eWeLL (5038) H1 FY2026 Earnings Analysis: Sustained High-Profitability, Accelerated AI Monetization, and a New Growth Phase Driven by 108% NRR

1. H1 FY2026 Earnings Highlights

eWeLL Co., Ltd. (5038) achieved significant growth in the first half of the fiscal year ending December 2026, reporting revenue of 1.991 billion yen (+24.2% YoY) and operating profit of 946 million yen (+20.1% YoY) . Progress against the full-year guidance (revenue of 4.277 billion yen, operating profit of 1.927 billion yen) stands at 46.6% for revenue and 49.1% for operating profit, with the latter trending 35 million yen ahead of initial projections.

Notably, the company maintained an exceptionally high H1 operating margin of 47.5% . While effectively managing increased development investments and personnel costs, the company’s performance was strongly driven by the growth in contracts for its flagship product, "iBow," and successful upsells to existing clients.

As illustrated in the slide transcript above, the company provides more than just standard medical billing software; it offers an operational system centered on daily nursing records and patient management (CRM). In response to the legal requirement for "consistency between records and billing" mandated by the 2024 medical fee revision, "iBow Receipt"—which enables end-to-end management from documentation to billing—has demonstrated a powerful competitive advantage. This has led to successful migrations from competitor systems and new contract wins with large-scale corporations operating multiple stations.

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2. Unique Billing Model and High-Profitability Foundation

The company’s flagship electronic medical record (EMR) service, "iBow," utilizes a hybrid model combining a fixed subscription with usage-based fees: "18,000 yen monthly base fee + 100 yen per visit."

Home nursing stations operate on a business model that generates approximately 8,500 yen in revenue per visit. The system is designed so that no additional fees are incurred regardless of the number of staff using it. This creates a win-win structure where the more a station increases its visit volume through operational efficiency, the more its revenue grows, which in turn increases eWeLL’s usage-based revenue.

Driven by this billing structure, the average monthly revenue per user (ARPU) rose steadily to 90,900 yen (+5.2% YoY) in the second quarter. Furthermore, the company maintained a high corporate gross profit margin of 76.1% , underscoring its robust earnings foundation.

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3. Disclosure of "NRR 108.0%": A New Metric for Customer Retention and Expansion

Starting this term, the company began disclosing NRR (Net Retention Rate) as a key metric to measure revenue expansion from existing customers. The NRR for its cloud services reached 108.0% in the first half.

This disclosure is critical for investors as it quantitatively proves that the company has entered a phase where growth is not solely dependent on "new customer acquisition," but is instead autonomously expanding through the business growth and upselling of existing clients.

• Expanding Corporations : Significant growth in per-corporate revenue as services scale across multiple stations.
• Growth/Startup Phase Corporations : Support for business scale-up through visit volume growth, AI service adoption, and recruitment/retention assistance.

The company has set a medium-term target of NRR 110% or higher , while maintaining a revenue churn rate of 0.2% , a figure significantly lower than the SaaS industry standard for excellence (under 1%).

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4. Full-Scale AI Monetization and Driving "Medical DX"

eWeLL’s greatest competitive advantage lies in its massive proprietary data assets: "over 1 million cumulative home-care patients" and "over 100 million cumulative home-care visit records" accumulated over 12 years. The application of AI services based on this data is accelerating rapidly.

1. AI Service Adoption : By the end of Q2, the number of stations using AI surpassed 1,600 (approx. 45% of all customers) . The number of healthcare professionals using the service reached 23,670 , meaning approximately 12.9% (roughly 1 in 8) of all home nursing professionals in Japan are utilizing eWeLL’s AI.
2. Productivity Gains : The average annual visit growth rate for AI-utilizing stations was 116.7% , which is 5.7 percentage points higher than non-AI stations (111.0%).
3. Monetization of "AI Visit Scheduling/Routing" : Paid service began in July 2026 at approximately 15,000 yen per month. July saw 246 new billable instances and 273 total contracts , a strong start significantly exceeding the initial target of 200. The company expects to reach approximately 400 contracts by the end of the term, representing over 10% of billable users.
4. New Development "AI Home Nursing Scoring (Tentative)" : A new feature scheduled for monetization in 2026 that automatically analyzes management KPIs for home nursing stations and provides specific improvement measures. It is positioned as a high-value upsell product, benchmarked against standard consulting fees (30,000–50,000 yen/month).

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5. Segment Trends and KPI Progress

Quarterly trends in business segments and KPIs confirm the company’s solid progress.

① Cloud Service Business

• Q2 revenue was 886 million yen (+20.4% YoY) .
• The number of contracted stations reached 3,736 (+13.7% YoY) , with a net increase of 103 stations in Q2.
• With the total market exceeding 20,000 stations, the company’s market share has risen to 18.6% (targeting 20% by the end of 2026).
• The account churn rate relative to the number of contracts at the start of the period was 1.76% , showing an improving trend from the previous year (1.85%) and the year before (2.07%).

② Cloud BPaaS Business

• The BPaaS business, which provides fully remote back-office outsourcing, saw Q2 revenue of 147 million yen (+36.8% YoY) , maintaining high growth.
• The number of active cases increased from 273 in Q1 to 297 .
• Due to improvements in per-capita productivity, the gross profit margin for the BPaaS business improved to 65.2% .

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6. Future Growth Strategy and Medium-to-Long-Term Outlook

Within the community-based integrated care system promoted by the government, the shift toward home medical care and nursing—which offers potential medical cost savings of approximately 35%—is positioned as a "national policy." As the number of stations nationwide continues to grow, the company plans to continue aggressive growth investments, supported by its robust financial position and cash-generating capability (a lean, elite team of 118 employees).

• Growth Investment Areas : Prioritizing "AI development" utilizing accumulated real-world data, "strengthening customer success and sales structures" to drive NRR, and allocating talent to the new "CareLog-t" business.
• Consideration of Price Revisions : While no price increases have been implemented since the service launched in 2014, the company is considering a review of its pricing structure within the year, taking into account the current cost environment and medical fee revision trends.
• Long-Term Vision : With targets of over 6 billion yen in revenue by 2028 and a 50% market share by 2040 , the company aims to evolve into a "Home Medical Care Platformer" that connects information across the entire chronic care spectrum, extending beyond the home nursing domain.