ZIGExN Co., Ltd. (3679) Q4 2026 Earnings Call Transcript

ZIGExN Co., Ltd. Financial Results Briefing for the Fiscal Year Ended March 2026 May 12, 2026

Event Summary [Company Name]

ZIGExN Co., Ltd.

[Company ID]

3679-QCODE

[Event Language]

JPN

[Event Type]

Earnings Announcement

[Event Name]

Financial Results Briefing for the Fiscal Year Ended March 2026

[Fiscal Period]

FY2026 Annual

[Date]

May 12, 2026

[Number of Pages]

55

[Time]

17:00 – 18:04 (Total: 64 minutes, Presentation: 47 minutes, Q&A: 17 minutes)

[Venue]

Webcast

[Venue Size] [Participants] [Number of Speakers]

2 Joe Hirao Sachiko Hatano

Representative Director, Operating Officer, CEO Director, Operating Officer

1

Presentation Hatano: Thank you for visiting the web presentation of ZIGExN Corporation today. Today, I would like to explain the situation with CEO, Representative Director Hirao and myself, Director Hatano.

First, I’d like to explain the agenda for today. Today, we announced our third medium-term management plan along with the full-year financial results. Hatano will begin with an overview of the financial results, and Hirao will review the second medium-term management plan and explain the outline of the third medium-term management plan, and the earnings forecast for FY27/3. We will then move on to the question-and-answer session.

2

I will now move on to an overview of the financial results. We will briefly explain the highlights. For the fiscal year ended March 31, 2026, we achieved revenue of JPY29.221 billion, EBITDA of JPY7.592 billion, and operating income of JPY5.913 billion, with revenue and each income achieving the financial forecast and hitting a record high. As Hirao will explain later in this presentation, based on the third medium-term management plan, we are aiming for record highs in revenue and each profit since the establishment of the Company for the fiscal year ending March 31, 2027. For the second mid-term business plan, although we have not achieved the company-wide performance targets, we have achieved the initially planned Z CORE of vertical HR through a combination of organic and inorganic growth. In the third medium-term business plan, based on the accumulated customer assets and industry-specific data, we will not only attract users but also aim to grow by deeply penetrating the entire customer business process and by optimally allocating human resources and AI. For the fiscal year ending March 31, 2031, we plan to achieve revenue in excess of JPY50 billion and EBITDA in excess of JPY12 billion.

3

This is the percentage of achievement against the forecast of full-year financial results. Revenues were driven by vertical HR, primarily Ties, which achieved its forecast. In terms of profit, the growth rate remains somewhat challenged due to upfront investments in vertical HR and the liquidation of some low-profit businesses, but we achieved our earnings forecast.

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This is the annual performance trend. Revenues totaled JPY29.221 billion, up 14.8% from the previous year. Revenue 1 (number of clients focused) has been growing steadily, mainly due to stable growth in existing businesses and contributions from new M&As. Revenue 2 (number of large companies and their unit price focused) grew significantly due mainly to the growth of the job-placement business, particularly Ties.

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It is about profit. Steady growth centered on vertical HR led to a 7.2% YoY increase in EBITDA to JPY7.592 billion and a 4.5% increase in operating income to JPY5.913 billion, both landing at record highs.

6

This will be an analysis of changes in operating income and EBITDA from the previous year. The figures are analyzed as shown in the figure. Operating income increased slightly from the previous year, mainly due to personnel expansion in the job placement business, marketing investments for business expansion, and system investments, including software development. The difference between EBITDA and operating income, which is shown on the right side of the graph as compared to the previous year, is widened mainly by the increase in amortization, a non-cash expense.

7

This shows the trend in cash flow. For operating cash flow, adjusted operating cash flow, which adjusts for changes in deposits in the travel settlement agency business, which are highly volatile depending on the timing of payments, is presented as an indicator of normal profitability. In the fiscal year ended March 31, 2025, on an actual capacity basis, excluding a one-time refund of approximately JPY0.37 billion in the previous fiscal year, the Company continues to generate cash equivalent to its record high in the current fiscal year. Regarding investment cash flow, we executed growth investments such as M&A and software development. Regarding financial cash flow, the Company returned cash to shareholders through dividends and share buybacks.

8

Here is the quarterly performance trend. In Q4, revenue increased 20.5% to JPY8.331 billion, EBITDA increased 13.3% to JPY2.198 billion, and operating income increased 13.8% to JPY1.751 billion, all new record highs.

9

Here is the quarterly breakdown of expenses. Advertising and sales promotion expenses remained stable year on year due to cost-effective management. The structure of COGS and SG&A expenses has changed somewhat for personnel-related expenses, mainly due to the inclusion of Alpha Staff, which operates a temporary staffing business, in the Group.

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Please see revenue by territory. We achieved a YoY revenue growth in all areas. In vertical HR, high growth was achieved due to the effects of Ties, which specializes in the manufacturing area, and M&A during the period. Living tech has remained stable thanks to the success of cross-selling measures in the energy domain. In life service, we promoted business operations with profitability in mind.

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The following table shows profitability by segment. In Q4, operating income before allocation of common expenses vertical HR 26%, living tech 25%, life service 20%. The profit margin of vertical HR has decreased in YoY due to the change in mix from new M&A, but has improved significantly in QoQ due to the inclusion of demand during the peak season. Living tech's profit margin remained at the same level as the previous year, although some of its businesses are in PMI. As expected, Q4 is the busy season for living tech, so the profit margin has improved in QoQ. Life service's profit margin improved in YoY due to profitability-conscious business operations. We will continue to improve the overall profit margin by streamlining the management of low-profit businesses.

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The current external environment. In vertical HR, the overall business environment is strong, while living tech and life service are experiencing headwinds in some business environments, partly due to geopolitical risks.

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This is about the number of corporate clients and the unit price per corporate client. The number of corporate clients reached 23,335, growing steadily due to progress in developing existing business clients and contributions from new mergers and acquisitions. The unit price per corporate customer has been steadily growing due to changes in the product mix resulting from the expansion of the performance of high unit revenue businesses.

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Vertical HR business status. Both listing and performance fees have reached record highs.

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Next, I will discuss the performance of vertical HR's mainstay, Ties. Steady progress in PMI, such as expansion into the Kanto and Tokai areas, knowledge leveling of highperformers, and cultivation of new ones, has led to ongoing customer loyalty and progress in customer development. The unit price per client is slightly decreasing due to an increase in new clients as a result of area expansion, but is expected to improve due to an increase in the market share of recruitment over the medium term. We’ll explain the details further on the next page. In Q4, the Company achieved solid YoY revenue growth rates on both a job placement/contract basis, reflecting the benefits of business investments and a busy season. We expect the same level of growth in the next fiscal year as in the current fiscal year.

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Ties' clients and unit revenue will be explained in detail. Comparing the graphs on the left and right, you can see that the number of new customers and repeat customers accounts for the majority of the clients, and the number of loyal customers with particularly high frequency of transactions is small, while the revenue from loyal customers is larger than that from new customers. Therefore, the unit price per customer for loyal customers is about JPY50 million, versus several million for repeat and new customers. By comparison, the unit price of loyal customers is significantly higher. As shown in the graph on the right, the number of repeat customers is growing in tandem with new customers as the Company expands into the Kanto region. Therefore, the overall downward trend in the unit price per customer shown on the previous page is due to a change in the customer mix as a result of an increase in new customers due to area expansion. Areas such as new customers and repeat customers are candidates for future loyal customers, and we will continue to aim to acquire them, and by making new and repeat customers loyal through the improvement of the value we provide, we aim to continuously increase the number of loyal customers and thereby increase revenue.

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In the same way, in Ties, as shown in the graph on the left, revenue per consultant tends to increase with the level of proficiency, and while the labor cost ratio is high in the initial stage of personnel expansion and training, in the mid- to long-term, we expect revenue to increase and profit margin to improve as labor productivity improves. The number of consultants is steadily expanding, as shown in the graph on the right. We will continue to promote flexible recruitment strategies that focus on the macro environment and productivity improvement through the use of AI at the same time.

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Vertical HR, the order backlog as a leading indicator. This one will include Ties, Up Base, and Any Career. The order backlog is the future revenue expected to be recorded from contracts that have been signed but have not yet reached their hire dates. Since the lead time from contract signing to job placement is roughly 2 to 6 months, the balance of orders as of March 31, 2026, is to be recorded as revenue in Q1 and Q2 of the fiscal year ending March 31, 2027, as job seekers are hired.

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Here is an update on living tech's business operations. The renovation area continued to struggle somewhat, but successful cross-selling measures in the energy area and growth in cross-border real estate contributed. The number of customers grew steadily due to contributions from the insurance domain and other areas acquired through mergers and acquisitions in the previous fiscal year.

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This is about the absorption-type demerger of one of living tech's companies, Hoken Mammoth, Inc. For the purpose of management efficiency, the Company has decided to integrate Hoken Mammoth's main business, such as insurance consultation service business, into the Life Support Division of the Company. This will enable us to directly invest our Web marketing know-how and management resources, thereby speeding up decision-making and accelerating business growth.

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Please see the case studies of AI applications on our website. The use of AI is being promoted company-wide to accelerate the improvement of conversion rates and productivity through operational improvements. In the future, we aim to further improve overall AI literacy by building a common AI knowledge database and providing education. In the medium term, we will also deeply integrate AI into each business process, leading to sustainable growth through improved productivity.

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We are also promoting BPR through the use of AI in each department and already have many examples of improved operational efficiency. The system is designed to immediately promote the horizontal development of good examples to the Group. For example, on the engineering side, AI agents have been introduced into each development process, and productivity has improved significantly. In existing businesses, we are also considering the development of new services utilizing AI, which will lead to improved business performance through the creation of mid- to long-term customer value.

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The results of the goodwill impairment test. In accordance with international accounting standards, the Company conducts an annual impairment test. As a result of impairment testing of each CGU comprising goodwill, the recoverable amount of the major CGUs with large amounts of goodwill significantly exceeded their carrying amounts, and no impairment loss was recorded.

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Balance Sheet. The amount of goodwill was JPY13.4 billion, and the balance sheet as of the end of March 31, 2026, maintained a high level of financial soundness, with an equity ratio of 0.6 times, and an equity ratio attributable to owners of the parent, or 55.5% under Japanese GAAP.

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This will be the effect of the introduction of the shareholder benefit program. We have introduced a shareholder special benefit plan with a record date of the end of March 2025. Regarding the 1,000-share layer of 10 units, which was our main target, the number of shares has expanded more than three times, and we recognize that this has led to demand for purchases by individual shareholders. We believe that the formation of a medium- to long-term holding layer based on the continuation of shareholder benefits has strengthened our resistance to market volatility. That is all from me. Next, our CEO, Hirao, will provide a review of our second mid-term management plan, as well as an overview of our third mid-term management plan and our earnings forecast.

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Hirao: I am Hirao, the representative of ZIGExN. I would like to review the second medium-term management plan, explain the third medium-term management plan, and provide guidance for the current fiscal year. Looking back, our second medium-term business plan for the period from the fiscal year ended March 31, 2022 to the fiscal year ended March 31, 2026, and up to the previous fiscal year, our overall vision was to achieve our revenue target of over JPY35 billion, EBITDA of over JPY10 billion, and Z CORE, the goal of creating a large business, based on three axes: selection and concentration, expansion of matching technology, and expansion of our client base.

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After five years, first, we have the summary of the numerical aspects of the project. As for revenue, we did not reach our target, but we doubled our revenue from the initial JPY12.5 billion to JPY29.2 billion, a 2.3-fold increase. As for EBITDA, although it did not reach the target of JPY10 billion, it was also the highest profit in the form of JPY7.592 billion from the initial JPY3.8 billion. As for operating income, we have compared the year when there was an impairment loss, and we went from a loss to the highest income of JPY5.913 billion. Net income, or net income attributable to owners of the parent company, as defined by Japanese GAAP, was also impaired, so the Company has gone from being in the red to posting the highest income of JPY4.157 billion. EPS went from being in the red at the time to the highest profit in five consecutive fiscal years in the form of JPY41.66. DPS had just started paying a dividend of JPY3 per share at the time, but we were able to increase the dividend to JPY11 per share, and I believe that we were able to provide stable growth and shareholder returns at the same time.

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I would like to look back at the individual projects, and this is Z CORE. We are a company that is engaged in a variety of businesses, but we believe that our weakness is that we do not have many large companies. We’ve been working hard toward our goal of building a major business over the past five years. At first, we chose vertical HR and living tech, one in the human resources industry and the other in the real estate industry, as the timing was right at the dawn of COVID-19, so we chose two business categories that would not be affected too much, and decided to work on them as candidates for “Z CORE”. As a result, vertical HR had very good timing in formulating strategies and entering the market, and we were also able to make good M&A deals with good companies, and we were able to grow from the initial JPY4.8 billion to over JPY10 billion to JPY13.3 billion, a 2.8-fold increase, almost 3 times the original amount. I am proud to say that we have successfully created a business entity with more than JPY10 billion. On the other hand, the living tech business, which we have positioned as our core business, did not quite reach the JPY10 billion mark, recording JPY6.93 billion in revenue, but I think it fell short of the threefold growth initially planned. Although not a core business, life service, a business category that includes all other businesses, doubled its revenue from JPY4.3 billion to just under JPY9 billion. In general, I think that vertical HR is at least at the level it should be, and although living tech was not so good, I think that we were able to raise the overall level by expanding both life service and living tech.

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I have written the KPI's for each business segment, and I have talked about changing the KPI's in the middle of the mid-term business plan and shifting the KPI's to the unit price per customer, which I believe has been successful. While revenue has increased 2.3 times, unit price per customer has increased 1.9 times. The number of corporate clients also continued to grow, albeit gradually, and we believe that we were able to achieve good growth in the mid-term plan by successfully changing the starting point here.

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Breaking it down, particularly in the vertical HR segment, while top-line revenue grew 2.8-fold, average revenue per customer increased 2.2-fold, rising from JPY420,000 to JPY920,000. With ZIGExN serving over 20,000 clients, I believe this five-year period was marked by significant spending from our major clients. In terms of distribution, the percentage of enterprise customers is still small, but as Hatano explained earlier, we have a growing share of customers such as Ties and loyal customers, especially trillion-yen companies in Japan. The unit price per customer is rising at a rapid pace.

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Since vertical HR was successful, our strategy for living tech has been to increase the unit revenue per client as well. Compared to VHR, there has been a gradual but 1.4-fold increase. Originally, the living tech site had a per customer revenue of JPY1.12 million, so average unit price per customer has increased to JPY1.58 million, but the original revenue is still high. The number of companies is also growing steadily.

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From here, I am pleased to announce our third medium-term management plan. We have established a large business called Z CORE, and we would like to evolve our service value from a matching technology to an agent, while further focusing on this selection and concentration. We call it ZIGExN Matching Agent, ZMA.

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As mentioned above, we have set a numerical target for the fiscal year ending March 31, 2031, which is higher than our disappointment with the mid-term plan. We will continue to pursue revenue in excess of JPY50 billion, EBITDA in excess of JPY12 billion, and ROE of around 20%. I will explain the details of the change in the segment later, but since vertical HR, as I mentioned earlier, has become Z CORE, our strategy is to further expand this segment. The living tech segment has been integrated into life service. We believe that the strategy is the same, and our business plan is based on these two axes. Regarding vertical HR, we have been developing this pay-for-performance model over the past five years, and we intend to expand it further. And now, we are thinking of expanding the value we provide by using AI to further increase the productivity and yield of our consultants, not only in areas where we are currently extending our services manually. As for life service, we will continue to expand and reproduce what we have already proven with HR, and although we are currently helping many of our clients to attract users, we will not only attract users but also help them to close deals and increase their revenue. In some cases, we may even be able to outsource business processes to support our clients' management. We are actively developing areas that can be automated by AI and areas that can expand the value chain. In terms of investment and finance, we would like to further increase ROE while actively pursuing M&A opportunities, which we consider to be one of our strengths.

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In the area of organizational strategy, we are planning to expand AI human resources in the form of an organizational structure that relies on AI, and to introduce a virtual company system in order to generate more synergy in group management, and we will do our best to optimize the allocation of human capital. M&A requires management personnel, so we would like to strengthen our pipeline in this area. We will also strengthen the alignment with our shareholders and support them by increasing stock-based compensation and performance-based compensation.

It is detailed, but it describes the achievements and challenges of the second medium-term management plan in an organized manner. Since we have little time, I would like to briefly discuss the issues on the left side of the table. As I mentioned earlier, the VHR business has reached Z CORE with an increase in the unit price per customer, but the life service business is lagging behind, and we recognize that there has been a delay in the conversion of the business model. In the area of investment and finance, the return on investment for M&A is very high, and we are achieving it, but there is a lack of large-scale projects, and I think that investment has stalled a little since the third year of the medium-term management plan. Although ROE has been high in the recent past, we recognize that we are not yet leveraged in this area as an issue. We, at the organization. We have been expanding our business horizontally, and the number of groups has been increasing, so we believe that we can maximize per capita productivity while improving governance by consolidating the businesses, while creating synergy among them. As a result, our goal is to become number one in each of the areas in which vertical HR is currently involved, and in terms of life services, we will be able to support our clients from user attraction to management support

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by conducting everything from attracting users to closing deals. We will not only achieve our investment and financial targets, but also actively grow as an operating company while maintaining disciplined capital efficiency through thorough portfolio management, which will be discussed later.

For your reference, we have written the first medium-term business plan after the listing of the first mediumterm business plan, the second medium-term business plan, and the third medium-term business plan from the period of the Company's foundation. The third medium-term plan is to further expand the business through ZMA and matching agents.

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What ZMA is written here. In the second medium-term business plan, we will continue to work hard to see signs of expansion in this human agent area, especially in the HR field. And in this newly emerging age of AI agents now, and in this age of AI replacing people, we do not expect everything to shift to AI agents at all in this five-year period. We believe that the ratio of AI will increase over a longer span of time, such as a 10-year term, but basically, while combining human agents and AI agents, as in the case of global FDEs, people are stationed at customers' sites, In the global market, there is a growing trend to combine human agents and AI agents, and to introduce AI to customers. We are looking to combine human agents and AI agents in order to help our clients' profitability and business management.

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The question is what will happen with it. First of all, we are thinking of expanding the size of the market, which is not a small market to begin with, but we would like to expand from the job advertising and recruiting market to the market where personnel expenses, not just recruitment expenses, are paid by the clients. The market is so huge that even as a percentage of GDP, it is worth several hundred trillion yen. For the sake of argument, we’ve set the total addressable market, TAM at JPY30 trillion, assuming we capture a 10% share. For our part, rather than the size of this TAM figure, we are more concerned with the amount of take rate and profit we can pull in from this figure. Theoretically, it is about JPY1 trillion. We believe that if we can get the 10% market share, we will be able to produce it. In the life service sector, while we typically receive payments for sales promotion and advertising expenses, there are also labor costs associated with the closing of deals. For example, we estimate that the BPO market includes call centers and sales teams that convert leads into contracts following the initial deal closure. We estimate the total addressable market for this sector to be approximately JPY20 trillion. In total, the TAM profit is about JPY1 trillion to JPY1.2 trillion. We believe that this is a theoretical market where a profit structure of JPY1 trillion to JPY2 trillion can be created. Therefore, from the profit range of JPY12 billion through the fiscal year ending March 2031, I believe that there is still a very fertile market, and the type of business we are currently engaged in still has many indicators of human involvement in the DX trend, so I believe that this will actually become more important in this age of AI. We would like to capture that, not the existing SaaS players.

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In the segment I mentioned earlier, I have written that green and orange will be integrated into orange. There are no major changes to the vertical HR, and we would like to make sure that this product is welldefined and aim for number one in each area. We do not mean to say that we will not expand our life service and living tech businesses, but that we will continue to develop them stably as the foundation for stable cash flow.

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As for the core business, which is Vertical HR, we are expecting to achieve our goal of a top-line CAGR of about 15% and an operating profit CAGR of 11%. The growth strategy is written again below, so please excuse me, but once we subtract the overhead cost from the EBITDA, we have broken it down to over JPY9 billion, which we believe is achievable.

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The reason why you are choosing this HR. You might already be aware, but we think this market will be a very good market, not that we are great, but that this market is very good. At first glance, Japan has a declining population, and we are often asked if HR is a growth market in a declining population, but we believe it will be a growth market until about 2040. At least over the next five years—from 2027 to 2031—the working-age population will decline gradually, and while it will drop sharply after 2040, we believe that, up until then, the labor shortage will become a serious issue because the worsening labor shortage will outpace the decline in hiring demand. Regarding the rate of job changes, Japan's new graduate market is still very much a lifetime employment market, and large companies still rely heavily on new graduates for their hiring. However, since the onset of the COVID-19 pandemic, large companies have finally begun to actively recruit mid-career professionals. This may be difficult for venture companies to understand, but the ratio of mid-career hires among large companies has been gradually increasing, and I think it is finally close to the level of the first year. The rate of job change is still quite low compared to the United States. Furthermore, among developed countries, Japan has lagged far behind in raising wages, and although it is often mentioned together with interest rates these days, base increases have been rising rapidly since COVID19, and we see this as another favorable factor. Therefore, we believe that although the number of workers will decrease slightly due to the severe labor shortage, our margins and the value of the roles we provide will increase in this market.

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In the area of investment and finance, where we are strengthening M&A, we have written a track record in the past. We have invested JPY23 billion in 35 projects and have achieved a cumulative EBITDA payback of 170% of EV, and the return on investment is about four years, which I think is an acceptable level. On the other hand, if you divide JPY23 billion by the 35 projects, each project is worth about JPY0.7 billion, so I regret to say that the number of large projects is small considering the size of the Company. However, over the past five years, while we initially conducted PMI using the ZVI framework based on this top-level marketing approach, the methodology for M&A PMI has now expanded to include marketing, sales, and operational improvements as key success factors for M&A deals. In addition to maximizing the leverage of revenue through the science of conversion while taking advantage of matching technology, we are also engaged in cross-selling from the customer base, strategy transformation, value expansion and reproduction, system integration, and management improvement. I believe that PMI techniques are on the rise at this time.

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For the next five years, we are building our SBU within these two segments, and each is developing a growth story with an equity story in mind. We would like to do a series of M&As in each of our businesses, and in some cases, we are thinking in the form of roll-ups, and in other cases, bolting on the missing pieces to the AI agents I mentioned earlier.

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We have created a new figure, which we have named ZIGExN Portfolio Matrix, and we are planning to increase the businesses in the upper right-hand quadrant. I would like to introduce one of our ideas on this cash cow. In terms of existing, vertical HR would be in the upper right corner, and life service would be slightly to the lower right. Of course, the upper right corner is where each business grows, but we are a company that reinvests the earnings generated by each business to grow at a compound interest. In particular, life service is reinvesting the cash it earns in businesses that have the potential to grow at the top left or the top right, especially in M&A. Regarding vertical HR, we want to expand and reproduce value by investing in existing businesses and make it a company that can grow with solid compound interest. Since we are a company with a large number of business units, we ultimately intend to apply our exit criteria—specifically those in the lower-left quadrant— in a disciplined and consistent manner. We have been engaged in several divestment activities since the previous fiscal year, some of which have been successful and have had an impact on earnings improvement. We intend to build our business portfolio while ensuring that we continue to recycle effectively in this area as well.

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For the financial part, we have written a five-year capital allocation. As I mentioned earlier, business investment and strategic investment are equal in magnitude, but in terms of return on invested capital, business investment tends to be higher, so I have broken it down in this way. We are considering an operating cash flow of JPY40 billion over the next five years, 40% of which will be invested in pre-projects, 40%, or JPY16 billion, in M&A, and the remaining 10% in shareholder returns. In the area of business investment, we would like to invest more and more in AI-related investments and in the expansion of human capital. With regard to strategic investments, we would like to do bolt-on and roll-up M&A continuously. In terms of shareholder returns, we have raised the dividend payout ratio slightly for the five-year period in the form of a stable dividend payout ratio, and in the previous medium-term management plan, we set a rule of 12% to 20%, In fact, we have paid special dividends, and in recent years we have paid out more than 20 percent of dividends, and we would like to manage our business as an operating company while returning more than 30 percent of our profits in a stable manner.

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I have summarized our financial policy. We have been working on the financial discipline for category 3 and category 4, and we have been working on the financial discipline for net cash, which has been rising in recent years, and we are trying to maintain the net debt-to-equity ratio of the financial discipline at 1 times. We have set this as a standard that is neither too low nor too high, while maintaining a net debt-to-equity ratio of about 1 times. In addition, EBITDA multiples. We believe that there is a risk of borrowing too much net debt, so we would like to leverage up to about 2 times EBITDA here. As mentioned earlier regarding dividends, we are planning for a payout ratio of 30% or higher. Until now, we have operated under a system where the portion of operating cash flow generated in a given year, excluding dividends, was allocated toward shareholder returns in the following year. Regarding this, we intend to take a flexible approach, such as issuing special dividends or making strategic investments as needed. Additionally, regarding share buybacks, we have established a policy to continue repurchasing shares until they account for 10% of the total number of shares outstanding.

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Finally, I would like to mention the organization. We believe that making investments in AI is closely related to making investments in AI human resources, including internal reskilling, the creation of an AI organization across the Group, and increasing the ratio of AI human resources, especially engineering human resources. We also need to increase the ratio of AI personnel, especially engineering personnel. As for the human agent, we are already seeing an increase in this area, and we would like to further increase productivity while managing both the number of employees and productivity per employee. As I’ve mentioned several times before, we plan to establish the virtual company system as a strategic unit within HR and life service, appointing a company head for each unit, and manage the organization as a cohesive, organic whole. We believe that this will lead to the creation of the next generation of CEOs, and we also believe that there are areas where waste has been generated by each company, which will lead to cost reductions in these areas. Finally, as I have been saying for a long time, in order to materialize our M&A strategy, we need to increase the number of management personnel, and we will further strengthen our efforts from training to hiring. This may be a trend among shareholders, but we would like to strengthen the alignment of shareholder value and executive compensation. Rather than fixed remuneration, we would like to increase the ratio of performance-based remuneration and stock-based remuneration in the future.

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Finally, I will explain the earnings forecast for this fiscal year. We are targeting revenue of JPY33.5 billion, EBITDA of JPY8.32 billion, and operating income of JPY6.43 billion. In terms of trends, VHR was able to finish with growth, so we project that the top line will grow by 15%, same as the previous year. As for the profit, we are aiming for about 10% growth year-on-year. By business segment, vertical HR, which I mentioned earlier, will be set to perform 123% better than the previous year, which may look a little strong, but we are expecting the effects of M&As in the previous fiscal year. We are looking forward to a solid 8% increase in the life service business.

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As for our financial strategy and strategic investment, we are considering shareholder returns based on dividends, rather than share buybacks, since we were able to invest about JPY3.08 billion in M&A last year. We plan to increase the dividend to JPY13.5 per share, with a payout ratio of over 30%. We would like to increase our corporate value not only through solid performance but also by increasing returns. That is all for a brief presentation of the mid-term business plan, a review of the second mid-term business plan, the announcement of the third mid-term business plan, and the earnings forecast for this fiscal year. Thank you very much for your kind attention. Hatano: That concludes the explanation.

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Question & Answer

Hatano [M]: We will now move on to the Q&A session. We have received three questions and will read them out in order. Participant [Q]: This time, you have come up with the concept of ZIGExN Matching Agent, but is this positioned as a tool to improve the business efficiency of existing businesses? Or do you have a vision to change the revenue structure itself in the future, from sending users and advertising model to a business agent and results-responsible model? Hatano [M]: Since this is a larger question, we would be happy to answer it one question at a time. Hirao [A]: I will answer the question. I assume your question is about what the concept of ZMA actually entails. Rather than a tool like SaaS— though I believe they used to refer to it as BPaaS—we’re currently exploring ways to expand our industryspecific FDE-style model. To address your specific inquiry, we’re developing a model where we provide business process outsourcing using a combination of software and human resources, while aiming to increase the proportion of software as much as possible. In a similar way, we are considering the possibility of developing a model that combines consultants and AI tools for existing clients or in specialized areas. Participant [Q]: I have the impression that while the current growth is driven by the human resources area, mainly Ties, profit growth is also dependent on relatively labor-intensive aspects such as headcount recruitment and PMI. In order to achieve the EBITDA of over JPY12 billion, which part of the structure do you want to change to one that will grow even without an increase in the number of employees? Hatano [M]: Hirao will answer the question as well. Hirao [A]: As for the human agents, I think you can see from the personnel ratio of the previous term that the number of salespeople has been increasing rapidly. In the future, I think that the important part in a software company will be sales and a builder who makes programs. We believe that a company with an ever-increasing ratio of builders and sales will grow strongly, and I believe that this is the line side of the so-called line and staff. In the past, managing people in marketing, direction, designing, and engineering and developing their skills equally were linked to revenue, but now, in this age of AI agents, the productivity of those who create programs has increased dramatically. But even if you create it, if it is BtoB, you have to sell it, and you have to lock in the place where you sell it. I think that is what Palantir is doing now, but if the builder or sales increase significantly, this is a driver of increased revenue. On the other hand, the other areas that you asked about should be more and more efficient, and we are moving toward this trend through reskilling in the areas of making and selling. We would also like to consolidate corporate costs.

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For example, there are some tasks in direction and marketing that do not need to be done by human hands. While reskilling in this area, I think it is important for us to be able to become an organization that can devote its volume to either making or selling products. Participant [Q]: Traditionally, I think ZIGExN has focused on its strengths in SEO and sending user optimization, but as AI utilization continues to advance, I feel that decision-making data and post-closing data will become more important than simply attracting users. Which data does the Company hope to accumulate as strategic assets? Hatano [M]: Hirao will reply to this as well. Hirao [A]: As part of ZMA’s strategic evolution, our goal of expanding our value chain involves gathering the data you mentioned. Under our 2nd Mid-term Management Plan, 'Z CORE,' we have successfully expanded our value chain—moving beyond traditional lead generation to ensuring successful recruitment through human intervention. However, I suspect that simply hiring people might not be enough; they might not perform well or could leave shortly after joining. The current state of HR services in the world today is that they don't have data to that point yet. This could include data on whether those employees are performing well, onboarding data, or—in the case of sales and marketing—information on which customers are loyal or have high LTV. We have been doing business on a per-lead basis, so we need to become more outcome-based and change our business system while taking data. Also, existing SaaS, POS, etc. have data, but in the context of orchestrating the data itself, I think that the context of AI this time is not only about first-mover advantage. This is an area in which ZIGExN, which originally came from data aggregation, excels, so I believe that we can support optimal marketing and recruitment by moving back and forth between dispersed data, such as POS data and customer CRM data, or macro data. It would be best if all the agents could collect all the data they need, but if they can go back and forth between actively collecting data and producing good outputs, I think this could be a very interesting project over the next five years. Hatano [M]: I received two additional questions. Participant [Q]: I have the impression that M&A has so far focused on contributions to territory expansion and sales growth, but going forward, assuming the ZMA concept and AI utilization, I feel that data acquisition and operational acquisition will also become more significant. Are you seeing a change in the criteria you emphasize for future M&A? Hatano [M]: Hirao will reply to this as well. Hirao [A]: What we focus on in M&A is the customer base and the strengths of the Company, including the operations, the expertise, and whether we can develop those strengths or not, and whether our strengths can be used by them or not. We recognize significant potential in companies that possess innovative operational mechanisms for AI agents and deep expertise. Our focus is on delivering value to 'real-world' domains—areas where traditional DX has yet to achieve meaningful improvement.

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We believe that companies with high AI expertise will be more likely to hit our radar, so we would like to work with companies that have the right combination of customer assets and strength. I think there is a possibility that it will become more AI-oriented. However, I believe that there are still many more interesting areas to be explored, and since there are people from a variety of business categories, I think there are many positive aspects, such as expanding our sourcing channels. Participant [Q]: The current mid-term plan shows revenue, EBITDA, ROE, etc., but on the other hand, I feel that it is also a phase of changing the business structure itself. What are the most important KPIs for the Company in the medium to long term? For example, where can we look in terms of closing rate, LTV, CAC, productivity, data accumulation, etc., to determine if structural transformation is underway? Hatano [M]: Hirao will reply to this as well. Hirao [A]: While the market trend toward performance-based models is something we have focused on since our IPO, we believe the required level and depth of these 'outcomes' are now reaching new heights. It wasn’t just about lowering the marketing CPA; we also need to look at whether our efforts were actually contributing to customer revenue. Regarding recruitment, we have evolved from simply tracking 'the number of applications' to successfully guiding 'how many candidates were actually hired' over the five-year period of our 2nd Mid-term Management Plan. Alongside the depth of these outcomes, the business side considers the actual volume of outcomes and its consistent growth to be our primary KPI. On the other hand, we will be mixing our two businesses, and I have written today about the productivity of our human agents and how it has increased from the first year to the fourth year, as well as the increase in the number of employees at Ties. I believe that it is very important to see if the productivity of human resources will increase. On the other hand, regarding AI, our revenue is currently coming from conversions, which are digital revenue, so the two may seem similar in that sense. We believe the key is how much AI related revenue will grow. We haven't decided on the scope of our disclosures yet, but for us, the point will be how far we have truly progressed in this transformation. Hatano [M]: Since there seem to be no additional questions, ZIGExN Corporation, I will close the web presentation. Thank you for the kind attention. Hirao [M]: Thank you. [END]

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Document Notes 1. 2. 3.

Portions of the document where the audio is unclear are marked with [inaudible]. Portions of the document where the audio is obscured by technical difficulty are marked with [TD]. Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides an answer from the Company, or [M] neither asks nor answers a question.

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4.

(A) This document has been transcribed based on English language audio provided by the Company. (B) This document has been transcribed based on interpreted audio provided by the Company. (C) This document has been translated by SCRIPTS Asia.

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