DAIWA COMPUTER CO.,LTD. Q4 FY2025 earnings call

Core Financial Results

• Total company revenue reached 3.204 billion yen, down 2.6% year-over-year but 0.3% above the revised full-year plan. Operating profit hit 571 million yen (up 1.2% YoY), ordinary profit reached 619 million yen (up 3.1% YoY), and net profit attributable to parent company shareholders hit 417 million yen (up 22.0% YoY, boosted by the reversal of prior-year impairment charges). All profit metrics hit new all-time records driven by cost improvements and profitability reviews.

Strategic Positioning & New 5-Year Mid-Term Plan (DCX 2030)

• Management framed the plan as the company's "second founding period," targeting 4.5 billion yen in total revenue and 700 million yen in operating profit by 2030. The plan prioritizes stable, achievable growth rather than rapid unsustainable expansion, with a focus on three core growth areas: cloud services, smart agriculture, and AI utilization, all anchored by the company's long-standing core software development capability.
• The first 3 years of the plan will focus on structural reform and active investment across business and human capital. While near-term operating profit will face pressure from investment costs, management will maintain top-line growth and ensure sufficient profit to sustain stable shareholder dividends. Investment in this period will lay the groundwork for accelerated growth after 2030.

Key Growth Initiatives

• Core Software Development: Maintain the company's long-standing focus on quality, continue the "Speed, Quality, Gutsy (S.Q.G)" operational framework, and integrate AI to improve delivery efficiency. The segment maintains long-term stable core partnerships with leading Japanese SIers SCSK and Otsuka Shokai, with growing inquiries and contracts from new clients.
• Cloud Services: Strengthen platform security to defend against cyberattacks, invest in marketing and inside sales to address historically low brand recognition, and upgrade infrastructure to improve service value for the core Platinum School (education management) and Platinum Fitness (fitness club management) product lines.
• Smart Agriculture: Address Japan's structural agricultural challenges (labor shortages, aging population, low food self-sufficiency) with ICT-enabled solutions. The company has developed three new commercial products in the 2025 fiscal year: premium limited-edition melon brand i MELON, upcycled melon liqueur "Tsuki to Melon", and pesticide-free whitefly pest control device "Pika Toru", which has received strong media and market response. The company is also commercializing NFC-based product traceability tools, and is currently in a transition period moving from R&D to full commercial business operations.
• AI Utilization: Focus on internal application of generative AI rather than developing foundational AI models. The company has launched an internal AI task force, established use guidelines to prevent information leakage, required all employees to pass an AI understanding test (100% pass rate achieved), and implemented a rotation program that places young volunteers in the AI team to test use cases before returning to operational departments. Management targets increasing the share of AI-capable engineers to 50% of the total technology workforce by the end of DCX 2030.
• Human Capital Strategy: Operate under the "Diamond Management" philosophy that frames employees as the company's core assets. The company will restructure training and development programs, implement skill visualization and targeted skill investment, and upgrade office environments to support employee engagement and retention.

New Product Launches in FY2025

• Launched NFC Link2, an NFC-based post-purchase customer engagement tool that has received strong inquiries from winemakers and apparel brands. Completed full rollout of safe internal generative AI utilization as noted above.

1. Software Development Related: Revenue of 2.397 billion yen, a decrease of 128 million yen year-over-year. Operating profit of 457 million yen, an increase of 16 million yen year-over-year. This segment accounts for 75% of total company revenue.
2. Service Integration Related: Revenue of 580 million yen, a decrease of 29 million yen year-over-year. Operating profit of 130 million yen, a decrease of 34 million yen year-over-year. This segment accounts for 18% of total company revenue, with its core cloud-based services for education and fitness holding a stable revenue share of over 20% of total company revenue.
3. Other (Smart Agriculture & Other New Businesses): Revenue of 232 million yen, an increase of 70 million yen year-over-year. Operating loss of 15 million yen, representing a 23 million yen improvement year-over-year. This segment accounts for 7% of total company revenue.

• For FY2026 (July 2026), management guides total revenue of 3.205 billion yen, operating profit of 252 million yen, ordinary profit of 281 million yen, and net profit attributable to parent company shareholders of 188 million yen. The guidance reflects planned investment in DCX 2030 initiatives, including workforce reallocation, internal infrastructure refresh, marketing and product upgrades for the Platinum cloud service line, and increased investment in smart agriculture, while maintaining sufficient profit to support shareholder returns.
• Management plans to maintain a full-year dividend of 19 yen per share for FY2026, matching the FY2025 planned dividend. The company will also consider a stock split, depending on market conditions.
• The DCX 2030 mid-term plan maintains a target of 4.5 billion yen in total revenue and 700 million yen in operating profit by 2030, with accelerated growth expected after the initial 3-year investment period.

• The broader macro environment is characterized by high volatility, uncertainty, complexity, and ambiguity (VUCA), driven by factors including rising prices, inflation, yen depreciation, and shifting global geopolitical conditions. Past successful strategies will not automatically work in this new environment, requiring proactive investment and transformation to sustain growth.
• Climate change has increased pest propagation activity in agricultural production, creating production challenges that the company is addressing with new product development like Pika Toru.
• Only a small single-digit percentage of the company's current engineering workforce is specialized in generative AI utilization, requiring significant targeted human capital investment to reach the 50% target by 2030.
• Near-term operating profit will face pressure from planned investments in the first three years of the DCX 2030 mid-term plan, as the company prioritizes long-term growth foundation over near-term profit maximization.
• The smart agriculture new business segment is still in a transition from R&D to full commercialization, and it remains uncertain whether existing technologies will achieve full-scale profitable business operations.

No question and answer section was included in the provided earnings call transcript.