YCP Holdings (Global) Limited Q1 FY2025 earnings call

• Organizational & Geographic Expansion

  • The company currently has ~470 professional consultants across regions: ~100 in Japan, ~100 in Southeast Asia, and over 200 in India, with targeted expansion in high-growth emerging Asian markets.
  • Masahiro Matsuoka joined as Head of Japan region in January 2025, leading a significant expansion of partner-level consultant hiring to grow the Japan business.
  • A new office will be opened in Akasaka, Tokyo in summer 2025 to accommodate planned team growth; the Jakarta office is also being relocated to support expansion.
  • The company is actively pursuing M&A in geographies including the Middle East, Australia, and for new high-synergy service lines to accelerate growth.

• Core Business Strategy

  • The company is refocusing on its core consulting businesses (Management Services and Professional Solutions) after the sale of SOLIA, and will continue to selectively sell mature principal investment assets to recycle capital into core growth.
  • Management Services focuses on on-site execution support for client corporate transformation and M&A integration, rather than purely advisory work.
  • Professional Solutions focuses on scalable specialized services across four verticals: DX, supply chain optimization, digital marketing, and sustainability, leveraging the company's existing 70,000+ client database.
  • The 3-year strategic target is to build a 300 billion yen total core business: 100 billion yen from Management Services and 200 billion yen from Professional Solutions, including organic growth and M&A. The published 3-year base target of 8.7 billion yen for Management Services and 4 billion yen for Professional Solutions excludes M&A.

• Capital Allocation & Shareholder Returns

  • The sale of SOLIA generated ~6 billion yen in net cash for the company.
  • 50% of recurring core operating profit will be distributed as dividends going forward, a new policy introduced after the SOLIA sale.
  • Any excess capital not used for M&A and organic expansion will be returned to shareholders via special distributions.

1. Management Services Business: Grew ~20% year-over-year in FY2025 Q1, with strong growth in Japan and Southeast Asia; India was flat with large new projects expected starting in Q2. The segment had 250 employees generating ~6 billion yen in annual revenue pre-Q1, with an internal target to reach 500 employees and 10 billion yen in annual revenue. It contributed ~60% of core consulting revenue for the full year 2024.
2. Professional Solutions Business: Generated 46 million USD (~0.7 billion yen) in revenue for FY2025 Q1. The supply chain segment recovered from prior quarter declines, the DX segment saw strong growth primarily in Japan, and the newly launched sustainability segment delivered solid revenue. It contributed ~17% of core consulting revenue for the full year 2024.
3. Principal Investment Business: The pet care segment (LifeMate Animal Hospital Group, 10 operating hospitals) generated 0.68 billion yen in Q1 revenue (a typical off-peak quarter), with Q2 expected to be a stronger peak period. Strategic investments consist of small-scale positions in sectors including food & beverage (Hong Kong/Singapore) and senior care, managed with strict risk controls to avoid large impact on group earnings. The former personal care segment (SOLIA) was sold in December 2024, removing 6.5 billion yen in annual revenue from the segment per IFRS rules.

• Full year FY2025 (ending December 2025) group revenue guidance (ex-SOLIA) is maintained at 14.5 billion yen to 15 billion yen.
• Management expects Q2 through Q4 2025 results to exceed initial planned guidance, following Q1 10% year-over-year revenue growth and 200% of planned operating profit (180 million yen for Q1).
• Management is targeting to exceed the current full year dividend guidance and implement an upward revision if full year results outperform plan, as Q1 is already tracking ahead of expectations.
• Core organic growth targets for Management Services (reaching 500 employees and 10 billion yen annual revenue) and 300 billion yen total core revenue are maintained, with M&A expected to accelerate achievement of this target.

• Japanese Management Services revenue is heavily influenced by 31 March fiscal year-end budget cycles, which historically creates seasonal softness in Q2, though geographic diversification (only ~30% of Management Services revenue is from Japan) has mitigated this seasonality significantly.
• JDR listings have persistent information disclosure issues on public platforms: while market capitalization is now correctly displayed, PER and PBR ratios are still not properly reflected on many financial platforms, and the company is continuing to work with the Tokyo Stock Exchange to resolve this.
• Scaling the Management Services business organically is inherently slow due to the need to hire and train specialized consultants, and reliance on experienced consultant talent creates natural turnover risk that limits rapid scaling.

Q: Why did YCP add Masahiro Matsuoka as Japan head and expand partner hiring, and how has his performance been so far? / A: YCP’s Japan business was already highly profitable, not needing a turnaround. The goal was to expand beyond the company’s historic core of private equity fund client work, to serve large established non-PE backed Japanese companies, particularly supporting their overseas expansion leveraging YCP’s existing Southeast Asia and India footprint. Management reports that Matsuoka has moved quickly to generate new inbound inquiries from large Japanese firms, and the early results are meeting or exceeding expectations, with lessons to be applied to other regional expansion. The full text of this exchange is cut off in the source transcript.

Q: Why does the initial plan show Q2 revenue and profit lower than Q1, and what is the actual outlook? / A: The Q2 plan is the original conservative full-year guidance set at the start of the period, and has not been updated. Q1 beat the initial revenue plan by ~15%, and operating profit beat plan by 100% even after heavy investment in hiring and office relocations across Japan and Southeast Asia. While there is historic seasonal Q2 softness from Japanese March fiscal year budget cycles, only 30% of revenue is now from Japan, so this impact is greatly muted. Management expects to exceed plan in Q2 and the remainder of the year, with no actual expectation of a large decline.

Q: What is the M&A pipeline for the SOLIA sale proceeds, and what targets is YCP looking at? / A: YCP is targeting two types of M&A: first, established consulting firms in underpenetrated high-growth markets like the Middle East and Australia, where entering via M&A is faster and lower-risk than building from scratch; second, specialized service providers in new high-synergy verticals that add to the existing four Professional Solution lines, to speed up expansion into new adjacent areas. Management notes that some M&A deals are already at advanced stages of negotiation, and expects to be able to announce at least one deal in 2025 if negotiations continue on track.