i Cubed Systems,Inc. Q2 FY2026 earnings call

• Market Leadership

  • Achieved 15 consecutive years of No.1 market share in the domestic self-branded MDM market, maintained the top position in the most recent year
  • Growing demand for MDM driven by increasing business use of mobile devices amid domestic digital transformation, with 37.4% of all corporate security incidents stemming from lost or stolen devices/data, increasing the need for mobile device security management

• Core Growth Strategy Execution

  • Customer Base Expansion: New customer acquisition via OEM supply to NTT DOCOMO Group continues to progress steadily, with stable customer growth matching the prior quarter's pace. The company has 7 domestic sales bases to strengthen collaboration with regional sales partners, and holds offline events to improve partner product knowledge for CLOMO and its optional services.
  • ARPU Improvement: Launched two new optional services in the first half to drive cross-selling: 1) CLOMO Advanced Wipe secured by TRUST DELETE, a Windows PC information leak prevention service co-developed with consolidated subsidiary Onebee Inc, which offers Ministry of Internal Affairs and Communications guideline-compliant data erasure that works even when devices are offline; 2) Trend Vision One Mobile Security, a mobile device security service co-developed with Trend Micro that provides multi-faceted threat defense across networks, apps and devices, plus real-time risk level visualization. The new optional services are hosted on the existing CLOMO platform to allow existing customers to access them in the same secure environment.
  • Service Value Improvement: Added a new Windows app distribution feature to the core CLOMO platform to expand Windows PC functionality. Completed base infrastructure development to host Onebee Inc products on the company's technology platform and has deepened cross-company collaboration including shared sales channels. The company has also maintained a stable customer retention rate of 97.6%.

• Sales & Operational Structure

  • CLOMO uses an indirect sales model primarily through mobile carriers and their agencies, with NTT DOCOMO Group as the top partner. The company has provided OEM CLOMO technology for DOCOMO's branded Anshin Manager NEXT service since 2022, which has become a key channel for new customer acquisition.
  • The consolidated balance sheet remains stable: equity ratio stays above 60% on a consolidated basis to support planned future growth investment. Software work-in-progress increased compared to the end of the prior fiscal year due to limited software releases in the first half.

• Shareholder Returns

  • Introduced a shareholder benefit program in the prior fiscal year, offering digital gift points that can be redeemed for common payment service points.
  • Initiated intermediate dividends this fiscal year: revised the planned intermediate and full-year dividends upward from 17 yen per share to 18 yen per share for each, bringing total annual dividends to 36 yen per share with a planned payout ratio of 25%. The company will maintain a balance between growth investment and continued shareholder returns while prioritizing top-line growth.

1. CLOMO事業: This is the company's core SaaS business focused on enterprise mobile device management. As of the end of the second quarter, CLOMO business annual recurring revenue (ARR) reached 3.515 billion yen, increasing 16.3% year-over-year. Parent company standalone revenue for the first half was 1.784 billion yen, with standalone operating profit of 637 million yen. Consolidated revenue for the three-month second quarter was 1.07 billion yen, with consolidated operating profit of 342 million yen; cumulative first half consolidated revenue was 2.127 billion yen, and cumulative first half consolidated operating profit was 684 million yen. CLOMO business accounts for nearly 100% of the second quarter consolidated revenue, as there was no revenue recognized from the investment segment in the quarter. Core KPIs for CLOMO business: 9,523 total customer companies as of December 2025, with 903 net new customers added in the first half; customer retention remained at 97.6%; ARPU (average revenue per user per company per month) has a moderate long-term downtrend due to a higher proportion of small and medium-sized new customers, but the rate of decline slowed in the first half. 2. Investment Business: The segment was launched in 2021 via a CVC subsidiary fund, investing broadly across startups (not limited to IT/software) to drive long-term growth for CLOMO business. There was no exit or revenue recognized in the reported second quarter; the segment's first exit was completed in the prior fiscal year, and the company continues new investments to target future returns. Investment business revenue contribution was 0% in the second quarter.

• Full-year 2026 June fiscal year results are expected to remain in line with the initial earnings guidance, with no upward or downward revision to the full-year profit forecast.
  • A rush of new customer demand is expected in the third quarter ahead of the end of service for an older offering in March 2026, which management expects will further accelerate the pace of new customer addition and increase in the number of customer companies.
  • The current fiscal year's business investment plan is back-loaded, with the majority of investments scheduled for the second half (second half of the fiscal year, after the second quarter). Expected investments include additional headcount, advertising and promotion activities to support medium and long-term business expansion. As a result, operating profit from the third quarter onward is expected to be moderately lower compared to the second quarter.
  • The company will continue to pursue growth based on its three core strategic pillars: customer base expansion, ARPU improvement, and service value enhancement, targeting continued ARR growth via OEM-driven customer acquisition and optional service-driven average revenue increases.
  • Dividend guidance was revised upward: the planned annual dividend increased from 34 yen per share to 36 yen per year, with intermediate and end-of-year dividends each raised from 17 yen to 18 yen per share.

No explicit material risks or operational failures were discussed in the provided transcript segment. The company notes that ARPU has seen a moderate long-term downtrend as the share of small and medium-sized new customers increases, but management does not view this as a negative risk at the current stage, and it is seen as a side effect of steady customer base expansion. The company is actively implementing measures to suppress the rate of ARPU decline via cross-selling of optional services.

No question and answer section content was included in the provided transcript.