i Cubed Systems,Inc. Q2 FY2025 earnings call

Business Overview

• The company operates two segments: core CLOMO business (cloud-based mobile device management software) and investment business (venture investment in startups, launched in 2021, with no sector restrictions on investments).
• CLOMO MDM, the flagship product, enables unified management of corporate mobile devices, with core functions including usage tracking, policy setting, and emergency response, plus 5 secure enterprise apps under the CLOMO SECURED APPs line.

Key Operational Milestones

• Achieved 14 consecutive years of No.1 market share in the domestic MDM market for its own brand.
• Completed ISMAP registration (Japanese government security qualification for cloud services), opening up opportunities for public sector client acquisition.
• Acquired 100% ownership of Onebe, a Windows PC security solution provider with over 600,000 units of installation experience, to expand PC-related services.
• CLOMO was certified as an eligible tool for Japan's IT introduction subsidy, lowering adoption barriers for small and medium enterprises.
• Recorded the first exit in the investment business, with a second exit scheduled.

Strategic Progress

Management has laid out three core growth strategies for CLOMO:

• Client base expansion: OEM supply to NTT Docomo Group continues to drive stable new client growth; actively expanded into the medical sector through event participation and case study publication; IT subsidy certification is expected to further accelerate SME adoption.
• ARPU improvement: Expanded optional services around the core MDM offering; rebranded and added new features to the existing home screen customization app; strengthened customer success activities to maintain high retention and drive upsell; the acquisition of Onebe enables cross-selling of Windows PC security services to existing CLOMO clients to boost ARPU.
• Service value enhancement: The Onebe acquisition improves the group's overall development capability and adds a new distribution channel through Onebe's existing trading relationship with distribution trading companies, complementary to CLOMO's existing carrier-focused sales network.

1. CLOMO Business (core business): Cumulative second quarter revenue of 1.595 billion yen, operating profit of 411 million yen, accounting for 93% of total cumulative consolidated revenue. As of the end of the second quarter, the annual recurring revenue (ARR) exceeded 3 billion yen, reaching 3.021 billion yen. Key KPIs: 7,694 corporate clients (an increase of 984 in the half-year), customer retention rate of 97.1%, and ARPU continues to decline gradually due to the growth of small and medium enterprise clients. 2. Investment Business: Recorded its first revenue this fiscal year from the first exit of an investment since the business launched, with a second exit planned. No investment business revenue was generated in the standalone second quarter. 3. Consolidated Results: Standalone second quarter consolidated revenue of 812 million yen, consolidated operating profit of 212 million yen; cumulative second quarter consolidated revenue of 1.716 billion yen, consolidated operating profit of 423 million yen, with an operating profit margin of 24.7%.

• Overall full-year performance is roughly on track with original plan, and the company will continue to implement necessary business investment for sales growth in the second half of the fiscal year.
• ARPU is expected to continue a gradual declining trend as small and medium enterprise client numbers grow, and the company will actively implement cross-selling and other ARPU improvement measures to limit the extent of the decline.
• The company maintains its 2025 June fiscal year end dividend plan at 32 yen per share, unchanged from the previous year, balancing business investment and active shareholder returns.
• Management will continue to pursue share expansion in the overall MDM market, including the OEM channel outside the own-brand market, and target share growth in the PC device management segment following the Onebe acquisition.

No explicit material operational or financial risks were discussed in the provided transcript. The company notes the gradual decline in ARPU driven by growing SME client penetration, which management frames as a natural outcome of client base expansion (not a negative risk) and plans to mitigate through active cross-selling initiatives.

Q: What is the current competitive landscape in the MDM market, and how is IQCube positioning itself amid any changes? / A: Management states that the competitive environment has not seen major shifts in recent years. The market structure is characterized by partnerships between domestic mobile carriers and domestic vendors, with Microsoft holding a steady market share as the primary foreign competitor. IQCube's core priority is expanding share in the PC device management segment on top of its leading position in mobile MDM, and the acquisition of Onebe is explicitly intended to help the company capture share in this growing market.