Ricksoft Co.,Ltd. Q2 FY2026 earnings call

Long-Term Vision & Strategic Transformation

• Riksoft has set a target of 3 billion yen EBITDA by 2030, with the 10-year transformation initiative branded "Reignite2030".
• The core transformation goal is to shift from a business model overly reliant on Atlassian license resale to a value-added model centered on professional services, in-house products, and AI-driven technology solutions.
• Organizational restructuring is underway: the company is flattening hierarchies to reduce distance between the CEO and frontline sales/engineering teams, starting with engineering team reform and now expanding to sales operations to improve cross-functional collaboration for better client value delivery.
• A total of 6 billion yen in cumulative strategic investment is planned through 2030: 1 billion to 1.4 billion yen for business model transformation, and 4 billion to 5 billion yen for human capital investment to expand specialized teams domestically and internationally.

Portfolio Growth Strategy

• The company aims to significantly scale Professional Services (end-to-end services from system planning, design/implementation, to operational support) to maximize long-term profit, while growing Technology Solutions by promoting AI integration for clients to meet rising market demand.
• In-house products, developed by combining technology solution expertise and professional service experience, are sold globally in the Atlassian ecosystem, and have successfully raised Riksoft's global brand recognition in the space. The company will leverage this brand to expand Technology Solutions and Professional Services globally by 2030.

Quarter Operational Highlights

• Contract liability (deferred revenue) increased to 3.4 billion yen, most of which comes from Atlassian cloud sales, building a stable foundation for future revenue and profit.
• In September 2025, Atlassian announced it will end support for its on-premise Data Center product in March 2029, which accelerates Riksoft's existing strategy of migrating clients from on-premise to cloud, a positive external development aligned with the company's strategic direction.

1. Technology Solutions: Revenue of 4.124 billion yen, 15.7% year-over-year growth, accounting for approximately 80.5% of total second quarter revenue. This segment remains Riksoft's core main business, growing steadily. 2. Professional Services: Revenue grew 69.5% year-over-year as a strategically prioritized high-growth segment, aligning with the company's long-term profit growth plan. 3. In-house Products: Revenue declined 5.2% year-over-year in the quarter. This slowdown is primarily due to pre-recording of planned Q2 revenue in Q1; adjusted for this timing effect, the segment still delivers meaningful non-financial value by boosting Riksoft's global brand recognition in the Atlassian ecosystem. Total company revenue for the quarter reached 5.126 billion yen, 19% year-over-year growth, with operating profit of 167 million yen, 25% year-over-year decline, resulting in a top-line growth but bottom-line decline result.

• The full-year 2026 February term guidance is maintained, with Q2 results matching management expectations: full-year revenue progress hit 50.4% and operating profit progress hit 40.7%, and the lower operating profit progress was in management's plan. Management confirms the current quarter's lower operating profit is partially driven by timing effects from pre-recording Q2 revenue in Q1.
• Management expects operating profit margin improvements from the Reignite2030 restructuring will start to be reflected in financial results once the transformation enters its mid-stage.
• Management expects Atlassian's end-of-support announcement for on-premise products will accelerate cloud migration demand, supporting the company's long-term growth and margin expansion goals.

• Large system integrator Atlassian partners have entered license sales competition over the past year, using low-price strategies that have created challenging conditions for Riksoft's license sales in some market segments, pressuring near-term profitability for the core license business.
• Near-term operating profit margin has declined, which management identifies as a key business issue to address through restructuring.
• 30 million yen in foreign exchange losses occurred in the quarter, which pressured current-period net income.
• The ongoing strategic transformation requires large cumulative investment, which will continue to pressure near-term margins before delivering profit improvements.

Q: Can you explain what Reignite2030 is in more detail? / A: Riksoft's past business was overly reliant on Atlassian license resale, which reduced the priority on delivering client-specific value and left client needs insufficiently addressed. Reignite2030 is the structural transformation to return to the company's origin of client value: shifting to a business model focused on delivering customized added value for clients. This is the core goal of the initiative.

Q: When can we expect a recovery in operating profit margin? / A: Management recognizes that operating profit margin has gradually declined over the past 1.5 years, and appreciates investor concern on this issue. Management believes that the ongoing Reignite2030 transformation will improve profits by reorienting to higher-value client value delivery. Margin improvement is expected to start showing up in financial results once the transformation reaches the mid-stage.

Q: How has the competitive environment changed for Riksoft? / A: There are two layers of competition. First, Atlassian competes with third-party products like Microsoft offerings and new entrant tools; management confirms Atlassian has maintained strong competitive position, delivering strong growth over the past 2.5 years. Second, competition between Atlassian partner resellers: large SI partners have entered the market over the past year with low-price license strategies, creating some difficult conditions for Riksoft's license sales. Management notes that in the cloud era, pure low-margin resale will not deliver enough value to clients, and Riksoft's shift to value-added services aligned with Reignite2030 will strengthen its long-term competitive advantage.

Q: Is the slight decline in engineer headcount due to the business model transformation's workforce restructuring? / A: The decline of 2 engineers is not 100% driven by transformation. Half of the decline is related to structural adjustments from transformation, and the other half comes from controlled hiring amid falling profit margins over the past 1.5 years. These two factors combined resulted in the slight net reduction in engineer headcount.