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• Core Growth Strategy (unchanged for multiple years): • Specialization: Each of the 14 group subsidiaries focuses on its own niche domain to pursue an only-one position and avoid price competition. • Profit Structure Transformation: Target a 50%/50% profit split between SI Business and Stock-type Business to build a recession-resistant, stable business structure (SI currently accounts for a larger share, and the company is growing the stock-type business to hit the target). • Global Expansion: Target young, high-investment ASEAN markets plus China, Japan, South Korea to leverage demographic growth and demand.
• Focus Business Areas: The group prioritizes 5 high-growth DX areas: Cloud (led by Fleekdrive), FinTech (led by SolXYZ本体), CASE (automotive, led by listed subsidiary Exmotion), IoT (led by E.I.SOL), and AI (group-wide development of LLM solutions). It has also added the fast-growing aerospace, space, and defense sector as a new focus area.
• Recent Operational Highlights: • AI Solutions: Launched internal LLM solution SOLXYZ Assistant (built on Amazon Bedrock) to answer internal knowledge questions and assist with document creation; currently running trials with a major distribution company for commercialization, with positive internal adoption. Fleekdrive cloud storage added a generative AI-powered PDF summarization feature to upgrade its service. • Aerospace/Defense: Group subsidiary E.I.SOL is the only Japanese Gold partner (top tier globally, only 18 worldwide) of NI (National Instruments), with growing inquiry volume driven by its specialized strength in embedded, sensor-based measurement/testing solutions for the sector. • e-Sports Solutions: Subsidiary eek has rolled out a packaged e-sports solution for local governments for regional revitalization, with the first implementation in Tomakomai, Hokkaido, targeting nationwide expansion.

• Full-year FY2025 (ending December 2025) guidance maintains the initial revenue target of 17 billion yen. As of the first half, revenue progress is 50% of the full-year target (in line with plan) and operating profit progress is ~60% (ahead of plan).
  • Mid-term rolling 3-year plan targets 20 billion yen in revenue and 2 billion yen in operating profit (10% operating margin) for FY2027 (December 2027), with management noting this target is achievable as Fleekdrive scales to contribute more profit.
  • Dividend guidance calls for a 1 yen increase to 13 yen per share for FY2025.
  • The company expects full-year results to land at a strong level if no unmanageable project issues arise, and will update guidance after the third quarter when the full-year outlook is confirmed. Management expects continued strong ICT demand in the second half to support on-plan results.

ソルクシーズグループ divides its business into two core segments: SI (System Integration) Business and Stock-type Business. For the first half of FY2025 (ending 2Q), all 14 group subsidiaries achieved year-over-year revenue growth, with improved profitability across all segments. Specific segment-level absolute revenue figures and revenue contribution percentages are not fully disclosed in the transcript. SI Business, which currently accounts for the majority of total revenue (profit share greater than 50%), includes core software development, consulting, and solution services for verticals including FinTech, automotive CASE, IoT, and AI, and contributed strong growth from large public sector projects and full-year contributions from Ef Inc., which joined the group last year. Stock-type Business includes cloud service Fleekdrive, Neumann (automotive driving school solutions), E.I.SOL (aerospace, defense, IoT solutions), and eek (e-sports solutions), all of which are growing, with E.I.SOL seeing particularly strong demand growth in the aerospace/defense segment.

• The IT industry faces a severe nationwide talent shortage, with particularly intense competition for experienced mid-career hires, creating hiring headwinds for the group.
  • SI projects carry inherent risk of scope creep and cost overruns (referred to as "runaway projects") that can negatively impact profitability, as seen in the company's 2018 downturn.
  • Neumann's revenue was negatively impacted in the first half by a recent road traffic law change that caused buying hesitation among its automotive driving school customers, though management expects a recovery in the second half.
  • Generative AI disruption creates long-term uncertainty for software development business models, though management believes large-scale system development cannot be replaced by current generative AI technology for the foreseeable future.

Q: When will SOLXYZ Assistant be commercialized, and what has internal adoption been like? / A: Management aims to launch the product as soon as possible. It is currently in trial with a major distribution company, and the company is refining the product based on customer feedback, with commercialization expected in the near future. Internally, it is already widely used for document search, email drafting, and contract creation, with good performance and high employee adoption, though employee prompt engineering skill is still improving gradually.

Q: Is there a concern that large unplanned projects in the first half will cause a revenue drop in the second half? / A: The large public sector project booked in the first half was a spot project with a timing shift from the prior year, and was not part of the original full-year plan. Excluding this project, first half results are in line with original plan. Barring any major runaway project issues, the second half will remain on track, and management will issue an updated guidance after the third quarter when the full-year outlook is finalized.

Q: What explains Neumann's lower revenue, and what is the outlook? / A: Neumann provides e-learning systems for Japanese driving schools, which follow a 5-year replacement cycle. A 2025 road traffic law change that shifted default training to automatic transmission caused customers to hold off purchases to wait for the updated version of the product, leading to lower first half revenue. Management expects this delayed demand will be recovered in the second half of the year.

Q: What is the inquiry outlook for the elderly monitoring solution Ima Irumo? / A: Originally developed for individual consumers, Ima Irumo has seen growing inquiry from nursing care facilities and local governments, which have strong demand for senior monitoring solutions in regional areas. Shikoku Electric Power group company Shikoku Denko has recently become an agent for the product, and demand is aligned with growing regional government focus on senior care, so interest is rising steadily.