9554.T

• Market Environment and Competitive Positioning

  • The Japanese internet advertising market remains a continuously growing fertile market, and the live streaming market (driving the creator economy expansion) is also expected to maintain high growth going forward.
  • The rise of generative AI and AI Overviews is often viewed as a risk factor for the industry, but management views this as a tailwind that highlights AViC's competitive advantage. These changes accelerate the increasing complexity and sophistication of advertisers' marketing environments, making it harder for advertisers to handle changes in-house from organizational and cost standpoints, increasing demand for professional external strategic partners like AViC.
  • Alphabet (Google) recent results show year-over-year growth, with no observed evidence that AI has damaged existing digital advertising business; no observed reduction in advertisers' overall marketing budgets from current market changes.
  • AViC's mission-driven model focuses on designing and pursuing KPIs directly tied to client business growth (rather than superficial KPIs or product-out thinking), developing custom overall marketing strategies before selecting products and delivering services, allowing it to deliver higher added value beyond individual localized execution and earn sustained client support.

• Core Growth Strategies

  1. Data-driven management balancing business growth and high productivity: The company manages all employee work hours and conducts company-wide cross-sectional management of various data such as client-aligned service level definitions; quantitative data-based decision making is the source of high business productivity. Proprietary in-house developed tools prevent personal dependency and enable the organization to deliver high productivity, high quality services. In November 2025, the company launched "Kei Eye AI", a generative AI tool developed to drastically improve the quality and speed of analysis work, with ongoing updates to existing tools continuing to drive productivity gains.
  2. Strategic hiring and talent development: The company systematically conducts new graduate hiring/development and mid-career hiring of experienced talent, uses technology to maintain and improve productivity, and expands organizational size appropriately aligned with business growth pace. It uses a data-based scientific approach (rather than personal/intuitive methods) to build a system that steadily and quickly develops versatile, productive talent. As of the end of 1Q, total headcount is 94 employees, with revenue per employee reaching 8.7 million yen, a 27.9% YoY increase.
  3. Sustained order growth from enterprise clients: New enterprise customer acquisition continues to progress strongly, with growth driven by cross-selling to existing clients and replacement of other advertising agencies, and the business is on track to meet targets. The company also established a joint venture with ADK Marketing Solutions that has a dedicated sales function to strengthen enterprise client marketing support.

• M&A of Spica

  • AViC acquired 100% of Spica (operator of TikTok LIVE streamer management business "like me") for an acquisition price of 1.5 billion yen, fully funded by bank borrowing with a cash consideration that includes earn-out and refund clauses tied to actual achieved revenue of the acquired business.
  • Accounting treatment: The P&L will be consolidated starting February 2026; the deemed acquisition date for the balance sheet is January 31, 2026, with consolidation reflected in the balance sheet starting at the end of March 2026. The transaction was completed at a disciplined valuation of approximately 3.1x to 3.6x EV/EBITDA based on closing consideration.
  • Post-transaction, key financial health indicators remain at appropriate levels, no equity financing was required, and sufficient borrowing capacity remains to fund future M&A growth investments via bank borrowing. The expected synergies are: combining AViC's existing marketing capabilities with Spica's streamer management business to build a comprehensive video marketing ecosystem, expand share in the TikTok market across live commerce and the broader streamer space, implement AViC's data-driven management framework to deliver repeatable growth, and diversify the business portfolio to strengthen the revenue base.

• AViC's 2025 September period full year revenue grew 38.6% YoY, and the 2026 September period full year plan forecasts 35.8% YoY revenue growth, with a high probability of achieving the full year operating profit plan even without including the yet-to-be-finalized consolidation impact from Spica, and high confidence in meeting full year targets after a solid 1Q start.
  • The ongoing 2Q 2026 September period is expected to deliver record high all-time results, even after absorbing one-time costs from the Spica acquisition. AViC has a historical seasonal pattern of stronger results in 2Q and 4Q, and 1Q showed a solid start consistent with past QoQ growth trends.
  • The company's core quality growth strategy remains on track, the growth trajectory is solid, and the company expects to deliver continued revenue and profit growth for the full 2026 September period.

1. Enterprise Customer Segment: Revenue increased 31.6% YoY, driven by strong new customer acquisition, higher average customer value from enterprise clients, and expanded cross-selling of products. 2. SMB Customer Segment: The company maintains high operational productivity while serving SMB clients alongside enterprise clients, with consistent gross margin maintained across both customer segments. 3. Newly Acquired Spica Segment: Spica operates the "like me" TikTok LIVE streamer management business, is a top-tier primary agency for TikTok LIVE certified as a "TikTok LIVE Excellent LIVE Agency", and generated expected 2026 April period earnings, with a unique business model that only earns incentive revenue from the platform without charging fees to affiliated streamers.

• While the rise of AI is generally viewed as a risk that could displace existing work, management notes that continuing to operate with legacy methods would carry risk, but that AViC's business model (focused on high-value strategic client partnership rather than routine operations) is well positioned to adapt. While it is possible that some individual products could be displaced by AI or become less valuable, the company has a track record of continuously launching new services and solutions in response to market changes, and views current changes as a tailwind that increases demand for its services rather than a material threat.
  • There is risk that market sentiment leading to stock price declines could impact investor confidence, though management notes that delivering strong sustained operating results is the primary response to this dynamic.
  • M&A transactions carry integration risk; management has structured the Spica acquisition with earn-out clauses to mitigate performance risk, and plans to leverage AViC's existing data-driven management framework to drive sustainable growth at the acquired business.

Q: What is the purpose of acquiring Spica, what are future prospects, and what strengths will this acquisition strengthen?

A: TikTok has three core pillars: advertising, live commerce, and streamers. AViC originally only handled advertising, and has already begun offering new marketing solutions centered on live commerce to clients. Adding Spica's streamer management capabilities will create synergies with live commerce that will be very effective for overall integrated marketing management. Additionally, Spica is a highly profitable business with strong growth prospects, so it helps diversify AViC's business portfolio and strengthen the revenue base. Going forward, AViC's M&A strategy will focus on high operating margin, high growth companies in areas where AViC's management and data-driven methods can add value, and will pursue disciplined M&A for both peer advertising companies and businesses that bring new solutions AViC does not currently offer.

Q: Why did you select Spica as an acquisition target?

A: First, Spica is one of the very few primary agencies for TikTok LIVE, and holds the rare positioning of being certified as a TikTok LIVE Excellent LIVE Agency. Second, the like me business has strong performance, an attractive portfolio of streamers in terms of both quantity and quality, and has achieved consistent strong growth. At the same time, Spica had an opportunity to improve its internal operations: it was operating largely on intuition, and needed to build a more reproducible, sustainable management framework. AViC was confident that by combining forces, we could help Spica achieve that goal, which made this an ideal acquisition.

Q: What is your response to recent stock price declines, and what is your outlook for business performance?

A: It is true that over the past two weeks, driven by market news related to generative AI, consulting and broader industry stocks (including AViC) have declined. Management believes that stock price is not driven by individual opinions, and that the most important response is to deliver solid performance to reassure investors. We expect 2Q to deliver record high all-time performance, and after integrating Spica we will continue to deliver strong performance and provide clear updates via IR. The core business is performing very well, and we are committed to moving forward with strong operations.

Q: What is your policy for shareholder returns?

A: The company is currently using profits to secure earnings and invest in new business, but we are also giving full consideration to shareholder returns, and will provide an update on this topic at a future date.

Q: Is AI a threat that will disrupt AViC's business model? What are the key risks related to AI?

A: It is true that there has long been debate about AI displacing work, and AI and automation have existed for over a decade. It is true that continuing to use legacy unchanged methods could carry risk. But AViC is not just a company that handles routine operations: we design comprehensive strategies focused on client business growth, select optimal products and deliver customized solutions, combining multiple products to deliver relevant modern solutions. AViC has always evolved with market changes, and our track record of growth proves that we are selected by clients specifically because we adapt to change. While some individual products may be displaced by AI or lose value, this type of change is not new to the industry. AViC has continuously launched new services such as live commerce and other new solutions, many of which leverage AI, and we create new value for clients by engaging with AI appropriately. Client advertising budgets are not declining, and clients are actively seeking new solutions amid AI-driven commoditization. AViC's strategy is to continue providing accompanying new solutions that avoid this commoditization, and we currently view AI as a tailwind that is generating large volumes of new client inquiries.

Q: What is your turnover rate, and what are your key points for talent hiring, given your young workforce? Do you promote young employees to executive roles frequently?

A: Our turnover rate is in the single-digit percentage range, and our company culture does prioritize promoting young employees to executive roles quickly. We have been able to hire successfully even in a tight labor market primarily because of our strong industry growth: candidates are attracted by the potential and learning opportunities the company offers. Additionally, the strong growth that new hires experience after joining drives very effective referral hiring, which is our largest source of new candidates.

Q: How will you leverage talent on TikTok, including via your subsidiary Rialation?

A: Talents now have many opportunities to operate not just on traditional TV but also on digital platforms. While no major new generalist search media have emerged recently, leveraging talent for marketing and product sales is still very viable. On TikTok, talents can operate as their own media for PR and product sales via live commerce, with drastically more flexibility than traditional channels. AViC owns Spica's like me agency and Rialation's incubation agency, which allows us to offer unique monetization and new solutions that competitors cannot match. Management also believes that these talent-focused activities will not be displaced by AI, and we plan to continue adapting to change and offering new services in this space.

Q: How is the joint venture collaboration with ADK Marketing Solutions progressing, and is the enterprise client pipeline strong?

A: We are very confident that the collaboration is going very well. Successful collaborative projects have built stronger mutual trust than ever before, and we are currently in the best relationship we have ever had. We have built an incredibly strong relationship despite being separate companies, and this has led to more opportunities for projects and proposals with new clients. This growing pipeline is not accidental: it is the result of accumulating steady day-to-day results, which drives our strong growth rate.