4060.T

• Overall Financial Results

  • All-time record high revenue, adjusted EBITA, and operating profit achieved in FY2025, beating initial full-year guidance: revenue beat by 218 million yen, operating profit beat by 28 million yen, adjusted EBITA beat by 85 million yen
  • Adjusted EBITA margin expanded 1.8pp YoY to 32%, while operating profit margin declined 3.2pp YoY to 23.4% due to increased goodwill amortization and personnel costs from two recent M&A transactions
  • Churn rate remained very low at 0.82% gross and 0.67% net in Q4 FY2025, both below 1%
  • Client count grew steadily to 2,552 in Q4 FY2025, paid licenses reached 1.24 million IDs (1.3% YoY growth), and unique users recovered from Q2/Q3 declines to end with a YoY increase
  • Cost of goods sold ratio decreased 4.5pp YoY to 29.6%, driven by capitalization of software development-related personnel expenses that reduced reported expense-side personnel costs by 34 million yen YoY
  • Selling, general and administrative (SG&A) expenses increased significantly YoY to 860 million yen, with the SG&A ratio rising to 47% due to incremental costs from M&A

• Product Updates

  • Price revision for select rakumo products tied to a major product update launched for new customers in October 2025, and extended to existing customers in January 2026; no material churn observed, and most customers have reacted positively to the price change given increased service value from new features including AI capabilities. The full impact of the price revision will accumulate through 2026, with maximum annual revenue contribution expected starting in January 2027
  • Completed the full product line launch for rakumo for Microsoft 365: released rakumo Calendar and rakumo Contact in 2025, added rakumo Board in February 2026. Secured distribution agency agreements with two major partners, SoftBank Group and USEN Smart Works, to expand sales. As of December 2025, the business had a pipeline of 39 prospects, 2 signed orders, and 464 sold licenses, with multi-million yen in revenue already projected for FY2026
  • Launched the first phase of rakumo Agent, an AI assistant feature, integrated into rakumo Calendar in February 2026. The function allows users to make requests via natural language for schedule registration, free time search, past schedule lookup, meeting time aggregation, and operational Q&A. Early customer feedback has been positive, with users noting improved convenience compared to base calendar tools. The company plans to roll out rakumo Agent to other products through FY2026

• Sales & Marketing Initiatives

  • Industry-focused marketing for local governments has performed very well: the number of discussions increased from 14 in FY2024 to 62 in FY2025, and licensed IDs doubled to 79,179. Won a large contract with Akita Prefectural Government, with additional large deals currently in negotiation. Given the 1+ year lead time for public sector contracts, most FY2025 pipeline will close in H2 FY2026, with the largest revenue contribution expected starting in FY2027
  • The company is updating its official website to give equal prominence to rakumo for Microsoft 365 alongside rakumo for Google Workspace, to increase inbound lead generation, and will actively participate in major industry trade shows for Microsoft 365 users in FY2026

• M&A & Post-Merger Integration (PMI)

  • Completed the acquisition of two companies, Startre and Agent Share, in FY2025, and PMI is progressing as planned
  • For Startre (provider of STARTRE CMS for SMEs): Leveraging group credit standing to secure agreements with major consumer finance companies for installment sales of CMS initial fees, which improves conversion rates and lowers finance fees to boost profit margins. The company is also integrating its AI development expertise to add AI capabilities to the Startre CMS product
  • For Agent Share (HR Tech provider): Leveraging the network of strategic partner Advantage Partners to generate new enterprise client introductions, and plans a major version upgrade of Agent Share's AGENT COLLEGE service using the group's system development capabilities

• Market & Competitive Position

  • The domestic groupware market is sized at 636.5 billion yen in 2025, with Microsoft 365 and Google Workspace holding a combined 90% market share and continuing to grow. rakumo's competitive advantage is adding Japan-specific workflow and UX features that are missing from these foreign groupware platforms, filling a gap in the market. Microsoft 365 is the largest market share holder in domestic groupware, so rakumo's expansion into this segment represents large untapped growth opportunity
  • rakumo has a 99% customer retention rate, with a scalable stacked revenue model where revenue accumulates steadily from existing customers

• Shareholder Return

  • Introduced a new shareholder benefit program, with the first record date set at June 30, 2026. Combined dividend and shareholder benefit yield is 4.03% based on the February 12, 2026 share price. The company will continue to consider increasing dividends, expanding benefits, and share buybacks going forward, balancing growth investment and shareholder return

• For FY2026 (ending December 2026), management projects: 2.33 billion yen in total revenue (27.3% YoY growth), 770 million yen in adjusted EBITA (31.5% YoY growth), and 550 million yen in operating profit (28.5% YoY growth). Growth is expected to be led by the full-year impact of the price revision, expansion of rakumo for Microsoft 365, and growing public sector sales
  • Management expects a 0.6pp improvement in cost of goods sold ratio, and a 0.4pp increase in the SG&A ratio for FY2026
  • The 3-year mid-term management plan (FY2025-FY2027) has a 2027 target of 3 billion yen in ARR, 1 billion yen in adjusted EBITA, 700 million yen in operating profit, and 30% payout ratio. As of the end of FY2025 (the first year of the plan), progress is on track: ARR reached 2.15 billion yen (71.7% progress), adjusted EBITA reached 590 million yen (58.5% progress), operating profit reached 430 million yen (61.3% progress), M&A investment reached 1.65 billion yen of the 3 billion yen 3-year target (55% progress), and payout ratio hit 19.2% against the 30% target
  • Key planned actions for FY2026 (second year of the mid-term plan) include: rolling out rakumo Agent to all products, progressing incremental major product updates to retain customers at the new price point, expanding sales of rakumo for Microsoft 365 through new distribution partners, and accelerating M&A activity with at least one new transaction planned. M&A origination will shift to direct outreach to target companies in partnership with new external advisors, expanding on the previous model of relying on introductions
  • Over the medium to long term, management expects revenue contributions from M&A and new growth areas (rakumo for Microsoft 365, HR Tech) to grow to match or exceed that of the existing core rakumo service, accelerating overall growth
  • Capital allocation for the next two years: total available capital includes 1.8 billion yen in existing cash, 1.3 billion yen in operating cash flow, and 2.4 billion yen in available borrowing capacity. Up to 2 billion yen is allocated for M&A investment, 700 million yen for new and existing business investment, with remaining capacity for increased dividends and share buybacks
  • The mid-term growth strategy is built on four pillars: 1) Grow core rakumo service via cross-selling/up-selling to increase average revenue per client and expand user count; 2) Grow rakumo for Microsoft 365 as a new growth driver in a large untapped market; 3) Grow in the HR Tech segment, where the Pasona-partnered alop product launched in FY2025 will start contributing full revenue in FY2026, with cross-selling opportunities with Agent Share's HR products; 4) Pursue new product development and additional M&A to expand the product portfolio

rakumo reports its business into two segments: 1. rakumo Service: Revenue of 1.415 billion yen, 17.3% YoY growth, accounting for 77.3% of total FY2025 consolidated revenue. 2. Other Services: Revenue of 415 million yen, steady growth from M&A additions, accounting for 22.7% of total FY2025 consolidated revenue. Total consolidated revenue for FY2025 is 1.83 billion yen, 26.8% YoY growth. Total adjusted EBITA is 585 million yen, 34% YoY growth. Operating profit is 428 million yen, 11.6% YoY growth.

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