4450.T

• Company Overview & Positioning

  • Power Solutions is a B2B IT company specializing in last-mile DX promotion, focused on solving unaddressed gap workflows between existing standard enterprise packages and end-user needs. It has a niche top position supporting DX in the growing financial/asset management sector, and is expanding into logistics and manufacturing.
  • Since its 2019 listing, the company has steadily grown results and expanded its business scope via continuous M&A and strategic alliances, adding 3 new group companies (including 2 consolidated subsidiaries) in 2025, and holds a strategic business-capital alliance with Australia's Sazae Inc. for global AI-powered SaaS expertise.

• Medium-Term Management Plan (2025-2027) Positioning

  • The 2022-2024 previous medium-term plan period focused on building foundational capabilities in talent acquisition, development, R&D, and expanding access to global AI-powered SaaS via M&A. The 2025-2027 period is positioned as a "transformational period for leapfrog growth", with core strategies of shifting from custom system development ("build") to leveraging existing global AI-powered SaaS ("use"), and expanding into upstream DX consulting.
  • The 2027 full-year revenue target of 9 billion yen is on track to be achieved a year early, with 2026 revenue expected to hit 10 billion yen.

• Core Sources of Competitive Advantage

  • Access to and expertise in world-class global AI-powered SaaS, built up over the previous medium-term plan.
  • Stable recurring business with key clients: Deep specialized expertise in the asset management industry (all top 7 investment trust firms by AUM are long-term ongoing clients), and growing licensing and expertise across a portfolio of leading SaaS products including UiPath, GeneXus, Smartsheet, Boomi, OutSystems, and Snowflake.
  • Multi-channel omnidirectional talent acquisition: Uses new grad hiring, mid-career hiring, cross-industry hiring, hiring for returning professionals, multinational hiring, partner utilization, and M&A to steadily grow headcount amid widespread industry talent shortages.
  • Continuous reskilling for talent development: Operates an in-house training academy (Next Mile University), and partners with Chiba University's DX Design Research Laboratory to maintain up-to-date workforce skills.

• Growth Strategy

  • The company practices "ambidextrous management": deepening specialized expertise in industry verticals while expanding cross-industry horizontal capabilities. It targets growth via both expanding existing client relationships and acquiring new clients.
  • Four key strategic initiatives: 1) Expand business with existing clients via customer success strategy, shifting to SaaS-based solutions to shorten delivery timelines and improve repeat proposal quality. 2) Acquire new clients by leveraging the brand recognition of leading global AI-powered SaaS products. 3) Expand headcount and improve customer unit economics, pairing workforce growth with skill upgrading via reskilling/upskilling to drive sustained increases in average customer value. 4) Expand into upstream DX design consulting to support overall IT redesign for clients, enabling the shift to SaaS-centric solutions.
  • Programmatic M&A strategy: Continues targeted M&A with two core goals: acquiring talent and expanding access to AI-powered SaaS products, specifically prioritizing firms with expertise in business infrastructure SaaS that serve as a foundation for AI deployment.

• 2025 Operational Highlights

  • Received Partner of the Year awards from both UiPath and Boomi in recognition of the company's SaaS deployment track record.
  • Scheduled to move its head office on March 30, 2026, consolidating Power Solutions and 4 Tokyo-based group companies at a single location to improve cross-group collaboration and synergy.
  • Implemented shareholder returns: Has paid dividends since 2024 and offered shareholder benefits since 2025, with a planned 1 yen per share dividend increase for 2026, and an 8,000 yen QUO card for qualifying shareholders.

• For the 2026 full year (ending December 2026), consolidated revenue is guided at 10 billion yen, representing more than 20% year-over-year growth, which exceeds the original 2027 medium-term plan revenue target of 9 billion yen, putting the medium-term plan ahead of schedule.
• A 0.1 billion yen one-time expense is expected for head office relocation (including restoration and moving costs), which will cause a temporary year-over-year decline in profit. The company maintains the original 2026 EBITDA target laid out in the medium-term plan, despite this one-time headwind.
• The 2026 guidance assumes normal demand levels and does not include any upside from stronger-than-expected demand that occurred in 2025. Management noted that if demand again exceeds expectations in 2026, there is material upside potential to the guided results.
• If the company successfully expands its consulting business as planned, management expects revenue per employee to exceed the 2030 medium-term forecast, driven by higher value added work.

Power Solutions operates three business segments: 1) DX Promotion & DX Consulting: This is the largest segment, contributed the majority of 2025 revenue growth, grew 20% year-over-year driven by stronger-than-expected customer demand and the full-year consolidation of Innovative Solutions Inc. acquired in 2024. 2) Infrastructure Engineering: Operated by Execution Inc., focuses on cloud IT infrastructure provision, contributed steady growth in 2025, supported by targeted talent acquisition via M&A in 2025. 3) RPA-related Services: Operated by OLDE Inc., uses UiPath products to support business innovation via the combination of AI and automation, was a stable contributor to 2025 results. Overall consolidated 2025 revenue grew 20% year-over-year, with EBITDA and operating profit growing more than 30% year-over-year.

• Persistent domestic Japanese IT talent shortage: Industry-wide supply of IT labor is not keeping up with growing DX demand, and the gap is expected to widen in the future. The company mitigates this risk via multi-channel talent acquisition, upskilling/reskilling, and leveraging AI-powered SaaS to enable citizen development by non-IT staff.
• AI disruption of SaaS market: Some existing SaaS products will likely be displaced by new AI capabilities, creating uncertainty for long-term market dynamics. The company mitigates this risk by focusing on business infrastructure SaaS that act as a foundation for AI deployment, which management expects to see increasing, not decreasing, demand as AI adoption grows.
• Cannibalization risk between RPA and AI agents: Management does not expect AI agents to cannibalize RPA demand, instead viewing AI agent development as part of the broader advancement of automation that will expand the total addressable market for automation solutions.
• Potential SaaS vendor price increases: The company acknowledges that leading SaaS vendors may implement price increases in the future, but mitigates this risk by focusing on value-added customized delivery on top of SaaS licenses, and commits to transparent communication with clients if price adjustments occur.

Q: What benefits do you expect from consolidating your group companies at a single new head office?

A: The main benefit is improved natural collaboration and synergy across the group when all team members are located in one place. The new office is in a high-profile location near Tamachi Station, which is also expected to improve hiring ability. It also has expanded communication spaces, which will help improve employee engagement.

Q: What is your competitive advantage in the last-mile DX space compared to large IT vendors, and is this advantage sustainable?

A: First, we have deep vertical specialized expertise in the financial and asset management sector, with over 20 years of experience serving clients in this industry and broad knowledge of existing products used in the space, which makes custom last-mile development our core strength. Second, we have deep horizontal expertise in building SaaS infrastructure for business. Combining these two strengths creates our sustainable competitive advantage. This advantage is supported by our in-house talent development system: we consistently share vertical industry expertise with new hires and continuously update SaaS knowledge for all employees. We also offer employees approximately 100 hours of annual training content to ensure they can always catch up on required new skills, which sustains our competitive position over time.

Q: Why does 2026 EBITDA not show strong growth even after accounting for the 100 million yen one-time relocation expense? What assumptions underpin the 2026 earnings target?

A: In 2025, demand exceeded our initial forecast, which pushed utilization and profit margins higher than planned. This was driven by the timing of large project wins overlapping in the year, which is a one-off dynamic rather than a permanent trend. We set the 2026 plan based on normalized demand levels excluding this one-off upside. That said, if we see the same type of overlapping large project timing in 2026 that we saw in 2025, there is still upside potential to the current plan.

Q: When do synergies typically materialize after M&A, and when do acquired companies start contributing to your product portfolio?

A: After M&A, we conduct post-merger integration by sharing sales content across group companies and promoting cross-selling, so synergies gradually emerge over time. In some cases synergies appear relatively early, while in other cases cross-selling takes more time to materialize. For example, last year Innovative Solutions saw stronger-than-expected demand, and our existing group workforce was able to support them in delivering that demand — without M&A they would not have been able to meet that demand on their own. That collaboration itself is evidence of synergy. Expanding the group also broadens our ability to capture unexpected demand, as the whole group can absorb larger project volumes together.

Q: Could vendor-led SaaS price increases and AI advancement impact your business going forward?

A: It is possible that SaaS vendors will increase prices in the future, and we are already aware of some discussion of potential price increases. We commit to communicating transparently with clients and responding appropriately if any price changes occur. For our business, while we do aim to secure stable license revenue, our core focus is delivering customized optimized solutions on top of the SaaS base. We are also proactively advancing AI integration by proposing SaaS foundations early to clients, building up proper data accumulation, and positioning our business to enable full-scale AI utilization for clients as the technology advances.