Key Positives From The Results
Full-scale ramp-up of the AI DC business propelled 1Q revenue to JPY 6.174B (+5.5x YoY) and operating income to JPY 149M (+3.5x YoY), both quarterly records since inception. Revenue contribution from the new business is accelerating, underscoring a clear structural transformation of the business portfolio.
- AI DC business posted revenue of JPY 5.225B and segment profit of JPY 253M, achieving 116% of 1Q budget; higher direct-sales mix contributed to margin improvement
- Consumer Media business (Kyujitsu Inubu / Kyujitsu Glamping-bu) surged +325% YoY, with 1Q booking value reaching JPY 1.717B (+86% YoY)
- Gross margin held at 29.7%, absorbing JPY 40M in upfront investments and JPY 11M in incremental organizational build-out costs, while delivering record operating income of JPY 149M
- Completion of the 14th tranche of warrant exercises raised a cumulative ~JPY 4.18B; use of proceeds expanded to digital assets broadly and AIDC investment, diversifying the funding base
- Appointment of CBO and CRO strengthened the management framework on both offense (business development, external relations) and defense (financial regulatory compliance, risk management)
Key Concerns From The Results
A JPY 132M crypto asset valuation loss pushed recurring profit down to just JPY 32M, creating a stark gap versus operating income of JPY 149M. The On-Chain Finance segment loss of JPY -112M is dragging on consolidated earnings, and managing crypto price volatility risk remains an ongoing challenge.
- On-Chain Finance segment posted a loss of JPY -112M; lending fee payments of JPY 130M and proprietary trading losses of JPY 58M offset investment income of JPY 80M
- AI UI business (legacy operations) revenue was JPY 868M, down -0.8% YoY (standalone basis), with the revenue gap from the divestiture of "Rakuraku Renrakumo+" yet to be fully filled
- pinpoint revenue was JPY 93M (-12.5% YoY); the new-graduate segment was solid at +3.2%, but mid-career segment declines weighed on the total
- Operating income progress versus full-year guidance stands at just 13.0%; even accounting for seasonality, a meaningful acceleration from 2Q onward is essential
- 10,000 thousand shares of the 15th tranche warrants remain unexercised, posing latent dilution risk
Focus Areas / Items To Monitor Going Forward
- Given AI DC business seasonality (revenue tends to concentrate in 2Q and 4Q), the depth of the order pipeline from 2Q onward and the direct-sales mix trend are key to achieving the full-year plan
- Concrete monetization timeline and financing arrangements for the western Japan 100MW-class DC initiative (up to JPY 3.6B in capital commitment) and the immersion cooling partnership with Castrol and WOODMAN
- Timing of when On-Chain Finance profitability improvement measures (building in-house trading capabilities, onboarding new asset managers) will take effect, and the outlook for obtaining a lending business license under the revised Financial Instruments and Exchange Act
- AI DC business customer composition (by industry and scale) and revenue concentration among top clients
- Financing method for the western Japan 100MW-class DC initiative (specific lenders and terms for planned borrowings)
- Initial order traction following the launch of immersion cooling solutions and expected timing of earnings contribution
- Root cause of the JPY 58M proprietary trading loss in the On-Chain Finance business and measures to prevent recurrence
- Current progress and confidence level toward the JPY 20B crypto AUM target
- Overall digital asset acquisition strategy beyond BTC (including HYPE) and the associated risk management framework
- Data accumulation status for "pinpoint tAIpe" in the AI UI business and the timeline for monetization
- Exercise outlook for the 15th tranche warrants (10,000 thousand shares outstanding) and dilution impact management policy
- Post-investment ownership stake in the Fukushima Futaba-machi DC project and expected consolidation / equity-method treatment
- Medium-term impact outlook from the decline in the active job openings ratio (down YoY) on the job search engine business
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 6.174B | — (no consolidated comparables in prior year) |
| Cost of Goods Sold | JPY 4.341B | — |
| Gross Profit | JPY 1.833B | — |
| SG&A | JPY 1.683B | — |
| Operating Income | JPY 149M | — |
| Recurring Profit | JPY 32M | — |
| Net Income Attributable to Owners of Parent Company (Quarterly) | JPY 17M | — |
| EPS | JPY 0.41 | — |
| Diluted EPS | JPY 0.39 | — |
| Adjusted Recurring Profit | JPY 164M | — |
| Adjusted Net Income | JPY 149M | — |
| Gross Profit Margin | 29.7% | — |
| Operating Income Margin | 2.4% | — |
No consolidated financial statements were prepared for the year-ago quarter, so direct comparison is not possible. On a supplementary-data basis, standalone 1Q revenue was JPY 1.125B in the prior year (+448%) and operating income was JPY 42M (+251%). A JPY 132M crypto asset valuation loss booked as non-operating expense weighed on recurring profit. Adjusted recurring profit (excluding the valuation loss) was JPY 164M.
Performance By Business Segment
The AI DC business accounts for 84.6% of total revenue, indicating the portfolio's center of gravity has fully shifted to GPU server sales. The AI UI business saw a marginal decline on a standalone YoY basis but improved profitability. The On-Chain Finance business remains in the red, as lending fee payments exceeded investment income.
Segment Performance Table
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| AI UI | JPY 868M | -0.8% (standalone basis) | JPY 7M | — | 0.9% |
| AI DC | JPY 5.225B | — (prior-year 1Q: JPY 50M) | JPY 253M | — | 4.9% |
| On-Chain Finance | JPY 80M | — | JPY -112M | — | — |
| Total | JPY 6.174B | — | JPY 149M | — | 2.4% |
- AI DC business: Revenue of JPY 5.225B. Down slightly from 4Q (JPY 5.495B) on seasonal factors, but achieved 116% of 1Q budget. Higher direct-sales mix, driven by advertising spend, contributed to margin improvement
- Consumer Media business: Revenue of JPY 22M, +325% YoY. Kyujitsu Glamping-bu's monthly booking value exceeded JPY 200M; Kyujitsu Inubu also set a new 1Q booking value record
- HR Ads Platform (agency channel): Agency-sourced revenue of JPY 36M, +31% YoY. Expansion of partner media and ATS integrations drove new client acquisition
- On-Chain Finance business: Against investment income of JPY 80M, lending fee payments totaled JPY 130M (JPY 72M regular + JPY 58M proprietary trading loss). While lending fees declined post-campaign, proprietary trading losses emerged, resulting in a segment loss of JPY -112M
- pinpoint: Revenue of JPY 93M, -12.5% YoY. The new-graduate segment was solid at +3.2%, but mid-career segment declines weighed on the total. Residual impact from the Rakuraku Renrakumo+ divestiture persists
Progress Versus Full-Year Guidance
1Q progress against full-year revenue guidance is 24.2%, a reasonable level. Operating income progress stands at just 13.0%; however, the AI DC business exhibits seasonality driven by customer fiscal year-ends (March and September), with revenue typically ramping in 2Q and 4Q. Additionally, the company's plan calls for On-Chain Finance profitability improvements to materialize from 2Q onward, and management has not revised guidance.
| Item | Value (1Q Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 6.174B | JPY 25.552B | 24.2% |
| Operating Income | JPY 149M | JPY 1.142B | 13.0% |
| Recurring Profit | JPY 32M | JPY 1.494B | 2.2% |
| Net Income | JPY 17M | JPY 1.270B | 1.3% |
- The AI DC business sees investment demand cluster ahead of customer fiscal year-ends (March and September), with revenue tending to ramp in 2Q and 4Q. 1Q and 3Q are typically transitional quarters
- The On-Chain Finance business plans for revenue expansion from 2Q onward, driven by the build-out of in-house trading capabilities and onboarding of new asset managers on a monthly plan basis
Changes To Guidance
No changes to the full-year guidance published on May 15, 2026. The 13.0% operating income progress rate is viewed as consistent with the full-year plan when factoring in seasonality and expected On-Chain Finance earnings contribution from 2Q onward.
Commentary On Shareholder Returns
The FY2027/3 dividend forecast remains unchanged at JPY 0.00 interim / JPY 0.00 year-end (JPY 0.00 full year). No dividend was paid in the prior fiscal year (FY2026/3) either.
Financial Position
Warrant exercises bolstered the capital base (capital stock and capital reserve each +JPY 468M), lifting net assets to JPY 4.449B and improving the equity ratio from 31.7% to 35.7%. On the other hand, crypto-related assets (proprietary holdings + deposited + loaned, totaling JPY 4.959B) account for approximately 40% of total assets, leaving the balance sheet highly sensitive to crypto price fluctuations.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Total Assets | JPY 12.428B | +13.0% vs. prior FY-end |
| └ Total Current Assets | JPY 11.836B | +24.1% vs. prior FY-end |
| └ Total Non-Current Assets | JPY 591M | -59.7% vs. prior FY-end |
| Cash and Deposits | JPY 2.857B | +118.4% vs. prior FY-end |
| Advances Paid | JPY 3.407B | Including DC development-related |
| Crypto-Related Assets | JPY 4.959B | Proprietary 732 + Deposited 461 + Loaned 3,765 |
| Interest-Bearing Debt | JPY 170M | Short-term 40 + Current portion of LT debt 39 + Long-term 90 |
| Net Assets | JPY 4.449B | +27.2% vs. prior FY-end |
| Shareholders' Equity | JPY 4.439B | +27.3% vs. prior FY-end |
| Equity Ratio | 35.7% | +4.0pt from 31.7% at prior FY-end |
| EBITDA | JPY 153M | Operating income 149 + D&A 4 (our estimate) |
News Released Alongside The Earnings Announcement
- 2026/08/13"Kyujitsu Inubu" monthly booking value exceeded JPY 500M in July 2026, signaling accelerating growth of the Consumer Media business Pet travel specialty media "Kyujitsu Inubu" surpasses JPY 500M in monthly booking value in July 2026!
- 2026/08/12"Kyujitsu Glamping-bu" monthly booking value surpassed JPY 400M just 1 year and 5 months after site launch, doubling from JPY 200M to JPY 400M in two months Glamping specialty site "Kyujitsu Glamping-bu" surpasses JPY 400M in monthly booking value 1 year and 5 months after site launch!
Major Announcements During The Quarter
- 2026/05/18Crypto lending service "Rakuraku Cho Coin" began handling USDC, expanding supported assets beyond BTC Rakuraku Cho Coin begins handling USDC
- 2026/06/19Terminated SPV interest acquisition agreement for Anthropic investment; received full refund of USD 5M principal. Redirecting funds toward DC-related businesses where the company can take a more active role Update: Termination of SPV interest acquisition agreement for Anthropic, PBC investment and refund of contributed capital
- 2026/07/06Concluded a memorandum of understanding on a business alliance with Shin Energy Development to jointly develop a 100MW-class AIDC integrated with LNG thermal power generation in western Japan. Up to JPY 3.6B in capital commitment expected Memorandum of understanding on business alliance with Shin Energy Development
- 2026/07/23Signed an MOU with Castrol and WOODMAN for next-generation liquid cooling / immersion cooling solutions for AI data centers. Targeting PUE of ~1.10 or below, with sales launch planned for August 2026 Strategic collaboration with Castrol, WOODMAN, and the company on next-generation liquid cooling / immersion cooling solutions for AI data centers
- 2026/07/29Acquired HYPE, Hyperliquid's native token, under the "Neo Crypto Bank" initiative. First such acquisition by a domestically listed company (per company research). Total planned purchases of JPY 100M through end of August Eole acquires "Hyperliquid (HYPE)," the crypto asset of the world's largest on-chain derivatives platform
Large-Shareholding Filings / Material Proposals Over The Past Year
- Japan Asia Investment: 33.09% → 29.93% (2026/06/30) — Pure investment, engagement, and material proposals as needed. Ownership ratio declining progressively due to dilution from warrant exercises
- SBI Securities: 10.15% → 4.05% (2026/05/12) — Held as trading inventory for securities operations. Ratio declined materially in connection with warrant underwriting
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