ASIRO Inc. Q4 FY2025 earnings call

Overall FY2025 Performance

• The full-year FY2025 result exceeded the upward guidance revised at 3Q, beating management's original expectations. The 4Q performance was better than forecast, completing preparation work for FY2026 successfully.
• FY2025 growth was driven by a large client that overperformed against plan, leading to a higher base than expected which makes FY2026 growth appear slower on a year-over-year comparision.

Strategic Focus

• FY2026 is positioned as a run-up period for breakout growth starting from FY2027, focused on strengthening foundations for long-term non-linear growth rather than chasing short-term growth.
• The core priority for FY2026 is building scalable new businesses and achieving measurable financial results for new segments within 12 months.
• Management's long-term strategy is to continuously generate organic new businesses internally before existing businesses reach market peak, to sustain 25% CAGR long-term, targeting 20 billion yen in revenue and 4 billion yen in operating profit by 2030-2031.

Business Updates

• Legal Base, the company's first AI-powered legal service, will launch in early 2026, with contract review as its most utilized core function, targeted at all Japanese corporations including SMEs at affordable price points.
• bonobo, the corporate insurance business, was launched in FY2025, focused on incremental organic growth via direct sales rather than large mass advertising.
• The share of revenue from large clients has decreased, reducing overall revenue volatility and improving budget predictability, aligned with the company's strategy to prioritize stable growth from small and medium stock-based revenue streams.

Capital Return

• Management views the current share price as undervalued relative to peer PER, so approved a share repurchase program of up to 0.5 billion yen during FY2026 to correct the undervaluation and improve shareholder returns.
• The company maintains a long-term policy of 30% payout ratio for dividends, and will continue returning capital to shareholders via both dividends and opportunistic share buybacks.

1. Media (Legal Media including ベンナビ series): Target 15%-20% revenue growth, 4Q 2025 revenue was 878 million yen and the business is currently growing steadily. Legal media is the core mature and stock-based revenue segment, and the proportion of large client revenue has been decreasing to reduce overall revenue volatility.
2. HR Business: Grew in line with plan, achieved full-year profitability in FY2025, targets 130%-150% revenue growth for FY2026, and is expected to reach hundreds of millions of yen in profit in FY2026. It is the fastest growing existing segment.
3. Insurance Business (bonobo for corporate clients): Launched recently, targets over 200% revenue growth for FY2026, currently in the early stage of base building, focused on steady client acquisition.
4. New AI Business (Legal Base): Scheduled to launch in early 2026, not yet included in official financial forecasts, targeted for measurable results by FY2027.

• Full-year FY2026 revenue guidance is set at 7 billion yen, which is a conservative, achievable target. Management has a higher internal target and aims to deliver an upward revision by the end of the year, consistent with its track record of upward revisions every year from 2022 to 2025.
• Segment-level growth targets: 15%-20% for Media, 130%-150% for HR, over 200% for Insurance, with new AI business revenue not included in the current guidance.
• The long-term target of 20 billion yen revenue and 4 billion yen operating profit by 2030-2031 is unchanged, and management believes it is achievable via existing business growth, new organic business creation and opportunistic M&A.
• FY2026 net income is guided lower year-over-year, due to planned strategic investments, conservative forecasting and one-off office relocation costs, not due to underlying operational weakness.

• Concentration risk from large clients: While the share of large client revenue has decreased, large client budget adjustments can still create quarterly revenue volatility and affect short-term growth appearances.
• Quarterly volatility: Seasonality impacts the derived HR media business, with Q3 and Q4 typically being off-seasons that can create quarter-over-quarter revenue declines even with steady year-over-year growth.
• Legal media's unmet opportunity: Corporate legal inquiries have historically been hard to capture via online channels due to industry norms of personal referrals, which remains a core operational challenge.
• Sustaining 25% CAGR gets harder as the revenue base grows, requiring continuous successful new business creation to maintain the long-term growth rate.

Q: Does AI普及 eliminate demand for the company's legal matching services? / A: Management says AI will not replace human-led legal consultation, because most legal disputes have nuanced fact patterns and emotional/contextual elements that AI cannot address. People in crisis will always seek human experts rather than relying solely on AI. AI will instead improve productivity by automating repetitive document work, allowing lawyers to focus more time on client consultation, which ultimately benefits the company's business.

Q: Why is there no large increase in investment spending for new businesses in the FY2026 plan? / A: Management believes successful new business creation relies more on smart strategy and existing resource reallocation rather than large spending. The company prioritizes growing existing businesses while incubating new businesses without disrupting the cost structure, by assigning top talent to new initiatives without large incremental expenditure.

Q: Why is the current share price not reflecting the company's strong operating performance? / A: Management acknowledges the share price has not performed in line with operating results and agrees the current valuation is undervalued. It responded with the new share repurchase program, and believes that continuing to deliver solid operational growth and new business progress is the best long-term path to proper valuation, rather than reacting to short-term price volatility.

Q: What synergy exists between the insurance business and core legal media operations? / A: As the corporate insurance business accumulates 50,000 to 100,000 client contracts, it will become a consistent source of corporate legal inquiries that the company has historically struggled to capture. Insurance clients will need lawyer referrals, creating a new, stable flow of high-value legal matching revenue that solves the long-standing challenge of capturing corporate legal demand.