IRRC Corporation Q2 FY2026 earnings call

Overall Financial Performance

• The company achieved all-time record highs for both revenue and all profit levels in the first half of the 2026 June fiscal year. Revenue increased 17.9% year-over-year, operating profit increased 23.6% year-over-year, and operating profit significantly exceeded the original budget, with a 191.3% achievement rate versus the first half budget. EBITDA exceeded 500 million yen as of the second quarter, with a 24.7% year-over-year growth rate.
• The company implemented a segment restructure starting from the 2026 June fiscal year: the original 3-segment structure (insurance sales, solution, system) was changed to a 4-segment structure (Insurance Clinic Business, FA Business, Solution Business, System Business), with the former FC business moved from the solution segment to the Insurance Clinic Business to support overall growth of the Insurance Clinic brand.

Business Restructuring and M&A

• The company actively pursued business acquisition opportunities: in July 2025 at the start of the fiscal year, it acquired 11 ManePro Shop stores from Broadmind Co., Ltd, 2 stores from Fukuoka-based Hoken no Aiselect, and 2 stores from Tokyo-based Hoken de Anshinkan from Asset Guardian Co., Ltd. The company's know-how, Hoken IQ System, and human resource development capabilities have already delivered early improvements in profitability for the acquired unprofitable stores.
• The Insurance Clinic business now exceeds 300 stores, reaching 306 nationwide. The company targets 307 stores by the end of the 2026 June fiscal year, and 500 stores by 2031. It plans to actively expand into major regional metropolitan areas (Nagoya, Osaka, Fukuoka) in addition to the existing concentrated Tokyo metropolitan area base.

Core Business Strengths and Strategic Initiatives

• Insurance Clinic Business: The business leverages web customer acquisition and its proprietary Hoken IQ System to build customer-centric comparative recommendation capabilities that create a competitive advantage. The company has reduced the time to profitability for new stores through investments in human resource education, and the Hoken IQ System accelerates training for new hires, allowing even industry newcomers to grow relatively quickly. The company continues its marketing partnership with the Fujioka Family as brand ambassadors to increase SNS exposure and drive web customer acquisition, while also actively participating in SDGs activities.
• FA Business: The business leverages Airic's existing FA operations and the 22 locations of Life Assist (acquired via M&A in 2023) to expand IFA business as a comprehensive financial service that includes offerings beyond insurance.
• Solution Business: The business provides system products centered on the AS Series to support compliance with the revised Insurance Business Act. It has launched the new AS FiNDER service, and is currently developing an AS-BOX product for non-life insurance to meet the new requirement for comparative recommendation that will now apply to non-life insurance under the revised law. The revised act mandates customer-centric comparative recommendation sales for insurance agencies, which creates strong tailwinds for the company's solution business.
• System Business: Starting from its core AI-powered smart OCR technology that specializes in unstructured form processing, the business has expanded to launch new products DenHo (AI electronic book storage service) and brox (enterprise search product to support paperless enterprise data management), all of which are growing steadily.

3-Year Medium-Term Plan (2026 June Fiscal Year to 2028 June Fiscal Year)

• The company targets a 17.3% compound annual growth rate for revenue, with end-of-plan targets of 15.2 billion yen in revenue, 1.578 billion yen in operating profit, a 10.4% operating profit margin, and ROE of 20% or higher.
• Growth capital will prioritize investment in human resources, branding and marketing for Insurance Clinic, and new system development for the AS Series in the solution business, including compliance with the revised Insurance Business Act.
• Operating cash flow and excess capital will be allocated to both future growth investment and shareholder dividends.
• The company changed its dividend policy to implement its first ever interim dividend this year, with a planned 16 yen interim dividend, 16 yen year-end dividend, and 32 yen total annual dividend, maintaining a target payout ratio of 50% or higher.

1. Insurance Clinic Business: Accounts for 49.8% of total company revenue. Revenue increased 19.2% year-over-year, and operating profit increased 21.6% year-over-year. As of the end of the second quarter, the business had 306 stores nationwide, with store foot traffic up approximately 40% year-over-year in the quarter, driven by successful web promotion, and the number of closed contracts also increased accordingly. The business achieved strong growth supported by multiple business acquisitions during the quarter and higher-than-expected increases in closed contracts that offset rising selling, general and administrative expenses.
2. FA Business: Accounts for 20.2% of total company revenue. This is a visiting-type insurance sales business that includes group company Life Assist, and it has been growing steadily with an increasing number of sales personnel.
3. System Business: Accounts for 18.1% of total company revenue. Stock revenue has grown steadily, with total revenue increasing significantly year-over-year, and operating profit increased 26% year-over-year. Compared to the first quarter of the 2024 June fiscal year, stock revenue has grown approximately 3-fold over two periods, driven by strong growth from the company's core product offerings: smart OCR, DenHo, and brox.
4. Solution Business: Accounts for 11.9% of total company revenue. Revenue decreased slightly year-over-year due to the impact of a contract termination with one major insurance company in the prior period that reduced stock revenue. Monthly recurring revenue (MRR) currently stands at approximately 78 million yen, though the number of IDs for the AS Series product line for agencies and banks has grown strongly, and there is significant remaining room for future growth.

• The company maintained its full-year operating profit guidance of 844 million yen, despite the first half operating profit significantly exceeding the original budget.
• The company reaffirms its 3-year medium-term plan targets of 17.3% CAGR for revenue, 15.2 billion yen in full-year revenue by the 2028 June fiscal year, 1.578 billion yen in operating profit, 10.4% operating profit margin, and ROE of 20% or higher, and management expects the plan to be achieved.
• For the Insurance Clinic business, the company guides 307 stores by the end of the 2026 June fiscal year, and maintains the 500-store target for 2031. For 380 stores under the 3-year plan, the company expects 15 billion yen in total revenue, with increasing operating profit margins as store count grows due to structured controls on headquarter overhead costs.
• For the solution business, management expects monthly recurring revenue to grow steadily from its current level of 78 million yen, driven by tailwinds from the revised Insurance Business Act.
• For the system business, management expects the current strong growth trajectory of stock revenue to continue.

• The company's current market capitalization is slightly below the 10 billion yen listing maintenance threshold requirement, and the company identifies this as a key issue to resolve through successful execution of its 3-year medium-term plan.
• The company faces low share liquidity, which management identifies as an ongoing key priority issue to address in the future.
• The company still faces staffing shortages across its business lines, despite active ongoing recruitment efforts.
• The company expects advertising expenses to increase along with its new store expansion strategy, which creates pressure on near-term costs.
• Development of the non-life insurance version of the company's solution system is dependent on data supply from insurance companies, and negotiation progress for this data supply creates uncertainty for the development timeline.

Q: What are Airic's differences and strengths compared to competitors?

A: The company's core strength is its proprietary, in-house developed Hoken IQ System. The company pioneered the comparative recommendation approach to insurance sales years ahead of regulatory requirements, and this first-mover advantage has created a large accumulated body of insurance industry data that competitors cannot easily replicate. Building the system itself is possible for competitors, but accumulating a multi-year database of all existing insurance products, including older offerings, is a unique strength that only Hoken IQ System holds.

Q: What is the company's systemization strategy and growth outlook for the broader insurance industry?

A: The company aims to promote systemization across the entire insurance industry. It plans to provide general-purpose versions of Hoken IQ System, including AS-BOX and AS FiNDER, to insurance agencies across Japan. The company does not only aim for its own growth, but for the growth of the entire industry, and it believes this approach will allow it to compete in a larger market.

Q: What are your candid thoughts on the strong earnings results?

A: The results are very strong, and the company has achieved better-than-expected results including from its M&A activities, so management is pleased with the outcome.

Q: There are concerns about costs associated with store expansion. When will new store investments turn profitable?

A: The company carefully selects new store locations, and new stores reach profitability on a P&L basis in approximately 3 months. The initial investment is recouped within 2 years. Human resource development is the most critical factor, and the company's training systems enable this fast timeline to profitability.

Q: What will revenue and profit be when the company hits the 500-store target? What is the per-store revenue expectation?

A: Under the current 3-year plan, the company targets 15 billion yen in total revenue with 380 stores, which gives a rough indication of the scale at 500 stores. As the company increases store count, revenue will grow and operating profit margin will also increase, because the company has built systems to limit the additional burden on headquarter functions as store count grows.

Q: What specific non-insurance financial products do you offer in your IFA business?

A: The company mostly handles topics related to asset formation, for example tax-advantaged products like accumulative NISA, which are increasingly requested by customers who come for insurance consultations and are interested in investing. The company is not a securities broker, so it does not provide specific stock recommendations, but it does discuss asset formation with clients and handles relevant products.

Q: How satisfied are you with the second quarter 2026 results?

A: Management is satisfied that the company delivered results more efficiently than the original plan projected, but we are not relaxing our efforts and remain focused on delivering growth in the second half of the fiscal year.

Q: What is the current staffing situation, and what is your approach to human resources?

A: The company is actively recruiting, and many new hires join across business units every month. However, staffing is still not sufficient, and the company continues to actively recruit additional personnel.

Q: What are your plans to address low share liquidity?

A: Low liquidity is a key issue for the company at present, and management will consider various strategic measures at the appropriate time to address the issue going forward.

Q: What are the advantages of Hoken IQ System, and what is its expected future contribution to earnings?

A: There are approximately 1.2 million life insurance salespeople in Japan, of which roughly 200,000 work for independent agencies, so there is enormous room for market share expansion. Currently, the company only has approximately 7,500 IDs for the system. The general-purpose version AS System is already used by 39 financial institutions, and there are around 100 regional banks in Japan. With comparative recommendation sales becoming mandatory under the revised Insurance Business Act, the company expects significant additional adoption across this sector, which creates major upside for future growth.

Q: Do you plan to increase or decrease advertising spending going forward? What factors have driven higher per-store profit margins?

A: Advertising spending will increase, because the company needs to increase advertising in new regions as it expands store count, so advertising spending will grow in line with store expansion. The company focuses on increasing the number of customers per store through detailed data collection and analysis, with a particular focus on effective targeted advertising to core demographics via social media, which drives higher per-store profitability.

Q: What has driven the strong growth of the Insurance Clinic business? Is it successful branding?

A: Branding has been a factor, but the company also actively pursues a scrap-and-build approach for store locations, which has delivered strong results. For example, the Ikebukuro Parco store moved from an upper-floor off-mall location to a 7th floor space in Parco directly fronting the train station, and reservations from social media increased multiple times after the move. This active optimization of store locations has driven significant growth in customer traffic.

Q: What is the progress of system development for the non-life insurance segment?

A: The company is building on the existing life insurance system base. The most critical requirement for development is data supply from insurance companies, and the company is currently negotiating with insurance companies to secure this data.

Q: Can you explain the specific business content of the solution business?

A: The solution business provides the general-purpose AS Series (based on the Hoken IQ System used in the Insurance Clinic business) to insurance companies, agencies, and financial institutions, while also continuously developing new systems. One new offering is AS FiNDER, which uses generative AI to read complex insurance documents such as product manuals and policy clauses, and can quickly answer salespeople's questions. This product has already received very positive feedback, and there is particularly high demand for it in the non-life insurance segment which has very complex policy terms. Combined with the mandatory comparative recommendation requirement under the revised Insurance Business Act, the company expects this dual-focus strategy to drive steady growth for the solution business.

Q: What is your future store opening plan and approach? Will you open stores in regional major metropolitan areas?

A: Area analysis shows that even in the Tokyo metropolitan area, Nagoya, Osaka, and Fukuoka, there are still more than 200 available areas for new stores, and the company will open in these locations sequentially. The company analyzes shopping centers by size: large shopping centers with over 30 billion yen in annual sales typically have space for 3 insurance shops, while 10 billion yen centers typically have space for 1, and there is still remaining opening capacity in these locations. The company has a history of successful strategic opening during the COVID-19 pandemic, for example being the first and only insurance shop at the new LaLaport Fukuoka development, which has been very successful.

Q: What is your approach to employee training, education, and hiring?

A: Education is a core focus for the company. The dedicated education training department provides full training from the ground up, and even experienced salespeople complete a minimum of 1 month of training to ensure they understand the company's methods and systems. The Hoken IQ System significantly speeds up training for inexperienced new hires. The company does not prioritize experienced candidates over inexperienced ones, and focuses hiring on candidates with strong listening and communication skills.

Q: How confident are you in the 3-year plan, and how is progress so far?

A: The plan was developed after careful consideration and analysis, and management is confident that it will be achieved.

Q: Will there be changes to the types of insurance you sell and your overall strategy due to demographic aging?

A: There are changes driven by demographic trends and broader market shifts. Against the current backdrop of high US interest rates and rising equity markets, customers are increasingly interested in products focused on asset formation, in addition to the traditional hospital coverage products that have long been mainstream, and this shift is reflected in the company's offering mix.

Q: Why do you continue to expand physical stores when web is mainstream? What is the difference between in-person and online insurance sales, and what is your advantage?

A: Insurance is difficult to sell purely online: less than 10% of insurance customers purchase purely online. Insurance is a product that depends on human connection, and customers value the peace of mind that comes with in-person consultation at a physical store location, so there remains strong customer demand for physical stores. The company does offer online sales, but most customers still prefer to use physical store locations.

Q: Which business do you expect to grow the most right now?

A: All four businesses are expected to grow, but currently the Insurance Clinic business is the key focus and is already growing steadily, and the company expects this trend to continue. At the same time, the revised Insurance Business Act is expected to create a shift in market conditions that will drive strong growth for the solution business, and the company will allocate significant additional resources to this segment as well.

Q: What is your approach to M&A and acquisitions of peer companies?

A: The company will not pursue any and all M&A opportunities, but it will actively evaluate opportunities as they arise. The agency market is polarizing very quickly, and the company already receives many inbound inquiries, so it plans to actively pursue attractive opportunities.

Q: What is your approach to share price improvement and shareholder returns?

A: The company faced a difficult period during COVID-19 that led to stagnant share prices, but business operations have now stabilized and are growing at a solid pace. The company expects continued business growth to drive earnings improvements that will lead to higher share prices. The company maintains a 50% or higher payout ratio, and will increase dividends as earnings grow to deliver higher shareholder returns.