6199.T

• Overall Q2 Performance

  • Revenue grew year-over-year, while gross profit was flat year-over-year (higher cost of sales from increased partner engineer utilization offset revenue gains). Operating income declined year-over-year due to upfront investments in senior-level hiring, AI-related education, and AI solution development. Despite the operating profit decline, the company achieved its first-half profit target.
  • Partner engineer utilization grew steadily, and enterprise demand for DX operation and onboarding support for platforms like Salesforce and COMPANY remains strong.
  • Key operational metrics: Registered business partners on the company's IT talent platform continue to grow, and partner engineer participation in company projects is increasing steadily. The revenue share of the DX domain remains steady, and high-value-added projects have grown due to focus on engineer skill development and sales outreach.

• Strategic Transformation Overview

  • The company is redefining its growth strategy around AI, with two core priorities: transforming into a high-margin AI solution company, and building structural competitive advantage through scalable AI talent supply and implementation capabilities. The strategy is organized across three time horizons:
  • Near term: Launch the new AI solutions business, shift existing business to AI focus, expand scale, and improve margins through company-wide AI adoption
  • Medium term: Scale the AI solutions business and achieve profitability for Midori Cloud Rakuraku Shukka
  • Long term: Capitalize on AI-driven changes to social and industrial structure to expand into new business areas

• Core Growth Strategies

  1. AI Solutions Business (New Entry): Targets establishment of the "Japanese-style FDE model", which places Serac's AI implementation talent at customer sites to meet growing enterprise demand for on-the-ground AI deployment. Leverages Serac's existing 3,000-engineer base, AI talent development know-how, and decades of experience providing on-site IT services to customers, to address the projected 120,000-person shortage of AI implementation talent in Japan by 2030.
  2. AI Shift for Existing Business: Proactively reallocates internal talent to growing AI-focused areas in anticipation of changing customer demand, and pursues margin improvement through AI-driven automation, expanded contract-based project delivery, and stronger partnerships with large enterprise customers. The company operates an IT talent platform with over 2,400 partner companies to meet near-term demand, and is building a partner ecosystem to support medium- and long-term AI demand growth by helping partner companies upskill their own workforces.
  3. Internal AI Adoption for High-Margin Operations: A dedicated AI team (built through development of the AI-enabled NewtonX app) develops custom AI tools for internal functions including recruiting and training, runs company-wide AI contests, and drives operational efficiency to reduce G&A rates and improve overall margins. Internal AI use cases are also documented and repurposed for customer sales proposals.
  4. Profitability and Technology Repurposing for Midori Cloud: Rakuraku Shukka adoption is progressing steadily, and profitability is now within reach. Proprietary core technologies developed for the product (including bulk simultaneous label reading, traceability, AI-powered automation and prediction) will be repurposed for new service offerings across other industries.
  5. AI Service Development via Midori Cloud Business: Technologies gained from Midori Cloud development (including environmental monitoring, IoT, AI development capabilities) will be leveraged across the entire group to create new AI services for both existing and new business domains, supported by the dedicated AI team.
  6. Long-Term New Business Development: The company views AI-driven shifts in talent demand and industrial structure as a long-term growth opportunity, and will develop new businesses leveraging its AI development and deployment capabilities.

• The company maintains its full-year 2026 August fiscal year plan for revenue and profit growth.
• Management plans to update its medium-term growth vision based on the new AI-centered strategy, and will announce the updated vision to investors as soon as it is finalized.
• No upward or downward revisions to prior quantitative full-year or medium-term financial guidance are provided in the transcript.

Serac reports three business segments:

1. Digital Integration Segment: Business scale expanded steadily due to solid utilization of business partners. High-value-added growth from engineer upskilling, and growth in the DX domain (focused on Salesforce and COMPANY operation/onboarding support) remained steady. Revenue for the DX sub-domain declined year-over-year only because of a large project booked in Q1 of the prior fiscal year, while underlying customer demand remains strong.
2. Midori Cloud Segment: Supports DX for the agriculture and livestock industries. The segment continues to prioritize product development and market expansion for its Midori Cloud Rakuraku Shukka product, with adoption progressing steadily across multiple Japanese agricultural cooperatives (JA). No specific year-over-year absolute financials are provided in the transcript.
3. Mechanical Design Engineering Segment: Revenue and operating income both grew year-over-year, driven by ongoing expansion into new business areas.

No specific risks or operational failures are discussed in the available transcript.

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