Nihon Enterprise Co.,Ltd. Q2 FY2026 earnings call

Company Overview and Operating Environment

• Nippon Enterprise is listed on the Tokyo Stock Exchange Standard market (code 4829), with 1.1 billion yen in capital stock, 5 board members (2 outside directors, 3 internal directors), and 221 employees as of the end of November 2025.
• The company operates two core segments: Creation Business (creates new lifestyles and business styles via self-owned intellectual property services) and Solution Business (provides new customer business value via IT solutions, currently shifting to a consulting-focused model).
• Macro environment: The domestic DX market is projected to grow to over 9 trillion yen by fiscal 2030, with accelerating AI adoption across manufacturing, retail, and food service sectors driving broader DX expansion, even as the working-age population decline continues to shrink the overall domestic market.

Creation Business Operational Updates

• Content Services: The company's existing "Sugotoku Content" fixed-rate content offering will transition to "d Value Pass", and the company is pursuing further content development. Key partnerships:
  • Femtech app "Rhythm Notebook", which has over 500,000 general users, was added to Daiwa Institute of Research's "Hearbit" corporate welfare platform for free employee access, opening the corporate market.
  • "ATIS Traffic Information" launched a mutual customer referral partnership with automotive news outlet Media Varg for "Kuruma News".
  • New content updates were rolled out for long-running game services, and ad investment efficiency is being measured to improve the "SugoComic" digital manga service.
  • The company is shifting focus from user acquisition via ad investment to enterprise partnerships, personalization, and UI/UX improvement to expand industrial use cases.
• Business Support Services:
  • Kitting Support: Demand for custom tools, tool sales, and kitting outsourcing is growing. The company uses its in-house developed RPA tool "Kitting-One" to develop custom solutions. With the NEXT GIGA School initiative driving demand for education device security upgrades and capability building after the initial 5-year cycle of the original GIGA School program, kitting support is positioned for continued growth.
  • Traffic Information: The company began providing ready-to-broadcast traffic information to media stations in Kanagawa and Shizuoka prefectures, and launched roadside signage showing road and parking availability at road stations in Kanagawa. Demand is growing from professional driver industries (taxi/hire) and disaster/emergency management use cases, and the company plans to expand into automotive-related industries.
  • Communication: The company began offering a gateway service for interconnecting different networks via new sales partners, and is integrating AI technology into its customizable on-premise and cloud-based IP-PBX communication systems to expand sales via new partners.
  • EC/ASP Services: The company's procurement support service, which offers secure closed-platform (fixed-fee "Profair") and open-platform (per-project usage-based "Nihon Open Market") options, has expanded its customer base to include national and public universities and large enterprises via referrals and inquiries.
• Renewable Energy: The company's solar power operation in Yamaguchi generated 6 times the group's total internal power consumption, and the company plans to combine its power generation capability with in-house expertise to develop new regional revitalization services.

Solution Business Operational Updates

• System Development Services: A new specialized department led by experienced top consultants was established to strengthen IT consulting capabilities. The company now offers end-to-end services starting from IT strategy consulting, IT investment planning, grand design, BPR, through system development, maintenance, and operation, targeting large new client projects amid growing demand for systems as AI and automation address industry-wide labor shortages.
• Business Support Services: The company provides on-site support focusing on upstream engineering work for major clients including communication carriers and media outlets, using pyramid-structured teams across multiple locations nationwide. The service is currently growing amid expanding market demand.
• Other Services: The company sells terminal peripheral products and operates a refurbished used terminal trading business. Growing demand for used terminals driven by regular device upgrade plans has made the market increasingly active, and the company uses industry-standard software to fully erase user data to protect privacy as it expands this business.

Overall consolidated net sales for the interim period was 2.189 billion yen, a 1.6% increase year-over-year (YOY). For the two main business segments:

1. Creation Business: Total net sales was 892 million yen, a 6.8% increase YOY. It accounts for 40.7% of total consolidated net sales. Breakdown of sub-segments:
   • Content Services: Net sales was 457 million yen, a 7.8% decrease YOY, driven by declining fixed-rate content revenue.
   • Business Support Services: Net sales was 401 million yen, a 30.8% increase YOY, driven by strong growth in kitting support and expansion across traffic information, communication, and EC/ASP services.
   • Renewable Energy: Net sales was 33 million yen, a 2.1% increase YOY, driven by favorable weather conditions for the company's solar power operation in Ube, Yamaguchi.
2. Solution Business: Total net sales was 1.297 billion yen, a 1.6% decrease YOY. It accounts for 59.3% of total consolidated net sales. Breakdown of sub-segments:
   • System Development Services: Net sales was 726 million yen, a 7.7% decrease YOY, due to delayed recovery in contracted development demand.
   • Business Support Services: Net sales was 504 million yen, a 1.8% increase YOY, driven by growing demand for SES (Software Engineering Service) support.
   • Other Services: Net sales was 66 million yen, an 84.4% increase YOY, driven by growing sales of solution-related goods including glass coating agents.

On a quarterly basis for the second quarter, Creation Business net sales grew 11% YOY, while Solution Business net sales declined 3.5% YOY, leading to an overall 2.1% YOY net sales growth for the second quarter.

• Full-year 2026 May Term consolidated guidance is maintained unchanged from the original forecast, with all metrics projected to deliver growth: full-year net sales of 5.33 billion yen, operating profit of 240 million yen, ordinary profit of 250 million yen, and net income attributable to parent company shareholders of 155 million yen.
• The annual dividend forecast is maintained unchanged at 3 yen per share. The company will maintain a policy of stable dividends, while retaining sufficient capital to prepare for future aggressive business expansion and changes in the operating environment to deliver medium- and long-term shareholder returns.
• The company stated it will work to grow profit in the second half of the fiscal year to meet the full-year forecast, after reporting small profits in the first half.

No explicit discussion of material risks or operational failures was included in the provided transcript.

No question-and-answer session was included in the provided transcript.