5621.T

Corporate Mission & Core Business

• Mission: Eliminate routine work, drastically improve customer productivity through data-driven insights delivered with one click, and act as an engine to support creative work focused on improving labor productivity across diverse industries.
• Core offering: "KING OF TIME", the 10-year consecutive market share leader in cloud-based attendance management, with a full suite of HR/labor solutions (attendance, HR, payroll, data analysis, system logs) all offered at a single price of 300 yen per user per month with zero initial fees.
• New 2025 launch: "KING OF TIME Electronic Contract", a paid add-on for existing users that integrates with core KING OF TIME services to streamline employment contract signing and expense settlement workflows.
• Core competitive advantages: Strong cost performance, 20+ years of trusted compliance with regulatory changes, and unmatched flexibility to meet diverse business requirements via pre-built setting combinations (no custom development needed).

Operational Progress

• Billed ID growth is steady, positively impacted by the completed billing system change completed in April 2025 with no major disruptions. ARR grew 26.4% year-over-year, supported by rising demand for advanced, efficient labor management.
• New OEM partnership: Scheduled to begin providing KING OF TIME attendance management functionality via OEM to HRBrain in spring 2026, enabling seamless integration from attendance management to talent evaluation, development, and organizational analysis, and expanding reach to new enterprise customers focused on talent management.
• Product line expansion: All KING OF TIME series products have received consistent industry awards for quality, with ongoing functional expansion to enhance value as a full HR platform aligned with the one-price strategy.
• KING OF TIME Electronic Contract update: Designed as a practice-focused e-contract service integrated with core HR/labor workflows, centered on simplifying labor administrative work. It supports legal compliance, enables unified management of dispersed workflows via integration with existing cloud storage, drives paperless operations, and improves both efficiency and information security, with current outreach focused on existing KING OF TIME users to boost ARPU via cross-selling.
• Billing system change completed: Transition finished smoothly, creating a more fair, transparent billing structure aligned with actual usage and stabilizing the company's revenue structure. The one-off revenue boost from the change is limited to the first half, with growth expected to return to normal trends (driven by new customer acquisition and existing user expansion) in the second half.
• Shareholder return: The company targets a 30% payout ratio, and plans a full-year dividend of 28 yen per share, a 7.5 yen increase year-over-year.

• Full-year FY2026 March term guidance is unchanged from the May 2025 initial forecast, after management confirmed the billing system change proceeded as expected and determined no update to initial projections was needed after timing growth investment appropriately.
• Full-year projected revenue is 7.265 billion yen, a 20% year-over-year increase, with KOT SaaS contributing 6.463 billion yen (89% of total revenue).
• Full-year projected operating profit is 1.285 billion yen, a 354 million yen year-over-year increase (after excluding last year's one-off profit boost from new service capitalization), with projected operating margin expanding 2.3pp to 17.7%. Projected net income is 888 million yen, delivering stable profit growth.
• The company maintains a balanced approach of securing profits while pursuing growth, and will accelerate growth investment in the second half, which may lead to a lower second-half operating margin, but overall investment will remain balanced.
• Medium-term targets remain 20% annual revenue growth and a 30% operating profit margin, with the period from FY2026 onward defined as the revenue expansion phase after the completion of upfront investment.

1. KOT SaaS (core business): 3.251 billion yen in cumulative H1 revenue, 26.5% year-over-year growth, accounting for 90% of total cumulative H1 revenue. For the full fiscal year, it is projected to reach 6.463 billion yen, accounting for 89.0% of total projected full-year revenue. 2. Other revenue (including terminal sales): 362 million yen in cumulative H1 revenue, bringing total cumulative H1 revenue to 3.613 billion yen. The 2nd quarter standalone operating profit was 329 million yen, with 3.1% year-over-year growth (the lower growth rate is due to the absence of last year's one-off profit boost from capitalizing electronic contract development costs).

• Increased outsourcing costs driven by electronic contract development expense recognition, SMP functional expansion, and ASEAN payroll service expansion pushed the outsourcing ratio from 12.8% to 16.7% year-over-year in H1.
• Accelerated growth investment in the second half may lead to a decline in second-half operating profit margin.
• No other material operational or financial risks were explicitly discussed in the available transcript.

Q: Can you provide an update on the OEM supply to Yoyoi Kaikei that started this term, and did it contribute to H1 billed ID growth? Are specific numbers disclosed? / A: The OEM supply to Yoyoi Kaikei started in April this year, and sales to Yoyoi's customers are progressing smoothly. It has contributed a certain amount to H1 billed ID growth, but the specific numerical contribution is not disclosed.

Q: What is the outlook for profitability improvement and cost management from next term onward? Will profitability rise naturally alongside top-line growth, or are there additional cost reduction opportunities? / A: The company will maintain its policy of 20% annual top-line growth medium-term. On the cost side, the company plans to improve the cost structure by accelerating AI adoption, especially in the support department. Going into next term, the company will pursue both top-line expansion and productivity improvement to drive incremental profitability gains.

Q: What types of investments will the company restart after clarifying the impact of the billing system change, and will investment levels decline after upfront investment wrapped up in FY2025? / A: After confirming the impact of the billing change by the end of Q1, the company adjusted the timing of various investment programs planned for this fiscal year. The company is making development investments for value-added services to boost ARPU for existing customers, which are positioned as core infrastructure improvements to support medium and long-term growth.

Q: What is management's expectation for the new OEM partnership with HRBrain? / A: HRBrain has strong traction and an established customer base in the talent management space. Management has high expectations for this partnership because it allows the company to deliver its attendance management service to HRBrain's existing customer base, expanding the company's market reach.