4373.T

• Overall Financial Performance • FY2026 March Term delivered all-time record results for revenue, operating profit, gross margin, and operating margin, with 3 upward revisions during the period. Final operating profit came in 1.0 billion yen above the January 2026 forecast of 14.3 billion yen, beating initial annual guidance by a wide margin • Revenue: 58.682 billion yen, +23.8% YoY; operating profit: 14.42 billion yen, operating margin 24.6%; net profit: 10.538 billion yen, +35.4% YoY; ROE hit 21.0% meeting the long-stated target of over 20% after a 5.0 billion yen share repurchase • The previous mid-term plan Chukei 2027 was achieved one year ahead of schedule, with pre-special-bonus operating profit already exceeding the 15.0 billion yen target. A 1.0 billion yen special bonus was approved for all employees and executives

• 5-Year Post-Relisting Progress • 5 full fiscal years have passed since relisting in September 2021, and the core growth strategy of "domain expansion × domain deepening" has been fully realized • Domain deepening: 3 client groups now have annual revenue exceeding 5.0 billion yen, up from zero in 2021, forming a stable large-scale transaction base • Domain expansion: Xspear Consulting (founded at relisting) grew to over 10.0 billion yen in revenue, and synergies between Xspear and Simplex have been established: 23 joint clients generate 28.6 billion yen in revenue, accounting for nearly half of total revenue • The end-to-end full-stack delivery business model Simplex Way is now fully implemented, covering strategy planning, business design, development, operation and continuous improvement

• AI Transformation Initiative • The company is shifting from "Work with AI" (AI as an individual productivity tool) to "AI-Native" (redesigned organizational delivery built around AI) • The Siphon Center of Excellence (CoE) team has been formed with top-tier system development and AI talent to standardize AI know-how, build productivity and quality assurance frameworks, and launch company-wide rollout starting in FY2027 March Term • Through H2 FY2026 pilot projects on client work, confirmed consistent man-hour reduction effects for AI-Native development, validating the model. Starting FY2027, all new development will use AI-Native Delivery, with incremental development and operations converted gradually from high-impact areas

• People Strategy for AI-Native Era • AI acts as an amplifier for high-skill talent: success depends on securing talented staff with strong design, development, verification, and clear communication to direct AI. The company maintains aggressive hiring to grow the pool of AI-capable talent • As of end-FY2026, nearly 600 employees earning over 10 million yen per year can proficiently use AI, with a target to grow this to 1,000 to compete with larger rivals on productivity and growth. The company ranked #1 for 20s growth environment on Japanese review site OpenWork, enabling strong young talent development

• FY2027 March Term Guidance • Revenue: 70.0 billion yen, +19.3% YoY; gross margin targeting 45.0%; operating profit: 17.2 billion yen, +~20% YoY, operating margin 24.6%; net profit: 12.42 billion yen; ROE 22.3% • Revenue split: 33.2 billion yen in H1, 36.8 billion yen in H2, as new hires become productive from August onward and net hiring is positive. Operating profit split: 7.35 billion yen in H1, 9.85 billion yen in H2, due to 800 million yen in new graduate training costs recorded in H1 • 3.5 billion yen in annual R&D investment focused on generative AI and web3, equal to 5% of revenue (up 1 percentage point from the prior 4% target) • Segment growth forecasts: Strategy/DX Consulting +29.4% YoY, Enterprise DX +47.8% YoY, Financial Retail +~10% YoY • Gross margin targets by service: Strategy/DX Consulting targeting 50%; System Integration 44% (up from 42% prior midpoint); Operation Services 42% (up from 41.4% prior actual). A wider ±3 percentage point margin volatility range is adopted this year due to transition costs for company-wide AI-Native rollout • Hiring plan: 250-300 new graduates, 250-300 mid-career hires, total 500-600 new hires for an average total headcount of ~2,560. Dividend raised from 18 yen to 24 yen per share, maintaining the 40% payout ratio target; share repurchases will continue flexibly to improve capital efficiency

• New Mid-Term Plan Chukei 2030 -Vision1000- (FY2027-FY2030 March Term) • The 1,000 billion yen revenue target (originally called Vision1000) is now explicitly targeted for FY2030 March Term. The 4-year plan splits into 2 years of investment phase (focused on generative AI and web3) followed by 2 years of harvest phase • 2030 targets: minimum 45.0% gross margin, 25.0% operating margin, with upside of up to 5 percentage point margin improvement from AI-Native Delivery and non-labor-intensive web3 business building, putting 30.0 billion yen operating profit in reach • Average annual revenue growth target of 14-15%, with at least matching operating profit growth, and upside to 20% average annual operating profit growth if generative AI harvest materializes • By 2030, Strategy/DX Consulting is targeted to reach 25% of total revenue (250 billion yen on 1,000 billion yen total revenue)

By Service Type:

1. Strategy/DX Consulting: 10.816 billion yen, +44.0% YoY, gross margin 48.4%, 18.4% of total revenue
2. System Integration: 33.758 billion yen, +28.3% YoY, gross margin 43.0%, 57.5% of total revenue
3. Operation Services: 14.093 billion yen, gross margin 41.4%, 24.0% of total revenue

By Business Domain:

1. Capital Markets (Financial): +13.9% YoY, part of a ~40.0 billion yen combined stable revenue base with Financial Retail
2. Financial Retail (Financial): +15.5% YoY, part of a ~40.0 billion yen combined stable revenue base with Capital Markets
3. Enterprise DX (Non-Financial): 8.696 billion yen, +51.5% YoY, highest growth segment
4. Xspear Consulting (Strategy/DX): 10.816 billion yen, +44.0% YoY, top-line growth driver

• Industry transformation and displacement risk: AI will drive accelerated bifurcation across the industry. Players limited to niche sub-contracting roles (secondary/tertiary contractors, offshore, pure testing firms) and time-and-materials consulting firms that do not take responsibility for business outcomes face high risk of displacement
• Pricing pressure risk: widespread industry AI-driven man-hour reduction could eventually lead to downward price pressure for equivalent system projects, though the company notes this trend will take longer to impact its high-complexity, mission-critical focus area
• Transition cost volatility: company-wide rollout of AI-Native Delivery may lead to higher-than-usual rework and recovery costs, creating higher volatility in gross margin compared to prior periods
• In-house development risk: while broad generative adoption may lead some clients to bring lower-complexity work in-house, mission-critical interconnected systems remain very difficult to in-source, leaving Simplex's end-to-end result responsibility value intact

Q: How far along is Simplex in generative AI adoption, and what is the company-wide rollout plan? / A: Through FY2026, the company was still in the Work with AI phase, but was already a leading adopter: many engineers daily use Codex, Claude, and Copilot, with active users ranking top 3 in Japan and AI usage in the top 20% globally. Productivity gains from AI helped drive per-employee annual revenue up 250 thousand yen year-over-year to 2.879 million yen. Pilots in H2 FY2026 confirmed man-hour reduction benefits for AI-native development, so FY2027 will be a transition year: all new development will use AI-Native Delivery, with existing projects converted incrementally.

Q: Will generative AI eliminate demand for consulting and SI firms like Simplex? / A: AI cannot guarantee final quality or take responsibility for business outcomes, which is critical for mission-critical systems. The value of firms that take on full end-to-end responsibility will actually increase. The industry will bifurcate: lower-tier sub-contractors and outcome-agnostic consultants face high displacement risk, but Simplex has always done prime direct contracting without sub-contracting, with full end-to-end responsibility, so it is well positioned to gain competitive advantage from AI. Only low-complexity work is at risk of in-house adoption, while mission-critical systems remain too complex to bring fully in-house.

Q: Can AI productivity gains lead to sustained growth despite potential price pressure? / A: Simplex primarily uses fixed-price contract development, not time-and-materials billing, so productivity and man-hour reductions flow directly to the company's bottom line, which was already visible in FY2026 results. Price pressure will take time to impact the high-complexity mission-critical space Simplex focuses on, giving the company time to capture first-mover advantage. Productivity gains create spare capacity that can be used to take on more new projects (removing the historic production capacity constraint on growth) or improve existing project quality and functionality to increase customer value. There is still substantial unmet DX demand among Japanese companies, providing a large backlog for growth.

Q: Is there still a need to hire new engineers and young talent in the AI era? / A: AI amplifies the value of high-skill talent: strong design, development, and communication skills to direct AI are more important than ever, so expanding the pool of AI-proficient talent is the key driver of future competitive advantage. There is no reason to slow hiring. The Siphon framework will spread AI know-how broadly, allowing even mid-tier talent to generate much higher productivity. The company targets growing the number of AI-proficient employees earning over 10 million yen from ~600 to 1,000, to compete with much larger firms on productivity growth.