Aidma Holdings,Inc. Q2 FY2026 earnings call

• Quarterly Performance Explanation

  • 2Q revenue decreased by approximately 200 million yen quarter-over-quarter, and operating profit decreased by approximately 150 million yen quarter-over-quarter, partially driven by 4 fewer business days in 2Q versus 1Q. On a business day-adjusted basis, revenue remains on a growth trajectory.
  • The primary causes of the sequential revenue decline are extended lead times to start customer projects and an increase in the number of unstarted projects, with a total combined impact of approximately 441 million yen on 2Q revenue. Almost all of this impacted revenue is expected to be recognized starting in 3Q.
  • Ending backlog increased 64% compared to the 2024 August fiscal year end, with more than 3 billion yen in accumulated backlog growth year-over-year. Extended lead times are driven by two factors: a 18 percentage point increase in multi-unit contracts (from 38% to 56% of total orders, pushing average lead time to 145.5 days, double the prior average), and a 5.9 percentage point increase in orders from sole proprietors, who typically have longer start timelines due to business registration timelines and staggered unit adoption based on cash flow.
  • Higher unstarted project volumes stem from customer-driven delays and non-payment of initial advance deposits, with disproportionately high unstarted rates for sole proprietor and multi-unit contracts, representing a 188 million yen revenue impact vs 2024 levels.

• Corrective Improvement Initiatives

  • Lead time reduction initiative: Set a target of 60 days or less, and after starting efforts in February, average lead time has already been cut from 104 days to 84 days (a 19% reduction). Changes include a new policy of starting support the week after order receipt, reallocating temporarily paused new sales hiring to kickoff support roles, and strengthening pre-order client alignment to enable same-month order and start. Multi-unit contract average lead time has already been cut from 145 days to 99 days (a 32% reduction).
  • Sole proprietor order policy changes: Introduced full advance payment requirements, tightened order qualification standards, and shifted to a non-proactive outbound sales strategy for sole proprietors to reduce high unstarted rate and bad debt risk. Since January, the unstarted rate for this segment has already improved by 3 percentage points.

• Strategic Shift to LTV Maximization

  • Management is shifting corporate strategy from prioritizing new order growth to maximizing customer lifetime value (LTV) as the next core growth driver. A 1% LTV improvement is estimated to add 100 million yen in future annual revenue, while a 5% improvement would add 500 million yen.
  • Three core LTV initiatives: (1) Mandate in-person attendance of Aidma consultants at customer sales meetings (currently ~20,000 monthly customer meetings) to optimize sales processes, which has already been shown to double customer order conversion rate and increase average contract value; (2) Focus resources on delivering measurable results within the first 3 months of support, as early results deliver more than double customer retention rates, with investments funded by AI-driven cost savings; (3) Provide monthly ROI reports comparing the outcomes and costs of using Aidma's services versus hiring full-time employees, to help customers make structured renewal decisions.

• New Order Growth Initiative: SME Support Package

  • Launched a pilot of the "SME Support Package" which provides free access to Aidma's SaaS tools (AI call answering, AI-powered corporate outreach database) in exchange for 3 monthly sales meeting slots. 10% of these slots convert to Aidma service orders, and unused slots are resold to third parties for 10 thousand yen per slot, generating high-margin revenue (85-90% gross margin expected).
  • As of March, the program has 778 participating companies, 2,190 active meeting slots, and has produced 30 new orders in March for an 11% average conversion rate. Cumulatively, 1217 meetings have produced 123 orders, with participating companies growing 50x in 8 months since full launch.
  • Long-term target for FY2028 August is 6000 annual orders from this program, with 70,000 participating companies and 210,000 total monthly slots, expected to require 160 dedicated staff and generate 10 billion yen in annual annual revenue from slot resale alone.

• Core Service Restructuring

  • Redefined the core sales support service into three dedicated units: meeting construction support, sales outsourcing support, and order conversion improvement support. The order conversion improvement unit is provided for free to existing clients of the core meeting construction unit to drive higher LTV.

The transcript does not provide separate segment-level financial results or revenue contribution percentages for Aidma Holdings' product lines. It only notes that order volumes for both sales support and human resources support segments are progressing in line with plan and grew year-over-year, with total company orders up 32.9% year-over-year. Aggregate consolidated results for the first half (2Q cumulative) are: total revenue of 7.248 billion yen, operating profit of 1.52 billion yen, representing a 42.6% and 38% progress against full-year plans respectively.

• Management maintains the original full-year revenue and profit guidance, with 2Q cumulative progress at 42.6% for revenue and 38% for operating profit, which is slightly behind plan but expected to recover starting in 3Q as improvement initiatives take effect and delayed backlog is recognized.
• The company plans to hire approximately 100 new employees in 3Q (including new graduates), with 85 new hires already joining in April (55 new graduates, ~30 mid-career hires), to scale up sales and support capabilities.
• Management expects cost of goods sold ratios to decline in the second half as improvement initiatives progress and prior advance investments normalize. Selling, general and administrative (SG&A) expense ratios are also expected to continue declining, after falling to 5% from 7% quarter-over-quarter due to lower bad debt provisioning.
• LTV maximization initiatives are expected to deliver material revenue and profit impacts within 12 months, as the company scales the new strategic focus across the entire organization.

• Extended lead times and high unstarted project rates have led to slower-than-planned full-year profit and revenue progress in the first half, creating pressure to deliver on improvement targets in the second half.
• Orders from sole proprietors carry higher inherent risk of delayed start, non-payment, and bad debt, compared to orders from corporate entities.
• LTV maximization is a long-term strategic shift that will not produce immediate financial results, requiring upfront investment in personnel and process changes before benefits are realized.
• The new SME Support Package initiative requires scaling dedicated personnel to hit long-term growth targets, with revenue growth ramping gradually over multiple years.

The provided transcript does not include a question and answer section.