4736.T

Overall Company Update

• Completed office relocation at the start of the fiscal year, with improved working conditions and higher employee morale; restored consolidated reporting for the first time in 8 fiscal periods after acquiring a Nagoya-based software development firm in July, opening a path for further group expansion.
• Is undergoing business structure transformation to become a leading DX solution provider for Japanese manufacturing, by productizing and platforming its integrated hardware/software solution capabilities. The transfer of engineering resources and enterprise experience from the Enterprise Solution Segment to in-house product development in the IoT Integration Segment is progressing on schedule.

Mid-term Management Plan Progress

• Three core strategic priorities are all on track: (1) Proactive investment-oriented personnel rotation and resource shift to DX/product operations is ongoing; (2) The core DataOps automation platform Dereva was launched ahead of schedule; (3) M&A and group expansion activities are progressing, leading to the return of consolidated reporting.
• The current fiscal year (the second year of the mid-term plan) is intentionally a springboard period for structural reform from people-centric to product-centric business, with planned investments dampening near-term sales and profit in line with original expectations. The compound annual growth rate for the manufacturing DX business is projected to exceed 20% through the plan period.
• The shift to a product-focused talent strategy is now established internally and externally. Leveraging project management and coding capabilities from the enterprise SI segment for product development has been proven effective, and the company will continue to strengthen this path alongside reskilling for cross-functional AI and platform development.
• The Dereva platform, designed as a data handling hub to enable ecosystem building with external partners, has received strong market feedback and positive reception for its edge product line since launch. The company is first exploring integration with the segment's video solution business, and will continue to leverage cross-company synergy for development, based on the belief that ecosystem collaboration delivers the greatest value in hardware development.

Recent Operational Updates

• Acquired all shares of One'sHouse Co., Ltd., a Nagoya-based software firm with 18+ years of steady contract development experience, to strengthen local development and client coverage in the Chubu region, a key manufacturing and automotive hub. The existing management team will be retained, and the firm will serve as a core hub for regional expansion.
• Launched the Intelligent Media Solution Promotion Division to address previous limits on video solution growth from restricted procurement sources. The new unit brings expertise in input-side high-tech hardware (cameras, codecs, transmission, recording) and now enables end-to-end total solutions from video capture through encrypted low-latency transmission to display. Full commercial launch is planned for next fiscal year, with current interim period spending counted as upfront investment.
• Began full commercial rollout of US-based Indicio's next-generation passwordless personal authentication solution Proven Auth, as an official domestic distributor and technical partner. The solution addresses growing concerns over unauthorized access, data leaks, and identity theft by combining strong security with high usability on consumer smartphones.
• Received the CYBOZU AWARD 2025 Area Award (Tokyo Metropolitan Region) for its kintone-based low-code solution work, recognizing its custom kinterp template released in 2021 that leverages core system development expertise for cross-industry clients.

• The full-year ordinary profit is currently 64% through the interim period, which is in line with management expectations and on track to meet the full-year plan, which was already revised downward ~20% from the original mid-term plan targets to account for planned investments. Management expresses confidence in meeting the full-year guidance.
• The full-year 2026 March fiscal year plan already incorporates expected costs including rising personnel expenses, upfront investment for the new Intelligent Media Solution division, core hardware talent acquisition costs, and Chubu region group expansion costs. Current progress against this plan is in line with expectations.
• Further growth in manufacturing DX is expected in the second half of the fiscal year, and the company will continue allocating human and capital resources to expand solution, product, and platform capabilities.
• The company will maintain the previous fiscal year's dividend level, resulting in an expected full-year payout ratio of approximately 32%.

1. Enterprise Solution Segment: Experienced a peak-out of large post-pandemic software development demand, leading to a year-over-year sales decline. Rising personnel and outsourcing costs have pressured segment profits. The segment continues to serve its core function of developing high-quality engineers through client projects. It currently makes up 58.3% of total company revenue, per the current IoT segment 41.7% revenue share split.
2. IoT Integration Segment: Grew year-over-year sales, offsetting the Enterprise Solution Segment's decline. The current segment revenue contribution is 41.7%, approaching the mid-term management plan target of 45%. Within the segment: new and expanded large manufacturing DX projects are growing steadily; embedded security solutions development is progressing well; the medical business has finished a cycle of large projects and is focused on product development, with no material near-term profit contribution; the integrated video solution business has launched new operations, which slightly pressured segment profit in the interim period.

• Rising personnel and outsourcing costs continue to pressure profits, particularly in the Enterprise Solution Segment. Improving project pricing and shifting development structure via AI utilization are ongoing priority management responses to this risk.
• The structural shift from a people-centric contract SI business to a product-centric DX platform business relies on successful reskilling of existing talent and retention of new core product talent. Execution of this transition remains a key risk to long-term growth targets.
• The springboard investment phase of the mid-term plan intentionally suppresses near-term sales and profit, creating risk of weaker short-term financial performance while platform and product capabilities are built out for future growth.

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