5586.T

• Overall Financial Performance • The first quarter consolidated revenue hit 630 million yen, gross profit hit 427 million yen, operating profit hit 113 million yen, and net income hit 88 million yen, reaching an all-time high revenue level driven by strong demand and some deferred revenue from the fourth quarter of the prior fiscal year. • The overall gross margin was 68%, which landed at the targeted healthy level, while operating margin was 18% that was slightly lower year-over-year due to increased personnel and hiring training costs from organizational expansion, but remained at a high level relative to the full-year forecast. • The balance sheet shows no material changes to the financial foundation, which remains solid with sufficient buffer.

• Customer Portfolio • Laboro.AI focuses on two core sectors: R&D-focused advanced manufacturing (semiconductors, construction, chemicals/materials, automotive) and downstream social infrastructure/consumer industries. In the first quarter, the proportion of revenue from advanced manufacturing increased slightly compared to the prior nearly 50/50 split. • The semiconductor sector has maintained stable large-scale revenue, with strong progress in AI-powered optimization solutions for design and production processes, which is a clear technical strength for the company. • The automotive sector saw significant growth this quarter, driven by both traditional manufacturing optimization work and deepening progress in new AI agent-focused projects. • The consumer goods/retail sector, which grew rapidly last fiscal year, maintains ongoing progress in AI agent implementation projects, with its relative revenue share declining slightly due to faster growth in other sectors. • Existing customers account for the large majority of revenue, and 3 new customers were added in the quarter, which is in line with plan.

• Business and Organizational Initiatives • The core full-custom AI development business (AI Solution Design, AI-SD) performed well with 3 new customer acquisitions. The new semi-custom growth initiative Agent Transformation (AGT-X), focused on AI agents, was officially launched this quarter, and has already secured strong project pipeline and steady revenue progress. • R&D is making progress on the development of shared platform functions. • The new AGT-X initiative has a dedicated new team with a new role, Agent Transformation Producer (AX-P), that hires talent with different profiles than traditional solution designers, driving faster organizational expansion and hiring. • Total headcount reached 106 at the end of the first quarter, with 4 new solution designers and 4 new AX-Ps added, plus additional hires to strengthen corporate functions. The full-year headcount target is 140, with further expansion planned for the engineering team. • Collaboration with I&B Consulting, the joint venture between Itochu Corporation and Boston Consulting Group, continues to advance, with ongoing concrete work to develop specific joint projects. The company has also publicly released a prototype of its new product-type service "Mirai Research" and is conducting validation with candidate customer companies. • The company officially launched AGT-X solution publicly in the quarter, and announced a joint project result with Omron in the AI-SD area, reflecting increasing public visibility of completed client projects that integrate AI. • For the system development business, work with existing customers and alignment with Laboro.AI's core business continues to progress, and the team has strengthened collaboration on hiring and training with the parent company, though no clear new customer acquisition results were achieved this quarter.

• Growth Strategy • The company maintains a three-pillar growth strategy with no changes: 1) Leverage technical strengths in optimization and generative AI to expand business, achieve vertical launch of the new AGT-X initiative, and step up R&D investment focused on core technical areas; 2) Continue to strengthen organizational infrastructure through priority hiring and development of top talent; 3) Explore inorganic growth opportunities including partnerships and M&A to pursue higher growth beyond incremental expansion of existing business.

• The full-year 2026 September fiscal year consolidated guidance remains unchanged from the initial announcement, with no upward or downward revision. • The full-year target is 2.486 billion yen in revenue, representing 31% year-over-year growth from the 2025 September fiscal year. • The full-year target is 1.603 billion yen in gross profit, with a targeted gross margin of 65%. • The full-year target is 294 million yen in operating profit, with a targeted operating margin of 12%. • The full-year target is 201 million yen in net income.

1. Custom AI Solutions Business: Revenue is 615 million yen, up 20% year-over-year. Gross profit is 419 million yen, up 17% year-over-year. Operating profit is 116 million yen, down 4% year-over-year. This segment accounts for 97.6% of total consolidated revenue in the quarter. 2. System Development Business: Revenue is 18 million yen, gross profit is 7 million yen, operating profit is negative 3 million yen. This segment accounts for 2.4% of total consolidated revenue in the quarter. The limited revenue contribution is due to a low number of projects reaching the acceptance inspection stage required for revenue recognition in this quarter.

• Engineer hiring proceeded at a slightly slower pace than planned in the first quarter, and total engineering headcount remained flat after accounting for turnover. However, management notes that hiring trends have improved recently, with multiple candidates having already accepted offers, and the situation is on an improving trajectory.

Q: Recently, social interest in AI agents and physical AI has grown. What impact does this have on your business, and what related projects do you have underway?

A: Laboro.AI also sees growing attention on AI agents and physical AI, and has aligned its business expansion to address these two areas. For AI agents, the company has launched the new AGT-X service and team to focus on this area. Currently, there is a large-scale ongoing project focused on integrating AI agents into organizational and business operations primarily in the consumer goods and retail sector, which is progressing well. The company has also received strong inbound interest from multiple areas for AI agent projects, and management expects this line of business to continue expanding rapidly. For physical AI, while Laboro.AI does not work directly on humanoid or other robots, it does work on AI-driven transformation of manufacturing in the advanced production sector. The company has core strengths in manufacturing control, design, and planning, and its accumulated optimization technology has very high synergy with the growing physical AI space. The advanced manufacturing sector that the company focuses on is also deeply connected to physical AI trends. Management expects to capitalize on growing demand for physical AI to accelerate business expansion in this area.

Q: Last year you faced some headwinds hiring consultant (solution designer) team members. What factors explain the improved hiring progress for consultant roles this term?

A: The improved hiring progress is the result of cumulative small improvements and efforts from last fiscal year that have now delivered results, rather than one single major change. First, the company has strengthened hiring branding by highlighting the value and interesting nature of work for solution designers and front-line AI consulting team members, putting the spotlight on existing staff to share their experiences externally. Second, the company has worked to expand reach to more candidates and strengthened the hiring process to help candidates understand the company better and build interest in joining. These cumulative efforts have driven the positive improvement. While the company is currently facing some headwinds in hiring engineers, it is applying similar process improvements and targeted initiatives, and early signs of improvement are already visible. Management will continue to implement layered improvements to expand the organization at a fast pace while maintaining hiring quality.