CrowdWorks Inc.

The Group plans to make growth investments of up to ¥2,550 million in FY2026 (ending September 2026), and the consolidated earnings forecast for the period anticipates a temporary operating loss. If the hiring plan for consultants and on-site engineers is delayed, or if the return on investment falls significantly short of plan, this could have a material impact on business performance and financial condition. As a countermeasure, the Group is building a system for rigorous measurement and management of investment returns and intends to flexibly review its investment strategy.

Structural changes such as the rapid advancement of AI technology and the accelerating return to office reducing demand for remote workers may slow growth in the existing Matching Business. The Group is considering withdrawing from unprofitable businesses whose returns fall below WACC across all 10 services and 8 group companies. If such withdrawals and business restructuring do not proceed as planned, or if the pace of market change outstrips the pace of structural reform, this could have a material impact on business performance. The Group positions DX Consulting as a pillar of growth and is promoting structural reform of its business portfolio.

With the rapid expansion of the DX Consulting business, the strategic hiring of full-time consultants and on-site engineers has become the most critical challenge, and there is a risk that talent acquisition may fall behind plan due to intensifying competition for highly skilled personnel. If hiring is delayed or the organizational design across the Group is delayed, this could lead to a decline in delivery quality for DX Consulting projects and stagnation of the growth strategy. As a countermeasure, the Group is advancing the design of a personnel evaluation system dedicated to consultants and developing a highly specialized organizational structure.

The Group conducts marketing centered on the platform "CrowdWorks (Platform)" to acquire freelance and side-job talent, but if competition for talent with advanced specialized skills intensifies, this could have a material impact on business performance. The Group has renamed its core agent business "CrowdWorks Agent" and unified it under the "CrowdWorks" brand to leverage brand recognition and improve marketing efficiency. It is also working to prevent worker attrition by building relationships through worker communities and networking events and by improving compensation.

The Group continues to acquire new users through digital marketing centered on SEO and listing (paid search) advertising, but if advertising efficiency deteriorates due to changes in search engine algorithms or rising advertising unit costs from new competitor entrants, this could have a material impact on business performance. As a countermeasure, the Group has established various user acquisition methods beyond digital marketing, and user acquisition at trade shows has been performing well recently amid the trend of returning to offline activities.

On "CrowdWorks (Platform)," transactions occur among an unspecified number of users through features such as messaging, creating risks of personal information leaks, illegal activity, and fraud using payment services. If such troubles occur, this could increase risks of declining service credibility, reputational damage, and uncollected transaction amounts, potentially having a material impact on the business and business performance. As a countermeasure, the Group conducts pre-registration checks on all projects using AI and manual review, has established a violation reporting system, and has implemented functionality to detect malicious listings.

The Group's services depend on internet communication networks, and if a surge in access increases load or unexpected trouble occurs due to natural disasters or accidents, a large-scale system failure could occur, potentially having a material impact on the business and business performance. As a countermeasure, the Group is working to ensure stable service operations by strengthening server equipment and building internal systems.

The Group is pursuing corporate acquisitions as part of its growth strategy, but if the expected results are not achieved after an acquisition, or if the post-merger integration (PMI) process for business, organization, systems, and culture does not proceed quickly and effectively, this could have a material impact on business performance. As a countermeasure, the Group has established three disciplines: "setting an EV/EBITDA multiple," "achieving operating profit before goodwill amortization," and "achieving an investment payback exceeding WACC within 36 months," and has codified its management know-how as "CW Growth Driver," which it deploys across group companies.

Each service holds personal information such as email addresses and is subject to the Act on the Protection of Personal Information. If personal information is leaked or misused externally for any reason, this could have a material impact on the business, business performance, and the company's social credibility. The Group addresses this through appropriate management based on its personal information protection policy and personal information protection regulations, along with thorough internal training.

"CrowdWorks (Platform)" is subject to multiple laws and regulations, including the Telecommunications Business Act, the Act on Specified Commercial Transactions, and the Provider Liability Limitation Act. If the business becomes subject to regulation or restriction due to the enactment of new laws or the strengthening of existing laws, this could have a material impact on business performance. There is also a risk that business operations could be restricted if the existence of intellectual property rights not recognized by the Group, or infringement of third-party intellectual property rights, comes to light. The Group addresses this through internal training, organizational structure building, and the introduction of a violation reporting system.