TECMIRA HOLDINGS INC. Q2 FY2026 earnings call

• Overall H1 Performance

  • Consolidated revenue was 4.875 billion yen, down 12% year-on-year, driven by the maturing sales cycle of last fiscal year's hit new game release. Consolidated operating profit was -180 million yen, and net profit was -206 million yen.
  • Increased costs stemmed from goodwill amortization following the acquisition of Retool (consolidated this fiscal year), and expanded corporate overhead for business expansion and new business research.
  • Intangible fixed assets increased due to higher development investment for upcoming game titles scheduled for future fiscal years.

• Strategic Priorities

  • The company's core fiscal 2026 strategy is to grow profit without a new major game release, by achieving profitability for existing invested businesses and expanding already profitable businesses.
  • The company classifies business by owned vs. contracted model: owned businesses (consumer/content, aiwa, SaaS, X-Tech services) are targeted to become the core profit driver, while contracted businesses (primarily IoT ODM) are being shrunk as resources shift to owned business.
  • As of H1, aiwa, SaaS, and consumer/content are already profitable. The company targets full-year profitability for all unprofitable X-Tech sub-segments, except Retool's HRTech business which is already profitable.

• Life Design Business Downstream Initiatives

  • KaroMama Plus wellness service has expanded AI-powered meal recognition from 300 to 150,000 menu items, with improved accuracy. The company will launch B2B SaaS licensing of KaroMama Plus capabilities to third-party healthcare operators, with large enterprise deals already in progress for H1.
  • Retool will launch a freemium version of its work style visualization tool in H2. HABUKU recruiting tool is already performing very well, and will continue expansion.
  • The bundled Crayon Shin-chan game collection is scheduled for overseas release at year-end, with currently strong pre-orders. Existing Switch games have been ported to mobile for distribution via Sony's Crunchyroll Game Vault, which will contribute H2 revenue.
  • KarteConnect medical record product is already deployed and well-received at TsuruKame Clinic, and sales expansion to additional clinics/hospitals is being accelerated via trade show outreach.

• AI & Cloud Business Downstream Initiatives

  • The company is calling FY2026 the

1. Life Design Business: Revenue was 1.214 billion yen (down from 1.835 billion yen year-on-year), accounting for 24.9% of total consolidated revenue. Segment operating profit was -106 million yen, compared to +25 million yen year-on-year. The decline was driven by a 136 million yen profit drop from the aging of last year's hit new game; newly consolidated Retool added a small positive offset, while HealthTech remained in the red. 2. AI & Cloud Business: Revenue was roughly flat year-on-year, accounting for approximately 30% of total consolidated revenue. Segment operating profit was 66 million yen (down from 109 million yen year-on-year). The core SaaS sub-segment (OfficeBot, cloud address book) achieved sustained profitability in H1, delivering a 68 million yen year-on-year profit increase, but 111 million yen in increased R&D investment for AI solutions dragged the full segment into a net profit decline. 3. IoT & Device Business: Revenue was roughly flat year-on-year, accounting for approximately 45.1% of total consolidated revenue. Segment profit was flat year-on-year. Production base restructuring (shifting from an in-house Chinese factory to third-party Chinese factories and a new Vietnam facility) improved gross margin, but 78 million yen in increased multi-site management costs offset the gain. The in-house aiwa brand sub-segment returned to profit in H1, and outperformed year-on-year in both quarters, while the ODM sub-segment saw declining revenue but improved profitability amid restructuring.

• Full-year 2026 consolidated guidance is maintained at 11.5 billion yen revenue, 680 million yen adjusted EBITDA, 200 million yen operating profit, and 100 million yen net profit. No change to the overall full-year forecast, despite weaker H1 results.
  • H2 is projected to deliver 6.625 billion yen revenue and 380 million yen operating profit, turning the full-year result to net positive operating profit.
  • Segment forecast revisions: IoT & Device Business full-year profit guidance is raised to 230 million yen from the original 135 million yen, due to smoother-than-expected production restructuring and stronger aiwa profitability. AI & Cloud Business full-year profit guidance is lowered to 300 million yen from the original double-digit growth target, due to slower-than-expected adoption of custom enterprise AI solutions. Life Design Business full-year profit guidance is slightly lowered due to slower-than-planned monetization of KarteConnect.
  • The 2027 medium-term target of 14 billion yen revenue and 10% operating profit margin is maintained unchanged. New full-year game launches are planned starting from next fiscal year, with the development pipeline now structured to support at least one release per year.
  • AI solutions is targeted to reach break-even in H2, after generating H1 losses.

• Large custom enterprise AI solution projects are seeing slower customer adoption than expected, with clients remaining in a wait-and-see mode despite broad industry AI hype, forcing a downward segment profit revision.
• Monetization of the KarteConnect medical product is progressing slower than planned, dragging down Life Design Business full-year profit guidance.
• The timing of the next major new game launch was shifted to next fiscal year to wait for clearer adoption trends for the Nintendo Switch 2, meaning no major game contribution to FY2026 results.
• Multi-site production management after global restructuring has generated higher-than-originally planned overhead costs, offsetting gross margin gains from the restructuring in H1.

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