3915.T

• Overall Financial Performance:

  • Total consolidated revenue grew 13.5% year-over-year in FY26, meeting the revised full-year guidance issued in Q3.
  • Operating profit hit a new all-time high, growing 7.4% year-over-year even after absorbing costs from aggressive upfront investments completed during the period.
  • The balance sheet shows growing assets driven by continued software investment and pre-expensed costs related to the upcoming head office relocation.

• Strategic Partnerships:

  • Launched the joint NTT DATA Salesforce Hub organization with NTT DATA one year after announcing their capital and business alliance, which reached 0.6 billion yen in revenue in FY26 and is now fully operational.
  • Acquired Salesforce license sales business from Mizuho Bank (formerly Mizuho Research & Technologies), and established a new cooperation framework to refer ~500 new customers annually to support their digital transformation.

• New Product Development:

  • Quickly implemented Model Context Protocol (MCP) functionality in its new AI product mitoco Buddy, which has seen strong market reception and is positioned as a core growth product for FY27.

• Group Restructuring:

  • Absorbed unprofitable or underperforming subsidiaries Enoki (AI-focused) and DiceWorks (marketing-focused) into the parent company to improve operational efficiency.
  • Brought Kit Alive, previously listed on the Sapporo Securities Exchange Ambitious market, back into the consolidated group to accelerate its growth with support from NTT DATA.
  • Discontinued the unprofitable US business to refocus on core opportunities, and restructured the relationship between cloud infrastructure subsidiaries Sky365 and BeeX, making Sky365 a subsidiary of BeeX to unify infrastructure service delivery.
  • Launched a new data center in Vietnam to meet growing global customer demand for 3-site disaster recovery solutions.

• Long-Term Innovation Initiatives:

  • Quantum computing algorithm development subsidiary Quemix partnered with hardware vendor Quantinuum, which plans to launch a practical gate-based quantum computer with multiple integrated QPUs by 2028. Quemix is advancing algorithm development for quantum chemistry simulation, CAE automotive simulation, and AI, with active joint research projects, published papers, patent applications, and selected government-funded projects, and is on track to achieve single-year profitability in FY27.
  • Security subsidiary LibelSky received a global award from Google Cloud for outstanding performance in selling and deploying Google security products.

• For FY27 (February 2027), management targets 22.4% year-over-year revenue growth to 34.3 billion yen, and 62.9% year-over-year operating profit growth to 2.5 billion yen. Management notes this target is achievable based on prior investments and confirmed growth drivers, and is not an overly aggressive goal.
• The company expects 0.2 billion to 0.3 billion yen in revenue from the NTT DATA Salesforce Hub joint venture in FY27, with an stretch goal of 0.3 billion yen, and plans to continue growing the partnership over the next 2-3 years.
• The company plans to hire over 200 new employees in FY27, reaching a total consolidated headcount of 1,871.
• Following its progressive dividend policy, the company plans a minor dividend increase to 17.00 yen per share, pending shareholder and regulatory approval.
• The company has officially shifted its strategic positioning from "Cloud Integrator" to "AI Integrator", built around three core business pillars: 1) AI-driven development to deliver faster, higher-quality, lower-cost system development leveraging AI; 2) end-to-end business consulting and system integration to embed AI into customer operations, centered on a human-in-the-loop approach; 3) offering AI platform products such as mitoco Buddy to platform customers. The company also continues to prepare for the future quantum computing era alongside its AI strategy.

1. Solution Business Segment: Revenue grew 13.4% year-over-year, with steady profitable performance, though profit growth fell just short of 10% year-over-year. This segment remains the company's core revenue contributor, holding the majority of total company revenue. 2. Product Business Segment: Revenue grew 14.2% year-over-year, with its revenue contribution share increasing slightly to 8.0% of total company revenue. The segment saw an increased loss gap in FY26 due to aggressive prior-period investments, but management expects it to return to positive profitability starting in FY27. Within the Product segment, the subscription revenue share was 89.6% in FY26, a slight decrease driven by higher initial implementation support fees for new products like mitoco Accounting, which reflects accelerating product adoption rather than a negative trend.

• The ongoing US business discontinuation is a completed response to the material risk of persistent losses from this unprofitable operation, removing this drag on group profitability going forward.
• The shift to AI-driven development will gradually reduce revenue from downstream system development and testing work over time, requiring the company to successfully pivot to higher-value upstream consulting and AI integration work to maintain growth.
• Aggressive upfront investments in new products and strategic initiatives compressed profit margins in the product segment in FY26, with profitability contingent on successful revenue growth and cost efficiency improvements in FY27.

This earnings call transcript provided only management's prepared remarks, and does not include a question and answer section from analysts or investors.