MIT Holdings CO.,LTD. Q1 FY2026 earnings call

Overall 1Q Financial Performance

• Total company 1Q results: revenue of 1.228 billion yen, gross profit of 289 million yen, operating profit of 59 million yen, ordinary profit of 58 million yen, net income of 34 million yen
• Year-over-year: both revenue and profit declined slightly, driven by the large prior-year project ending, temporary organizational effects, and increased personnel costs for talent investment and compensation improvements
• Sequentially (compared to prior quarter): profit increased significantly, driven by efficiency improvements from cost cutting, growing recurring revenue from digital marketing, and recovering orders for CAD drawing services. The company notes an ongoing improving profit trend after group-wide restructuring and efficiency efforts
• The company cut 10 million yen in fixed costs in 1Q 2026 through organizational restructuring, business integration, and efficiency improvements, resulting in a 1Q operating margin of 4.8%

Business Portfolio Overview

• MIT Holdings operates two core services: the stable core business of System Integration, and the high-growth, high-value-added DX Solution segment centered on proprietary products. System Integration represented 85.6% of 2025 full-year revenue, while DX Solution represented 14.4%
• System Integration: 35+ years of experience as an independent systems integrator, with 76.1% of orders coming from large manufacturers and listed companies, focused on building and operating systems supporting social infrastructure (public services, finance, telecommunications, energy). The company expects continued growth in IT investment for ongoing digital transformation
• DX Solution: Three service lines based on in-house products: digital marketing, drawing DX, cloud system solutions. It has maintained high growth since listing despite a temporary 2025 revenue decline

Growth Strategy

• System Integration Service: Expand upstream orders from prime contractors, raise engineer unit prices through skill improvement and optimal staff placement, improve process efficiency and proposal capabilities by integrating new technologies including AI, and expand the customer base
• DX Solution Service: Strengthen the foundation of recurring/stacked revenue models, improve service value through data utilization and AI application for in-house products
• Long-term 2030 Targets (unchanged): Target 10 billion yen in total revenue and 10% operating margin. The company plans to grow System Integration steadily while expanding DX Solution to represent 30% of total revenue by 2030 through AI-powered feature and value expansion

Shareholder Return

• 2025 full-year: 30 yen per share total dividend (26 yen regular, 4 yen commemorative)
• 2026 full-year planned: 30 yen per share regular dividend, aligned with the policy of targeting a consolidated payout ratio of 30% or higher
• Shareholder benefit program (retained from prior year): 5,000 yen QUO card for shareholders holding 300+ shares as of November 30, distributed after the annual shareholder meeting in February

1. System Integration Service: 1Q 2026 November Term revenue is 1.07 billion yen, accounting for 87.2% of total revenue. Full-year 2026 planned revenue is 4.764 billion yen. Year-over-year revenue fell in 1Q due to the aftermath of a large transportation and logistics project completed in the prior year's first quarter and temporary work hour reductions from post-integration project reorganization and staff realignment, though major customer orders remain solid, especially with growing development projects in the energy sector.
2. DX Solution Service: 1Q 2026 November Term revenue is 157 million yen, accounting for 12.8% of total revenue. Full-year 2026 planned revenue is 936 million yen. It is split into three sub-segments: (1) Digital Marketing: 1Q revenue of 29 million yen, with revenue recognition for some projects pushed to Q2 and beyond, and expected future growth from existing customer upsells and new projects; (2) Drawing DX Solution (includes DynaCAD sales and scaffolding drawing services): 1Q revenue of 90 million yen, with limited new sales due to delayed next-version development; (3) Cloud System Solution (includes The Meal meal reservation system and GIGA School support services): 1Q revenue of 37 million yen, with growing new orders for The Meal and ongoing preparation for 2026 new GIGA School projects, with expected order growth from Q2 onward.

• Full-year 2026 November Term maintains its original plan of increasing both revenue and profit: total revenue target of 5.7 billion yen, operating profit target of 285 million yen, and operating margin target of 5%
• 1Q 2026 revenue reached 21.5% of the full-year target, and operating profit reached 20.8% of the full-year target. Management expects progress to accelerate from Q2 onward, as delayed projects from 1Q will recognize revenue and new annual budget cycles from April will drive expanded order intake
• System Integration full-year planned revenue is 4.764 billion yen (up from 4.378 billion yen in 2025), targeting an average annual growth rate of 6.3%
• DX Solution full-year planned revenue is 936 million yen (up from 739 million yen in 2025), targeting an average annual growth rate of 20.4% and a full-year revenue goal of 1 billion yen

• 1Q revenue and profit declined year-over-year due to the negative impact of a large transportation and logistics project completed in the prior year's first quarter, which created a difficult comparison base
• Post-group business integration reorganization led to temporary project realignment and staff reallocation, which temporarily reduced work hours and operating performance in 1Q
• DX Solution growth was held back in 1Q: delayed development of the new version of DynaCAD limited new sales, and some digital marketing projects had revenue recognition pushed to future quarters
• Increased personnel expenses from talent recruitment, development investments, and compensation improvement put pressure on near-term profitability, partially offsetting cost reduction efforts

No question and answer section is included in the provided transcript.