Dawn Corporation

Business Details

The company serves police, fire departments, municipal disaster prevention authorities, and social infrastructure maintenance operators as its primary customers, providing a range of cloud services (SaaS) built on geographic information technology. Recurring revenue from stock-type services such as the NET119 emergency reporting system and Live119 video reporting system accounts for the majority of sales, complemented by contracted SI development and license sales. All business operations are managed as a single segment, Information Services. Major customers include government agencies, local municipalities, and electric power utilities, with operations confined to the domestic market.

Recent Overview

Full-year net sales and all profit line items reached record highs, with cloud usage fees surpassing ¥900 million for the first time

For the full fiscal year ending May 2026, the company achieved net sales of ¥1,734 million (up 5.3% YoY), operating profit of ¥655 million (up 14.1% YoY), and net income of ¥471 million (up 12.6% YoY). Cloud usage fees continued to grow steadily, reaching ¥907 million (up 10.0% YoY). Cloud initial setup revenue rose to ¥372 million (up 19.7% YoY), supported by additional Digi Police features and private-sector app projects. On the other hand, SI (initial development & maintenance) declined to ¥305 million (down 25.9% YoY) due to a rebound from a large-scale project in the prior period. Order intake for contract development increased sharply by 131.9% YoY, and the resulting backlog carried into the next fiscal year has been confirmed. A 1-for-2 stock split was implemented effective June 1, 2026. For the fiscal year ending May 2027, the company forecasts net sales of ¥1,800 million (up 3.8% YoY) and operating profit of ¥670 million (up 2.3% YoY).

Key Products

Growth Drivers

• Continued accumulation of stock-type revenue (cloud usage fees): full-year cloud usage fees rose 10.0% YoY to ¥907 million, increasing steadily each quarter
• Deepening penetration of the Gov-tech market: continued nationwide adoption of NET119 and Live119, along with growth in contract numbers through new customer acquisition
• Expansion of cloud initial setup revenue: full-year revenue rose 19.7% YoY to ¥372 million, driven by additional Digi Police features and private-sector app projects
• Rollout of new services: launch of the fire department app "RED" (January 2026) and addition of an international call blocking feature to the crime-prevention app "Digi Police" (December 2025)
• Substantial increase in contract development order intake: up 131.9% YoY to ¥670 million, with order backlog also up 153.5% YoY to ¥171 million, serving as a favorable leading indicator for the next fiscal year's performance
• Creation of edge AI technology utilization and crime-prevention business synergies through the capital and business alliance with tiwaki Inc. (currently in the pilot testing stage)
• Strategy of "deploying AI-powered cloud services" and M&A/business alliance initiatives under the second medium-term management plan
• Growing demand for government cloud solutions, supported by the Digital Agency

Risks

• Given the nature of business with government agencies, there is a time lag before results are reflected in performance, creating seasonal fluctuation risk as order intake and sales recognition tend to concentrate in specific quarters
• Risk of a rebound decline following large-scale SI initial development projects: in the current period, SI (initial development & maintenance) declined significantly by 25.9% YoY, reflecting the instability of flow-type revenue
• Risk of difficulty in hiring and rising personnel costs due to intensifying competition for IT talent: headcount growth has stalled, and the next fiscal year factors in increased recruitment and personnel expenses as cost-increasing factors
• Price competition and order uncertainty arising from general competitive bidding for government contracts
• Risk that synergies from the capital and business alliance with tiwaki will take time to be reflected in results: given the nature of government-related business, the process from pilot testing to monetization may be prolonged
• Risk of economic downturn stemming from global economic instability factors such as heightened tensions in the Middle East, US policy developments, and rising resource and energy prices
• Mitigation of customer concentration risk: STNet Inc., which accounted for 14.0% of sales in the prior period, fell below 10% in the current period, indicating greater customer diversification, alongside residual risk from fluctuations in dependence on specific customers