Dynamic Map Platform Co., Ltd.

Because expanding the coverage area of HD Maps is a prerequisite for adoption, upfront investment is unavoidable, and the company has continued to record losses and negative operating cash flow since its founding. While mapping of expressways and motorways within Japan (Domestic) has been completed, expansion to general roads is underway in North America, and mapping is also in progress in Europe, South Korea, and the Middle East, meaning the mapping-ahead-of-revenue state requiring significant expenditure is expected to continue for the time being. If the market launch does not proceed as expected, the recording of losses could become prolonged, potentially affecting cash flow.

As of the end of March 2025, the shareholding ratio of venture capital and other investment entities reached 55.6%, and INCJ, the largest such holder, may continue to dispose of its shares even after the expiration of its operating period (end of March 2025). If a large volume of shares is sold within a short period, this could disrupt the supply-demand balance in the stock market and affect the share price. INCJ has stated that it will seek transfer and sale methods that do not create downward pressure on the share price, but this is not guaranteed.

Full-scale adoption of HD Maps for Level 3 and above autonomous driving has been delayed by several years relative to initial expectations at the time of the company's founding (2016). The company recorded a full impairment of goodwill and other assets at its North American subsidiary in FY2022 (ending March 2022), and also recorded impairment of fixed assets in FY2024 (ending March 2024). Combined with uncertainty over the new U.S. administration's tariff policy, if there is a decline in sales volumes of vehicles equipped with advanced driver assistance systems or a decline in the automotive industry's appetite for investment in autonomous driving, this could have a material impact on the company's business performance and financial position. The company's policy is to improve profitability through revenue expansion and reduced mapping costs, but the risk that the market launch will not proceed as expected continues.

The pipelines for both the Automotive Business and the 3D Data Business are classified into stages such as "Contracted," "RFQ," "RFI," and "In Negotiation." Even at the "Contracted" stage, there is a risk of cancellation by customers, and for license-type revenue, actual amounts fluctuate depending on vehicle sales volumes. The RFQ and RFI stages are not legally binding and carry the risk of lost deals, while significant exchange rate fluctuations can also affect the amount and timing of revenue recognition. If contracts cannot be concluded or transactions executed at the expected timing or terms, this could have a serious impact on business performance and financial position.

Against a backdrop of continued losses and negative operating cash flow since its founding, the company continues to raise funds through a combination of share issuances, bank borrowings, and commitment line agreements. However, its major borrowings are subject to financial covenants, and breaching these could result in the loss of the benefit of the term. The company also continues to make additional capital contributions to its North American subsidiary, and if profitability improvement does not proceed as expected, improvement in cash flow could be delayed, potentially affecting the company's cash position. As of the end of March 2025, tax loss carryforwards had reached ¥25,938 million.

Competitors such as Here, TomTom, and Google have entered the market, and there is a risk that competitors with technology or price competitiveness superior to the company's own—such as technology for shortening map data update cycles or low-cost measurement methods that could replace MMS—may emerge. In addition, if the approach adopted by Tesla and others, combining SD maps with driving data, becomes widespread as a substitute technology for HD Maps, the company could lose market demand. The company is pursuing joint research and development with other companies and working to adapt to substitute technologies, but currently assesses that the potential for practical application of substitute technologies remains limited.

The company has a global presence with operations in North America, Europe, the Middle East, and South Korea, but there is a risk that deteriorating economic or political conditions in each country, changes to laws, regulations, tax systems, or foreign investment restrictions, and differences in business practices could make business execution difficult. In addition, since financial statements for each region are prepared in local currency, the consolidated financial statements are affected by exchange rate fluctuations; the company has formulated a foreign exchange risk management policy and is considering hedging transactions. While the company has established preventive frameworks for each risk scenario, including the engagement of local law firms and the application of its BCP framework, if unforeseen circumstances arise, this could affect business performance and financial position.

At the North American subsidiary, Dynamic Map Platform North America, Inc., sales of HD Maps for General Motors Company's Super Cruise™ account for more than half of total revenue, resulting in a high degree of dependence on this customer. If relations with GM deteriorate or GM experiences a significant deterioration in performance or major change in business activities, this could have a material impact on the group's business performance and financial position. The company states that it is working to reduce this dependence by expanding sales to other customers.

If a vehicle accident occurs in a vehicle equipped with HD Maps and the cause is attributed to a defect in the HD Map, this could be subject to a damages claim under the Product Liability Act and related laws. Some contracts with customers do not set an upper limit on damages, creating a risk that the amount of damages could affect business performance and financial position. The company has established a dedicated quality control department and works to ensure safety, but assesses that, given the redundant systems built by automakers, the likelihood of liability being attributed solely to the HD Map is not high.

Security regulations concerning the mapping and cross-border transfer of HD Map data differ by country. While the company has already obtained the necessary permits and licenses from authorities in some regions, the enactment of new regulations or changes to existing regulations could result in additional compliance costs and constrain business development. In addition, violations of laws and regulations such as antitrust laws, or unexpected regulatory changes, could also give rise to new compliance costs. The company works with advisory attorneys in Japan and the U.S. as well as local law firms to gather information and maintain a response framework.