circlace Inc Q2 FY2026 earnings call

Overall Financial Performance

• Cumulative first half consolidated revenue: 2.094 billion yen, +23.4% YoY, hitting 45.5% of the full-year plan, exceeding the prior year's 44.6% progress rate after six months
• Cumulative first half operating profit turned positive at 6 million yen, swinging from a -28 million yen loss in the prior year, after absorbing 30 million yen in one-time headquarter relocation costs and 67 million yen in global business investment; net income attributable to parent company shareholders was 15 million yen
• Q2 standalone operating profit was 70 million yen, +203.6% YoY, with profitability improved after absorbing one-time cost increases
• Equity ratio remained at a strong 64.7% as of the end of September, with no issues regarding financial health
• Total headcount increased by 3 from the prior quarter to 372 employees

Operational Milestones and Product Updates

• AGAVE SaaS: Won new client adoption at Toa Denki Kogyo for its AGAVE Overseas Payroll service, cutting related workload by 50%, and supported Mitsubishi Motors' overseas HR BPR in partnership with Nippon Express, cutting related workload by 75%. Held the 4th AGAVE User MeetUp 2025 with 58 attendees from 31 client companies to expand user community and collect AI utilization demand. Contracted user IDs grew 16.1% YoY
• Salesforce Business: Initial platform adoption among clients has saturated, and the market is entering a transition period. Management is expanding service scope to adjacent areas including DevOps and test automation (e.g. Copado) to capture new demand for advanced operation and development efficiency, and growing AI/data utilization business improvement projects for existing clients
• ServiceNow Business: Growth has exceeded 100% YoY, with profitability improved significantly due to stable utilization and steady project acquisition. Expanded client base via participation in government projects and new orders from the financial industry, and continues to strengthen introduction of global ServiceNow solutions to domestic Japanese firms
• Group Expansion: Now operates with 5 companies (2 consolidated subsidiaries: Circlace HT (Vietnam development) and Aoranau Co., Ltd. (full-cycle ServiceNow support); 1 existing investment target Synthesy Co., Ltd. (AI consulting); 1 planned investment target arcbricks Inc. (Databricks-based data/AI consulting)) to leverage group synergy and deliver end-to-end solutions

Strategic Direction

• Pursues AI & Data Innovation strategy as a multi-platform service provider, expanding service coverage proactively across industries by adopting the latest global IT trends
• Strengthens global talent recruitment to scale domestic and international project expansion
• Expands AI agent utilization projects for both Salesforce and ServiceNow platforms
• Refreshed corporate philosophy to "Transforming Tomorrow thru Disruptive Technology!", focusing on driving management transformation with clients and solving social issues via cutting-edge global technology

1. Salesforce Segment: 6-month cumulative revenue of 1.515 billion yen, 10.4% year-over-year growth, representing 72.4% of total cumulative consolidated revenue. Quarter-over-quarter growth remained steady during the first half of the fiscal year. 2. ServiceNow Segment: 6-month cumulative revenue grew 121.7% year-over-year, with quarterly revenue growing 128.6% year-over-year (more than doubling from the prior year). Revenue contribution percentage was not explicitly stated. 3. SaaS (AGAVE) Segment: 6-month cumulative revenue grew 25.3% year-over-year, with quarterly revenue growing 32.6% year-over-year. Contracted user IDs grew 16.1% year-over-year. Revenue contribution percentage was not explicitly stated. Total consolidated 6-month cumulative revenue is 2.094 billion yen, 23.4% year-over-year growth. All three segments achieved year-over-year revenue growth.

• Management maintains the original full-year guidance with no revisions: full-year revenue is projected at 4.6 billion yen, +20.9% YoY, operating profit is projected at 350 million yen, +71.9% YoY, targeting a 7.6% operating profit margin while continuing to invest in mid-to-long term growth
• The business has inherent seasonality with heavier concentration in the second half, and revenue is expected to grow gradually as the fiscal year progresses
• Current performance is on track to meet the full-year plan, with progress already exceeding the prior year's pace after the first half

• The Salesforce market has entered a transition period, as initial platform adoption among core clients has saturated, creating pressure to find new revenue growth drivers in adjacent business areas
• Continued heavy investment in new business and global expansion could pressure near-term profitability before new initiatives generate sufficient returns

No Question and Answer section is included in the provided transcript.