SAKURA internet Inc.

Business Details

The sole reportable segment operated by the SAKURA internet Group. Leveraging its self-operated data centers, the segment provides public cloud (Sakura Cloud), GPU computing infrastructure (Koukaryoku PHY series), physical infrastructure such as housing and dedicated servers, and Other Services including system integration, to individual, corporate, education, and public-sector customers. The segment is enhancing its presence as a domestic public cloud provider against a backdrop of expanding generative AI demand, with official adoption for the Government Cloud also serving as a key strategic pillar.

Recent Overview

Net sales rose 12.4%, but the surge in GPU-related investment led to an operating loss of ¥403 million

For the full year of FY2026 (ending March 2026), net sales reached ¥35,301 million (up 12.4% year on year); however, a sharp increase in depreciation and amortization associated with GPU-related investment (¥7,739 million, up 62.3% year on year), server maintenance costs, and data center rent, combined with progress in personnel investment, expanded cost of sales to ¥27,345 million (up 35.5% year on year), resulting in an operating loss of ¥403 million (compared with operating income of ¥4,145 million in the prior period). Ordinary income was secured at ¥105 million, supported by non-operating income including ¥617 million in cloud program subsidy income. Expenditure on acquisition of property, plant and equipment reached ¥36,337 million (up 105.8% year on year), and cash and cash equivalents declined to ¥15,394 million at period-end (down 47.8% from the prior period-end). The company forecasts a recovery in FY2027 (ending March 2027), with net sales of ¥45,000 million and operating income of ¥1,500 million.

Key Products

Growth Drivers

• Aggressive investment and sales expansion in GPU Infrastructure Service against a backdrop of growing generative AI demand (launch of H200 plan and NVIDIA Blackwell B200 services)
• Steady growth in Sakura Cloud and Sakura Rental Server (up 9.4% year on year for the full year)
• Expansion of Other Services driven by acquisition of large-scale contracts for government and public agencies, among other factors (up 19.6% year on year for the full year)
• Expansion of sales channels in the public and enterprise sectors following official adoption for the Government Cloud
• Acceleration of investment through use of subsidies, starting with certification under the Ministry of Economy, Trade and Industry's cloud program supply security plan
• Growing demand for domestic public cloud from the perspective of economic security and countermeasures against the IT trade deficit
• Robust demand for modernization of legacy systems

Risks

• Risk of profit pressure from a rapid increase in GPU-related investment (depreciation and amortization, server maintenance costs, data center rent), with depreciation and amortization up 62.3% year on year to ¥7,739 million
• Risk of cost increases outpacing sales growth due to upfront investment in personnel recruitment and marketing enhancement (SG&A expenses of ¥8,360 million, up 18.0% year on year)
• Change in sales composition due to continued decline in usage of Physical Infrastructure Services (housing and dedicated servers) (down 7.2% year on year for the full year)
• Liquidity risk from a sharp decline in cash and cash equivalents (¥15,394 million at period-end, down 47.8% from the prior period-end)
• Risk of rising interest expense associated with an increase in interest-bearing debt (short-term borrowings of ¥10,687 million, long-term borrowings of ¥10,574 million, lease liabilities of ¥14,566 million)
• Risk of a downturn in the domestic economy due to the impact of US trade and tariff policy and rising prices
• Risk of equipment obsolescence due to the rapid pace of technological innovation cycles in the GPU market