AViC Co.,Ltd. Q4 FY2025 earnings call

Market Environment Perspective

• AViC views common industry changes including in-housing of marketing and generative AI adoption as tailwinds rather than risks
• In-housing is only feasible for a small subset of top-tier "Tier 0" advertisers, and has limited impact on AViC's core target of "Tier 1" and smaller advertisers, as in-housing requires clearing high organizational and cost-effectiveness thresholds that most advertisers cannot meet
• Changes to search results driven by AI have not reduced search advertising revenue (Alphabet saw 14.5% YoY search ad growth, and AViC has not experienced revenue declines from this shift); these changes further increase the complexity of marketing, raising demand for AViC's professional support
• No overall contraction in advertiser marketing budgets has been observed, and AViC is seeing increased opportunities to be selected as a strategic partner for advertisers struggling with in-housing and AI-driven complexity

Core Growth Strategy

• Data-driven, productivity-focused management: Maintain cross-company management of work hour tracking and service level definition to drive high productivity, a practice that will continue as the organization scales
• AI tool adoption: Developed and launched the in-house AI agent "Keiai AI" that uses generative AI to quickly analyze large internal/external datasets and identify marketing metric changes and drivers. The tool combines AI analysis with human judgment/execution to expand consultant capacity, free up staff time for high-value work, and improve both the quality and speed of analysis.
• Strategic talent recruitment and development: Plan organizational expansion aligned with growth pace, combining planned new graduate recruitment, development, and experienced mid-career hires. A data-driven, scientific approach is used for talent development to ensure early contribution. Total headcount is targeted to reach 120 by the end of the 2026 September period.
• Continuous enterprise client acquisition: Enterprise client revenue growth remains on track, and the joint venture with ADK Marketing Solutions is progressing smoothly. AViC has achieved high revenue growth and high operating profit margins through structured maintenance and enhancement of both demand generation and service delivery capacity. Post-acquisition PMI (post-merger integration) for acquired companies has successfully improved their operating profit margins using AViC's standard methods, and AViC outperforms peer advertising agencies in both revenue growth and productivity.

The full-year 2025 September period saw revenue growth of 38.6% YoY, and operating profit growth of 62.3% YoY. For the 4Q 2025 period, AViC achieved an all-time record quarterly operating profit of 0.22 billion yen, with YoY growth of 82.5% for revenue, 72.5% for gross profit, and 59.4% for operating profit. Revenue from enterprise clients grew 37.3% YoY, and has been growing steadily through organic client acquisition and partnership collaboration. The recently consolidated Riareasion (added in Q3) contributed profit after amortization of goodwill and other intangible assets, and has become part of AViC's organic growth through integration with existing business. AViC maintains high profit margins for both enterprise and SMB client segments, and improved operating profit margins for acquired FACT and Riareasion through its standardized management approach.

• For the 2026 September period, AViC guides 35.8% YoY revenue growth, 35.9% YoY operating profit growth, and maintains an operating profit margin target of 27%, targeting industry-leading growth and profitability
• The achievement probability of the plan is already high based only on existing secured orders and high-probability pending orders
• New strategic initiatives including post-M&A PMI for acquired companies, China market entry, and TikTok Shop operation support are all progressing on track
• Management expects to maintain and improve the current high operating profit margin in coming periods, driven by productivity gains from AI adoption and improving productivity from a growing share of enterprise clients

No material operational or financial risks were explicitly discussed in the available transcript. Management frames widely discussed industry shifts (marketing in-housing, AI-driven search changes) as opportunities rather than material risks.

Q: What factors allow AViC to sustain its high growth rate? / A: Management attributes sustained high growth to two core factors. First, AViC has built clear competitive advantage for its services in its targeted market segment. Second, effective recruitment and development of human capital is a core strength. Balanced, well-functioning demand generation and service delivery capacity is the primary reason AViC can maintain its high growth rate.

Q: What is the current split between new orders and replacement of other agencies' existing contracts? / A: Management confirms that the vast majority of AViC's new business currently comes from replacing existing contracts held by other advertising agencies.

Q: What are AViC's plans to enter the top-tier "Tier 0" advertiser segment as capabilities scale? / A: AViC started targeting smaller Tier 2 advertisers, then moved into the Tier 1 segment over the past year. Management states that AViC will enter the Tier 0 advertiser segment when the timing is appropriate, with no fixed immediate timeline.

Q: Is there still room to improve AViC's already high profit margin, from AI productivity gains and growing enterprise client share? / A: Management confirms that AI adoption will continue to improve productivity, and the growing proportion of higher-value enterprise clients will also drive further productivity improvements. Management expects to be able to improve on the current high profit margin over time.