SecuAvail Inc.

Business Details

Since its founding in 2001, the company has operated as a dedicated information security business, offering "NetStare®," an integrated security operations service combining SOC and NOC functions, and "LogStare®," a cloud-based security operations platform. The segment is composed of two companies, Securevail Inc. and LogStare Inc., serving a wide range of industries including public institutions, medical institutions, and manufacturing (OT/IoT). It is built on a stock-based (recurring revenue) contract model, providing a stable revenue structure. In FY2026 (ending March 2026), the segment achieved increased revenue and profit through the expanded sale of the AI-SOC Series and the renewal of stock-based contracts with existing customers.

Recent Overview

Segment profit margin improved significantly from 15.8% to 25.0%, driven by the effect of amortized LogStare software and expanded sales of AI-SOC.

In the Information Security Business for FY2026 (ending March 2026), revenue reached ¥1,031 million (up 9.7% year on year) and segment profit reached ¥258 million (up 74.1% year on year), representing a significant increase in profit. The main driver of the improved profit margin was increased sales of the "LogStare" product, which is already-amortized software in terms of development expenses. The company promoted the launch of the AI-SOC Series and expanded support for major cloud services and network devices. Despite investments such as increased headcount, the profit margin improved to 25.0%. Revenue from the major customer, NRI SecureTechnologies, increased significantly to ¥264 million (20.6% of consolidated revenue) from ¥190 million in the prior period, and it should be noted that customer concentration risk is increasing.

Key Products

Growth Drivers

• Expanding demand for information security driven by the increasing sophistication and complexity of cyberattacks amid DX progress and expanding cloud usage
• Expanding demand for log monitoring and analysis systems among critical infrastructure operators and their supply chain companies, driven by progress in institutional frameworks for active cyber defense
• Enhanced competitiveness and new customer acquisition through the expansion of the AI-SOC Series leveraging AI technology
• Maintaining and strengthening the high-profit-margin structure through increased sales of the already-amortized "LogStare" software product
• Expanding the customer base through the rollout of services targeted at small and medium-sized enterprises
• Diversifying the customer base through industry-specialized service offerings such as those for medical and OT/IoT sectors
• Stable contract renewals and revenue accumulation through the stock-based (recurring revenue) business model
• Upselling and new customer acquisition through partner development and revitalization of existing partners

Risks

• Increasing customer concentration risk due to revenue dependence on NRI SecureTechnologies Ltd. (20.6% of consolidated revenue in FY2026 (ending March 2026), a significant increase year on year)
• Increased recruitment and training costs due to a shortage of information security engineers and rising labor costs
• Risk of profit margin pressure from business investments such as expanded sales of the AI-SOC Series, planning and development of new services, and development of the security operations platform
• The need for continuous investment in service development to address the increasing sophistication and complexity of cyberattacks
• Erosion of the stock-based (recurring revenue) base due to the risk of existing customer cancellations
• Risk related to meeting the Growth Market listing maintenance criteria (market capitalization)

Business Details

This business, operated by the consolidated subsidiary Careervail Inc., trains and staffs information security engineers. It adopts a business model in which engineers who have undergone practical training based on Securevail's training program are dispatched to client companies. The business also develops hybrid proposals combining network-type services and engineer staffing for existing customers of the Information Security Business, creating synergies within the group. There is no order backlog, so revenue and orders received are structurally equal.

Recent Overview

Both revenue and profit recovered significantly, driven by expanded transactions with existing customers and progress in price pass-through negotiations.

In FY2026 (ending March 2026), expanded transactions with existing customers and successful price pass-through negotiations for contract amounts in response to rising labor costs led to a significant improvement, with revenue reaching ¥249 million (up 19.0% year on year) and segment profit reaching ¥26 million (up 153.8% year on year). In the prior period (FY2025, ending March 2025), segment profit had remained at a low level of ¥10 million, but profitability recovered markedly in the current period. Intersegment internal revenue also expanded to ¥41,685 thousand (from ¥40,229 thousand in the prior period), and synergies within the group continued.

Key Products

Growth Drivers

• Expanding demand for staffing driven by a chronic shortage of information security engineers
• Expanding revenue per unit and overall scale through increased staffing on existing projects
• Progress in price pass-through negotiations for contract amounts amid rising labor costs
• Creation of synergies through cross-selling (hybrid proposals) to customers of the Information Security Business
• Increasing demand for security personnel among private companies, driven by the government's prioritization of cybersecurity as a key policy area (including the development of active cyber defense systems)

Risks

• Risk that continued increases in labor costs could once again pressure profit margins
• Structural risk of low revenue visibility due to zero order backlog
• Risk of deteriorating profitability due to increased recruitment and training costs for security engineers
• Revenue structure dependent on internal transactions (intersegment revenue) with the Information Security Business
• Corporate credit risk associated with failure to meet the Growth Market listing maintenance criteria (market capitalization)