Hennge (4475) Q4 2024 earnings summary

Executive summary

• Net sales rose 23.5% year-over-year to JPY 8.37B for FY2024, in line with forecasts, driven by strong HENNGE One growth, which accounted for 92.5% of total sales.

• Operating income increased 43.4% year-over-year to JPY 1.02B, with net income up 62.6% to JPY 827M, reflecting improved margins and extraordinary income in Q3.

• HENNGE One added 341 contracted companies and 114K users, with ARR up 26.3% to JPY 8.75B and ARPU rising 20.5% to JPY 3,508, supported by a price revision.

• Recruitment challenges limited net employee growth to 28, below the planned increase of over 50.

Financial highlights

• Gross profit increased 23.9% year-over-year to JPY 7.04B, with gross margin improving to 84.1% due to higher ARPU despite increased infrastructure and security costs.

• Operating expenses and SG&A rose year-over-year, mainly from higher personnel, recruitment, and advertising costs.

• Cash and cash equivalents at year-end were JPY 6.33B, up from JPY 4.59B, with strong operating cash flow.

• Basic earnings per share increased to JPY 25.67 from JPY 15.75 year-over-year.

Outlook and guidance

• FY2025 net sales are forecast to grow 24.8% to JPY 10.44B, with operating income expected to rise 55.1% to JPY 1.57B and net income to increase 34.1% to JPY 1.11B.

• HENNGE One ARR is targeted to exceed JPY 10B in FY2025 and JPY 20B by FY2029, with a long-term goal of JPY 100B ARR and 50% operating margin by FY2035–2037.

• Dividend forecast for FY2025 is JPY 4.00 per share.