DIGITAL GRID Corporation

Business Details

An electric power trading business targeting power sources other than renewable energy on the Digital Grid Platform (DGP). Demand-side customers can trade directly with power generators through DGP without initial costs, specialized knowledge, or a retail electricity business license. The Group does not bear market fluctuation risk and generates revenue through DGP fees based on transaction volume. Its competitive advantages lie in low-cost fees, flexibility in contract structures, and highly transparent disclosure of cost structures. The Company continues to pursue business expansion initiatives, including expanding partner collaboration, strengthening customer success measures, and offering tailor-made electricity proposals designed to mitigate price surge risk.

Recent Overview

Sales increased 2.9% year-on-year, but segment profit decreased 1.0%, resulting in a decline in profit margin

For the cumulative third quarter of FY2026 (ending July 2026) (August 2025 to April 2026), segment sales were ¥4,357 million (up 2.9% year-on-year), while segment profit slightly declined to ¥2,859 million (down 1.0% year-on-year). DGP fee revenue decreased from ¥3,393 million in the same period of the prior year to ¥2,898 million, while other revenue related to electricity settlement with general electricity transmission and distribution utilities, etc. increased substantially from ¥748 million to ¥1,316 million, supporting overall sales. The Company continues to expand partner collaboration, strengthen customer success measures, and offer tailor-made electricity proposals designed to mitigate price surge risk. One of the main factors behind the upward revision of the full-year earnings forecast (sales of ¥6,595 million, operating profit of ¥2,836 million) is that revenue recognition in the Electric Power Platform Business exceeded the initial budget.

Key Products

Growth Drivers

• Growing demand among companies for decarbonization management and electricity cost management driven by GX policy promotion
• Expanding acceptance of market-linked procurement among demand-side customers amid increasing JEPX price volatility
• Reduction in customer acquisition costs and increased business opportunities through expanded collaboration with partner companies (agencies)
• Maintaining low-cost fees and strong price competitiveness through in-house development of AI supply-demand management systems
• Improved customer lifetime value through the launch of an inside sales team and strengthened customer success measures
• Responding to hedging needs and improving retention rates through diversification of procurement options, including the use of futures trading

Risks

• Decline in per-transaction unit price of DGP fees due to intensifying competition (DGP fee revenue has been trending downward year-on-year)
• Risk of contract cancellation due to annual contract renewal, as electricity contracts are generally single-year agreements
• Risk of increased electricity procurement costs and customer attrition among demand-side customers during JEPX market price surges
• Impact on business results from large-scale electricity settlements (imbalances) with general electricity transmission and distribution utilities (settlement gains increased substantially in the current period, boosting revenue, but this is highly volatile)
• Imbalance risk arising from the limitations of AI supply-demand forecasting accuracy (settlement at penalty-based unit prices)
• Business continuity risk due to the departure of core engineers and specialized electricity personnel and difficulty in hiring replacements