CHANGE Holdings,Inc. Q2 FY2026 earnings call

Alignment with New Administration Policy Priorities

• Economic security focus: 1 year after entering the defense industry, current order book stands at 1.1 billion yen, centered on G-Gravity supporting Ground Self-Defense Force DX, which will remain a key priority going forward.
  • Cyber security: Sailygh leverages its full end-to-end service capability from consulting to operations to support government and corporate cyber security enhancement.
  • Food security: Currently piloting the "Tsunagu Kyushoku" local food for school lunch program in Kisarazu, Chiba, with plans for national expansion to improve farmer incomes and food self-sufficiency.
• Regional revitalization: Will develop furusato nozei frameworks to support new government policies in medical care, education and community development, centered on Furusato Choice.
• Other priorities: Expand administrative DX via the market-leading LoGo Series; address private-sector labor shortages and productivity improvement via DX/AI/automation tools; build strong regional 100 million-yen level companies via business succession M&A.

Shareholder Return and Governance

• The board has committed not to eliminate the shareholder benefit program for at least 3 years to address investor concerns about program continuity. Eligible shareholders holding 300+ shares receive up to 20 thousand yen in annual digital gifts based on holding tenure; total combined yield (benefit + dividend) is 8% based on the closing price as of November 12.
• Executive leadership changes at key subsidiaries to strengthen governance and capture growth:
  • Trustbank (operator of Furusato Choice): Appointed former DeNA director and ex-Ministry of Internal Affairs and Communications bureaucrat Oi as CEO to drive sustainable growth beyond furusato nozei following the October point ban.
  • e-Guardian: Appointed Change CEO Noda as alliance executive to maximize group synergy via DX know-how and customer base utilization.
  • fundbook: Appointed Change Holdings executive Yamamoto to head group partnership strategy to deepen relationships with large financial institutions and accelerate alliance deal flow.

Key Operational Milestones

• Furusato nozei: Did not participate in pre-ban point competition, so saw less September rush demand than competitors; OEM partner GMV share reached 1/3 in Q2, cumulative OEM partnership donations hit 100 billion yen over 2.5 years. Post-ban October-November donation flow has been strong.
• fundbook: Launched large financial institution alliance in September, received 56 qualified lead referrals by mid-November; currently maintaining ~140 front sales staff while focusing on productivity improvement, in growth preparation phase for H2 and FY2027+.
• Beecap: Delivered efficiency gains of 50 minutes per employee daily and 3km reduced daily travel distance for Kumamoto International Airport cart management, with inquiries already received from other airports for expansion, and applicable to medical and corporate asset management use cases.
• Carbon credit: Leverages TCS subsidiary's existing customer base of 240 forestry associations (40% of all national associations) to build end-to-end carbon credit generation and sales support, currently expanding from Tohoku to national coverage.

1. NEW-IT Transformation (民間DX・M&A仲介領域): Added 2.6 billion yen in revenue, with a -2 million yen contribution to core operating profit. M&A brokerage saw a 300 million yen profit deferred to Q3 due to a closing date shift; BPO (e-Guardian) reported lower revenue from a large client sales contraction; DFA Robotics grew sales 32% from large cleaning robot orders; Beecap sees ARR growth of ~140% year-over-year, with strong operational progress. Cyber security revenue increased 13% YoY to 183 million yen, slightly below plan.
2. PublicTech (地方創生領域/パブリテック事業): Added 1.845 billion yen in revenue, with a +656 million yen contribution to core operating profit. Furusato Nozei sales grew 1.67 billion yen, with 440 million yen in incremental operating profit (profit growth trailed sales due to intensified marketing competition). Logistics revenue grew 77% YoY, very strong on rising donation volume; J-Credit (carbon credit) contracts with 4 Tohoku prefectures' forestry associations are expected to generate 110 million yen in annual revenue over 16 years, with 50-60% of total credit value recognized as revenue.
3. Public DX (公共DX領域): Added 1.148 billion yen in revenue, 86.7% YoY growth, outperforming plan. LoGo Series has 969 paid contracts for LoGo Chat (1,537 including free) and 765 paid contracts for LoGo Form; LoGo AI Assistant holds the top installed base in the local government generative AI market. Ground Self-Defense Force DX support via G-Gravity has 1.08 billion yen in orders booked through next fiscal year, up from 50 million yen in FY2025. Overall, total company revenue is 22.2 billion yen, 35% YoY; EBITDA is 3.8 billion yen, 13.4% YoY; operating profit is 2.5 billion yen (-34.4% YoY, distorted by a 1.569 billion yen non-recurring valuation gain in the prior year, core operating profit is +250 million YoY).

• Management confirms that year-to-date operating profit progress is 17.9% of full-year target, in line with the prior year's pace, and expects accelerated growth in the second half, concentrated in Q3, centered on furusato nozei and M&A brokerage.
  • Furusato nozei: After the October 2025 ban on point-based promotions, new entry barriers have risen, and competition will shift to platform differentiation; management expects steady growth as the company holds high share among the 20-30% of donors who do not prioritize points, with the full-year GMV peak still expected in December as in prior years.
  • fundbook: Alliance-driven deal flow has accelerated from October, and the 300 million yen of deferred Q2 profit will be realized in Q3, with the business expected to enter a high growth phase starting in H2 and continuing into next fiscal year.
  • Public DX: The LoGo Series will continue to expand via prefecture-led municipal adoption driven by network effects; defense DX will continue to expand from the Ground Self-Defense Force to other Ministry of Defense organizations and other central government agencies.
  • New growth initiatives: "Tsunagu Kyushoku" will first solidify its position in Kisarazu before expanding to prefecture-wide rollout; Beecap location solutions will accelerate expansion to other airports and medical facilities in the near term.

• Intensified competition in furusato nozei prior to the October point ban led to higher marketing investment that limited profit growth relative to sales growth in H1.
• BPO (e-Guardian) is facing near-term revenue pressure from a large client sales contraction.
• The company's conglomerate discount has pressured share price, as the market has not positively valued its diversified business portfolio.
• Goodwill from the fundbook acquisition has temporarily pushed the risk asset to equity ratio to 91%, near the company's internal 100% limit, though management expects this to improve with full-year profit generation.
• Cyber security and M&A brokerage performance were slightly below plan in H1.

Q: What is the management's view on progress of fundbook's post-acquisition integration (PMI), and what are future prospects? / A: Management says PMI has focused on strengthening direct sourcing and strategic alliances, and alliances are already gaining traction. The company is pursuing a novel companion-style M&A model that provides long-term consulting to raise enterprise value for sellers not seeking an immediate exit, which is new to the industry, and will scale this to drive fundbook profit growth.

Q: After the ban on point-based promotions in furusato nozei changed the competitive environment, why did Trustbank change CEOs, and what is the outlook for market share recovery after weak September demand? / A: The new CEO Oi has deep policy knowledge from his time at the Ministry of Internal Affairs and Communications and existing private sector leadership experience, and will fully focus on expanding Trustbank's business beyond just furusato nozei in the new regulatory environment. Management notes 20-30% of donors do not prioritize points, and the company already holds high share in this segment, so business will stay on track for the typical December peak rush.

Q: The share price and PER have declined since the holding company formation, and the market is discounting the diversified conglomerate structure. Will management revise the business portfolio to address this? / A: Management agrees that increasing group synergies, periodically reviewing the business portfolio, and sharpening focus on core priority businesses is necessary to eliminate the conglomerate discount, and will pursue these steps.

Q: Can you share details on the defense DX business: what is the market size, competitive position, and what services do you provide? / A: Defense DX focuses on developing AI/RPA tools to improve efficiency of routine indirect tasks like document processing, information research, and inquiry response. The company targets a 100 billion yen market and already holds 11 billion yen in orders, with a competitive advantage from its very fast market entry and execution speed, and will expand share from this position.