Caster Co.Ltd. Q1 FY2025 earnings call

• Key Business Updates
  • Changed the name of the core WaaS segment to BPaaS to align with current market terminology, with no changes to underlying business operations.
  • Reached a record high of 1,244 active client companies at quarter end, an increase of 52 companies from the prior period end, and on track to hit the full year target of 1,413 companies. Improved service utilization and reduced churn, CAC remained stable, and LTV stayed steady despite lower ARPU from the new low-volume service.
  • Expanded low-volume service offerings to better serve small businesses with flexible small-usage needs. This service has generated strong customer inquiry and is used as an entry point for first-time users of the company's remote assistant services.
  • Strengthened partnerships with SaaS companies and platform providers. Kinashima from Money Forward joined as an outside director, and the company is preparing cross-selling structures for both companies' customers starting from Q2.
  • Started AI-focused initiatives: AI subsidiary LUVO began a collaboration with KPMG Japan on AI agent development and utilization for workflow automation, and the company launched an internal AI agent production agency service for clients, which has already received initial customer inquiries.
  • Established a new overseas subsidiary in Vietnam to act as a system development hub, leveraging Glams' existing offshore development experience in Vietnam to address tight domestic engineer supply in Japan.
  • Launched Remotte, an online career school focused on reskilling workers for the accounting field, which faces widespread labor shortages.
• Strategic Focus Areas
  • The company is currently prioritizing two core strategic areas: AI and accounting. It is building partnerships with key industry players in these spaces and accumulating specialized expertise to drive long-term growth.

1. BPaaS (previously WaaS) Business: Grew active client companies steadily with the launch of the new low-volume service, which has performed very strongly. ARPU saw a slight decline driven by the smaller contract size of the new service. Revenue contribution from the segment forms the core of the company's overall revenue. 2. Other Businesses: Grew revenue supported by the start of profit and loss consolidation of newly acquired subsidiary Glams Inc., and the new CASTER EC-Consulting business has had a smooth launch. The completed closure of the former Berlin branch has reduced segment costs, with no expected future large losses from this former operation. Overall company total revenue for the quarter is 1.164 billion yen, with an operating loss of 143 million yen.

• The full year 2025 August fiscal year guidance remains unchanged, with a planned full year operating profit of 10 million yen.
• Q1 revenue progress reached 23.1% of the full year plan, which is in line with the company's expectations.
• Management expects to swing back to operating profit starting from Q3, following the pattern seen in the company's first listing year, and achieve the full year profit target. The company maintains its goal of hitting the 1,413 active client full year target, with potential upside if current growth continues.
• The company updated its target unit economics LTV:CAC ratio from 300%-500% to 500%-700% this fiscal year, to align with its priority on achieving full year operating profitability.

• The closure of the Berlin branch is fully completed, with no expected future material losses from this prior operation.
• The Vietnam development subsidiary is still in the preparation stage, with no current material barriers or bottlenecks reported, but execution risk remains for the new offshore expansion.
• Domestic Japanese engineering talent supply remains very tight, which is the primary driver for the company's offshore expansion into Vietnam.

Q: What are the core operations and competitive strengths of Glams and LUVO? / A: Glams specializes in streamlining and operating EC product preparation (product photography, measurement, copywriting called sasage work) for e-commerce sellers, with deep expertise in building efficient, AI-powered operations for hard-to-automate industry processes. It already has accumulated offshore development experience in Vietnam, which will support Caster's new expansion there. LUVO is a newly established AI subsidiary launched in 2024, positioned perfectly at the center of the fast-growing AI agent trend. Caster will support LUVO to take initiative in AI agent production and related new business areas.

Q: What is Caster's medium-to-long term growth strategy? / A: Against a backdrop of steady, permanent decline in Japan's working-age population, demand for outsourced business process services will continue to grow. Caster's core strategic priority through 2030 is to steadily expand its addressable service areas, maintain strong talent supply to meet client demand, grow top-line revenue while protecting minimum profitability. The only major exception to this organic growth focus is AI agents, which Caster is prioritizing as an early mover to accelerate its core BPO growth. No major inorganic strategic moves are planned at this stage.

Q: What are the characteristics of the low-lot service, and what demand does it meet? / A: The core difference from traditional service is that it cuts entry price to around 1/3 of Caster's traditional monthly pricing, with smaller contract volume to make it easier for new users to start. Because Caster has already heavily systemized its operations, the per-account management cost is almost the same for low and high volume contracts, making the low-lot offering economically viable. This fits the demand of small businesses that have never used remote assistant services before, allowing them to trial the service to identify use cases before expanding, which drives long-term customer growth.

Q: What is Caster's alliance strategy with vendors? / A: SaaS providers are Caster's most important alliance partners. Most SaaS companies face a shared problem: shrinking labor pools mean they struggle to find enough talent to operate their new tools for clients. Caster can provide reskilled talent to help clients use these SaaS tools, creating a mutually beneficial partnership model. Caster also plans to actively pursue alliances with vendors in critical, labor-short domestic sectors like eldercare, healthcare, and construction to help address industry-wide labor gaps.