INTLOOP Inc. Q2 FY2025 earnings call

Overall Financial Performance

• H1 2025 results beat expectations, with strong double-digit growth in revenue and operating income driven by successful execution of the medium-to-long term strategic plan VISION2030. The key drivers of profit growth are deliberate selection of high-margin projects, sales organizational transformation, and price adjustments that improved gross margins. The capital and business alliance with Itochu Corporation has driven increased new orders that contributed to H1 revenue growth.

Alliance and New Business Progress

• Established Shokukyosoh Partners, a joint venture with Asahi Foods Co., Ltd., focused on a specialized buyout fund for the food industry. Began development of a logistics DX system in partnership with Sony Semiconductor Solutions and Mitsui Warehouse Supply Chain Solutions, which leverages Sony's technology and Mitsui's industry expertise. Several customer inquiries have already been received, and sales will launch once development is completed.

VISION2030 Strategic Progress

• Freelance business strengthening and consulting domain expansion: The alliance with Itochu is progressing well, and business with the Itochu Group is expanding, with ongoing transition to a sales structure focused on high-margin projects via organizational change and price revision. Solution portfolio expansion: After forming a capital and business alliance with Idein Inc., sales have launched, with multiple customer inquiries already received. Service development is ongoing with Altz Inc., and development of the logistics DX system noted above continues, with future focus on AI-related fields. Open innovation new business creation: The INTLOOP Ventures Accelerator has launched, with startup-focused events beginning next month, to support venture growth by applying INTLOOP's upsell strategies and data programs, and connect startups to venture capital. JV co-creation and fund investment business strengthening: The joint venture with Asahi Foods has been completed. Lean group management base building: Core system replacement is progressing, with preparation for launch in the next fiscal year, and some components already operating. Senior-level talent hiring continues, with ongoing focus on strengthening the group management structure.

Workforce and Freelance Network Update

• INTLOOP standalone total employee growth slowed slightly in Q2 due to temporary departures, but delivery employee headcount remains on track. Non-delivery back-office and sales roles are not refilling departing positions to support lean, efficient operations. The overall direction of gradual headcount growth combined with improved retention remains unchanged. Freelance registered members grew to 48,143, with 1,451 active workers; the company is focusing on quality over quantity of registrations, combined with marketing cost efficiency, to grow both registrations and active workers.

The provided transcript does not break out separate financial performance for individual product segments. Aggregate consolidated results for the first half (H1) of the 2025 July fiscal period are: total revenue exceeds 16 billion yen, up 36.1% year-over-year; operating income exceeds 1 billion yen, up 92.7% year-over-year; parent company attributable net income is up 105% year-over-year. Gross margin improved 2.8 percentage points year-over-year for H1, and 3.1 percentage points year-over-year for Q2 alone. For INTLOOP standalone Q2: revenue grew only 3.7% quarter-over-quarter due to deliberate high-margin project selection, while gross margin improved 4.4 percentage points year-over-year, and operating margin reached 7.3% after advertising cost optimization. For full-year 2025 July, H1 revenue reached 46% of the full-year consolidated plan, in line with historical seasonal trends, and operating income is currently ahead of plan.

• Full-year 2025 July fiscal period guidance is maintained unchanged from prior estimates: full-year revenue target is 34.55 billion yen, operating income target is 1.969 billion yen, and ordinary income target is 2 billion yen. No upward or downward revisions to any full-year financial targets are implemented at this time. While H1 operating income is currently ahead of plan, future investment in senior-level talent hiring is already budgeted within the existing VISION2030 plan and full-year guidance, so no change to the full-year target is needed. The company expects full-year revenue growth to accelerate in the second half (H2), in line with historical seasonal trends, and expects to continue the growth trend seen in H1. INTLOOP expects the gradual shift to high-margin projects will eventually restore standalone revenue growth to prior trend levels after the current deliberate slowdown from project selection. The company will continue to actively expand into new business areas in H2.

• The only risk factors noted in the provided transcript are investor concerns: investors are concerned about slow standalone INTLOOP revenue growth, which management acknowledges is the intentional result of deliberate high-margin project selection. Investors also expressed concern about slow employee growth, which management notes is partially the result of a deliberate efficiency strategy for non-delivery back-office roles, while delivery headcount remains on track. No major material operational risks or failures are discussed in the available portion of the transcript.

The full text of Q&A exchanges is not included in the provided transcript; only the list of question topics is available. Key topics of Q&A, which were not transcribed in full, are: senior-level talent hiring, INTLOOP's role and goals in logistics DX, the objectives of core system replacement, project selection strategy after the first half, the impact of the capital and business alliance with Itochu Corporation, full-year cost outlook, challenges for forming teams of 50+ people, next fiscal year profit outlook, and business progress at the Shokukyosoh Partners joint venture.