Lib Work Co.,Ltd. Q2 FY2026 earnings call

3D Printer Housing Development & Commercialization

• Successfully obtained a patent for its soil-based 3D printer housing technology just 6 months after filing, far faster than the average 2-year patent approval timeline. The patent covers 3D printed homes constructed primarily from soil and its proprietary material composition, creating intellectual property protection against future competitors developing similar soil-based products.
• The approved 100 square meter 3D printed home is the largest of its kind in Japan, meets all Japanese Building Standard Act requirements, and achieves the highest Level 3 seismic resistance rating (1.5x the requirement for a Level 7 earthquake). It uses no cement, produces approximately 50% less CO2 emissions than a standard concrete home, and can be demolished on-site with no need for special industrial waste disposal.
• After receiving feedback that the 60 million yen premium edition model was too expensive, the company is developing the 20 million yen range "Lib Earth House model B" standard edition, an 85 square meter unit priced at roughly the same or slightly below the cost of a comparable wood-frame home. The company has a long-term target of developing a 10 million yen range model to capture greater market share.
• High demand interest has been observed in Southeast Asia, where the 3D printing construction model addresses industry pain points of poor labor quality control and extended construction timelines. The company is currently in discussions with a local Southeast Asian developer that starts 10,000 units annually, and management notes that 3D printed housing could penetrate the region faster than Japan.

Platform Business Progress

• My Home Robo: The company is developing an image generation AI feature that will allow users to customize roof shapes, exterior colors, and interior designs on demand, with a target launch within 6 months to improve user experience. Management addressed concerns that the rise of general-purpose generative AI would lead to increased churn, noting that generative AI is not widely adopted in the Japanese construction industry, and integrating the capability directly into My Home Robo will drive industry adoption.
• niko and ... EDIT HOUSE: Unlike traditional franchising, the model only provides brand licensing with no required material supply, creating a capital-light, high-margin operation. The brand has demonstrated strong pull with consumers, with one partner model home drawing 40 visitor groups in its opening week and another drawing 100 groups, an extremely strong result amid an industry-wide decline in model home foot traffic. The company targets expanding to 50 locations over the next several years, with future expansion into other brand partnerships, and new segments including condominiums and renovation.

Marketing & Digital Initiatives

• The company's official YouTube channel has surpassed 150,000 subscribers and earned the YouTube Silver Play Button for crossing 100,000 subscribers, a rare achievement for a corporate channel in the housing industry. Estimates indicate roughly half of all consumers actively searching for a new home in Japan have watched at least one of the company's videos.
• Starting in April 2026, the company will roll out a new lead generation feature that allows viewers to request property price estimates and detailed drawings directly via links in the video description, eliminating the need to navigate to the company's main website to inquire. Based on current viewership levels, management estimates this could generate 50 to 500 information requests per video, a meaningful volume of new leads.

Profitability & Cost Management

• The company maintains a proprietary housing SPA (Specialty Retailer of Private Label Apparel) model where it directly sources raw lumber from forests, processes lumber into cut columns in-house, and completes all production steps internally. This full in-house process cuts costs compared to the industry standard of sourcing pre-cut parts from third-party factories.
• Current lumber yield is 45%, and management is targeting to increase this to 60%, which would boost overall profit margin by approximately 5%. The company is also expanding in-house production for foundation construction, framing, and plumbing to reduce outsourcing ratios, using foreign trainee employees to cut labor costs while training workers to meet Japanese quality standards.

Technology & R&D Collaborations

• Collaborating with a Canadian AI company to develop a custom AI that can generate full custom home floor plans from natural text descriptions of customer requirements, leveraging the company's proprietary database of 10,000 Japanese home plans to train the model. General-purpose AI like ChatGPT and Gemini cannot generate Japan-appropriate floor plans due to differing living layout norms, so this capability will fill a gap in the market. The tool is expected to launch within the current calendar year and will be made available to partner construction firms.
• Discussed a potential collaboration with a Canadian physical AI firm to add sensor-equipped physical AI to 3D printer nozzles, which would automatically correct for small on-site deviations during construction, potentially enabling fully unsupervised automated construction in the future.
• Recently launched a collaborative high-end villa product LIVELY VILLA Noki with Teijin, featuring a 3-meter cantilevered eave that is impossible with traditional wood-frame construction, enabled by Teijin's carbon-reinforced wood technology. The company sees strong demand for this product in the luxury villa segment and will expand into non-residential wood construction including villas and inns to grow the customer base.

Organizational Strategy

• Uses AI to conduct first-round interviews to handle large application volumes (over 3,000 applications this year), which has been well-received by candidates who feel more comfortable speaking to AI than older senior hiring managers, and provides unbiased, consistent evaluations. All first-round interviews are recorded for later human review to avoid missing strong candidates.
• Operates with a small 3-4 person unit structure that creates clear accountability and enables early leadership development, with new graduates eligible to become unit leaders as early as their second year. The company has an average employee age in the 20s, and the unit structure accelerates talent development.
• Uses electronic manuals to share knowledge company-wide, allowing employees to search for process guides on mobile devices to avoid knowledge silos and accommodate younger workers who prefer self-service over asking senior colleagues for help.
• Provides stock options to all employees, not just executives, to align all staff with shareholder and business growth objectives, under a "all-employee management" philosophy. The company targets a future listing on the Tokyo Stock Exchange Prime Market.

Crypto Asset Holdings

• The company currently holds 500 million yen worth of Bitcoin, purchased as part of a long-term asset diversification strategy to hedge against the erosion of yen asset values amid 3% annual inflation. The unrealized valuation loss from the purchase price (average 16-17 million yen per Bitcoin, current price 10-11 million yen per Bitcoin) is a non-cash accounting entry, and the company has no plans to sell, holding for a 20-30 year horizon. Management is open to diversifying into other alternative assets including overseas real estate to achieve a consistent return above 3% annually.

1. Core Custom Built Detached Housing Segment: Reported total net sales of 6.899 billion yen for the first half of the 2026 June fiscal year, down 14.5% year-over-year from the prior period's 8.07 billion yen. Operating income fell sharply from 378 million yen to 92 million yen, driven by a 1 billion yen reduction in gross profit tied to lower sales and increased fixed costs. However, per-unit gross margin remained unchanged from the prior year at its historical level, with profitability maintained via the company's in-house SPA model. Recurring profit turned negative at -2 million yen, primarily due to an unrealized valuation loss on the company's Bitcoin holdings. Year-to-date orders are up approximately 10% year-over-year, indicating strong underlying demand that is expected to flow into sales in the second half of the fiscal year and next fiscal year. 2. 3D Printer Housing Business: This is an early-stage growth segment that has commenced sales in January 2026, with purchase reservations currently accumulating ahead of formal contract finalization after construction permit review. The business has received over 1,800 inquiries globally since launching its 100 square meter model home in July 2025, including interest for domestic construction, business partnerships, franchising, and overseas market entry. 3. Platform Segment: a. My Home Robo: A SaaS monthly subscription service that has been adopted by over 200 construction firms across Japan, with ongoing talks about adoption from a major large-scale home developer. b. niko and ... EDIT HOUSE: A brand licensing business for construction firms that currently operates 21 model houses nationwide, generating monthly revenue of 550 thousand yen per licensed location. The business is run by just 2 full-time employees, making it a high-margin, low-overhead segment. No segment-specific revenue contribution percentages are provided in the transcript.

• Full fiscal year 2026 operating income is expected to recover to approximately 500 million yen by the end of the full fiscal year.
• Compared to the previous guidance issued November 12, 2025, full year recurring profit has been revised down by approximately 100 million yen due to the unrealized valuation loss on Bitcoin holdings, with no other material changes to core revenue and operating profit guidance.
• The mid-term management plan consolidated performance targets have been revised to account for prolonged construction permitting timelines after the Building Standard Act revision. The original targets for the platform business's recurring revenue streams (My Home Robo and IP licensing business) are maintained unchanged, as these segments are progressing as planned.
• Management expects solid growth for the next fiscal year, as orders have been accumulating steadily to offset the delayed sales from the first half of 2026.
• Management does not expect construction permitting timelines to return to the previous average 2-week level, and will operate under the new baseline of at least 1 month permitting timelines going forward.

• The 2025 April revision to the Japanese Building Standard Act eliminated the "Category 4 Exception" that allowed simplified permitting for small-scale residential construction. Permitting timelines have extended from an average of 2 weeks to 1.5 to 2 months, a 1 to 1.5 month extension, which has delayed construction timelines and pushed expected revenue recognition into future periods, causing the year-over-year sales decline in the first half. Third-party review agencies and local governments have not caught up with the increased workload from the new requirements, so the extended timelines are expected to persist.
• Bitcoin price volatility creates quarterly swings in recurring profit, as unrealized valuation gains and losses are recorded each quarter. While the company holds Bitcoin for the long term, short-term price declines will negatively impact reported profit in the period, just as price increases will improve reported profit in periods of price gains.
• The company is investing heavily in 3D printer housing and new technology R&D in the near term, which increases selling, general and administrative costs and suppresses near-term operating profit. Management chose to continue this investment rather than cut spending to improve near-term profit, as it views this period as a critical growth inflection point.

No questions or answers from an analyst Q&A session are included in the provided transcript.