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• Corporate Strategy & Capital Market Initiatives

  • The company is currently executing the "6.600 Strategy", which targets reaching a 600 yen share price by the end of June 2025 to meet the Tokyo Prime Market's market capitalization listing maintenance requirements.
  • To support this goal, the company raised its payout ratio target from 35%+ to 45%+, implemented a 3 yen per share increase to a 12 yen per share full-year dividend forecast, and introduced a new shareholder benefit program in April 2025 to encourage long-term shareholding.
  • The company prioritizes maintaining its Prime Market listing for two core reasons: to preserve corporate creditworthiness with clients, and to improve its ability to attract top new graduate engineering talent, which is critical to the business.

• Growth Initiatives for Key Focus Areas

  • AI Business: The company has expanded its AI solution lineup, including its branded Prophetter Series for customized data analysis, BearAI which links IoT data and analysis, and generative AI solutions co-developed with Nagasaki University. Prophetter is particularly well-received for its ability to build custom AI models from client-owned data, combining AI with RPA to enable advanced automation beyond basic routine task automation.
  • Migration Development: Leveraging its Nagasaki Development Center nearshore base and its legacy of financial system development (with both COBOL and Java engineering talent), the company provides end-to-end migration services including automated testing. Demand extends beyond the 2025 legacy system modernization "cliff" to include broader modernization of older tools like VBA, with market growth expected through 2030.
  • IT Outsourcing & Software Testing: The company addresses client pain points around securing and retaining specialized IT operations talent, providing managed services for system operations and software testing (including testing linked to migration projects). It has built a stable delivery framework at its Nagasaki center, and has expanded automated testing services for multi-device environments.
  • Solution Business Expansion: The company is growing through strategic partnerships, including integrating its Invoice PA electronic expense solution with BPO services, collaborating on low-code development tool offerings, and recently launching Citrix virtualization solution partnerships targeting public sector clients.

• Operational Efficiency & Profitability

  • The company maintains a target selling, general and administrative (SG&A) ratio of under 10%, and achieved a 9.2% ratio in the first half. It drives cost control through internal automation (including chatbots for internal inquiries, paperless operations, and AI/RPA for internal process automation) to reduce labor hours and overtime costs.
  • High profitability is supported by a growing share of long-term (2+ year) stock projects and recurring subscription SaaS revenue, which improve operational stability and productivity.

• Human Capital Strategy

  • The company has shifted its hiring focus to new graduates, targeting new hires equal to 10% of current headcount annually, and invests in comprehensive technical, management, and compliance training programs.

• Full-year 2025 September term: Target consolidated revenue of 10.6 billion yen from existing operations, or 11.5 billion yen including planned M&A, targeting continued high profitability.
• Next fiscal year (2026 September term): Target 14% revenue growth, with 11.6 billion yen in revenue from existing operations, or 13.0 billion yen including M&A, targeting ordinary profit of 1.7 billion yen.
• Management continues to push for catch-up on full-year revenue targets in the second half, after first half revenue came in slightly below 50% of the full-year plan, while first half profit already exceeded 50% of the full-year target with strong profitability on track.
• The company has begun internal work on post-6.600 Strategy medium-term targets, and will disclose updated goals appropriately once finalized.

For the first half of the 2025 September term, total company revenue was 5.034 billion yen, up 4.3% year-over-year. Operating profit was 734 million yen, up 5.3% year-over-year, and ordinary profit was 742 million yen, up 4.4% year-over-year, hitting a record high for the first half. The company operates three core service segments:

1. Business System Development: This is the company's core segment, with revenue growing 3.3% year-over-year. It remains the largest contributor to total revenue.
2. IT Infrastructure: Grows in tandem with business system development projects, and continues to expand its scale as a supporting segment.
3. Solutions: This is the fastest-growing segment, with revenue growing 23.9% year-over-year, and its revenue contribution share has increased significantly. Approximately half of the segment's revenue comes from AI-related solutions, driven by growing adoption of cloud-based expense management and AI services, with stable subscription revenue streams.

• The company has not yet met the Tokyo Prime Market's trading market capitalization maintenance requirement, creating ongoing pressure to improve share price and business performance to retain its listing.
• The core common risk across all focus business areas is securing sufficient engineering talent to support growth, even with nearshore hiring in Nagasaki and ongoing productivity improvement initiatives.
• While market demand for migration services remains strong through 2030, competition in the crowded legacy modernization market could pressure margins.
• While growing AI and solution demand creates upside, the company does not build its own AI engines and relies on client data and existing partnerships, which could limit margins relative to foundational AI developers.

Q: What are the main drivers of NeedsWell's consistently high profit margin, and can the current 9.2% SG&A ratio be maintained going forward? / A: High margins come from three core factors: a growing share of long-term 2+ year stock projects that enable stable, efficient operations; growing subscription SaaS revenue from the solutions segment that provides recurring high-margin income; and disciplined SG&A control via internal process automation that cuts overtime and labor costs. The company will maintain its 10% maximum SG&A target, and will continue leveraging AI and RPA for internal efficiency to keep costs at current target levels. As the solutions segment grows, overall gross margins will continue to improve, since SaaS solutions become more profitable over time after initial setup costs. /

Q: Why is the company prioritized meeting the Prime Market listing requirements through the 6.600 Strategy? / A: Retaining Prime Market listing delivers two critical strategic benefits that support long-term growth: first, it preserves the company's brand creditworthiness with clients, which is especially important for long-term system development and solution contracts. Second, it greatly improves the company's ability to attract top new graduate engineering talent, as Prime Market listing is a key consideration for students evaluating job opportunities, and engineering talent is the foundation of the company's business. /

Q: What is the current status of the company's M&A strategy? Has the approach changed from prior plans? / A: M&A is still part of the formal business plan, with 900 million yen allocated for 2025 September term and 140 million yen allocated for 2026 September term. The main change to the strategy is a more cautious, step-by-step approach: the company now prioritizes testing business collaboration first to verify synergy potential before pursuing M&A, rather than completing deals quickly. A possible change to goodwill amortization rules would have some impact on M&A financial planning, but it would not change the core priority on verifying synergy value before completing any deal. /

Q: What can you share about demand for your new Citrix virtualization solution partnership, and what are your target clients? / A: Citrix virtualization is most widely adopted by government and local government clients, which fits well with the company's existing client base in the public sector. The trend toward reducing on-premise physical PCs amid cloud adoption is driving growing demand for this solution, and growing security awareness is also a tailwind, as many public sector clients prefer on-premise or hybrid cloud setups over public cloud for security reasons. The company will pair the virtualization offering with its existing public sector solutions to win new clients.