Summary
1Q revenue fell YoY as the North American project rolled off. License revenue, however, grew +10.0%, which improved the revenue mix and the quality of earnings. The first focus for 2Q is whether AI-related corporate licenses and mass-production licenses keep building. Sustained growth is needed to absorb the heavy fixed-cost component of cost of goods sold. Second, the Kumamoto Earthquake of July 28 was disclosed as a subsequent event. The amount and classification of costs to repair and rebuild map data will drive the range of 2Q earnings outcomes. Third, the subsidy income disclosed in September is included in the definition of adjusted EBITDA. We will separate the subsidy contribution from underlying improvement and assess whether the full-year plan for positive adjusted EBITDA (JPY 50M) is maintained.
Key Points for Next Quarter
| Key Points & Focus | Implications |
|---|---|
License Revenue1H cumulative license revenue YoY and progress vs. full-year plan | 1Q came in at JPY 645M (+10.0%), or 21.5% of the JPY 3,000M full-year plan (our estimate). This high-contribution-margin revenue is the starting point for narrowing losses, so sustained growth is critical. |
Revenue Recovery and Full-Year Plan1H cumulative revenue YoY and recovery in project revenue | 1Q progress was 16.4% (our estimate), leaving JPY 5,853M to be booked from 2Q onward. How far the gap narrows vs. 1H revenue of JPY 2,451M in the prior year is a gauge of plan credibility. |
Earnings StructureStandalone 2Q gross profit/loss and adjusted EBITDA trend | In 1Q, cost of goods sold of JPY 1,445M exceeded revenue, producing a gross loss of JPY -297M and adjusted EBITDA of JPY -667M. The focus is the degree of underlying improvement, excluding subsidies, toward the JPY 50M full-year adjusted EBITDA plan. |
Kumamoto Earthquake ImpactAmount and classification of map data restoration costs, and treatment in the full-year plan | The 1Q earnings release disclosed the event as a subsequent event, with the damage amount under investigation. The cost booked in 2Q (Jul–Sep) and whether the plan is maintained or revised are the most important checkpoints for the investment case. |
Financial PositionCash and deposits at end-2Q and 1H cumulative operating cash flow | Cash and deposits stood at JPY 4,253M and long-term borrowings at JPY 1,516M at end-1Q. Comparing against 1H operating CF of JPY -592M in the prior year will show how well liquidity holds up amid continued losses. |
Key Issues from Previous Results (FY3/2027 1Q)
1Q revenue was JPY 1,147M (-21.3%), and the operating loss widened to JPY -999M. License revenue, however, grew to JPY 645M (+10.0%), lifting its share of total revenue. The full-year plan (revenue of JPY 7,000M, license revenue of JPY 3,000M, adjusted EBITDA of JPY 50M) was left unchanged. The key issues for 2Q are an early read on progress toward this plan and quantification of the Kumamoto Earthquake impact.
1. Sustained License Revenue Growth and Rising Revenue Share
- Previous Quarter: License revenue reached JPY 645M (+10.0%), and its share of revenue rose to 56.2% from 40.2% a year earlier (our estimate).
- This Quarter's Checkpoints: We will check whether overseas mass-production and corporate licenses remain firm and whether corporate licenses to domestic autonomous driving system developers keep building. Another focus is whether the loss of usable map data in some areas due to the Kumamoto Earthquake affects license revenue.
- Key Metrics: 1H cumulative license revenue YoY, and progress vs. the JPY 3,000M full-year plan (21.5% as of 1Q, our estimate).
2. Project Revenue Recovery and H2-Weighted Full-Year Revenue Plan
- Previous Quarter: Project revenue was JPY 502M (our estimate), down -42.5% from JPY 873M a year earlier. The company attributed the decline to the completion of a new North American data development project.
- Previous Quarter: Domestic segment revenue fell to JPY 142M (-62.2%), reflecting the absence of a large project in the prior-year period.
- This Quarter's Checkpoints: In the domestic 3D data business, we will track progress on logistics automation projects and the contribution from consolidating Rikanosu. Overseas, we want to see new data development projects building up to replace North America.
- This Quarter's Checkpoints: The Saudi Arabia project disclosed on October 28 (approx. JPY 670M) was won after the 2Q period end. It will be reflected in revenue from 3Q onward, not in 2Q.
- Key Metrics: 1H cumulative revenue YoY (JPY 2,451M in the prior year), progress vs. the JPY 7,000M full-year plan, and contract liabilities at end-2Q (JPY 1,420M at end-1Q).
3. Cost Structure and Room for Adjusted EBITDA Improvement
- Previous Quarter: Cost of goods sold rose to JPY 1,445M (+41.4%), exceeding revenue and resulting in a gross loss of JPY -297M. Depreciation increased to JPY 293M (JPY 213M a year earlier).
- Previous Quarter: SG&A rose to JPY 702M (+11.1%), including JPY 25M of acquisition-related costs for Rikanosu. Adjusted EBITDA was JPY -667M (JPY +24M a year earlier).
- This Quarter's Checkpoints: The company describes license revenue as carrying largely fixed cost of goods sold and high contribution margins. The focus is therefore whether a revenue recovery flows straight through to gross profit.
- This Quarter's Checkpoints: Government subsidies are included in the definition of adjusted EBITDA. We want to assess the contribution of the subsidy income disclosed on September 4 separately from underlying improvement.
- Key Metrics: Standalone 2Q gross profit/loss (JPY -227M in standalone 2Q of the prior year, our estimate), the gap between 1H cumulative adjusted EBITDA and the JPY 50M full-year plan, and segment losses (1Q: domestic JPY -400M, overseas JPY -602M).
4. Recognition of Restoration Costs from the Kumamoto Earthquake
- Previous Quarter: The 2026 Kumamoto Earthquake on July 28, 2026 left part of the company's high-definition 3D map data unusable for customers. The company disclosed this as a material subsequent event and expects to incur restoration costs for repair and rebuilding. The damage amount is under investigation.
- This Quarter's Checkpoints: The earthquake occurred within 2Q (Jul–Sep), so we will check the amount of costs booked and their classification (cost of goods sold vs. extraordinary loss). How the impact is factored into the full-year plan is also a focus.
- This Quarter's Checkpoints: In 1Q, a JPY 20M gain on negative goodwill kept the net loss (JPY -980M) smaller than the recurring loss (JPY -997M). We will again review the breakdown of extraordinary items and income taxes in 2Q.
- Key Metrics: Breakdown of 1H cumulative extraordinary losses and cost of goods sold, the gap between recurring profit/loss and quarterly net income/loss attributable to owners of parent company, and whether full-year guidance is revised.
5. Financial Position and M&A Integration
- Previous Quarter: Cash and deposits were JPY 4,253M at end-1Q (+JPY 595M vs. the prior fiscal year-end). Long-term borrowings rose to JPY 1,516M (+JPY 736M on the same basis), while the current portion of long-term borrowings fell to JPY 287M.
- Previous Quarter: The equity ratio was 60.1% (66.2% at the prior fiscal year-end). The acquisition cost of Rikanosu was JPY 242M, with provisional goodwill of JPY 169M amortized on a straight-line basis over 10 years.
- This Quarter's Checkpoints: A quarterly cash flow statement is expected with the 1H results. We want to check the scale of operating CF and of investing CF, which is centered on software. We will also check whether the purchase price allocation for Rikanosu has been finalized.
- Key Metrics: Cash and deposits and the equity ratio at end-2Q, and 1H cumulative operating CF (JPY -592M a year earlier) and investing CF (JPY -882M a year earlier).
Key Timely Disclosures During the Period
- 2026/10/28Large-Scale Road Data Development Order at Consolidated Subsidiary - Consolidated subsidiary DMP Arabia won an order of approx. JPY 670M from NAVER Innovation for road surveying and road network data development in Saudi Arabia. Revenue is scheduled to be recognized in FY3/2027 and FY3/2028, supporting a recovery in project revenue from 3Q onward. It will not affect 2Q earnings.
- 2026/09/15High-Definition 3D Map Data Adopted for Nissan "Elgrand" - The data was adopted for ego-vehicle localization in ProPILOT 2.0, expanding cumulative adoptions to 39 models across 6 OEMs. This signals a broadening base for mass-production licenses. The timing of the revenue contribution depends on production and sales ramp-up, which we will monitor from 3Q onward.
- 2026/09/04Recognition of Non-Operating Income (Subsidy Income) - Disclosed during 2Q, this could support 1H cumulative recurring profit/loss. Because government subsidies are included in the definition of adjusted EBITDA, we want to assess underlying improvement excluding subsidies separately.
Previous Quarter Results (FY3/2027 1Q Actual)
The company develops and owns high-definition 3D data for autonomous driving and ADAS. It operates in two segments, domestic and overseas, generating license revenue from granting data usage rights and project revenue from contracted data development. Under its "Modeling the Earth" vision, it is expanding its Data for AI business for AI training, evaluation and validation, and pushing into non-automotive areas such as logistics, infrastructure and real estate. It is also pursuing M&A aimed at building a network of surveying firms. For FY3/2027, the company plans revenue of JPY 7,000M (+23.1%) and a return to positive adjusted EBITDA of JPY 50M. In 1Q, however, revenue declined and losses widened due to the North American project roll-off.
| Item | Amount | YoY | vs. Company Plan | Notes |
|---|---|---|---|---|
| Revenue | JPY 1,147M | -21.3% | - | Roll-off of the North American project and a large domestic project in the prior year. Progress vs. full-year plan of 16.4% (our estimate) |
| License Revenue | JPY 645M | +10.0% | - | Corporate licenses expanded, led by AI applications. Progress vs. full-year plan of 21.5% (our estimate) |
| Adjusted EBITDA | JPY -667M | - | - | JPY +24M a year earlier. Full-year plan of JPY 50M |
| Operating Income | JPY -999M | - | - | JPY -196M a year earlier. Cost of goods sold rose +41.4%, resulting in a gross loss of JPY -297M |
| Recurring Profit | JPY -997M | - | - | JPY -223M a year earlier. Includes subsidy income of JPY 29M |
| Quarterly Net Income Attributable to Owners of Parent Company | JPY -980M | - | - | JPY -285M a year earlier. JPY 20M gain on negative goodwill booked as extraordinary income |
| EPS | JPY -41.48 | - | - | JPY -12.10 a year earlier |
Note: The company discloses only a full-year plan, not quarterly targets, so "vs. Company Plan" is shown as "-". No full-year guidance is disclosed for operating income, recurring profit, net income or EPS.
Guidance Achievement Rate (Revenue Basis): 16.4% (prior year: 25.7%) Note: Because the company does not disclose full-year guidance for recurring profit or operating income, the rate is calculated on a revenue basis (our estimate). The prior-year figure is FY3/2026 1Q revenue of JPY 1,459M divided by full-year actual revenue of JPY 5,686M for that fiscal year.
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