ZenmuTech, Inc.

Business Details

With a mission to "pursue data protection and data utilization," the company develops security solutions leveraging its proprietary secret sharing technology "ZENMU-AONT." Its flagship product "ZENMU Virtual Drive (ZVD)" is an information leakage prevention solution for PCs, sold through agents to think tanks, financial institutions, IT vendors, and others. The company's business model is based on recurring revenue combining subscription and maintenance contracts, and it also offers the Secure Computation Solution "QueryAhead." Adoption studies and proof-of-concept projects are progressing in the medical DX field and VDI/DaaS domain.

Recent Overview

Q1 net sales down 9.6% year-on-year; operating loss widened to ¥55 million, mainly due to increased SG&A expenses

Net sales for the first quarter of FY2026 (ending December 2026) (January to March 2026) were ¥145 million (down 9.6% year on year). While recurring revenue from the secret sharing solution steadily accumulated, flow-type revenue from the secure computation solution declined due to the reversal effect of a large-scale project in the same period of the prior year. Selling, general and administrative expenses increased significantly to ¥179 million (up 23.6% year on year), and the operating loss widened to ¥55 million (compared with a loss of ¥7 million in the same period of the prior year). Overseas expansion advanced through the MOU signed with Taiwan's BigObject. There is no change to the full-year earnings forecast (net sales of ¥1,080 million, operating profit of ¥161 million). In addition, a 2-for-1 stock split was implemented with a record date of March 31, 2026 (effective date: April 1, 2026).

Key Products

Growth Drivers

• Continued accumulation of recurring revenue from the secret sharing solution (strengthening a stable revenue base through expansion of ZVD license numbers)
• Increased acquisition of large-scale projects (1,000+ licenses) through agent collaboration (Nomura Research Institute and Hitachi Systems Engineering Services are top customers)
• Expansion of alliance sales through OEM deployment of ZENMU Engine into drones, surveillance cameras, and generative AI-related fields
• Progress in commercializing the Secure Computation Solution "QueryAhead" and realization of a "Secure Data Intelligence Platform" and overseas expansion through strategic collaboration (MOU signed) with Taiwan's BigObject
• Steady progress in adoption studies and proof-of-concept projects in the medical DX field and VDI/DaaS domain
• Expansion of the endpoint security market driven by AI advancement, IoT proliferation, and DX progress (the global market is projected to reach US$28.8 billion by 2030)

Risks

• Risk of revenue concentration among specific customers (top four customers account for 76.7% of net sales: Nomura Research Institute 25.3%, Hitachi Systems 21.7%, Deloitte Tohmatsu 16.5%, AIST 13.2%)
• Risk of seasonal concentration of orders (orders tend to concentrate in March, the fiscal year-end month for customers, and December, the company's own fiscal year-end month)
• Risk of expanded losses due to a sharp rise in SG&A expenses (Q1 FY2026 SG&A expenses of ¥179 million, up 23.6% year on year, with operating loss widening to ¥55 million)
• Instability of flow-type revenue from the Secure Computation Solution "QueryAhead" (a decline occurred due to the reversal effect of a large-scale project in the same period of the prior year)
• Risk of a second-half-weighted structure in achieving the full-year earnings forecast (net sales of ¥1,080 million, operating profit of ¥161 million) (Q1 net sales of ¥145 million account for only about 13% of the full-year forecast)
• Risk of intensifying competition in the information security market (competition with VDI vendors and major security companies) and increasing costs to keep pace with technological innovation
• Financial burden including short-term borrowings of ¥130 million (up ¥30 million from the end of the prior period) and continued accumulated losses (retained earnings of -¥244 million)