COPRO-HOLDINGS.Co.,Ltd. Q4 FY2025 earnings call

• Overall Consolidated Performance

• The company achieved record-high revenue and profit across all metrics for the 2025 March fiscal year, with all full-year profit targets exceeded after absorbing unbudgeted stock compensation expenses and additional Q4 hiring investment. Total group technicians reached 4,861, up 23.7% year-over-year; consolidated revenue hit 30.015 billion yen, up 24.6% year-over-year; operating profit reached 2.763 billion yen, up 29.1% year-over-year; Non-GAAP operating profit hit 3.328 billion yen, up 36.5% year-over-year; net income reached 1.82 billion yen, up 24.4% year-over-year.
• Over the first three years of the current mid-term management plan, total annual hiring expanded 3.1x from 870 to 2,711 technicians, total in-service technicians grew 2.2x, and core construction dispatch business grew 118.1% from 2022 March fiscal year, outpacing industry peers and moving the company to 2nd place from 3rd in the industry ranking.
• A 99 million yen stock compensation expense was recorded for stock options tied to achieving mid-term plan targets, as the company confirmed a high probability of hitting these goals.

• Sales and Operational Strategy

• The company prioritizes deep cultivation of existing major clients (including top 5 super general contractors) over new client acquisition, targeting higher placement ratios at pre-defined target clients, which currently stand near 90%.
• The company promotes team/set placement of technicians at the same project site, which has improved retention; team placement ratio has increased 17.8 percentage points since the start of the mid-term plan, to under 50% (752 teams), and the company will continue to increase this ratio to improve retention.

• Hiring Strategy

• The company's core competitive advantage is its low-cost in-house hiring model that avoids reliance on external recruiters. Q4 2025 March fiscal year saw upfront hiring investment to drive higher hiring in Q1 2026 March fiscal year, pushing hiring cost per hire up to 684,000 yen, which the company expects to stabilize as hiring volumes grow.
• 77.5% of new hires are inexperienced entrants, as the company focuses on training inexperienced young workers to become qualified technicians, given tight markets for experienced workers. The company is formalizing its multi-stage training program as the "Engineer Support Platform".

• Training and Retention Strategy

• The top priority operational challenge is improving retention for technicians with 1-2 years of tenure, whose retention rate is more than 5 percentage points lower than technicians with 3+ years of tenure.
• The company opened a new practical training center in Shinagawa, Tokyo in April 2025 that offers hands-on skills training with real equipment (such as surveying tools) to reduce the gap between training and on-site work and lower post-placement reality shock. The company is also expanding multi-stage training aligned with technician tenure (6-month, 1-year, 2-year training) to support ongoing skill growth and improve retention.

For the 2025 March fiscal year:

1. Construction Technician Dispatch Business (operated by Copro Construction): This is the company's core segment, which delivered strong double-digit growth, and accounted for the majority of consolidated revenue and profit growth. The segment's annual hiring reached nearly 2,400 technicians, up 17.5% year-over-year, driven by the company's low-cost in-house hiring strategy that avoids reliance on external recruitment agencies. Operationally, overall technician utilization rate holds above 90%, and annual retention rate stands at 73.7%.
2. Electromechanical and Semiconductor Technician Dispatch/Contracting Business (operated by Copro Technology): The segment saw revenue contribution from semiconductor technician dispatch. The new Semicon Techno Lab training center opened in Shin-Yokohama in February 2024 trained over 100 graduates within 11 months of opening, who are now placed at major client firms including Kioxia and Ibiden. The segment still faces operational challenges, and the company plans to expand the business by rolling out proven operational expertise from the construction segment.
3. IT Technician Dispatch Business: The segment's dedicated job site "Bescarri IT" gained traction, with applicant volume up 45.6% year-over-year. However, weak sales capabilities limited client project acquisition, so total technician growth slowed to 28.3% year-over-year, and securing sufficient projects to match growing applicant volume is a key near-term priority for the segment.

• For the 2026 March full fiscal year, the company forecasts continued above-industry growth and new record highs across all financial metrics: total group technicians will reach 6,271 (up 29.0% year-over-year), consolidated revenue will hit 38.0 billion yen (up 26.6% year-over-year), operating profit will reach 3.8 billion yen (up 37.5% year-over-year), operating margin will improve 0.8 percentage points to 10%, Non-GAAP operating profit will reach 4.425 billion yen (up 32.9% year-over-year), net income will reach 2.47 billion yen (up 35.7% year-over-year). • For the 2026 March fiscal year, the company forecasts a full-year dividend of 80 yen per share (30 yen interim, 50 yen year-end), up 20 yen from the 2025 March fiscal year. The company maintains a policy of no dividend cuts during the mid-term plan period, targeting a consolidated dividend payout ratio of 50% or higher. • The company upwardly revised all financial targets for the final year of the mid-term management plan (2027 March fiscal year): consolidated revenue was raised from the original 40.0 billion yen to 47.0 billion yen (3x 2022 March fiscal year revenue), Non-GAAP operating profit was raised from 5.0 billion yen to 6.2 billion yen (3.4x 2022 March fiscal year profit), total group technician target was raised from 6,271 to 8,000, and the company set a new target of 185 yen EPS for 2027 March fiscal year.

• The company's IT Technician Dispatch segment has strong applicant growth but insufficient project acquisition due to weak sales capability, which limits near-term growth for the segment. • Overall retention remains at 73.7%, with 1-2 year tenure technicians having materially lower retention than more senior technicians, which risks slower in-service technician growth and higher hiring costs if not addressed. • 2025 March fiscal year in-service technician targets were not met, and the 2026 March fiscal year plan targets a very aggressive 1,400 net increase in technicians, which requires continued improvement in hiring yield and retention to achieve.

• Hiring cost per hire rose to 684,000 yen in Q4 2025 March fiscal year due to upfront investment, and the company must stabilize hiring costs as it grows hiring volumes to maintain margin targets. • A potential economic downturn or slowdown in domestic construction investment would negatively impact demand for the company's dispatch services, and any impact from external policy changes (such as US trade policy) on domestic construction demand requires ongoing monitoring.

Q: When does management expect to reach a 100.0 billion yen market capitalization, and what strategies will be used to hit this target? What is the company's stance on stock splits to increase accessibility for retail investors? / A: Management confirms that 100.0 billion yen market capitalization (equal to 5,000 yen per share) is an explicit near-term target, and while management cannot commit to a firm timeline, the CEO believes it is fully achievable within his tenure (from the then-current share price of 2,020 yen, a 2.5x increase). The company prioritizes organic growth to build a stable foundation, and will only pursue M&A after solidifying organic growth, as M&A-led growth without a strong organic base is viewed as unsustainable. Management is open to stock splits to lower entry prices for retail investors aligned with Tokyo Stock Exchange guidance, and has already completed two splits; management notes a 2-for-1 split would be considered if the share price stabilizes at 2,000-2,500 yen to encourage more retail trading activity.

Q: What drivers will support profit growth in the 2027 March fiscal year after the upward target revision? / A: In addition to revenue growth from expanding technician headcount, the company will improve profitability by streamlining back-office operations and reforming internal processes to optimize selling, general and administrative costs, while improving overall operational efficiency.

Q: The 2026 March fiscal year targets a 1,400 net increase in technicians, much larger than the ~900 annual net increase of the past two years. Is this target achievable? / A: Management acknowledges that the 2025 March fiscal year in-service target was missed and takes this miss seriously, but notes that total annual hiring still grew a strong 22.0% to 2,711 hires, showing that hiring capability is improving steadily. For 2026 March fiscal year, the company forecasts 3,544 total hires (up 30.7% year-over-year), and will hit this target by expanding use of in-house job sites and referral hiring, optimizing recruitment channel efficiency, and improving conversion from application to hire. The company is also improving retention through enhanced support for early-tenure technicians to help hit net headcount goals.

Q: What is the company's competitive advantage in the increasingly commoditized technician dispatch industry? / A: Management believes that sustainable competitive advantage comes from the ability to consistently secure high-quality technicians, and the company has built a fully in-house end-to-end hiring process from advertising to closing that delivers industry-leading hiring volumes. Beyond hiring, the company's core value is creating an environment where technicians can work long-term stably, so the company is also pursuing deep client cultivation, team placement, and expanded training to improve retention, which reinforces competitive positioning.