Datasection Inc.

Business Details

The Domestic Business consists of four businesses: the strategic core AI infrastructure business (development and provision of AI Cloud Stack "TAIZA", GPU server supply, GPUaaS, and AI data center operations), the data science business (DX and data utilization consulting for major companies), the systems integration business (financial-sector contract development by DSS Inc., the "Biz Prepaid Card" payment service, and MSP services), and the marketing solutions business (domestic rollout of the store analytics SaaS "FollowUP", digital marketing and research by SI Inc. and MSS Inc.). The segment's main customers are leading blue-chip companies, and its strengths lie in AI technology, data analytics technology, and engineering capabilities.

Recent Overview

AI infrastructure business began full-scale operations in Q3, driving substantial growth in revenue and profit

The AI infrastructure business began service provision in September 2025, and for the cumulative nine months of the fiscal year (April-December 2025), Domestic Business revenue was ¥15,103 million (vs. ¥1,305 million in the prior-year period), and segment profit was ¥1,158 million (vs. a segment loss of ¥87 million in the prior-year period), turning profitable. In the AI infrastructure business, the company has already concluded three large-scale AI data center service usage agreements with one of the world's largest cloud service providers, and has also signed fixed asset acquisition agreements for 625 GPU servers equipped with NVIDIA B200 GPUs (5,000 units) and 1,250 GPU servers equipped with B300 GPUs (10,000 units). The data science and SI businesses performed well, driven by DSS Inc.

Key Products

Growth Drivers

• Full-scale launch of the AI infrastructure business: service provision began in September 2025, with three large-scale AI data center service usage agreements already concluded with one of the world's largest cloud service providers
• Expansion of infrastructure base through large-scale procurement agreements for GPU servers equipped with NVIDIA's latest GPUs (B200 and B300)
• Strong performance in the data science and systems integration businesses, driven by DSS Inc.
• Expansion of Domestic Business revenue scale through the consolidation of MSS Inc. as a subsidiary in July 2024
• Expansion of the domestic AI business market (projected to reach 1.7 times the FY2021 market size by FY2027)

Risks

• Continued operating losses on a cumulative basis due to substantial upfront investment costs for the AI infrastructure business (consolidated operating loss of ¥332 million for the cumulative nine months of Q3 FY2026)
• Risk that the AI data center business, where contract amounts per project are substantial, may be significantly affected by whether a single project is secured or not
• Recognition of events or circumstances that raise material doubt about the company's ability to continue as a going concern, requiring continued fundraising
• Foreign exchange loss risk (foreign exchange losses of ¥109 million recorded in the cumulative nine months of the current fiscal year)
• Marketing solutions business revenue and profit remaining flat year-on-year due to sluggish growth at MSS Inc.

Business Details

The Overseas Business is the segment responsible for the overseas expansion of the AI camera-based store analytics SaaS "FollowUP." Its main bases are Chile and Colombia, with consolidated subsidiaries also in Panama, Spain, and Peru. The company provides stock-type analytics services combining in-store customer behavior data with POS data, generating recurring revenue. Order intake has remained solid, supported by growth in the South American smart retail device market (5.3% CAGR through 2027).

Recent Overview

Cumulative Q3 FY2025 (ended March 2025) revenue of ¥825 million, up 9.4% year-on-year, maintaining solid growth

In the cumulative nine months of Q3 FY2026 (ending March 2026) (April-December 2025), order intake remained solid at the main bases of Chile and Colombia, with revenue from external customers of ¥825 million (up 9.4% year-on-year) and segment profit of ¥132 million (up 13.0% year-on-year). Full-year (FY2025, ended March 2025) results were revenue of ¥1,023 million (up 18.2% year-on-year) and segment profit of ¥163 million. Compared to the prior year (FY2024, ended March 2024), the addition of consolidated subsidiaries (Panama and Spain) also contributed. Note that the Mexican subsidiary Fupbimx, S.A.P.I. de C.V. was added to the scope of consolidation from Q1 of FY2026 (ending March 2026).

Key Products

Growth Drivers

• Solid order intake at the main South American bases, centered on Chile and Colombia
• Expanded geographic coverage through the addition of consolidated subsidiaries in Panama, Spain, and other regions
• Growth of the South American smart retail device market (5.3% CAGR from 2020 to 2027)
• Growing demand for store analytics driven by digital transformation in the retail industry
• Accumulation of recurring revenue through the stock-type service model

Risks

• Complex macroeconomic and political conditions across various South American countries (including foreign exchange fluctuation risk)
• Occurrence of foreign exchange losses (consolidated foreign exchange losses of ¥109 million recorded across the entire company for the cumulative nine months of Q3 FY2026, ending March 2026)
• Impairment risk related to unamortized goodwill balance of ¥74 million (as of the end of FY2025, ended March 2025)
• Track record of recording an impairment loss of ¥103 million in the Overseas Business segment in the prior fiscal year (FY2024, ended March 2024)
• Risk of intensified price competition due to competitors entering the South American market