Japan Markets ViewWeathernews (4825) Boosts Efficiency with AI, Operating Profit Margin Nears 20%

 

[Chiaki Yumi, QUICK Market Eyes] The stock price of Weathernews Inc. is gaining momentum. The company has recently boosted efficiency through the introduction of artificial intelligence (AI), further improving its profitability. Its operating profit margin is now approaching 20% by refining its unique business model of supporting client operations with weather data.

AI Utilization Enables Revenue Growth without Increasing Headcount
In an age where detailed weather forecasts are readily available on television, the strength of Weathernews lies in its ability to transform weather data into profitable information. For example, the company boasts a 40% share of the global market for maritime navigation weather services, which support ships’ safe and efficient navigation according to the day’s weather conditions. This service uses computers to calculate the best routes based on a vessel’s speed, fuel consumption, and sailing schedule and provides route guidelines. Weathernews supports voyages by providing recommended routes as needed for vessels underway as well as before departure.

The company provides this service to a wide range of clients, including those in the maritime, aviation, and retail industries. Convenience stores and supermarkets utilize its weather forecasts to adjust their in-store product assortments. Weathernews analyzes the impact of weather changes on product sales by cross-referencing historical retailer sales data with corresponding weather data in advance, and provides demand forecasts for a wide range of items.

To provide comprehensive services to its clients, the company previously had a labor-intensive structure where dedicated department personnel monitored and reported weather conditions for contracted companies on a shift basis. This created a dilemma: as the number of clients grew, more personnel were needed to handle the workload, which structurally lowered the profit margin.

 

*Compiled based on Weathernews’s financial statements

 

Weathernews is using AI to overcome this challenge. By leveraging AI, the company has reduced the time spent on periodic report preparation and introduced automated voice response for telephone calls, including the development of canned answers that correspond to customer attributes. Through digital transformation (DX) of its operational processes, Weathernews successfully reduced monthly work hours by 7,000 as of the end of May 2025. In fact, for the fiscal year ending May 2025, its operating profit margin reached 19.2%, bringing the target set in its medium-term management plan (20% or higher) within sight.

Expanding Client Base with SaaS, Fueling Top-Line Growth
With a structure now in place that facilitates profitability, top-line growth will be easier to evaluate going forward. Gaining attention is the expansion of its Software-as-a-Service (SaaS) offerings, which provide software via the cloud. Previously, Weathernews offered services on a per-company contract basis, leading to a service deployment centered on large corporations. The company now offers a pricing structure clearly designed based on product scale. This makes it easier for small and medium-sized companies to use the products.

The number of users for WxTech (pronounced “weather-tech”), a service that provides weather data analysis, forecasting, and system development, nearly doubled to 539 companies in the fiscal year ending May 2025, up 260 companies from the previous year. For the fiscal year ending May 2026, the company expects the number of users to grow to 800 companies, and sales to expand to about JPY1.8 bn.

 

*Source: Weathernews, “Supplementary material on financial results for FY2024”

 

With the frequent occurrence of extreme weather events, situations where business operations become difficult based on conventional wisdom alone are likely to increase. Weather information could come to play a crucial role in business operational decision-making. In our daily lives as well, the need for weather information increases during the summer months, when extreme heat and flood damage frequently occur. This is likely to further boost the stock’s upward momentum.
(Reported on July 14)

 

Discover datasets unique to the Japanese equity market
Visit QUICK Data Factory: https://corporate.quick.co.jp/data-factory/en/

Back to Japan Markets View Top