TECHMATRIX CORPORATION

Business Details

Comprises the Company along with Cross Head Corporation, OCH Corporation, Firmus Sdn.Bhd., Firmus Consulting Sdn.Bhd., and Firmus Pte.Ltd. Provides product sales of networking, security, storage and other equipment, along with integration, maintenance, operation, and monitoring services. The Company is promoting the shift of cloud-based security products to subscription models, building up recurring revenue. In November 2024, the Company made Firmus Sdn.Bhd., Malaysia's largest cybersecurity provider, a wholly owned subsidiary, and has begun expanding into the ASEAN market.

Recent Overview

In FY2026 (ending March 2026), both revenue and operating profit reached record highs, with the order backlog building up to ¥78,880 million.

In the Information Infrastructure Business for FY2026 (ending March 2026), orders for both new and renewal projects, centered on cloud-based security products, progressed favorably, resulting in record-high revenue of ¥51,620 million (up 13.2% year on year) and operating profit of ¥6,580 million (up 24.9% year on year). Cross-selling of the AI-driven SOC Operations Automation Solution also progressed. On the other hand, Cross Head Corporation fell below prior period results due to the rebound from a large-scale deal in the prior period, and OCH Corporation fell below prior period results due to a decline in sales performance among key distribution partners. Performance forecasts for the next period (FY2027, ending March 2027) call for revenue of ¥59,500 million and operating profit of ¥7,240 million.

Key Products

Growth Drivers

• Expanding demand for cybersecurity countermeasures amid the worsening severity and increasing frequency of ransomware attacks
• Accumulation of recurring revenue through progress in the subscription-based shift of cloud-based security products (recurring revenue ratio of 87.9%)
• Expanding cross-selling of the AI-driven SOC Operations Automation Solution
• Increasing demand for AI-driven defensive security products in response to the growing sophistication of AI use by attackers
• Security countermeasures becoming a management issue amid strengthened legal regulation and corporate governance
• Accelerated expansion into the ASEAN market through the subsidiarization of Firmus Sdn.Bhd.
• Improved visibility of future revenue through the buildup of an order backlog of ¥78,880 million
• Proactive investment in developing high-value-added services such as managed services

Risks

• Risk to the continuity of agency agreements with overseas vendors (such as Palo Alto Networks): possibility of losing agency rights due to acquisitions or sales network restructuring
• Rising procurement costs due to the depreciation of the yen (the majority of procurement is denominated in US dollars)
• Risk of advance payment burden and cash flow strain associated with the increasing scale of multi-year subscription contracts
• Slowdown in the UTM business for SMEs due to a decline in sales performance among key distribution partners at OCH Corporation
• Risk of declining competitiveness of handled products due to accelerating technological innovation in the IT industry
• Rising personnel costs and difficulty securing staff amid intensifying competition for IT talent
• Risk that increased SG&A expenses from proactive investment to strengthen the support structure could pressure profit

Business Details

Comprises the Company's group along with Casareal Inc., Alexia Fintech Corporation, TechMatrix Asia Holdings Co., Ltd., and others. Provides system development, applications, packages, and cloud (SaaS) services to face-to-face markets across four fields: CRM (in-house product "FastSeries"), software quality assurance (testing tools), business solutions (contracted development for the public and financial sectors), and education (school administration support SaaS "Tsumugino"). The company is promoting a shift toward subscription-based business, placing the accumulation of recurring revenue at the core of its strategy.

Recent Overview

Revenue reached a record high, but the segment fell into an operating loss due to expanded upfront investment.

In FY2026 (ending March 2026), revenue reached a record high of ¥9,884 million (up 7.7% year on year), while operating profit/loss fell into a loss of -¥148 million (a decline of ¥289 million year on year). In the CRM field, personnel costs and public cloud costs increased; in the education field, the loss expanded beyond the initial budget due to a change in the first quarter to recognize the full amount of software development costs as R&D expenses. Only the software quality assurance field significantly exceeded prior period results across orders, revenue, and operating profit, making it the only strong-performing area within the segment. Against the Medium-Term Management Plan's FY2026 (ending March 2026) targets (revenue of ¥10,200 million and operating profit of ¥500 million), revenue fell short and operating profit fell significantly short.

Key Products

Growth Drivers

• Continued accumulation of subscriptions for testing tools for automotive and embedded software in the software quality assurance field, along with continued expansion of demand for compliance with functional safety international standards
• Steady accumulation of subscription-based revenue in the CRM field and accelerated business expansion into the ASEAN region (such as Thailand)
• Expansion and enhanced sales of generative AI-powered contact center solutions through collaboration with Mobilus Inc.
• Strengthened collaboration for the education-field product "Tsumugino" with Benesse Corporation and expanded deployment into the high school market
• Cultivation of a new revenue source through the market launch of the in-house developed dashboard tool "Quomiru"
• Development of public-sector DX and CX improvement solutions in the business solutions field and utilization of contracted development technical capabilities

Risks

• Continued upfront investment in the education field (product development, marketing, personnel reinforcement), posing a risk of expanded short-term losses (an operating loss of ¥148 million was recorded in FY2026, ending March 2026)
• Pressure on profit margins due to increased personnel costs and public cloud costs associated with business expansion in the CRM field
• Risk of failing to secure large-scale deals at Alexia Fintech Corporation and high revenue volatility
• Difficulty securing new and large-scale repeat deals in Casareal Inc.'s IT training business, and deteriorating profitability
• Uncertainty in the order environment for bid-based projects in the business solutions field and risk of deteriorating profitability for specific projects
• Balancing investment and monetization to achieve the operating profit target of ¥200 million in the final year of the Medium-Term Management Plan (FY2027, ending March 2027)

Business Details

Comprises PSP Corporation, Ichigo LLC, and A-Line Inc. Provides medical institutions with the cloud-based medical image management system (PACS) service "NOBORI," remote diagnostic imaging support service "Ichigo," the dose management system "MINCADI," and other offerings. While promoting the shift from on-premise PACS to the cloud, the company also continues upfront investment in new businesses, including the development of an AI platform business and a PHR service for general patients. In April 2026, the company made Medmain Inc. a subsidiary, expanding its business into the pathological diagnosis AI domain.

Recent Overview

Orders, revenue, and profit all exceeded prior period results; the company expanded into the pathological AI domain through the subsidiarization of Medmain Inc.

In FY2026 (ending March 2026), orders received were ¥13,936 million, revenue was ¥10,229 million, and operating profit was ¥1,329 million, with orders, revenue, and operating profit all exceeding prior period results. Orders for the medical information cloud service "NOBORI" remained robust, with the cumulative number of contracted facilities increasing, and the AI platform business secured a large-scale deal. The recurring revenue ratio rose to 61.0%. As a subsequent event, on April 30, 2026, the company additionally acquired 57.51% of the shares of Medmain Inc. (pathological diagnosis support AI software), making it a consolidated subsidiary (voting rights ratio of 72.05% after acquisition). Total acquisition cost was ¥2,883 million (cash of ¥2,302 million plus the fair value of previously held equity of ¥582 million). Medmain is in an upfront investment phase, which is expected to be a short-term drag on consolidated operating profit.

Key Products

Growth Drivers

• Expansion of recurring revenue (recurring revenue ratio of 61.0%) through the continued increase in newly contracted facilities for the medical information cloud service "NOBORI" and the accumulation of contract renewals from existing users
• Long-term shift toward recurring revenue through the promotion of the cloud shift from on-premise PACS to cloud PACS (with plans to further strengthen efforts targeting large-scale medical institutions)
• Expansion of the medical imaging diagnosis support AI platform business (secured a large-scale deal in FY2026, ending March 2026)
• Promotion of digital pathology diagnosis platform development and commercialization, and expansion into the pathological AI domain, through the subsidiarization of Medmain Inc. (April 2026)
• Increased orders for the dose management system "MINCADI" (backed by growing investment appetite among medical institutions for radiation safety management)
• Creation of new businesses through the expansion of the PHR service and its user base, and joint development with medical institutions and external companies

Risks

• Short-term decline in revenue and operating profit due to the PACS cloud shift (profit pressure during the transition period)
• Short-term downward impact on consolidated operating profit due to Medmain Inc. being in an upfront investment phase
• Cost pressure from personnel reinforcement, proactive development investment, and increasing public cloud expenses aimed at business expansion
• Against the Medium-Term Management Plan's FY2027 (ending March 2027) targets (revenue of ¥11,100 million and operating profit of ¥1,080 million), the performance forecast incorporating the impact of the Medmain subsidiarization (revenue of ¥11,170 million and operating profit of ¥760 million) is expected to fall short of the operating profit target
• Impact on profitability from continued upfront investment in the PHR service and new AI businesses
• Risks from changes in the external environment, such as trends in IT investment by medical institutions and revisions to medical service fee schedules

Business Details

The TechMatrix Group is composed of three reportable segments: "Information Infrastructure Business," "Application Services Business," and "Medical Systems Business"; "Other (Company-wide Common)" is not disclosed as an independent reportable segment. This category handles the elimination and adjustment of inter-segment internal revenue processed in the consolidated financial statements, and no independent profit or loss is disclosed.

Recent Overview

The elimination amount for inter-segment internal revenue increased by ¥81 million year on year.

In FY2026 (ending March 2026), the elimination amount for inter-segment internal revenue was ¥580 million (compared to ¥499 million in the prior period), an increase of ¥81 million year on year. The main factor was the expansion of inter-segment transactions in the Information Infrastructure Business and the Application Services Business. The segment profit adjustment amount was zero, as company-wide common costs have already been allocated to each reportable segment. Additionally, during the current period, the provisional accounting treatment related to the business combination (Firmus Sdn. Bhd.) was finalized, resulting in a retrospective restatement of prior period figures.

Key Products

Growth Drivers

• Increase in internal revenue due to the expansion of inter-segment transactions across the group as a whole (¥580 million, up ¥81 million year on year)
• Strengthened intra-group collaboration accompanying the business expansion of each reportable segment

Risks

• Possibility that increases in company-wide common costs (such as personnel expenses) affect the profitability of each reportable segment
• Structural risk that consolidated revenue is compressed due to increases in the elimination amount as inter-segment transactions expand
• Risk of retrospective restatement arising from the finalization of accounting treatment related to business combinations (as demonstrated in the Firmus case)