MicroAd,Inc. Q4 FY2025 earnings call

Core Financial & Productivity Achievements

• 2025 was positioned as a year focused on productivity improvement, which progressed faster than initially expected, driving base revenue expansion and margin improvement that exceeded original forecasts, with two upward earnings revisions during the period.
• The historically weaker season off-peak Q4 delivered a 19% YoY revenue increase, and generated 0.2 billion yen in operating profit (excluding one-time bonuses) versus a prior year Q4 loss, marking the highest Q4 operating profit in company history. This confirms the business has achieved a sustainable profit structure after structural reforms.
• AI utilization increased time available for sales activities, driving a steady increase in proposal volume, and gross margin improved significantly over the year, with management expecting to maintain this improved margin level going forward.

Operational & Strategic Updates

• UNIVERSE maintains well-diversified industry exposure with no concentration to any single industry, and focused small and medium customer growth delivered over 20% growth year-over-year, even reaching near peak season account levels in off-peak Q4. A moderate decline in average customer value from increased small customer penetration is viewed as a natural, non-problematic outcome.
• New business expansion:
  • TikTok Shop-related initiatives: A 100% subsidiary will launch a new weekly 4-episode in-platform program "Oshikoma!" as a new media/e-commerce experiment, and another subsidiary is running successful joint e-commerce with local governments selling regional specialty products, with strong inbound interest from additional municipalities.
  • Overseas expansion: Completed consolidation of new subsidiaries in Indonesia and China, expanding the business line-up from only digital marketing to add inbound marketing for international tourists and outbound sales of Japanese IP collaboration products to global consumers, laying groundwork for future multi-market growth.
  • IP collaboration: A new smartphone case collaboration with ANYCOLOR's Nijisanji via IPmixer is currently seeing strong initial sales.
• Alternative data business: Full-year annualized return was -4.84% dragged by the legacy model, with the new model delivering a 6% annualized return from January to September. The legacy model has been discontinued, and the business now operates only with the new profitable model.
• Strategic positioning: Management maintains a long-term goal of becoming a "comprehensive data company", expanding beyond core data marketing into new business lines, with 2025 marking the company's first entry into direct-to-consumer businesses.
• Service classification change: Starting from 2026 Q1, third-party ad platform revenue (previously classified under consulting "other") will be reclassified to Data Products to align with the new expansion strategy, where Data Products will now include both UNIVERSE own-platform and third-party platform revenue.
• New shareholder policy: A new shareholder benefit program is introduced starting this period, offering near-cash digital gifts twice yearly to shareholders holding 800+ shares, with a 3.49% yield based on November 12 share price. Management will prioritize benefits for individual shareholders while market capitalization is low, and will review a potential shift to or addition of dividends if market capitalization approaches 300 billion yen (the common threshold for institutional investor inclusion).

1. Data Products: Total gross profit increased 11.4% year-over-year, outpacing the loss of the deconsolidated digital signage business. The core product UNIVERSE saw 4.3% year-over-year revenue growth and 16.7% year-over-year gross profit growth. UNIVERSE active accounts grew 28% year-over-year, driven by focused growth on small and medium customers and agencies. For 2026 September year, Data Products (now including UNIVERSE own-platform and third-party platform revenue) is forecasted to hit 10.214 billion yen in revenue (+10.5% YoY) and 3.621 billion yen in gross profit (+14.5% YoY).
2. Consulting Services: Both domestic and overseas consulting delivered large revenue and profit growth. Domestic media consulting grew 52.7% YoY in revenue and 44.3% YoY in gross profit after a weak prior year period. Overseas consulting grew 32.1% YoY in revenue and 45.2% YoY in gross profit, driven by strong growth of IP collaboration product sales through IPmixer. For 2026 September year, Consulting Services is forecasted to hit 7.229 billion yen in revenue (+12.5% YoY) and 1.849 billion yen in gross profit (+12.4% YoY).

Total consolidated revenue for 2025 September year was 15.67 billion yen (+14.3% YoY), with adjusted operating profit of 0.784 billion yen and reported net income of 0.195 billion yen. The underlying core net income after adjusting for one-time items is 0.42 billion yen.

• For the 2026 September full year, management forecasts total consolidated revenue of 17.444 billion yen (+11.3% YoY), adjusted operating profit of 1.026 billion yen (the first time operating profit has exceeded 1 billion yen), and net income attributable to parent shareholders of 0.663 billion yen. This guidance reflects the company's transition to a full-fledged profit generation phase after years of productivity improvement, while continuing to invest in new growth areas including IP and TikTok Shop.
• Medium-term targets: Management targets 15 billion yen in operating profit within 1-2 years, with an intermediate short-term revenue target of 200-220 billion yen, and expects the business is on track to grow steadily toward this goal.
• The UNIVERSE data ecosystem expansion: Starting 2026, the company will expand full-scale use of its data for marketing campaigns on major third-party platforms including Facebook, Instagram, and TikTok Ads, expanding the total addressable market beyond the company's own platform.

• The alternative data business had negative full-year returns in 2025 due to underperformance of the legacy parallel model, though the legacy model has now been discontinued to resolve this issue.
• The company still faces seasonal demand volatility, with the first half (H1) historically much stronger than the second half (H2), though improved structural profitability has now delivered strong off-peak profits even in the weaker season.
• New strategic initiatives including TikTok Shop e-commerce, overseas expansion, and third-party platform ad data services carry execution risk as they are new untapped areas for the company.

No formal question and answer section is included in the provided transcript.