Ekitan & Co., Ltd.

Commoditization of core services is progressing rapidly, as mega players such as Google provide transit navigation-related information free of charge, threatening the foundation of paid subscription revenue. The Group is leveraging its business assets to create new revenue pillars that connect local residents' needs with local business services.

Against a backdrop of yen depreciation, rising raw material prices, and increased demand driven by AI services, the procurement cost of hardware and software required to maintain transit navigation services is rising sharply. Due to ongoing commoditization, it is difficult to raise prices for paid subscription services, adversely affecting the Group's profits. As a countermeasure, the Group aims to improve profitability by offering new services and high-value-added, high-profitability services.

Achieving sustainable growth requires professionals across a wide range of areas, including engineers, business personnel, management, and executive talent. If the Group is unable to sufficiently secure and develop appropriate personnel, it could slow the achievement of the medium-term management plan and impact business performance. The Group is working to secure and develop personnel through the use of recruitment agencies and M&A, internal promotion, study sessions, and improvements to the working environment through work-style reforms.

The Group carries out M&A and investments in new businesses to achieve its medium-term management plan and drive Group growth. However, if contingent liabilities are discovered after an acquisition or if a target company's earnings plan is not achieved, it could impact the Group's business performance and financial condition. The Group works to reduce this risk through due diligence, confirmation of consistency with medium-term business strategy, and ensuring transparency in the acquisition process.

The Group holds a variety of personal information, including transit navigation user information and personal information entrusted by customers. If a leak occurs, it could damage the Group's reputation and result in claims for damages, impacting Group business performance. The Group is advancing measures against data loss and leakage through the development and operation of various information security regulations, education and training for officers and employees, and strengthening of network security.

If computer systems, including data centers, stop functioning or malfunction due to natural disasters such as earthquakes or typhoons, large-scale power outages, terrorism, or war, business operations could be disrupted, and there is a risk that financial reporting could not be conducted normally due to the suspension of financial systems. In addition to maintaining daily stable system operation, the Group continuously considers and implements improvements to its information systems infrastructure.