4012.T

Overall 2025 Fiscal Year Performance

• Achieved 6 consecutive years of revenue and profit growth since listing, with all-time record full year results. Total revenue grew 9.4% year-over-year to 8.134 billion yen, operating profit grew 12.4% year-over-year to 888 million yen, and operating margin expanded 0.3 percentage points year-over-year to 10.9%. The Q4 2025 quarter also set new all-time quarterly records for both revenue and operating profit, with revenue up 160 million yen from Q3 2025.
• The full year dividend was set at 46 yen per share, a 1 yen increase from the initial beginning-of-period forecast.
• Balance sheet remains very healthy: equity ratio is 75.4%, maintaining a high level of financial stability, and increased cash holdings will be allocated to planned growth investments including M&A and AI development.

2025 Key Initiative Review

• System Services Segment: Shift to upstream IT consulting progressed as planned. Growth of high-potential areas (including Salesforce practice) advanced, and the new AI platform Communication Insight was launched and began growing. Expansion of existing business areas and cloud integration business also progressed on track.
• IT Services Segment: KITARO growth was largely on track despite the slight miss on the 10,000 unit contract target. Service development support was slightly behind schedule, with new service release delayed from the original plan. New location information service RouteLabel was successfully launched, and BPO services for small and medium enterprise (SME) IT departments under DX consulting grew steadily.

2025 Notable Operational Updates

• Launched RouteLabel, a consumer-facing location information app for iOS and Android with route recording and real-time location sharing features; will continue enhancing features based on user feedback.
• Entered into a business partnership with do.Sukasu, a holder of proprietary patented spatial cognition assessment technology, to integrate do.Sukasu's technology into KITARO to improve traffic accident risk prediction and reduction.

New Medium-Term Management Plan "Go Beyond" Overview

• The previous plan Vision2027 was accelerated and replaced with Go Beyond (covering FY2026 to FY2029) to respond to rapid industry changes including widespread adoption of generative AI and low-code/no-code SaaS platforms, which have expanded customer demand and increased technological sophistication.
• Core vision: Evolve into a "co-creation partner for value" that meets the needs of both customers and society, with three core mid-term priorities: improve customer value, improve corporate value, and improve social value.

Core Business Strategies under Go Beyond

1. Deepen core SI industries and expand into untapped industries: Further deepen existing expertise in finance, public social infrastructure, and information communications, while expanding into new sectors such as manufacturing. Shift business mix to higher-value upstream work including IT consulting, digital infrastructure, and network construction, increase direct end-user transaction ratio to over 30%, expand no-code/low-code development, strengthen sales capabilities, and grow strategic partner ratio to over 50%.
2. Expand high-growth technology areas and services: Prioritize growth in SaaS, ERP, AI, cloud, and data analytics. Target hiring and reskilling to build a workforce of over 120 consulting/project management personnel, over 350 full-stack engineers, and over 100 AI engineers by FY2029. For IT Services, evolve the mobility-focused business into a comprehensive "mobility × data × AI" cloud platform, expand KITARO functionality and new services such as RouteLabel, and grow DX consulting focusing on SME IT department BPO.
3. Upgrade business through AI utilization: Use AI as a cross-cutting common foundation to improve customer value, upgrade existing and new services with embedded AI, and improve development/operation productivity and quality. Expand service offerings built on the company's existing generative AI platform Communication Insight.

Financial and Capital Strategy under Go Beyond

• Financial targets for FY2029: revenue of at least 14 billion yen, operating profit of at least 1.6 billion yen, operating margin of at least 12%, ROE of at least 18%, and payout ratio of at least 40%.
• Target compound annual revenue growth of 14.5% through the plan period, expand high-value-added business to over 50% of total revenue, and build out targeted certified personnel capabilities:
• Total planned growth investment of over 8 billion yen over the plan period: over 4 billion yen allocated to M&A, over 3 billion yen to human capital investment, and over 1 billion yen to service development and capital expenditure.
• Maintain progressive dividend policy, target payout ratio of 40% or higher, balance growth investment with stable shareholder returns.

• FY2026 December Full Year Guidance: Expects 7 consecutive years of revenue and profit growth, with another new all-time record performance. Total revenue is projected at 9.444 billion yen, up 16.1% year-over-year. Operating profit is projected at 1.0 billion yen even, up 12.6% year-over-year, with projected operating margin of 10.6%.
• FY2026 segment level revenue guidance: System Services revenue projected up 16.5% year-over-year, IT Services revenue projected up 8.6% year-over-year.
• FY2026 dividend guidance: Plans to continue progressive dividend growth, with a full year dividend of 57 yen per share, an 11 yen increase year-over-year, and a 5 percentage point increase in payout ratio from FY2025.
• FY2026 Key Segment Initiatives Guidance:
  • System Services: Continue accelerating shift to upstream IT consulting, expand high-growth areas, improve margin through increased end-user direct transactions, and scale cloud integration.
  • IT Services: Target 10,800 contracted KITARO units by end of FY2026, expand KITARO-based development support services, accelerate new service releases, and grow SME IT department BPO contracts for DX consulting.
• Medium-Term Guidance: Confident in hitting the FY2029 targets set out in the Go Beyond plan, supported by favorable market tailwinds: domestic IT investment in manufacturing is projected to grow 2.4x, and the domestic AI system market is projected to grow 3.7x over the plan period.

For the FY2025 December full year, total company revenue was 8.134 billion yen, with the company operating two core business segments:

1. System Services Segment: Revenue grew 9.6% year-over-year to a new all-time high. Despite losing a public sector bid in Q2, the segment secured multiple public social infrastructure projects from Q3 to Q4 that drove full year growth. Order backlog increased 20.3% year-over-year, averaging over 1.9 billion yen in backlog across the full year. By vertical, revenue from core banking/financial clients grew 2.0% year-over-year, public social infrastructure revenue grew 11.0% year-over-year, and information communications revenue grew 13.8% year-over-year. Revenue per employee saw a slight year-over-year decline due to internal personnel reallocations from the IT Services segment, which management notes is a structural organizational change with no material impact on overall performance. This segment contributed the majority of total company revenue, accounting for approximately 92% of total revenue growth for the full year.
2. IT Services Segment: Revenue grew 6.3% year-over-year. While technical support revenue to third parties saw a slight year-over-year decline, the segment's core service KITARO (a mobility-focused cloud service) grew steadily, driving overall segment growth. KITARO contracted units grew 8.0% year-over-year, nearing the 10,000 unit full year target; the target was slightly missed as multiple large contract negotiations are still ongoing and require additional time to finalize.

• In FY2025, System Services experienced a public sector bid loss in Q2, and KITARO slightly missed its full year 10,000 contracted unit target due to extended timelines for large contract negotiations.
• Under the previous medium-term plan Vision2027, IT Services saw slower growth in technical support revenue and delayed development of revenue-generating cloud services, and no M&A transactions have closed to date, though M&A activities continue.
• No material operational failures or other major risks were explicitly discussed in the available transcript.

The structured list of planned Q&A topics is confirmed as follows, though full question and answer text was not included in the available transcript: Q: What was the status of government project bidding in Q4 FY2025?

A: No full answer text available in the provided transcript.

Q: What is management's outlook for the business environment in FY2026?

A: No full answer text available in the provided transcript.

Q: What is the operating profit target for FY2027?

A: No full answer text available in the provided transcript.

Q: What is the probability of achieving the FY2027 plan targets?

A: No full answer text available in the provided transcript.

Q: Why did management decide to front-load the launch of the new medium-term management plan, replacing the previous Vision2027 early?

A: No full answer text available in the provided transcript.

Q: What impact will the full-scale arrival of the AI era have on Axis' business?

A: No full answer text available in the provided transcript.

Q: What are the target business models and size ranges for potential M&A candidates?

A: No full answer text available in the provided transcript.