4264.T

• Company and Core Business Overview
  • Founded in 2002, 224 consolidated employees as of end-2025, operates primarily across Japan with a development subsidiary in South Korea. Mission is to build safe and secure environments, digitize physical spaces, and upgrade infrastructure to enable smart buildings and smart cities.
  • Provides fully integrated one-package solutions combining software, hardware, AI, network, and electrical infrastructure, focused on the middle to high-end market. Holds ~50% market share for security-use facial recognition in Japan, ranked No.1 for 4 consecutive years, with over 13,000 client companies across industries.
  • Differentiates from large competitors like NEC by providing flexible custom solutions matched to private enterprise client needs on performance and cost; differentiates from full-cloud providers by offering customized on-premise/cloud hybrid deployments that are cost-effective for 24/7 operation use cases, with clear market segmentation that avoids direct competition.
• Core Security Business Progress
  • Demand for integrated security solutions is growing strongly, driven by expanding security needs covering both external and internal threats, and multi-purpose use of cameras to address labor shortages. The domestic surveillance camera market is projected to grow from 250 billion yen currently to 450 billion yen in 5 years.
  • The company is expanding sales and marketing headcount to a target of over 100 employees in 2026. New sales staff require 1.5-2 years of training to become fully productive, and staff hired 2-3 years ago are now contributing to business results.
• AI Store (Unmanned Store) Business Development and TOUCH TO GO Acquisition
  • Unmanned/ labor-saving retail is the company's second core growth strategy, aligned with addressing severe labor shortages in Japanese retail. The company developed its own AI STORE LAB 2.0 unmanned store technology, which uses only ceiling-mounted cameras to recognize product selection with 99.5%+ recognition accuracy, and has launched pilot tests at Ministop and Mizuho PayPay Dome Fukuoka.
  • In February 2026, the company acquired a 56.2% stake in TOUCH TO GO, a leading Japanese unmanned checkout solution provider. TOUCH TO GO was founded as a joint venture between JR East Startup and Signpost, has existing shareholders including FamilyMart, Toshiba Tec and Glory, and has nearly 250 installed stores with proven solutions that support low-price small-format stores, cash and point services.
  • The acquisition complements Secure's existing AI STORE LAB technology: TOUCH TO GO is optimized for convenience store formats with low cost, while Secure's solution is suited for high-traffic venues like stadiums. Combined, the partnership can cover all unmanned retail use cases in Japan.
  • Management believes Amazon GO's exit from the market does not invalidate the unmanned store model, as there are fundamental differences between US and Japanese retail: Japan has more severe labor shortages, a culture of daily small-volume shopping, and high public acceptance of unmanned retail due to good public safety, creating large market potential for unmanned stores in office, hospital, school, convenience store night shift and stadium/venue use cases.
  • The short-term goal is to achieve profitability for the combined AI Store business in calendar 2026, build a profitable business model, and target 1,000 installed locations as an early milestone, with the long-term goal of building an autonomous AI retail operation platform and establishing a new standard for unmanned retail in Japan.

• For FY2026 (December 2026 term), management guides total revenue of 8.206 billion yen, representing 20% YoY growth, and operating profit of 620 million yen, representing 90.1% YoY growth.
  • The company remains in an investment phase, but is targeting steady operating margin expansion, with an intermediate target of reaching 100 billion yen in total revenue with further improved margin.
  • The 1,000-store AI Store deployment target is planned to be achieved within 1 to 3 years after the acquisition completes on April 1, 2026, with 2026 focused on validating the profit model and testing go-to-market hypotheses via rapid PDCA cycles.
  • Management targets increasing the share of stable recurring/stock revenue from the current ~10% (30-40% including predictable repeat replacement orders) to over 50% in the long-term, driven by growth of subscription AI services and recurring revenue from the AI Store business.

1. SECURE AC (Access Control System): Accounts for 27.2% of total revenue. 1,532 installation units in FY2025, saw stable growth year-over-year, despite a Q1 sales dip due to a large 2024 comparison base, and achieved positive full-year growth. 2. SECURE VS (Surveillance Camera System): Accounts for 61.1% of total revenue. Recovered from 2022 semiconductor shortage impacts and maintained full-year year-over-year growth in 2025, with steady growth from accumulating small and medium-sized projects amid a lack of large-scale projects. 3. SECURE Analytics / Other (including SECURE ES): Has delivered steady steady growth and order accumulation. 4. TOUCH TO GO (Unmanned Checkout Solutions): In FY2025 March term, revenue reached just under 1 billion yen, with significantly reduced losses after completing most product development, and is entering the market expansion phase. 5. Consolidated FY2025 Total: Total revenue of 6.84 billion yen, up 9.5% YoY; operating profit of 326 million yen, slightly below initial guidance.

• Operating profit missed FY2025 initial guidance by ~20%, driven by slower-than-expected progress on new market and new client initiatives in Q2 and Q3, and one-time costs associated with the TOUCH TO GO acquisition.
  • The key internal challenge is securing and developing highly specialized talent, as the integrated solution business requires deep cross-domain expertise and long training lead times for new staff.
  • AI STORE LAB's original camera-only recognition model faces challenges including high costs that make it uneconomical for low average transaction price use cases, and the need to add support for diverse Japanese payment methods including barcode payment, transit electronic money, points and coupons.
  • While facial recognition hardware costs have declined, successful deployment requires complex consulting and integration work that few providers can deliver, but if new low-cost standardized solutions enter the market, increased price competition could pressure margins.

Q: How do the security solution business and AI Store business relate internally?

A: Both businesses address the core trend of labor shortage: AI Store solves labor needs via unmanned operation, while security addresses the increased risk of shoplifting that comes with reduced staff. From a technology perspective, detecting shoplifting and detecting customer product selection are fundamentally similar computer vision tasks, so security technology can be directly leveraged for unmanned retail. The two businesses are two wheels of the same strategy, not separate businesses, and existing security clients are very likely to become future AI Store clients, given the large problem of unexplained inventory loss in Japanese retail that totals 800 billion yen annually, which grows worse as headcount declines.

Q: What was the background of the TOUCH TO GO acquisition?

A: It was a coincidental opportunity: both companies already knew each other from industry connections, and TOUCH TO GO was looking for a new partner to support its upcoming scale-up phase after completing development. Secure found that TOUCH TO GO perfectly complements its weaknesses in AI Store, so the deal came together quickly.

Q: What is the difference between TOUCH TO GO's SENSE series and Secure's AI STORE LAB, and were they competitors previously?

A: TOUCH TO GO's solution is optimized for convenience store formats, with very low cost for small spaces, which is very effective for that use case. Secure's AI STORE LAB is more multi-functional, can handle high-traffic crowded venues with very high recognition accuracy, but has a higher cost point, so it is suited for use cases like stadium concessions where improving checkout rotation is a high priority. The two solutions address different use cases, so they are not competitors. Over time as GPU costs decline, the two technologies will likely converge into a single unified offering.

Q: What is the return on investment for retailers that adopt unmanned store technology?

A: ROI varies by use case: 1) For retail formats like cosmetics or apparel where associate time is better spent on customer service than checkout, automating checkout allows reallocating labor to selling activities, driving higher sales rather than just cost reduction. 2) For 24-hour stores, night shifts face severe labor shortages, and automating night operation cuts high night-shift labor costs while also allowing stores to open when they would otherwise be closed, driving incremental revenue. 3) Unmanned technology also allows retailers to open small satellite stores near existing main stores to capture incremental sales that would not be possible with full staffing. There are multiple business models beyond just replacing all labor in existing stores.

Q: What is the current ratio of flow vs stock revenue, and what is the target long-term ratio?

A: Monthly recurring stock revenue is currently just under 10% of total revenue; including predictable repeat replacement orders, stable predictable revenue totals 30-40% of revenue. Long-term, the company aims to grow recurring stock revenue to over 50% of total revenue, via new subscription-based AI services and the AI Store business.

Q: How do you see the progression of image-based AI and your subscription strategy?

A: Text-based generative AI is already widely adopted, but image-based AI is still in the early adoption phase, and will progress slower than text-based AI due to the much larger data volumes involved. Secure already has wide camera coverage across Japanese commercial spaces, so there are many opportunities to add AI connected services, which the company plans to roll out via a subscription model going forward.

Q: Is there risk of price competition in facial recognition technology?

A: While facial recognition technology itself has become relatively affordable, successfully deploying facial recognition solutions still requires complex consulting and integration work that very few providers can deliver. This creates a meaningful barrier to entry, so Secure maintains a favorable pricing position and does not expect excessive price competition in the near term.

Q: How do you compete with established players like large electric manufacturers and sub-contractors in the surveillance camera market?

A: Delivering a complete solution requires integrating hardware, low-voltage infrastructure, networking, servers, software, AI and deployment model (on-premise/cloud) all together. General contractors and sub-contractors have expertise in hardware and infrastructure but struggle with the software and AI integration part of the solution, so they are not direct competitors. Many large Japanese electric manufacturers have exited the market, creating a gap that Secure is targeting, leveraging its fully integrated solution strength to capture share.

Q: What is the growth outlook from scaling the sales team?

A: When sales reach 100 fully trained staff, the business will reach a much larger scale than today. New sales staff require 2-3 years of training to become fully productive, and as staff gain experience, their per-employee sales and margin improve, so hires made in 2025 will gradually contribute to growth over the next 2-3 years.

Q: What is the timeline for the 1,000-store AI Store target, and what is the per-store revenue contribution?

A: The acquisition completes on April 1, 2026, so integration will start from that date. 2026 will be spent on integration, validating the profit model and testing different use case models via rapid PDCA. The company targets achieving 1,000 stores in 1-2 years at the earliest, 2-3 years at the latest. Further details on per-store revenue contribution will be finalized as the integration progresses. There is potential for more than 1,000 stores given the worsening labor shortage in Japanese retail.

Q: Which competitors does Secure recognize, what is its key differentiator, and what are its main challenges?

A: Competitors include physical security device manufacturers, security system integrators, and some IT vendors, with competition mostly occurring at the intersection of multiple domains (physical security, IT, AI) rather than a single market. The key differentiator is the ability to deliver a fully integrated end-to-end solution covering software, hardware, AI, and network infrastructure for physical security. The main challenge remains securing and developing highly specialized talent.

Q: Which industry is seeing the fastest growth in successful cases of surveillance camera as a business problem-solving tool?

A: Inquiries are growing across all industries, but the fastest growth is coming from retail and other industries facing severe labor shortages, where many new use cases are emerging.

Q: Is the unmanned convenience store at Middle Eastern airports a Secure/TOUCH TO GO project?

A: No, but TOUCH TO GO completed a pilot test of TTG-SENSE at JTC Corporation in Singapore (supported by JR East Business Development SEA) from February to November 2025 as its first overseas project. The company will focus on the domestic Japanese market first, but will evaluate overseas expansion in the medium to long term.

Q: What is the main driver of Secure's current growth?

A: The main current growth driver is expanding demand for fully integrated physical security solutions, driven by social trends including labor shortage and increasing security sophistication, with Secure's end-to-end business model covering design, installation, operation and maintenance receiving high market acceptance. The AI Store business led by the TOUCH TO GO acquisition is positioned as the next growth driver for the medium and long term, building on the stable growth of the core security business to drive further corporate value growth.