Bewith,Inc. Q1 FY2025 earnings call

• Overall Quarterly Performance

  • Revenue and operating profit both declined year-over-year, in line with management's pre-planned forecast incorporating the impact of the winding down large public contract. 50.2% of half-year revenue target and 35.4% of half-year operating profit target were achieved in Q1, with lower profit progress explained by planned concentration of one-time costs and profit growth expected in the second half. Q1 is expected to be the operating profit bottom for the full fiscal year.
  • 60 million yen in one-time costs for site optimization were recorded in Q1, as expected. Indirect headcount reallocation delivered 150 million yen in positive profit impact already in Q1.

• Short-Term Profit Recovery Plan Progress

  1. Site Total Seat Optimization: Site consolidation is on track for completion by the end of the first half. Total seats will be reduced from 7,042 to 6,700 by the end of Q2. Management targets restoring site utilization to 85% by full-year end through new client acquisition in the second half.
  2. Indirect Labor Cost Optimization: Approximately 100 corporate indirect/non-billable personnel were reallocated to operational frontline roles in Q1, bringing the indirect labor cost ratio back to an appropriate level, with further profit contribution expected as reallocated staff become fully productive.
  3. Omnia LINK Sales Capability Strengthening: Sales and operational headcount has been incrementally added since April 2025, creating a dedicated implementation and operations team that frees sales staff to focus on new business acquisition. This restructuring has already driven an increase in proposal volume including large deals, with further growth expected as new hires complete training.

• Q1 Operational Updates

  • A reseller agreement for Omnia LINK was signed with SoftBank, upgrading the prior referral partnership. SoftBank will now handle its own delivery and maintenance for Omnia LINK, opening access to SoftBank's broad customer base and improving product credibility, with 100+ new annual deals expected from the partnership.
  • ビーウィズ was selected as a constituent stock of the JPX-Nikkei Mid and Small Cap Index.
  • The company is pursuing measures to maintain Tokyo Stock Exchange Prime Market listing, as it does not currently meet the traded market capitalization requirement. It is prioritizing Prime compliance by focusing resources on core growth areas, executing the short-term profit recovery plan to improve share price, enhancing IR and shareholder returns, and evaluating measures to increase free float ratio; it is also preparing a backup plan to move to the Standard Market if Prime compliance cannot be achieved within the allowed improvement period.

1. Contact Center (CC) & BPO Segment: Total company revenue for Q1 is 8.93 billion yen, with the segment comprising the majority of revenue. The segment saw a 350 million yen year-over-year revenue decrease from the wind-down of a large public sector contract, offset partially by 110 million yen in new revenue from new and expanded existing client projects. By industry sub-segment: Public sector saw a year-over-year revenue decrease (planned), information communications saw significant year-over-year revenue growth from new major carrier client wins and cross-synergy with financial sector payment services, financial sector captured new demand for fraud response work after the new NISA rollout, lifeline (local and new power) new client acquisition progressed well, and manufacturing/other and distribution segments tracked in-line with plan. 2. Omnia LINK External Sales Segment: Q1 revenue was 290 million yen, against a full-year plan of 1.31 billion yen, tracking in-line with plan. Annual Recurring Revenue (ARR) reached 1.16 billion yen, an increase from prior periods. Total external licenses stood at 4,788, with 328 new licenses shipped in Q1 and ~600 licenses remaining in backlog for the full year. ARPU has stayed stable at 20 thousand yen. The segment delivered 70 million yen in year-over-year net revenue growth for the company.

• Full year revenue is expected to see a 1.9 billion yen year-over-year decline driven by the full wind-down of the large public contract, which was fully incorporated into the initial annual plan. The large public contract will be almost fully wound down by Q4 (full year end), with step-down reductions continuing through the second half.
  • One-time site optimization costs will be incurred in Q2 as well, but all optimization costs will be completed by the end of the first half, allowing operating profit to increase materially in the second half. Q1 2026 is expected to be the trough of operating profit for the full fiscal year.
  • Management targets a sustained 40% gross profit margin for Omnia LINK (after accounting for delivery personnel costs, communication expenses, data center fixed costs and amortization), with a 70% marginal profit margin. This target is not tied to reaching a specific revenue scale, but rather to be maintained consistently through gross margin management across business cycles.
  • Management targets 85% site utilization by the end of the full fiscal year, following seat reductions completed in the first half and new business growth in the second half.

• The company currently does not meet the Tokyo Stock Exchange Prime Market listing requirement for traded market capitalization, and faces the risk of being required to move to the Standard Market if improvement efforts are not successful within the one-year improvement period.
  • Omnia LINK's current growth requires incremental pre-emptive investment in data center and network infrastructure, which can cause temporary quarterly gross margin volatility as the business scales.
  • While the winding down of the large public contract is fully planned, there is risk that new client acquisition may not fully offset the resulting revenue decline in the timeframe expected.

Q: When will the winding down of the large public contract be complete, what is the total annual revenue impact, and are there other large contracts at risk of similar reduction? / A: The contract has been winding down gradually since the prior fiscal year, and will be almost fully complete by the Q4 2026 (full year end). Total full year revenue impact is a 1.9 billion yen year-over-year reduction, which is already fully incorporated into the current fiscal year plan. No other large contracts are expected to see similar large reductions, so the plan accounts for all expected major negative impact. The large contract was a multi-billion yen peak annual revenue national government administrative processing contract unrelated to COVID-19 or furusato tax payment programs.

Q: What is the current and target profitability of the Omnia LINK external sales business? / A: Clear standalone segment operating profit is hard to report because of shared internal resources and internal use of Omnia LINK for the company's own contact center operations. The target is 40% gross margin after including delivery personnel, communication costs, data center fixed costs and amortization; marginal profit is approximately 70%. The target 40% gross margin is a sustained operating target, not tied to a specific revenue scale, and the business is already at around this target today. Expanding fixed costs for infrastructure to support growing client volume can cause temporary quarterly margin fluctuations due to pre-emptive investment.

Q: Does the reported Omnia LINK ARR include internal sales for in-house use, and how much of the company's own contact centers use Omnia LINK? / A: The reported 1.16 billion yen ARR for Q1 includes only external third-party sales, with no internal sales included. Internal use for the company's own contact center operations covers over 90% of internal seats, with a small number of clients that require use of their own existing systems.

Q: What customer segments will the SoftBank reseller partnership address, and will there be channel conflict with BEWIS' own direct sales team? / A: SoftBank has a much broader, nationwide customer base across all industries, compared to BEWIS' historical focus on the contact center industry. The partnership allows SoftBank to proactively offer Omnia LINK to its existing broad customer base across all sectors, with no expected channel conflict. The company expects over 100 new annual deals from the partnership.