License-type revenue of JPY 645M (+10.0% YoY) confirms the build-up of corporate license orders; the focus in 1Q is on booking deals to reach full-year positive adjusted EBITDA

Key Positives From The 1Q Results

High-margin license-type revenue grew +10.0% YoY, lifting its share of total revenue to 56.2% (from 40.2% a year earlier; our estimate). Additional corporate license orders for AI applications (Data for AI) from a major overseas semiconductor manufacturer, plus orders for autonomous truck development, are giving concrete shape to the pipeline supporting the full-year license-type revenue target of JPY 3,000M. Despite the pullback in project-type revenue, guidance was left unchanged, with the plan progressing on the assumption of a second-half-weighted earnings profile.

• License-type revenue of JPY 645M (+10.0% YoY) exceeded the year-ago quarter, which included a large deal, lifting its revenue share to 56.2%
• Data for AI for a major overseas semiconductor manufacturer expanded beyond North America to European, Korean and Japanese data, advancing monetization of regional data assets
• Mass-production licenses now cover 39 models across 6 OEMs, securing a base for cumulative growth driven by unit volumes
• Cash and deposits of JPY 4,253M (+16.3% vs. prior year-end); long-term borrowings up JPY 736M lifted net cash to JPY 2,450M, securing liquidity on hand
• Consolidated Ricanos (UAV surveying) in April 2026, executing the second deal in the surveying company roll-up project. This strengthens data acquisition capability and builds a nationwide surveying network.

Key Concerns From The 1Q Results

Against revenue of JPY 1,147M (-21.3% YoY), cost of goods sold rose to JPY 1,445M (+41.4% YoY), producing a gross loss of JPY -297M. Fixed costs including depreciation of JPY 293M (vs. JPY 213M a year earlier) weighed heavily, and adjusted EBITDA deteriorated to JPY -667M (vs. +JPY 24M a year earlier). Achieving full-year adjusted EBITDA of +JPY 50M requires JPY 717M of adjusted EBITDA over the remaining nine months. Given the earnings structure in which deal recognition tends to concentrate in the second half, monetization of the pipeline is the key focus.

• The reversal of the prior-year large deal drove gross profit/loss to JPY -297M (vs. +JPY 436M) and operating loss to JPY -999M (vs. JPY -196M)
• Domestic segment revenue of JPY 142M (-62.2% YoY), with segment loss widening to JPY -400M on the reversal of the prior-year large deal
• Overseas revenue of JPY 1,005M (-7.2% YoY) as project-type work wound down with completion of new North American data creation; segment loss of JPY -602M
• Equity ratio of 60.1% (66.2% at prior year-end), down 6.1pt on the net loss and increased borrowings
• As a subsequent event, part of the map data was rendered unusable by the 2026 Kumamoto earthquake, with restoration costs expected (amount under assessment)

Focus Areas / Items To Monitor Going Forward

• The remaining progress toward full-year license-type revenue of JPY 3,000M against 1Q actual of JPY 645M. Building the pipeline of corporate licenses for AI applications is key.
• The fixed-cost structure within cost of goods sold. With depreciation running at JPY 293M, how far gross margin recovers on higher second-half revenue.
• The scale of map data repair and re-creation costs from the Kumamoto earthquake, and whether these are incorporated into full-year guidance.

Key Financial Highlights

Despite lower revenue, cost of goods sold rose JPY 423M, driving a JPY 733M YoY deterioration in gross profit/loss. Adjusted EBITDA is defined by the company as operating income + depreciation + government subsidies + M&A-related expenses.

Performance By Business Segment

Domestically, Automotive served corporate licenses for autonomous driving system developers and 3D data saw progress on logistics automation projects, but the reversal of the prior-year large deal depressed revenue. Overseas, license-type revenue was solid in both mass-production and corporate licenses, but project-type revenue declined with completion of the new North American data creation business.

Segment Performance Table (revenue is on an external customer basis)

Margin is segment profit/loss as a percentage of external customer revenue (our estimate).

Progress Rate Versus Full-Year Guidance

Revenue progress stands at 16.4%, versus 25.7% in the year-ago quarter against full-year actuals (our estimate). The company notes that it recognized JPY 2,313M in 4Q of the prior fiscal year, centered on corporate license deals, and assumes the second-half-weighted earnings structure will persist. Adjusted EBITDA of JPY -667M in 1Q represents front-loaded losses against the +JPY 50M full-year plan, but management describes the shortfall as "within budget," and the pipeline of deals expected to be recognized in the second half — including Data for AI projects for a major overseas semiconductor manufacturer — appears to be building steadily.

• In the prior fiscal year (FY3/26), JPY 2,313M was recognized in 4Q, mainly from corporate license deals, and quarterly adjusted EBITDA was positive only in 4Q at +JPY 786M — a pattern of earnings concentrating in the latter half of the year
• Project-type revenue depends on deal acceptance timing, resulting in large quarter-to-quarter swings

Changes To Guidance

Full-year consolidated guidance is unchanged from the previous announcement. Revenue of JPY 7,000M (+23.1% YoY), license-type revenue of JPY 3,000M (+15.6% YoY) and adjusted EBITDA of +JPY 50M are all maintained. The scope of impact and damages from the Kumamoto earthquake are still under assessment, and a reasonable estimate of costs is stated to be difficult at this stage. FY3/27 full-year guidance is likewise unchanged from the prior announcement.

Commentary On Shareholder Returns

FY3/27 dividend guidance is JPY 0.00 for both interim and year-end, or JPY 0.00 annually, maintaining no dividend. There is no revision from the most recently announced dividend forecast. No mention of share buybacks, and treasury shares at period-end stood at 0.

Financial Position

The equity ratio fell to 60.1% on the net loss, but the company maintains a net cash position with cash and deposits of JPY 4,253M exceeding interest-bearing debt of JPY 1,803M. It has lengthened its funding profile through long-term borrowings while also securing a JPY 2,000M commitment line.

Key Figures

EBITDA (operating income + depreciation) was JPY -706M (our estimate). Company-disclosed adjusted EBITDA was JPY -667M.

Leverage Metrics

News Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• Nomura Securities (joint holders): new 5.34% stake (filed 2026/02/19) — Nomura Securities and Nomura International hold as securities trading inventory; Nomura Asset Management holds for trust asset management
• Nomura Securities (joint holders): 5.34% → 4.18% (filed 2026/05/11) — fell below 5% on position reduction; holding purpose unchanged from prior filing
• Mitsubishi Electric: 6.60% → 4.91% (filed 2025/12/09) — held for strategic investment purposes; no material proposal actions applicable