Bewith,Inc. Q2 FY2026 earnings call

• Overall Performance: The company has focused on a short-term performance recovery plan since the start of the fiscal year, and the effects of these measures are gradually materializing. Overall sales are in line with plan, and operating profit is 38.8% above the first half plan, showing a clear recovery. While results are still down year-on-year in both revenue and profit, the short-term plan is delivering steady results. Short-term plan consists of three core initiatives: 1. Reduce increased fixed costs to improve operating profit; 2. Optimize elevated indirect labor cost ratio; 3. Grow Omnia LINK external sales. All initiatives are progressing as planned, with profit improvement effects already emerging in some areas. - Site Optimization Progress: The site consolidation project to optimize total site seats to close supply-demand gaps was completed as planned in the first half. Total seats were reduced from 7,042 at end-Q1 to 6,660 at end-Q2, with a site utilization rate of approximately 80% at end-Q2. The company is targeting a baseline utilization rate of 85%. - Indirect Labor Cost Optimization: In Q1, the company reallocated approximately 100 employees: moving non-billable cost department staff and corporate general and administrative department personnel to operational frontline roles. This improved the indirect labor cost ratio to an appropriate level, with the full effect of this measure materializing in Q2 and delivering further improvement. Going forward, the company will continue to optimize labor cost structure by reviewing business processes and leveraging digital/AI tools to maintain appropriate cost levels. - Omnia LINK External Sales Business Enhancement: Since April 2025, the company has incrementally increased sales and operations headcount for Omnia LINK external sales, resulting in a growing trend in the number of proposals including large projects. Q2 focused on training for the newly added staff, with the company expecting accelerated proposal growth as these new employees become fully productive. The company has shifted its sales strategy to prioritize large projects of 100+ seats, and is currently in a transition period where license counts and backlog may fluctuate quarter-to-quarter. A dedicated structure has been established: sales teams focus exclusively on new orders, while implementation and operations teams handle delivery, so expansion efforts are progressing steadily. - New Product/Service Initiatives: 1. Omnia LINK auto-score: The company added generative AI-powered automatic response quality evaluation to the Omnia LINK platform. Previously, evaluating a 10-minute call required 30 minutes of monitoring/comment writing plus 10 minutes of coaching, leading to insufficient time for high-priority coaching and development. The new tool automatically generates an evaluation score and comment immediately after each call, and can score subjective factors such as vocal impression and context-appropriate communication to deliver consistent, accurate, reproducible evaluations. It reduces evaluation time by approximately 30 minutes per call, freeing up time for manager coaching, operator development, and center operation improvement. Commercial launch is scheduled for spring 2026, and is expected to increase the added value of Omnia LINK. 2. AI Agent-supported autonomous year-end tax adjustment service: The company launched a new service that uses AI agents to automate most traditional manual year-end tax adjustment processes. After document scanning, AI automatically handles arrival data confirmation, error detection, and other core processes, reducing work time for a 20,000-employee company from approximately 3,000 hours to 1,000 hours (a 65% reduction). Currently, only error and reminder notifications are handled by human staff, with plans to automate this step in the future. The company will continue to actively expand AI-powered business going forward. - Workforce Stability: The number of managers (SV, etc.) is slightly increasing while maintaining a stable level, operator headcount is flat in line with sales, and turnover remains low due to retention initiatives, keeping the workforce stable. - Balance Sheet & Cash Flow: Cash and deposits changed from the end of the previous fiscal year due to tax and dividend payments in Q1, but financial soundness is maintained.

1. Contact Center & BPO (CC・BPO) Business: First half total company sales reached 17.939 billion yen, 0.8% above plan. Sales decreased year-on-year primarily due to the contraction of a large public sector project (an 830 million yen negative impact year-on-year), which was offset by 230 million yen in positive contributions from new project acquisitions and expansion at existing clients in the finance and information and communications industries. By industry segment: Public sector decreased year-on-year in line with initial forecasts; Lifeline sector performed in line with plan; Manufacturing and other sectors saw steady performance from multiple medium-to-large project wins; Distribution sector performed in line with plan; Information and communications sector saw significant year-on-year sales growth driven by expansion of helpdesk and sales support work for major carriers amid growing adoption of data and generative AI-powered solutions; Finance sector captured new demand for regulatory and compliance support (such as fraud response and anti-money laundering desks at securities firms) after the peak of new NISA-related demand. Q2 standalone sales were 9.0 billion yen, an increase from Q1, and Q2 standalone operating profit was 0.4 billion yen, an improvement from Q1. 2. Omnia LINK External Sales: First half cumulative sales (including initial sales) were approximately 0.6 billion yen, in line with the full-year plan of 1.31 billion yen; Q2 standalone sales were 0.32 billion yen. ARR reached 1.27 billion yen at the end of Q2, growing steadily driven by the launch of large projects. Total licenses outstanding at end-Q2 were 5,279, with 491 licenses shipped in Q2 and approximately 250 licenses in backlog. ARPU has remained stable in the 20,000 yen range with no major fluctuations. The year-on-year sales increase for Omnia LINK external sales was 150 million yen, which contributed positively to total company sales.

• Full-year guidance remains unchanged from the initial forecast announced at the start of the fiscal year. - Site utilization improvement: After completion of site optimization in the first half, the company expects utilization rate to improve further in the second half as new projects launch and existing projects add seats, and is targeting a baseline utilization rate of 85%. - Profit improvement: After the completion of site optimization in the first half (with all one-time costs already recognized), the company expects to return to a structure capable of generating stable profit from the second half onward, combining site optimization benefits with the full effect of workforce reallocation. - Omnia LINK growth: The pipeline of proposals including large projects is growing, so the company expects steady license count growth going forward after the current transition period. - Next fiscal year (FY2027 May term): The large negative impact from the contraction of the public sector project (which heavily impacted the current fiscal year) is expected to be resolved, so the company is targeting growth for the contact center and BPO business. The company will maintain optimal control of total site seats; if large new project wins lead to seat shortages, the company will conduct new site investment to support sales and profit growth. The current fiscal year's priority is reaching the 85% site utilization target.

• The shift to a large-project focused sales strategy for Omnia LINK external sales creates quarterly volatility in license counts and backlog, and the company is currently in a transition period where newly added sales staff are still being trained and brought up to full productivity. - A projected 200 license reduction is expected in Q3 from one specific client due to client-specific circumstances. - The contraction of a large public sector project created a significant year-on-year negative impact on sales and profit in the current fiscal first half, though this impact was fully expected and incorporated into initial plans.

Q: How much cost reduction has been achieved from site consolidation?

A: One-time costs for site optimization were incurred in the first half (Q1 and Q2), and the project is now complete. Starting from the second half, the cost reduction effect will materialize, with approximately tens of millions of yen in quarterly cost savings going forward.

Q: For next year's contact center and BPO business plan, do you expect flat performance, or are you targeting growth? If you expect growth, do you plan to conduct additional site investment?

A: Next year's plan is still being finalized, but the large negative impact from the contraction of the major public sector project that significantly impacted this fiscal year is expected to be resolved, so we are targeting growth for the business. We plan to maintain control of total site seats at an optimal level. If we win large new projects and face seat shortages, we will carry out the necessary investment to support sales and profit growth. For the current fiscal year, our priority is reaching the 85% site utilization target.