KIYO Learning Co.,Ltd. Q3 FY2025 earnings call

• Overall Company Financial & Cost Structure

  • Total company 3Q cumulative revenue was 3.78 billion yen, up 12.9% YoY. Operating profit fell 28.0% YoY, driven entirely by accounting revenue recognition timing shifts from longer average course enrollment periods for high-margin difficult qualification courses, not underlying business weakness. Unrecognized 3Q revenue will be recognized in 4Q and future fiscal periods.
  • Advertising efficiency improved: advertising expense as a share of Studying cash-based revenue fell to 49% from 53% in the prior period, a 4 percentage point reduction that has a large positive impact on overall profitability. Cost of goods sold increased by ~2 percentage points due to higher sales of bundled printed materials for difficult qualification courses, though gross margin remains controlled.
  • The company has strengthened talent hiring for course development, system development and marketing, adding 23 new employees from the start of the fiscal year, hitting original hiring targets. Personnel cost share has increased as part of this growth-focused forward investment.

• Studying Business (Individual Segment) Operational Updates

  • Growth is focused on high-unit-price difficult qualification courses (e.g. Small and Medium Enterprise Management Consultant, Social Insurance and Labor Consultant, Tax Accountant), leading to slower new paid member growth of 3.7% YoY but rising average customer revenue from high prices, bundled printed materials, and strong repeat purchases (renewal for failed attempts and cross-selling of additional qualifications).
  • AI-powered learning features are a core competitive advantage: all traditional machine learning features (AI Ability Score, AI Study Plan, AI Question Review) are patented, and generative AI features have been expanded with new proactive advice and encouragement functionality for the AI Learning Navigation tool to support self-study students.
  • Brand building: Over 31,000 success stories from passing students are published online, creating a positive growth cycle. Year-round TV advertising with spokesperson Haruna Kawaguchi is running to expand brand awareness.
  • New business launch: Studing Publishing will launch in late January 2026, with the first title focused on Small and Medium Enterprise Management Consultant (the company's founding course with the #1 pass count in the market). The printed books include linked online smart question sets and AI question answering as a free feature to address common pain points for self-study students.

• Corporate Education Business Operational Updates

  • AirCourse (SaaS subscription e-learning) maintains a very low monthly average churn rate of 0.92%, supported by dedicated customer success teams. Growth is accelerating from rising large enterprise client acquisitions, with common department-level pilot deployments expanding to full company/ group company roll-outs (upsell growth).
  • Demand for corporate Studying qualification courses (especially IT Passport for IT literacy and DX talent development) is surging, and the sales team is being strengthened to capture this demand. The standard all-you-can-learn course catalog has expanded to 1,181 courses, with active expansion of high-demand topics including generative AI, DX, legal/ labor reform, and hierarchical training.
  • New product launch: AirCourse AI Knowledge, a generative AI-powered internal knowledge tool that works with existing AirCourse functionality, allows access to internal corporate information, includes 150+ pre-built prompt templates, and shares successful prompt workflows across the organization to democratize effective generative AI use.

• New Growth Initiatives

  • Studying Career: A direct recruitment matching service that connects Studying qualified candidates with hiring companies and recruiters, expanding the business beyond qualification courses to end-to-end career support. The company is building out successful placement cases focusing on candidates from difficult qualification programs.
  • AirCourse AI Knowledge as noted above, the second new initiative.

1. Studying Business (individual online qualification courses, core segment): 3Q cumulative accrual-based revenue grew 8.4% YoY (10.2% YoY under legacy accounting classification), with 3Q standalone accrual-based revenue growing 4.2% YoY. Cash-based revenue (internal key performance metric) hit a new all-time high: 3Q cumulative grew 14.4% YoY, 3Q standalone reached 1.44 billion yen, up 15.6% YoY. This segment contributes approximately 78% of total company revenue. 2. Corporate Education Business (centered on AirCourse SaaS e-learning): 3Q cumulative revenue grew 44.4% YoY (30.9% YoY under legacy accounting classification), with 3Q standalone revenue growing 44.6% YoY. Revenue contribution is approximately 22% of total company revenue, up from prior periods due to accounting classification changes that reclassified corporate sales of Studying courses to this segment.

• The company maintains its overall high growth target, with underlying cash-based revenue growth remaining strong despite near-term accounting-driven profit shifts.
• Management will continue to prioritize growing high-unit-price difficult qualification courses as a core business pillar, while adding expanded offerings of short-duration accelerated/single-year courses to meet customer demand for shorter study windows and curb the trend of lengthening revenue recognition periods. This policy change is intended to maximize near-term accrual-based revenue and profit growth while maintaining customer satisfaction.
• The company continues to invest in growth (talent, product expansion, new initiatives) to build long-term enterprise value, with targets of becoming the leading provider in online qualification education and corporate e-learning in Japan.

• The lengthening of average course enrollment periods from strong growth in multi-year difficult qualification courses is shifting revenue and profit recognition to later periods, which reduces near-term reported earnings even though underlying business performance is strong.
• Self-study students have a naturally high dropout rate, which creates execution risk for the new Studying Publishing initiative to convert this segment to paid online courses.
• Generative AI adoption varies by user skill level, which creates adoption risk for new AI-powered products for both individual and corporate segments, though the company has built pre-built templates and sharing features to mitigate this.

No formal question and answer section was included in the provided transcript.