AI DC business surged to JPY 3.1B in 3Q standalone, driving an operating profit turnaround; crypto asset valuation losses weighed on recurring profit, but the business foundation is in an expansion phase

Key Positives From The Results

The AI DC business posted JPY 3.1B in 3Q standalone revenue (+2.2x QoQ), driving consolidated results to record-high 3Q cumulative revenue of JPY 7.65B (+170.8% YoY). Operating income swung to a JPY 134M profit, while the existing AI UI business also delivered solid growth of +19.7% YoY.

• AI DC Business Surged
  : 3Q standalone revenue of JPY 3.1B, cumulative JPY 4.62B. Growth driven by the buildout of a reseller distribution network and the launch of next-generation products featuring the Blackwell architecture
• AI UI Business Steady Growth
  : Revenue of JPY 3,054M (+19.7% YoY), supported by rigorous KPI management from operational reforms and a focus-and-prioritize strategy
• Operating Profit Turnaround
  : Swung from an operating loss of JPY -72M (prior-year 3Q cumulative) to operating income of JPY +134M. The AI DC segment's JPY 173M profit was the key driver
• Crypto Finance Business Transitioning To Operations
  : Shifted from development to operational phase, with annualized BTC yield of 13.8%, indicating a solid ramp-up
• Non-Core Business Rationalization Complete
  : Divestiture of the "Rakuraku Renrakumo+" business and discontinuation of the travel business completed, enabling concentration of management resources

Key Concerns From The Results

Despite posting JPY 134M in operating income, a JPY 182M crypto asset valuation loss booked as non-operating expense pushed the company into a recurring loss of JPY -48M. Full-year guidance was also revised downward to a recurring loss of JPY -533M and net loss of JPY -505M, highlighting the structural risk that BTC price volatility poses to the financials.

• Crypto Valuation Losses Exceed Operating Profit
  : JPY 182M in crypto asset valuation losses booked as non-operating expense, surpassing the JPY 134M operating income and resulting in a recurring loss. Period-end market value declined against an average BTC acquisition cost of JPY 15,222,860
• Full-Year Guidance Revised Downward
  : Recurring profit revised from JPY 161M to JPY -533M; net income from JPY 162M to JPY -505M. The revision assumes BTC remains at current rates through fiscal year-end
• AI UI Segment Loss Persists
  : Segment loss of JPY -42M continues in the Internet Media (AI UI) business, failing to reach breakeven despite revenue growth
• Dilution Risk From Third-Party Allotment Warrants
  : Shares outstanding increased ~44% from 26,489K to 38,254K
• Advances Received Dominate Liabilities
  : Advances received of JPY 2,596M account for 78% of total liabilities, reflecting the outsized impact of GPU server sales-related prepayments on the working capital structure

Focus Areas / Items To Monitor Going Forward

• 4Q Revenue Achievability For AI DC
  : The full-year plan of JPY 9,365M less 3Q cumulative of JPY 4,625M implies a 4Q requirement of JPY 4,740M. This appears within reach if the 3Q standalone JPY 3.1B growth trajectory is sustained, though execution is dependent on delivery timing of large orders
• Crypto Lending Scale-Up And Yield Sustainability
  : Following the "Rakuraku Cho Coin" lending balance surpassing JPY 4B, monitor the pace of expansion and sustainability of yields (December single-month APY of 14%). Maintaining the spread between the 8% borrowing rate and investment yields is the key to monetization
• Warrant Exercise Progress
  : The 14th tranche warrants (with exercise price reset provision) are over 50% exercised as of end-December (5,253K shares exercised). The exercise pace of the remaining 14,747K potential shares (14th tranche remainder + entire 15th tranche) will impact share price and dilution

Key Financial Highlights

(Note 1) As the company began preparing quarterly consolidated financial statements from 3Q, prior-year comparative figures are not available. Per supplementary materials, prior-year 3Q cumulative revenue (non-consolidated) was JPY 2,527M versus JPY 7,659M consolidated this period, representing +170.8% YoY.

Performance By Business Segment

Progress Versus Full-Year Guidance

3Q cumulative revenue of JPY 7,659M represents 57.8% progress against the revised full-year plan of JPY 13,257M. The implied 4Q revenue target for the AI DC business is approximately JPY 4.7B, above the 3Q standalone result of JPY 3.1B, but appears achievable given the accelerating growth trajectory. Operating income at JPY 134M cumulative versus a JPY 201M full-year plan represents 66.8% progress, broadly on track.

• The AI DC business is project-based around GPU server deliveries, carrying inherent risk of order timing slippage between quarters
• HR-related services within the AI UI business tend to see demand concentrated in 1Q, driven by the new graduate recruitment season

Changes To Guidance

On February 13, 2026, the company revised its full-year consolidated guidance. Revenue and operating income were revised upward, while recurring profit and net income were revised downward due to the recognition of crypto asset valuation losses.

• Revenue
  : JPY 12,291M → JPY 13,257M (+JPY 966M, +7.9%)
• Operating Income
  : JPY 163M → JPY 201M (+JPY 38M, +23.3%)
• Recurring Profit
  : JPY 161M → JPY -533M (JPY -694M)
• Net Income
  : JPY 162M → JPY -505M (JPY -667M)
• Rationale
  : AI UI and AI DC businesses are performing well, driving upward revisions to revenue and operating income. However, following the 3Q crypto asset valuation loss, recurring profit and net income were revised downward assuming current BTC rates persist through fiscal year-end

Commentary On Shareholder Returns

The dividend forecast for FY03/2026 remains unchanged at JPY 0.00 per share at year-end (JPY 0.00 annual). No dividend payments continue. No mention of share buybacks.

Financial Position

The company prepared consolidated financial statements for the first time from 3Q. Crypto asset-related holdings (self-owned + deposited + lent, totaling JPY 1,563M) are growing in significance on the balance sheet, while advances received of JPY 2,596M constitute the majority of liabilities. The equity ratio remains at a stable 46.4%.

News Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• SBI Securities: 25.19% → 24.17% (filing obligation date: 2025/10/02) — Change in ownership ratio due to warrant exercises
• SBI Securities: 17.97% → 15.87% (filing obligation date: 2025/11/21) — Decrease in potential shares from continued warrant exercises
• SBI Securities: 15.87% → 12.54% (filing obligation date: 2025/12/03) — Same as above
• SBI Securities: 12.54% → 11.25% (filing obligation date: 2026/01/07) — Continued decline in ownership ratio from ongoing warrant exercises
• Naoto Yoshida (Chairman of the Board): Largest shareholder at 17.15% (as of September 30, 2025)