Direct Marketing MiX Inc. Q1 FY2025 earnings call

Overall Quarterly Performance

• Total sales revenue reached 5.99 billion yen, a slight year-over-year increase. Excluding the impact of one-time spot projects in the prior year first quarter, organic revenue growth was 7%.
• Operating profit was 0.75 billion yen. After adjusting for the prior year's high-margin spot projects, the company achieved steady underlying profit growth, and core business profitability is in a recovery trend.
• EBITDA grew significantly quarter-over-quarter due to seasonal factors, but decreased slightly year-over-year, partially due to reduced depreciation and amortization from capacity optimization.
• Operating cash flow increased sharply year-over-year, driven by the elimination of temporary one-time outflows (such as contract liability impacts) that occurred in the prior year first quarter.

Operational Highlights

• Within the Marketing segment, outbound and hybrid operations have bottomed out after a temporary slowdown from communication carrier group restructuring, and have entered a recovery phase. Growth in communication infrastructure sector sales and steady expansion of DX fulfillment are driving overall sales growth.
• Operating personnel in the Marketing business is growing steadily amid solid order trends. Capacity cost optimization has improved the capacity cost ratio quarter-over-quarter, in line with planned sales expansion.
• The company launched its medium to long-term management vision "DmMiX Vision 500" in March 2025, targeting 50 billion yen in sales revenue and 5 billion yen in operating profit by the 2030 December period (the 10th anniversary of listing). This represents 2.3x sales growth and 2.8x operating profit growth compared to the 2025 full-year forecast.
• For capital policy, the company will consider moving to an early achievement of a payout ratio over 40% if the current business recovery trend continues, balancing shareholder returns and sustained corporate value growth.

Segment Strategic Direction

• Outbound: Base growth is expected from expansion of existing projects in the communication and infrastructure sectors. Upside growth potential exists if communication carrier partnerships with the financial sector and strategic products in non-communication areas (electricity, gas) are finalized.
• Hybrid: Identified as the domain with the highest expected growth, driven by online conversion of traditional offline channels and profitization of formerly cost-center inbound call centers. The company will expand solution lineups for online customer service to accelerate revenue growth.
• DX Fulfillment: Continued strong sales growth is expected, driven by expansion of existing services including financial settlement, identity verification, and mobility. The company is building networks and gathering information to participate in new promising DX services from the planning stage to capture growing demand.
• Inbound (public sector focused): Maintains a cautious medium-term outlook, and will continue to focus operations only on high-margin projects that leverage the company's operational expertise.
• Research/Other and Onsite: Flat performance is expected for the full year.

1. Marketing Business: Achieved 4% year-over-year revenue growth, with both existing operations and new growth areas expanding steadily. Operating profit decreased year-over-year, driven primarily by the loss of high-margin one-time spot projects from the prior year period. The overall core business profitability is on a recovery trend, with growth from the communication infrastructure, Web/IT, and mobility sectors contributing to overall sales. 2. Onsite Business: Experienced a year-over-year revenue decline, but profit margin improved significantly from 2.5% to 4.5% following successful unit price negotiations and selling, general and administrative expense cuts. Operating profit increased 48.5% year-over-year. Management plans to continue maintaining and improving profitability for this segment.

• Full-year 2025 December period guidance is maintained unchanged from the initial announcement. The first quarter achieved a high progress rate against the full-year plan, with a solid start to the fiscal year.
• While the communication infrastructure sector is already in a recovery trend with solid order bookings, there was initial uncertainty in the full-year outlook that has been partially resolved by continued strong ordering, and the company targets further full-year growth.
• Capital expenditure in 2025 is driven primarily by PC replacements due to the end of Windows 10 support. Depreciation and amortization is expected to decrease year-over-year, following the exit from unprofitable locations in the 2024 December period that reduced right-of-use assets.

No specific material risks or operational failures were explicitly discussed in the provided transcript.

Q: Which business areas are currently seeing the strongest growth for the company? / A: Management highlighted two key fast-growing core growth drivers. The first is hybrid operations, where growing demand for proposal-oriented cross-selling and upselling in inbound services, plus accelerating multichannel retail strategy and labor reduction in brick-and-mortar stores, has driven rapid expansion of online customer service operations. A key example is the company's growing online helper business for mobile stores, which provides remote expertise for high-complexity services like fiber internet and credit cards. / A: The second fast-growing area is DX fulfillment, a custom comprehensive BPO service for digital service providers that handles the human operational components of new digital services including QR code payments, online identity verification, and ride-sharing. Smaller digital service providers lack in-house operational capacity, so outsourcing demand for these services is growing rapidly. These two domains are currently the core pillars driving the company's overall growth.