources to the fast-growing generative AI and AI agent fields; Total Support remained consolidated in the third quarter financials.

• Operational Milestones

  • Hosted BRIDGE FORUM 2025 "Maximizing Revenue" with over 430 pre-registered attendees, featuring sessions on generative AI applications in sales process transformation.
  • The company's subsidiary i-Learning's training business won first place for the second consecutive year in the Oricon Customer Satisfaction Survey for face-to-face public corporate training for young/general employees.

• Shareholder Return Enhancement

  • The annual dividend per share has been significantly increased from 35 yen to 85 yen, maintaining a target payout ratio of 50% or higher.

1. Inside Sales Outsourcing Segment: Revenue grew 2.9% year-over-year, with a 84.5% year-over-year decrease in segment profit. The profit drop was driven by 24 million yen in special retention bonuses, 38 million yen for management department strengthening, and 55 million yen in outsourcing costs related to the holding company transition, all one-time expenses. This segment contributes 52% of total company revenue.
2. Process & Technology Segment: Overall revenue was 1.359 billion yen with 60 million yen in operating profit, with overall revenue nearly flat year-over-year but profit improving significantly. Within the segment, consulting & system solutions revenue grew 7.0% year-over-year. The divested subsidiary Total Support contributed 700 million yen in revenue and a small positive profit within this segment for the third quarter.
3. Training Segment: The segment performed steadily, with revenue growing 106.5% year-over-year driven by strong new hire training demand concentrated in the second quarter. The segment saw 118 million yen in year-over-year revenue growth for the nine-month cumulative period.

• Full-year 2025 consolidated guidance: Full-year revenue guidance is revised downward from an initial range of 9.477 billion yen to 10.338 billion yen to 9.027 billion yen to 9.858 billion yen, following the removal of the approximately 400 million yen in Q4 revenue that was previously expected from Total Support. The operating profit guidance range is also revised to remove the 35 million to 40 million yen Q4 profit contribution previously expected from Total Support.
• Segment-level guidance revision for Process & Technology: The revenue guidance lower bound is revised from 2.306 billion yen to 1.856 billion yen, and the segment profit lower bound is revised from 123 million yen to 88 million yen, reflecting the exit of Total Support from the consolidated group.
• The company maintains a target 11% operating profit margin for the full year, and expects to stay within the 9.0 billion yen to 9.9 billion yen revenue range.
• Mid-term 2024-2026 plan maintains targets of 11.0 billion yen in revenue, 1.3 billion yen in operating profit, and 12%+ operating profit margin by the 2026 December fiscal year. Updated mid-segment KPIs are: (1) Inside Sales Outsourcing: keep inside sales rep turnover below 10% (current Q3 turnover is 9.0%, full year projected at 11% with a target to return to 10% by 2026); (2) Process & Technology: expand technical staff to 77 employees (currently at 60, excluding Total Support staff, and on track to fall short of the 70 employee full year target); (3) Training: increase the number of clients running 3+ training themes per year to 180, to reduce dependence on new hire training.
• Financial targets: Maintain 16% target ROE, 18x+ target PER, and 8.0%+ target DOE; the company will continue to work on improving performance and IR activity to increase market valuation.

• A portion of Inside Sales Outsourcing large deals have slipped to Q4 from Q3, leaving domestic IT segment progress at only 55.1% year-to-date, creating near-term revenue delivery risk.
• The Process & Technology growth segment (centered on generative AI solutions) is only 54.8% progressed against full year targets, with headcount expansion falling short of plan after the divestment of Total Support, creating execution risk for mid-term growth targets.
• The company recorded 85 million yen in one-time transition costs for the holding company reorganization, which pressured near-term profitability.
• The training segment remains heavily dependent on new hire training concentrated in the second quarter, with diversification to other training themes still in progress, creating quarterly revenue volatility risk.

Q: Why did you decide to divest Total Support just 1.5 years after acquiring it? / A: Management determined that it would take several more years for Total Support to deliver the originally projected sales and profit contribution, while also building the required governance structure for a listed company subsidiary. Given the rapidly accelerating demand for generative AI and AI agent solutions in the sales growth support space, management made the decision to reallocate resources to this higher-priority growth area as part of a portfolio review.

Q: Why is Inside Sales Outsourcing profit down sharply despite modest revenue growth, and what is the outlook? / A: The profit decline is entirely driven by one-time investments for future growth: costs for strengthening the management team, holding company transition expenses, and special retention bonuses for key employees. All of these are one-time base-building investments aligned with the original beginning-of-year plan, and are expected to support re-accelerated growth starting next year.

Q: Will the downward full-year guidance revision impact the planned 85 yen per share dividend? / A: No change to the dividend forecast is planned. The required 305 million yen in dividend capital for the 85 yen payout falls well within the range of projected net income after the guidance revision, even after accounting for the Total Support divestment impact. The company prioritizes medium-term shareholder return stability and does not plan to cut the dividend for temporary performance fluctuations.

Q: What is driving the sharp improvement in profitability for Process & Technology's consulting and system solutions line? / A: The improvement comes from optimized resource allocation that improved utilization rates for the existing CRM development business, which allowed the company to significantly reduce outsourcing costs. Management will continue strengthening the existing profit base to free up resources to expand AI-focused growth offerings going forward.