Direct Marketing MiX Inc. Q3 FY2025 earnings call

• Overall 3Q Cumulative Performance: The company achieved 8.3% year-over-year revenue growth and 41.9% year-over-year operating profit growth, driven by steady recovery in its core communications infrastructure segment. EBITDA decreased year-over-year due to the reduction of right-of-use assets from 2024 cost structure reform, but underlying profitability met management expectations. The company has maintained strong progress toward its full-year operating profit target. • Operational Efficiency: The company flexibly adjusts headcount aligned with business growth to maintain an optimal operating structure. Capacity cost ratio remains well controlled, supporting efficient operations. • Saiyobu Co., Ltd. Acquisition: Completed the full acquisition of Saiyobu, a fast-growing RPO firm specialized in professional recruitment for the dental and healthcare sectors. This acquisition expands the company's portfolio into the stable, high-growth RPO market, complements its existing project-based revenue model with high stock-like recurring revenue, and strengthens the overall business portfolio. The company will leverage its existing sales network and financial foundation to unlock Saiyobu's growth potential, targeting non-continuous group-wide growth and early earnings contribution. • Capital Policy: The company raised its full-year end-of-period dividend from 6.0 yen per share to 7.0 yen per share. It targets early achievement of 10%+ ROE, 15-20% ROE in the medium-to-long term investment recovery phase, and 40% total payout including share buybacks. If current business recovery trends continue, the company will consider moving to a payout ratio over 40% earlier than planned. • Mid-Long Term Vision: The company launched the "DmMiX Vision 500" mid-long term strategy, targeting 50.0 billion yen in revenue and 5.0 billion yen in operating profit by the 2030 December fiscal year (its 10th anniversary as a public company), representing 2.3x revenue and 2.8x operating profit compared to the original 2025 full-year forecast. • Balance Sheet Update: A portion of long-term borrowings was reclassified from non-current to current liabilities as the repayment date falls within the next 12 months. • Capital Expenditure: Major capex in the period is driven by PC replacements due to the end of Windows 10 support. Depreciation and amortization are expected to decrease year-over-year due to right-of-use asset reduction from 2024 unprofitable location closures.

The full transcript does not provide absolute financial values or revenue contribution percentages for each product domain. All performance is described in directional terms: 1. Outbound: Core communications and infrastructure sector orders have bottomed out after a temporary stagnation from carrier group restructuring, and are now in a recovery phase, leading overall revenue growth; growth is based on existing project expansion, with upside potential from non-communications strategic products (power, gas) and carrier-financial sector collaboration. 2. Hybrid: Identified as the highest-growth domain amid the shift of traditional in-person channels to online operations and the profitization of formerly cost-center inbound call centers; the company is expanding solution offerings to accelerate revenue growth in the online customer service segment. 3. DX Fulfillment: Continues to deliver high growth, driven by the ongoing expansion of existing services including financial settlement, identity verification, and mobility; the company is building networks and gathering information to capture demand for new high-growth DX services. 4. Inbound (centered on the public sector): Maintains a cautious medium-term outlook; the company will focus operations on high-profitability projects that leverage its operational expertise. 5. RPO (Recruitment Process Outsourcing, new domain): Following the full acquisition of Saiyobu Co., Ltd., the company will accelerate growth in dental sector recruitment via increased advertising and sales investment, and pursue expansion into additional sectors. 6. Research, other, and onsite: Flat performance is expected.

• Full-year consolidated guidance was upwardly revised: Full-year operating profit is now expected to be approximately 17% higher than the prior forecast, driven by stronger-than-planned 3Q cumulative performance from solid new and existing client order growth and improved profitability from fixed cost optimization. • The company expects to achieve its 2025 full-year revenue and profit targets. • 17% upward revision to full-year operating profit from the previous guidance. • The end-of-period dividend was upwardly revised from 6.0 yen per share to 7.0 yen per share. • The company plans to implement strategic investment in AI-related initiatives and new business lines in 4Q 2025 to lay the groundwork for future growth.

• Uncertainty remains around the timing of carrier strategy adjustments and budget allocation in the core communications infrastructure segment. • Persistent external uncertainty around market conditions and client spending. • The inbound public sector segment has a cautious medium-term outlook. The transcript does not discuss other operational failures or material risks beyond these items.

Q: Given the strong 3Q performance, was the upward guidance revision delayed? What is the main driver of the upgrade? / A: Management maintained a conservative full-year outlook after 2Q due to ongoing uncertainty around carrier budget and strategy timing. When 3Q results showed clear outperformance versus the original plan, the company upgraded guidance at this point. The main driver is faster-than-expected recovery in the core communications infrastructure segment that directly lifted earnings, combined with accelerated company-wide profit improvement from a higher share of high-margin projects. / A: With lingering external uncertainty, the combination of core segment recovery and structural profit improvement put full-year results on track to exceed the original forecast, leading to the upward revision.

Q: What specific areas does the planned 4Q strategic investment in AI and new businesses cover? / A: The investment is for strategic pre-investment to connect current profits to future growth and enable non-continuous expansion starting next year. It falls into two main areas: first, accelerating post-merger integration (PMI) for recently acquired companies including Saiyobu, to strengthen business foundations and drive synergy realization by investing in digital promotion and corporate value growth for the acquired firms. Second, investment in new business areas, focused on building AI capabilities for the inbound call center segment, where profit-center transformation is an industry trend. The company is running multiple proofs-of-concept to establish a top-tier AI-powered call center service that combines AI and human workflows, with 4Q investment covering costs for this development phase. /

Q: What is the purpose of the Saiyobu acquisition, and what key synergies do you expect with existing business? / A: The core purpose is to strengthen the company's business portfolio by balancing stability and growth. It expands the company's offerings from core sales BPO (customer acquisition) into RPO (recruitment/talent acquisition), adding high-stock-recurring revenue that complements the existing project-based revenue model. Saiyobu has strong expertise in fast-growing specialized recruitment for dental and healthcare sectors, which will strengthen the group's earnings base. The primary near-term synergy is accelerating Saiyobu's existing growth via the injection of Direct Marketing Mix's management resources. Medium-term, the company will expand the specialized RPO offering into new industries using the group's existing business foundation. Long-term, the company aims to build an end-to-end support structure for client growth covering from recruitment to back-office BPO operations.