265A.T

• Business Model and Competitive Advantage

  • Hmcomm is a B2B AI company with over 80% of revenue coming from direct contracts with business partners; non-core downstream development is outsourced to enable efficient, fast delivery of high-quality services.
  • The company maintains a unique in-house end-to-end R&D business process, starting from issue-driven R&D, moving through alliances with established companies, joint development, productization, and full commercialization.
  • The core competitive advantage is end-to-end coverage from custom AI solutions to general-purpose AI products: the company identifies and solves client-specific issues, then uses those insights to develop general-purpose AI products that solve industry-wide problems for broad market distribution, creating differentiation from competitors.

• Co-creation Phase Progress

  • The company conducts issue-driven R&D with multiple co-creation partners and business companies after an initial R&D phase, and actively converts development and pilot test results into general-purpose AI products.
  • As of the end of December 2025, co-creation partners increased by 8 companies year-over-year to 44 total, and total projects increased by 86 year-over-year to 152 total, growing the company's access to critical real-world data which is a key barrier to entry in the AI industry.

• 2025 Key Operational Milestones

  • Entered into an agency agreement and business alliance with 双日テックイノベーション, which included adoption of Hmcomm's Terry2 into 双日テックイノベーション's generative AI build and operation support service; the company expects this to serve as a leading promotional case for operator workflow automation via early expansion into the financial sector.
  • Launched facility monitoring for an LNG vaporization plant in partnership with SecondSight, using Hmcomm's abnormal sound detection system FAST-D, for the JFEエンジニアリンググループ, with future expansion to multiple additional sites expected.
  • Launched an AI automatic scoring service for ベネッセi-キャリア's GPS-Academic college student test, marking commercial deployment of the company's AI technology in the education sector.

• Financial Position

  • The company repaid all interest-bearing debt, ended the period with an equity ratio of 80.7%, and operates with no debt, resulting in a solid financial foundation.
  • Cash and deposits decreased due to goodwill recognition from business acquisitions completed in February and August 2025, but still remains at approximately 60% of total assets, leaving ample investment capital available.
  • Operating cash flow remained positive; investment cash flow was negative due to business acquisition expenditures, and financing cash flow was negative due to expenditures for treasury share purchases.

• Inorganic Growth (M&A) Strategy

  • The company launched an inorganic growth strategy in 2025, focused on reinforcing existing strengths and compensating for internal weaknesses, rather than pursuing indiscriminate deals, to capture growth opportunities and address threats amid a rapidly changing market.
  • Based on SWOT analysis, the company has four priority target areas for M&A and capital alliances: 1) expansion into areas surrounding the company's core sound technology expertise, 2) turnaround of underperforming IT development companies, 3) acquisition of capabilities from specialized and highly skilled talent, 4) strengthening the company's recruitment foundation.
  • To support this strategy, the company operates an investment review committee, has established an M&A Strategy Office to improve candidate selection and due diligence quality, and is strengthening organizational capabilities to deliver post-M&A PMI value creation.

• For the 2026 December fiscal year, management expects the investments and business development initiatives (including 2025 business acquisitions) completed in 2025 to deliver full results, projecting that both AIソリューション and AIプロダクト will achieve growth rates exceeding 20%.
  • Full-year 2026 revenue is projected at 1.37 billion yen, a 23% increase year-over-year from 2025.
  • Full-year 2026 ordinary income is projected at 40 million yen, with an ordinary income margin of 3.3%. The main growth drivers for higher ordinary income are expected to be rising AIプロダク customer average prices and increasing AIソリューション project volume.
  • EBITDA, a key metric of cash generation capacity, is projected to be 100 million yen, a 33% increase year-over-year, despite continued goodwill amortization expenses from the 2025 business acquisitions.
  • The expected increase in ordinary profit will be limited due to planned higher costs from stepped-up hiring of specialized talent to support future growth.
  • Mid-term, the company is focused on achieving a market capitalization of 10 billion yen as soon as possible to meet the Tokyo Stock Exchange Growth Market listing maintenance requirement of reaching 10 billion yen market capitalization within 5 years of listing. The company will pursue aggressive investment via both organic and inorganic growth strategies to hit this target.

Hmcomm operates two business segments: AIソリューション and AIプロダクト. For the 2025 December fiscal year, total company revenue was 1.11 billion yen. AIソリューション contributes 61% of total revenue, and performed roughly in line with plan: the segment achieved 162% of full-year project count targets, with the average project price rising to 4.5 million yen driven by the adoption of new large-scale projects. AIプロダクト contributes 39% of total revenue, and missed full-year revenue targets, reaching only 86% of plan, due to delayed customer budget execution and corresponding shifts in project start dates that pushed deployment into 2026. Despite the miss, the average price per AIプロダクト account held steady at 10.2 million yen, and new customer adoption progressed steadily.

• AIプロダクト revenue is subject to delays from customer budget execution timelines, which can cause results to miss planned targets as experienced in 2025.
  • Upfront M&A-related costs (including goodwill amortization and due diligence expenses) plus stepped-up hiring investment can pressure near-term profitability even as the company invests for long-term growth.
  • The company's ability to hit its mid-term market capitalization target depends on successfully executing the positive growth spiral of completing M&As, delivering post-deal PMI value creation, and sustaining ongoing growth investment, which carries inherent execution risk.

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