Saison Technology Co.,Ltd. Q4 FY2025 earnings call

Capital Cost and Shareholder Value Focused Management

• The company targets a medium-to-long term ROE of 20%, with an estimated cost of equity capital of approximately 3% based on CAPM calculation.
• For FY2025, actual ROE was 10.6% (below target, as the company is investing in product/service development during its business structure transformation period), TSR was 134.9%, DOE (dividend on equity) was 10.2% against a 10% target, and equity ratio was 67.2%.
• The company's 2020-base TSR has lagged the industry average, primarily due to high starting share price in 2020 and depressed EPS from development investments for HULFT Square.
• The company maintains a DOE-based dividend policy to deliver stable payouts to shareholders insulated from short-term profit fluctuations.

Business Transformation and Core Product Progress

• The company is executing a four-shift strategy to transform its business structure from a custom contract-based system development model to an in-house product/service provision model, with data linkage business as the core growth focus.
• Core mature products HULFT and DataSpider Servista saw steady growth: HULFT support contracts increased 1,507 year-over-year, new license shipments increased 625; DataSpider Servista support contracts increased 107 year-over-year, new license shipments increased 52. The company launched the updated HULFT 10 product line with container, on-premise, and Red Hat OpenShift compatibility through 2024-2025.
• HULFT Square, the company's primary growth driver launched in 2023, has achieved steady enterprise adoption globally, with the company's engineers supporting client implementation projects. The product has secured initial enterprise use cases in North America and Europe, and launched in ASEAN.
• The company targets increasing the data linkage business revenue share to 70% by the FY2028 March period to improve overall profitability.

Strategic Initiatives

• Global expansion: The company exhibited at major global tech events including Dreamforce 2024, DNX Day, and Digitech ASEAN Thailand 2024 to build brand awareness, capture market demand, and incorporate global technology trends into product development.
• Technology and talent development: The company earned recognition and awards from all three major cloud platforms (Google Cloud, Microsoft Azure, AWS) for its expertise. It carried out company-wide engineer skill surveys to map technical and data management capabilities, completed hiring of 19 new graduates and 40 mid-career hires in FY2025, and continues to upskill staff to support growth.
• The company is addressing major industry trends: it provides data linkage infrastructure to enable companies' AI utilization, and supports legacy core system modernization (including the SAP 2027 end-of-support transition) by helping enterprises extract and utilize data from legacy systems.

Employee Focus and ESG

• The company identifies people as a core materiality, and offers flexible work arrangements including super-flexible hours and remote work to support work-life balance.
• It has set a target of 30% female managers by 2030, launched a women's community and related sustainability initiatives, and added employee wellness facilities including a hyperbaric oxygen room in the office.

1. Financial IT Service Segment: Revenue decreased 0.792 billion yen year-over-year; operating profit decreased 0.374 billion yen year-over-year.
2. Distribution IT Service Segment: Revenue increased 0.917 billion yen year-over-year; operating profit increased 1.776 billion yen year-over-year. The revenue gain included a one-time temporary revenue increase in the period.
3. Data Platform Segment: Revenue increased 0.346 billion yen year-over-year; operating profit decreased 0.54 billion yen year-over-year.
4. HULFT Segment: Revenue increased 0.047 billion yen year-over-year; operating profit increased 0.255 billion yen year-over-year. 63.9% of this segment's revenue is stable recurring stock revenue from support and maintenance contracts.

Overall consolidated results: Total consolidated revenue increased 0.518 billion yen year-over-year; total consolidated operating profit increased 1.117 billion yen year-over-year. Data linkage business (the company's core growth vertical) accounted for 52.6% of total company revenue as of FY2025, up 0.5 percentage points year-over-year.

• For FY2026 March full year consolidated guidance, Seizon Technology projects a year-over-year revenue decline, driven by the reversal of the one-time temporary revenue increase in the Distribution IT Service segment in FY2025.
• Revenue growth in the core data linkage business is expected to continue, driven by rising market demand for data linkage infrastructure amid accelerating AI adoption and enterprise data utilization trends.
• Consolidated operating profit and ordinary profit are projected to increase year-over-year, supported by data linkage business expansion and ongoing productivity improvements.
• The company maintains its DOE-based dividend policy, and plans a full year dividend of 90 yen per share (45 yen interim, 45 yen year-end), matching the target 10% DOE framework.

• The company is in a period of business structure transformation, and is currently investing heavily in new product development, which has suppressed near-term earnings and ROE, and contributed to lower TSR relative to industry averages.
• Near-term revenue is exposed to volatility from the one-time revenue impact in the Distribution IT Service segment, which will drive a projected year-over-year revenue decline in FY2026.
• Most enterprises still face multiple unaddressed challenges to generate business value from AI adoption, which creates near-term uncertainty for demand for the company's AI-focused data linkage solutions.

The provided transcript does not include a transcribed question and answer session, so no key exchanges can be summarized.