Broad-Minded Co.,Ltd. Q4 FY2025 earnings call

Overall 2025 March Fiscal Year Results

• Total revenue grew 15.3% YoY, hitting double-digit growth, driven by expanded new graduate hiring, growth of the online sales organization, and full-year operation of the acquired ManePro Shop business. The result was a decrease in revenue and profit compared to the original full-year guidance, with an overall increase in revenue but decrease in profit YoY.
• Selling, general and administrative costs increased 23.6% YoY, driven by higher personnel costs from expanded new graduate hiring and one-time expenses related to the headquarters office relocation. Over 0.2 billion yen in total special losses were recorded for the old office impairment loss and the planned impairment loss for the ManePro Shop business sale.

Core Competitive Advantages in New Graduate Talent Development

• The company has three core systems to support high new graduate performance: (1) A blended digital + in-person education system with systematic digital training content for core knowledge, and dedicated full-time education staff providing 1-on-1 practical guidance; (2) Systematic marketing via partnerships with card companies, fintech firms, bridal businesses and government welfare programs that delivers 1,500-2,000 monthly steady consultation requests, enabling new consultants to get client access immediately after placement; (3) Proprietary digital tools including the BroadTalk online consultation platform which has doubled consultant throughput (over 80% of consultations are now online), and the Moneypass life plan simulator for unbiased, integrated insurance and asset allocation proposals.

Key Strategic Initiatives for FY2026

• Generative AI integration in sales processes: Developing an AI consulting agent that automates the client consultation process, targeting internal rollout in Q3 FY2026. The AI will leverage BroadTalk conversation data to replicate the company's proprietary consulting process, enabling expanded consultation volume, standardized performance for new consultants, and 24/7 client access. Future external sales/OEM to insurance companies and agencies is planned.
• Expansion of Burokkori corporate welfare financial education service: Growth has been solid, driven by corporate demand for employee financial wellbeing as part of sustainability strategy. The service connects program participants to the company's own consultants, delivering 1.5x to 2x higher revenue per client than partner-sourced leads, acting as a B2B-to-B2C lead channel for the core business.
• Launch of MoneyWith online financial school via joint venture: Opened in late April 2025, the school offers basic financial literacy courses and a practical side-career focused course, including FP training. The school doubles as a new recruitment channel for the company: FP course graduates can become consultants for the company, enabling lower-cost hiring of diverse talent that was previously unreachable via traditional channels, and supporting scalable, low-fixed-cost expansion of the online sales organization.

• Financial Consulting Service (main business): Grew 18.8% year-over-year, driven by strong growth across all sub-segments:

• Life insurance agency commissions: Grew 20.5% YoY, accounting for the largest share of main business revenue.
• Cross-sell (non-life insurance, mortgage, financial product brokerage, real estate brokerage): Grew 21.2% YoY.
• Digital services: Grew on the back of expanded sales of the Moneypass life plan simulator. • ManePro Shop (former Seven Insurance Shop): Acquired in March 2024, contributed to full-year revenue growth but underperformed on profitability, with lower-than-planned new visitor footfall and lower-than-expected recurring commission revenue from in-force policies. The business generated ~0.3 billion yen in annual revenue in FY2025. • Real estate development (via subsidiary MIRAI Inc.): Hit by soaring building material and land prices, resulting in deteriorated profitability. • Marriage consulting (via subsidiary Innocent Co., Ltd.): Faced slow new member acquisition growth, leading to underperformance.

• Full-year FY2026 (ending March 2026) revenue is expected to stay near FY2025 levels: the 0.3 billion yen revenue loss from the ManePro Shop sale is expected to be offset by ~10% growth in the core online consulting business. Operating profit is forecast to increase 10.7% YoY, driven by cost structure improvements from the business sale and steady growth of recently hired new graduate consultants. • The half-year performance profile is expected to be an investment phase in H1 (temporary higher personnel costs from April 2025 new graduate hiring and ongoing ManePro Shop operating costs into Q1) followed by a harvest phase in H2, when new graduate talent growth drives profit improvement. • The company maintains a target 100% payout ratio, and plans a 18 yen per share increase in year-end dividend to 60 yen per share. It will also conduct share repurchases, as it judges the current share price to be undervalued relative to the company's intrinsic value.

• Persistent elevated land prices, construction material costs and labor costs continue to pressure profitability for the real estate development segment, requiring stricter project-by-project profitability review. • While the market for savings-type insurance remains overall strong, continued uncertainty around exchange rate and interest rate movements creates volatility for insurance sales; though the impact from previous surrenders of level-payment foreign currency life insurance has already passed, and the shift to variable product sales is reducing exchange rate-related risk. • Stock market volatility could impact IFA business results, even as structural demand for accumulative investment remains high. • The company's expanded new graduate hiring in previous years resulted in delayed growth for 2023 hires due to an understaffed education department, though improved training systems have put this cohort back on a growth trajectory.

Q: What is the performance outlook and strategic shift related to foreign currency single-premium insurance?

A: The company completed a strategic shift away from level-payment foreign currency insurance to variable insurance starting in FY2025. The wave of policy surrenders driven by yen weakness has already fully passed, with limited remaining impact on FY2026. The shift to variable products will reduce future exchange rate-driven surrender risk going forward. Single-premium foreign currency insurance sales have remained strong in FY2025, contributing to overall life insurance commission growth.

Q: What steps is the company taking to maintain its listing on the Growth Market?

A: The company is focused on growing its core profitable business and improving market valuation via consistent strong performance and enhanced shareholder returns, including planned ongoing increases in dividends and active share repurchases to meet listing requirements.

Q: What are the key challenges for the April 2025 new graduate hiring cohort's training?

A: The main challenge is scaling the improved training system that delivered strong growth for the 2024 cohort to the 2025 new graduate class. The company has already expanded its dedicated education team and integrated sales management into early-stage training, so it expects the 2025 cohort to match the strong start of the 2025 cohort, with full performance contribution by the second half of FY2026.