Morpho,Inc.
3653・Growth Market・Information & Communication
Business
Morpho, Inc. was founded in 2004 and is listed on the Growth Market of the Tokyo Stock Exchange. It is a software company that develops and licenses various software utilizing image processing and image recognition technology for embedded devices, including smartphones. With a group of six companies in Japan and overseas (five consolidated subsidiaries), it has overseas offices in the United States, South Korea, China, and Taiwan, and counts global manufacturers such as Xiaomi and Sony Semiconductor Solutions among its major customers. It has designated smart devices, automotive/mobility, and DX as its three strategic areas, and is pursuing business expansion under its medium-term management plan, "Vision2027."
Business Model
Revenue is composed of three categories: (1) royalty income (license fees based on the number of units shipped, usage period, or per-model lump-sum arrangements), (2) support income (implementation assistance and maintenance), and (3) development income (evaluation licenses and contracted development). Royalty income forms the core, with sales to Xiaomi in FY2025 reaching ¥589 million (up 19.3% year on year), reflecting an expanding trend. The company's competitive advantage stems from its low power consumption and compact software-only design that achieves functionality without additional hardware.
Company Strengths
By realizing all functions through software, the company eliminates the need for extra volume and suppresses power consumption. It holds a total of 123 patents (49 in Japan, 74 overseas including the US, Europe, China, and South Korea), actively pursuing the rights protection of its proprietary technology.
Sales to Xiaomi Communications Co., Ltd. reached ¥589 million in FY2025 (up 19.3% year on year), accounting for 17.5% of total sales. Sony Semiconductor Solutions (capital and business alliance since September 2024) also accounts for 12.5%, reflecting business relationships built with major global partners.
As of the end of FY2025, total liabilities stood at a low ¥526 million against total assets of ¥4,146 million. The company held cash and cash equivalents of ¥2,525 million, maintaining a financial structure that does not rely on interest-bearing debt. It is positioned to fund forward-looking R&D investments with its own capital.
ENVALITH's Perspective
Performance Trend
Revenue peaked at ¥3,301 million in FY2024, remained roughly flat at ¥3,360 million in FY2025, then sharply decelerated to ¥1,152 million (down 24.8% year on year) in the H1 (6 months) of FY2026 (ending October 2026). Although the company turned profitable in FY2024 (operating profit of ¥257 million), operating profit plunged to ¥46 million in FY2025, falling back into deficit, and the deterioration accelerated further with an operating loss of ¥539 million in the H1 of FY2026 (ending October 2026). As an external factor, the global surge in semiconductor prices led customers to adjust production, directly hitting royalty income (down 32.5% year on year). Cost of sales rose slightly year on year (from ¥743 million to ¥769 million) even as revenue fell sharply, causing the gross margin to drop sharply from 51.5% to 33.3%. SG&A expenses also increased from ¥897 million to ¥923 million, making improvement of the earnings structure an urgent priority. The full-year forecast has already been revised downward to revenue of ¥3,000 million (down 10.7% year on year) and an operating loss of ¥350 million.
Growth Strategy
Under Vision2027, the company is pursuing high-value-added solutions leveraging its technological advantages across three domains: smart devices, automotive, and DX.
In response to the maturation of the smartphone market, the company is promoting new business development and proposal activities targeting manufacturers of wearable devices such as smart glasses and action cameras. Positioned as a next-generation growth driver, the company emphasizes the competitive advantage of its lightweight, low-power-consumption technology.
The company continues to strengthen alliances with major automakers and automotive equipment manufacturers, while optimizing its customized development framework. It is focusing on building up its pipeline of contracted projects for the second half and beyond, although progress on projects continues to be delayed due to increased caution in customer investment.
The company is strengthening sales activities and product development aimed at capturing demand for purely domestic image processing and AI technology in industries such as defense and construction. It is also pursuing new infrastructure domains, including railways, aerospace, and shipping, with the aim of creating stable and non-continuous revenue opportunities.
The company is promoting research and development of product-out offerings that leverage 3D spatial imaging technology using cameras and Vision-Language Models (VLM), aiming to drive non-continuous growth. Some results have already begun contributing to revenue, and the company aims to accelerate business creation going forward.
The company implemented the absorption-type merger of its subsidiary Morpho AI Solutions Inc., along with a capital reduction and loss compensation (reducing capital stock from ¥1,859 million to ¥100 million). It recorded structural reform costs of ¥144 million and impairment losses of ¥40 million in the interim period, aiming to optimize its cost structure.
Last updated: July 17, 2026