5029.T

Overall Financial Performance

• Cumulative consolidated revenue through the 3rd quarter of FY2026 March is 3.202 billion yen, up 18.5% year-over-year, reaching 69.6% of the full-year plan.
• Consolidated operating income reached 11 million yen, maintaining profitability despite the impact of continued new business investment and one-time expenses related to the relocation of the company's head office. Net income attributable to parent company shareholders was 4 million yen.
• Q3 standalone consolidated revenue was 1.108 billion yen, up 10.4% year-over-year, and operating income remained profitable for the second consecutive quarter, after factoring in increased costs from talent investment and Salesforce business structural reform.
• The equity capital ratio remains at a high level of 64.2%, maintaining a stable financial foundation. Total employee count is 379, an increase of 7 from the end of the previous quarter, as the company continues talent investment to support future growth.

Strategic Business Development

• The company focuses on high-value-added business areas that combine large volumes of data accumulated from Salesforce, ServiceNow and other platforms with AI, and continues to expand projects leveraging Salesforce and ServiceNow AI agents.
• In response to rapid market changes (declining demand for new Salesforce development projects), the company launched unplanned business structural reform at an early stage, centered on shifting the Salesforce business to an AI-focused model, and completed all restructuring by the end of Q3.
• Two new strategic partnerships were announced after the Q2 earnings release: 1) A strategic collaboration with Copado to enter into reseller and technology partner agreements, allowing Circlace to operate as an official Copado certified partner and provide comprehensive implementation and utilization support for Copado's AI-powered DevOps platform to Japanese enterprises; 2) A collaboration with Shinko Environmental Solution Co., Ltd. to leverage Microsoft autonomous AI and automation technology to drive digital transformation and solve social environmental issues (supporting DX for water and waste treatment environmental plants).

Long-Term Value Creation Strategy

• The company's overall goal is to create "AI Standard Enterprises", leveraging globally leading standard solutions to seamlessly connect users, automate end-to-end business processes across customer touchpoints/experience, data linkage, workflow automation, and internal data/AI utilization, while actively adopting world-leading cutting-edge technology across all business areas.
• Circlace Group is structured as 5 core entities (Circlace leading Salesforce business, Aoranau leading ServiceNow business, Synthesy for upstream management strategy consulting, arcbricks for Databricks-powered data + AI business transformation, and Circlace HT the Vietnamese subsidiary), and maximizes group synergies to provide comprehensive optimal solutions for client IT management challenges.
• The group provides end-to-end one-stop services from consulting through implementation and adoption, supports client data-driven management and digital transformation through active AI utilization, and actively expands service coverage across all industries and business categories by adopting technology aligned with global IT trends.

• The full-year FY2026 March revenue plan remains unchanged at 4.6 billion yen, representing 20.9% year-over-year growth, driven by Salesforce and ServiceNow business expansion and group synergy creation.
• The full-year operating income plan remains unchanged at 350 million yen, representing 71.9% year-over-year growth, with a planned operating margin of 7.6%, as the company continues investment for medium- to long-term growth while improving profitability.
• All existing full-year financial targets are maintained with no upward or downward revision, despite slower-than-expected profit progress through the first three quarters, as all required investment preparations have been completed by Q3 to support full-year target achievement.

• Salesforce Business: 9-month cumulative revenue through the 3rd quarter is 2.28 billion yen, with 1.0% year-over-year growth in the 3rd quarter (year-over-year cumulative growth). Quarter-over-quarter revenue decreased from Q2 to Q3 due to a decline in new development projects. It accounts for approximately 71.1% of cumulative total consolidated revenue. Revenue growth was driven by expanded AI and data utilization business improvement projects in the customer success segment for existing clients, alongside expanded service coverage for Salesforce operational advancement and development efficiency needs. By the end of Q3, business restructuring was completed, and the number of prospective lead pipeline entries has increased significantly for Q4 and beyond.
• ServiceNow Business: 3rd quarter revenue grew 64.7% year-over-year, with 9-month cumulative revenue growing 94.3% year-over-year. The segment achieved quarterly profitability starting in the 3rd quarter. In Q3, the company secured 3 new orders for combined AI and ServiceNow projects from 3 clients. It has expanded support for client in-house development and operational advancement, covering areas from black box environment visualization to automatic proposal generation and AI utilization validation in SPM (project management). The segment is currently building out delivery capabilities for full-scale launch of AMS (Application Managed Service) to meet market demand. It accounts for an increasing share of total group revenue, alongside significant profitability improvement versus the prior year.
• SaaS Service (AGAVE): Revenue grew 17.3% year-over-year, driven by expanded adoption of the AGAVE Overseas Payroll Calculation Service. Total contracted user IDs grew 9.9% year-over-year, with AGAVE Overseas Payroll Calculation Service user IDs growing 53.9% year-over-year. Profitability has improved significantly year-over-year, and the business maintains steady continuous growth. The company holds regular seminars to acquire new clients and improve existing client contract retention rates.
• Global/AI Business: All upfront investment and organizational infrastructure setup was completed by the end of the 3rd quarter. The segment is expected to contribute materially to revenue starting from the 4th quarter.

• The Salesforce business faces ongoing market headwinds from slowing demand for new development projects, which led to quarter-over-quarter revenue decline between Q2 and Q3 and slower-than-expected cumulative profit progress through the first three quarters. No explicit operational failures or additional material risks were discussed in the available transcript.

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