Pacific Net Co.,Ltd. Q3 FY2026 earnings call

• Core Business Model and Competitive Advantage

  • Pacific Net provides end-to-end lifecycle management (LCM) support for IT devices (from procurement, deployment, operation, maintenance, recovery, data erasure to reuse and recycling) for enterprises, government agencies, and educational institutions, covering device subscription, initial setup, helpdesk, replacement unit arrangement, and end-of-life processing.
  • The company operates 7 technical centers across Japan to deliver one-stop LCM services, distinguishing itself from fragmented competitors that only cover individual stages of the IT device lifecycle.
  • The overall stock revenue ratio increased from 19.9% (2017 May fiscal year) to 71.0% (2025 May fiscal year), with recurring revenue continuing to rise.

• Industry Growth Drivers

  • Industry forecasts project the subscription share of domestic PC deployments in Japan will grow from 8% (2016) to 13% (2026), with subscription PC shipment volumes doubling from 480,000 units to 960,000 units.
  • Worsening information systems (infosis) personnel shortage at Japanese enterprises drives rising demand for outsourcing routine IT device management work: the Ministry of Economy, Trade and Industry estimates Japan will face a shortage of 790,000 IT personnel by 2030, creating sustained favorable demand for the company's outsourced services.
  • Windows 11 migration has boosted ITAD demand: the company has seen increased inflows of used IT devices driven by OS update demand, and rising new PC prices have lifted market prices for used PCs, benefiting the ITAD segment.
  • Both core subscription device business and ancillary IT services are growing, expanding revenue opportunities beyond just device leasing.

Based on 2025 May fiscal year external customer revenue: 1. IT Subscription Business: accounts for 70.6% of total revenue. In the 2026 May fiscal year third quarter, long-term IT subscription revenue grew 29.2% year-over-year, the number of leased PC units grew 17.4% year-over-year, and overall IT service revenue grew 24.0% year-over-year. 2. ITAD Business: accounts for 25.5% of total 2025 May fiscal year revenue. 3. Communication & Device Business: accounts for 3.9% of total 2025 May fiscal year revenue.

• For the full 2026 May fiscal year, management upward revised full-year guidance to 10.3 billion yen in total revenue and 1.35 billion yen in operating income, incorporating the tailwind from Windows 11 migration-related ITAD demand.
  • Management expects a 9th consecutive year of dividend increases, with a projected full-year annual dividend of 52 yen per share.
  • The company maintains a stated dividend policy of targeting a payout ratio of 30% or higher, and a Dividend on Equity (DOE) of 5% or higher.

No explicit risks or operational failures are discussed in the provided transcript.

No formal question and answer section is included in the provided transcript.