Hengge

Hi, I am Haruo Amano, director of Henge. Thank you for joining us today for our full-year financial results briefing of FY 2025. Today, our CFO, Ryo Kobayashi, will explain our full-year financial results. Then, I will explain our full-year forecast for FY 2026 and our growth strategy.

Hi, I'm Ryo Kobayashi, CFO of Henge. First, let me explain our full-year financial results for FY2025. This is the summary of our consolidated financial results. The results were in line with the revised full-year forecast disclosed on May 7th, 2025. Our quarterly consolidated net sales are as presented on the slide. Since the net sales of Henge One Business is recurring in nature, it has been increasing throughout each quarter. Our year-on-year consolidated net sales are as presented on the slide. Our quarterly gross profit and gross profit margin are as presented on the slide. Our year-on-year gross profit and gross profit margin are as presented on the slide. Gross profit margin increased mainly due to higher APU maintaining a high level. The quarter-on-quarter breakdown of operating expenses is as presented on the slide. The year-on-year breakdown of operating expenses is as presented on the slide. Expenses increased mainly for strengthening recruitment capabilities, along with personnel expenses driven by a higher headcount and branding-related advertising expenses. Our quarterly net sales and operating expenses are as presented on the slide. The trend in the number of employees is as presented on the slide. While the recruitment environment remains challenging, our various initiatives have yielded favorable results in hiring. In addition, the number of resignations was low, leading to a net increase of 79 employees, which was higher than the initial target of 40. That said, the recruitment of sales personnel fell behind our initial target and continues to be a challenge. The status of our cash flow is as presented on the slide. Now, I will explain our business activities during this quarter. This is an overview of our business highlights. Major advertising activities for the fourth quarter are as presented on the slide. We also focused on activities to raise awareness and strengthen our brand. Notably, from August, we have launched a campaign featuring three ultra heroes to boost recognition of Henga One. Next, I would like to explain the results of our KPIs. The progress of Henga 1 KPIs from the end of the last fiscal year is as presented on the slide. Year-on-year KPI results for Henga 1 are as presented on the slide. The churn rate of Henga 1 is as presented on the slide. The theoretical average contract period exceeds 25 years. The number of contracted companies and users is as presented on the slide. During this quarter, we acquired multiple contracts from relatively large companies. In addition, we continue to achieve stable growth in the number of contracts with small to mid-sized companies through deepening relationships with resellers. Despite cancellations from relatively large companies, the number of contracted users also increased steadily, supported by robust new contract acquisitions. The quarterly trend of ARR and ARPU is as presented on the slide. During this quarter, the trend of choosing Henga One Pro has continued among both new and existing customers. At the same time, we also saw an increase in the number of new customers opting for single-feature plans, such as DLP, regardless of the company size. As a result, the overall increase in ARPU for this quarter was limited. Furthermore, the proportion of Henga One Pro within the total ARR has increased to approximately 17% as of the end of this quarter.

Next, I will touch on our full-year outlook of FY2026.