Techno Mathematical Co.,Ltd.

Business Details

The company uses its proprietary algorithm "DMNA," based on mathematical methods, to license and sell video/audio compression-decompression technology compliant with international standard specifications (H.264/H.265/MPEG, etc.) in three forms: software IP, hardware IP, and solutions. Its main customers are electronics manufacturers, and its technology is deployed in diverse applications including automotive, defense, broadcasting, surveillance, and aviation. Operating a fabless business model, revenue is seasonally concentrated around the fiscal year-end of its major customers (September and March). In FY2026 (ending March 2026), the company achieved sales of ¥685 million (up 64.6% year on year) and turned an operating profit of ¥44 million, swinging from an operating loss.

Recent Overview

FY2026 (ending March 2026) saw sales grow 64.6% and operating profit turn positive, but delisting risk has become apparent

Full-year sales for FY2026 (ending March 2026) were ¥685 million (up 64.6% year on year), with operating profit improving significantly to ¥44 million (versus △¥286 million in the prior period). Non-operating income of ¥65 million, including a ¥53 million gain on sale of investment securities, contributed to ordinary profit of ¥106 million. By segment, Software License generated ¥287 million, Hardware License ¥193 million, and Solutions ¥204 million. Meanwhile, the company is highly likely to fail to meet the Tokyo Stock Exchange Standard Market's tradable share market capitalization criterion (¥1 billion), and has been designated a security under supervision (pending confirmation) since April 1, 2026. If the non-compliance is confirmed, the company is expected to be delisted effective October 1, 2026. As a subsequent event, the company resolved to implement a capital reduction without consideration, a reduction of capital reserves, and an appropriation of surplus, effective August 1, 2026, aimed at fully covering accumulated losses of ¥2,336 million. Full-year forecasts for FY2027 (ending March 2027) call for sales of ¥705 million (up 2.8% year on year), ordinary profit of ¥34 million (down 68.0% year on year), and net income of ¥31 million (down 64.0% year on year), reflecting a significant profit decline due to the absence of non-operating income (gain on sale of securities) recorded in the prior period.

Key Products

Growth Drivers

• Expansion of licensing into high-value-added applications such as defense, space (lunar landers, artificial satellites), and aviation (flight simulators, aircraft communication systems)
• Continued acquisition of custom development projects in the Solution Business for defense equipment, police, broadcasting, and disaster prevention applications
• Improvement in order unit prices and efficiency through a shift toward licensing sales that modularize multiple IPs
• Expansion of LucidEye video enhancement devices and libraries into defense, automotive, and police applications
• Improvement in profit structure through reductions in selling, general and administrative expenses (from ¥663 million in the prior period to ¥589 million in the current period)
• Expansion of the Hardware License Business to capture demand for next-generation technologies such as 4K/8K, lossless, super-resolution, and H.265 (FY2027 (ending March 2027) forecast: ¥265 million, up 37.2% year on year)

Risks

• High likelihood of failing to meet the Tokyo Stock Exchange Standard Market's tradable share market capitalization criterion, with delisting expected on October 1, 2026 (currently designated as a security under supervision)
• Significant profit decline forecast for FY2027 (ending March 2027), with ordinary profit down 68.0% and net income down 64.0%, due to the absence of non-operating income such as gain on sale of investment securities
• Seasonal risk of sales concentration around the fiscal year-end of major customers (September and March) (concentration in the fourth quarter)
• Risk of prolonged periods from design to mass production in the Hardware License Business, and uncertainty regarding royalty income
• Risk of stalled development and production at major customers (electronics manufacturers) due to geopolitical risks such as Trump tariff policies
• The company carries accumulated deficit in retained earnings (△¥2,336 million as of March 31, 2026), and procedures to cover this through capital reduction without consideration and reduction of capital reserves require shareholder meeting approval and creditor objection procedures