CRI Middleware Co., Ltd.

Business Details

The segment mainly licenses audio/video-related middleware "CRIWARE" and image optimization solution "OPTPiX" to the gaming industry, and also conducts audio production (voice recording, etc.) through its subsidiary Two Five Inc. The core business model accumulates licensing revenue across three regions—Japan, China, and Europe/US—and functions as a source of technology and funding for the group as a whole. R&D investment in the online communication middleware "CRI TeleXus" is also continuously carried out within this segment.

Recent Overview

Both revenue and profit declined year on year due to upfront overseas investment and weakness in Europe/US

In the interim period of FY2026 (ending September 2026), Game Business revenue was ¥937 million (down 1.2% year on year), and segment profit was ¥87 million (down 32.6% year on year). Domestic licensing revenue declined slightly as the impact of the decrease in Q1 remained, despite securing several bulk license contracts in Q2. In China, licensing revenue increased as the results of the account sales strategy began to materialize, while in Europe and the US, revenue declined as the acquisition of adopted titles did not proceed as planned. Audio production at Two Five Inc. saw revenue growth driven by strong large-scale projects from China. On the profit side, upfront investment for strengthening overseas expansion (such as increased sales staff) weighed heavily, resulting in a significant profit decline.

Key Products

Growth Drivers

• Securing multiple bulk license contracts in Japan through strengthened proposal-based sales (several contracts secured in Q2)
• Increase in licensing revenue as the results of the account sales strategy in the Chinese market materialize
• Continued receipt of large-scale voice recording orders for Chinese companies by Two Five Inc. and steady repeat orders from existing clients
• Mid- to long-term market development in Europe and the US through a combination of direct sales and distributor sales
• Creation of new revenue sources through commercialization of "CRI TeleXus" (expansion into the online communication market)
• Mid- to long-term market development through strengthened sales of video-related middleware domestically and overseas and increased overseas sales staff

Risks

• Risk that the acquisition of adopted titles in the Europe/US market does not proceed as planned (materialized in the current interim period)
• Risk of upfront investment and profit pressure in the short term due to increased costs such as additional sales staff for strengthening overseas expansion
• Uncertainty regarding the continuity of new adoption deals in the Chinese market
• Large fluctuations in revenue between periods due to concentration of large worldwide title contracts in specific periods
• Cost burden risk in case of delayed commercialization, as R&D investment in "CRI TeleXus" and other projects is recorded in this segment
• Impact on overseas revenue from trade policy and foreign exchange fluctuations in various countries

Business Details

Leveraging audio and video-related technologies developed in the Game Business, this segment licenses middleware and solutions and undertakes contract development mainly for customers outside the gaming industry. The focus areas are three: mobility (in-vehicle sound and meter graphics), embedded systems such as karaoke equipment, home appliances, and IoT, and cloud solutions related to web video and still images. The segment aims for higher profitability through expansion of licensing revenue, but in the current interim period, the falloff of special karaoke-related demand and the shift of cloud solutions to the R&D phase have weighed on profit.

Recent Overview

Despite strength in mobility, profit declined 17.1% year on year due to the falloff of special demand in embedded systems and the shift of cloud to R&D

In the interim period of FY2026 (ending September 2026) (October 2025 to March 2026), the Enterprise Business achieved revenue of ¥912 million (up 0.5% year on year), a slight increase. In the mobility field, licensing revenue from CRI Glassco for two-wheeled vehicles in the Indian market was strong, contributing to revenue growth. On the other hand, the embedded systems field saw a revenue decline due to the falloff of special demand associated with the launch of new karaoke models in the prior year, and the cloud solutions field saw a revenue decline due to the shift to the R&D phase since Q3 of the prior fiscal year. On the profit side, the combined impact of these two fields caused segment profit to fall to ¥214 million (down 17.1% year on year), with the profit margin declining to 23.5% (from 28.5% in the same period of the prior year).

Key Products

Growth Drivers

• Expansion of adopted vehicle units for CRI Glassco in the mobility field (continued strength centered on two-wheeled vehicles for the Indian market)
• Rising demand for in-vehicle solutions against the backdrop of the spread of SDV (Software Defined Vehicle)
• Build-up of licensing revenue through expansion of adopted vehicle models for CRI ADX Automotive
• Market launch of new products in the cloud solutions field following completion of R&D (planned from the second half of FY2026 ending September 2026 onward)
• Strengthened overseas expansion in the mobility field based on the medium-term management plan (2026-2030)

Risks

• Irregularity in the timing of recording large bulk licensing revenue in the embedded systems field (karaoke, etc.) and the risk of falloff of special demand
• Continuation of the short-term revenue decline associated with the shift of the cloud solutions field to the R&D phase
• Uncertainty regarding the pace of expansion of adopted vehicle models and unit volumes in the mobility field
• Impact of trade policy and tariff trends in various countries (particularly US tariff policy) on the investment plans of manufacturing customers such as automakers
• Reduced visibility of future revenue due to a significant year-on-year decline in order intake and order backlog