Human Creation Holdings,Inc. Q3 FY2025 earnings call

Overall Third Quarter Financial Results

• Total company revenue was 2.226 billion yen, a 20.7% year-over-year increase. Operating profit was 168 million yen, a 6.4% year-over-year decrease. The year-over-year profit decline was driven by one-time costs including post-merger integration (PMI) costs and platform infrastructure buildout expenses.
• Excluding one-time costs, core operating profitability grew 20.1% year-to-date, and operating profit increased quarter-over-quarter, confirming steady growth in underlying earnings capacity.
• Cumulative revenue through the first three quarters reached 6.298 billion yen, and cumulative operating profit reached 547 million yen, equal to 70.7% and 86.1% of the revised full-year consolidated forecast, respectively.

Balance Sheet and Capital Allocation

• As of the end of June 2025, the equity ratio was 31.8%. Management will continue to allocate efficiently generated cash to reinvestment or shareholder returns to deliver rapid corporate value growth.

Acquisition and Synergy Progress

• Following the full acquisition of HC Financial Advisor (HCFA), HCFA's results are now fully consolidated. The combination of Human Creation Holdings' and HCFA's expertise enables expansion into management consulting and accelerates growth of existing businesses through synergies.
• The acquisition is expected to improve the probability of hitting the company's medium-term EPS target.

1. Strategic Segment: Revenue was 904 million yen, representing a 62% year-over-year increase. The segment contributed over 40% of total company revenue, marking the first time it exceeded 40% contribution. It has delivered double-digit quarter-over-quarter revenue growth for the past two consecutive quarters and is driving overall company growth.
2. SES Segment: The segment faced headwinds from workforce shifts to the strategic segment and increased turnover at the legacy CLS business, but still achieved slight quarter-over-quarter revenue growth.

• Full-year 2025 September fiscal year guidance is maintained despite the third-quarter operating profit progress rate (86.1%) significantly exceeding the 75% benchmark. This is because management expects to carry out additional front-loaded investments to support sustainable growth starting from the 2026 September fiscal year.
• The company revised its 6-year medium-term management plan (ending in the 2030 September fiscal year) in November 2024, after the strategic segment missed its 2024 September fiscal year plan by a wide margin, prompting a strategic shift.
• For 2027 September fiscal year (end of the 2nd stage of the plan), the target is 12 billion yen in revenue, focused on scale expansion and business transformation through aggressive investment including M&A.
• For 2030 September fiscal year (end of the 3rd stage of the plan), the target is an EPS of 1000 yen pre-stock split, 500 yen post-stock split (4x 2024 September fiscal year levels), and ROE of over 30%, focused on investment return realization and synergy capture.
• Management published scenario simulation analysis for four key factors required to hit the EPS target: avoiding excessive idle cash, strengthening reinvestment including M&A, generating M&A synergies, and sustainable growth across subsidiaries. This simulation is not a binding commitment, only illustrative planning.

• The SES segment faces ongoing operational headwinds from workforce reallocation to the high-priority strategic segment and elevated turnover at the legacy CLS business.
• Near-term profitability is pressured by one-time costs from recent M&A integration and strategic platform buildout, leading to a year-over-year decline in current quarter operating profit.
• The medium-term EPS simulation is based on assumed fixed conditions and is not a binding committed performance target, so actual results may differ from the projected scenario.

No question and answer section is included in the provided transcript.