PLAID,Inc.

The Group is entrusted by business operators with the handling of their customers' personal information, and revisions to the Act on the Protection of Personal Information or changes in international regulatory trends could have a material impact on the business. In particular, since the Group primarily uses 1st party cookies for data collection, there is a risk that service functionality could be restricted if legal regulations on such use are tightened in the future or if users become increasingly reluctant to provide data. In response, the Group has obtained ISMS and Privacy Mark certifications and is working to closely monitor legal and regulatory trends and build systems at an early stage.

The Group handles information of client business operators and behavioral data of their customers through KARTE, and if an information leak occurs due to external attacks or intentional or negligent acts by related parties, this could have a material impact on the business and results of operations through damage claims and loss of social credibility. Operations rely on external cloud services such as Google Cloud and Amazon Web Services, and the Group partly depends on the security measures of these providers. In response, the Group has obtained ISO/IEC 27017 and ISO/IEC 27001 certifications and continues to strengthen information security measures and monitor its cloud providers.

The Group's revenue depends mainly on the SaaS Business (KARTE), and growth in the CX and digital marketing market is a premise for business expansion. If market growth or demand falls short of expectations due to changes in domestic and overseas economic conditions, business trends, or customer preferences, this could affect the business and results of operations. In response, the Group continuously gathers information on market trends and works to raise service awareness through active marketing activities.

The CX software market is relatively new in Japan, and if competition intensifies as existing marketing tool providers offer similar services at low cost or free of charge, this could affect the Group's business and results of operations. The success or failure of expansion into new markets with different competitive environments, such as overseas markets, could also affect performance. In response, the Group is enhancing existing service functions, developing new features, and increasing added value through means such as obtaining patents.

KARTE is provided via internet communications, and system failures may occur due to human error, communication equipment malfunction, surges in access, software defects, computer viruses, power outages, or outages of external cloud services. Since operations rely on Google Cloud and AWS, system failures or termination of contracts by these providers could also disrupt service provision. In response, the Group continues to make systems redundant, implement security measures, and continuously monitor operating status.

KARTE's competitiveness lies in its integrated provision of real-time customer behavior analysis, customer analytics, and campaign delivery. However, if the Group's response to rapid technological innovation is delayed or if compatibility with other companies' applications and platforms cannot be ensured, the service's competitiveness may decline, affecting the business and results of operations. The Group strives to provide services that business operators can use effectively and easily by reflecting feedback from cancellation interviews and trend analysis in its development activities.

KARTE (for Web) and KARTE for App adopt a fixed monthly billing model based on the average MAU count over the 12 months prior to contract, so there is a risk that if MAU counts surge sharply within a year, server costs could exceed the fixed monthly fee, reducing gross profit margin. A similar impact could occur if negotiations to increase usage fees at contract renewal are unsuccessful. In response, the Group strives to periodically review its pricing model and continuously conduct cost analysis.

The Group recognizes deferred tax assets for deductible temporary differences and tax loss carryforwards. If, as a result of reviewing estimates of future taxable income due to changes in the business environment or other factors, it is determined that all or part of the deferred tax assets are not recoverable, a write-down would be required, which could affect results of operations and financial condition. The Group periodically reviews estimates of future taxable income in light of changes in the business environment and other factors.

Representative Director, Executive Officer and CEO Kenta Kurahashi and Director and Executive Officer Naoki Shibayama play important roles in business policy, strategic decision-making, service development, and new customer acquisition, and if it becomes difficult for these two individuals to continue managing the business, this could affect the business and results of operations. In addition, insufficient recruitment and development of excellent personnel, including engineers and sales staff, could lead to a decline in service competitiveness and increased recruitment costs. In response, the Group promotes the internalization of its vision and the development of a comfortable working environment, including flextime and work-from-home arrangements.

The Group protects its intellectual property through patents and registered trademarks, but there is a possibility that intellectual property protection may be insufficient if competitors develop similar technologies or services, or assert that the Group's rights are invalid. In addition, if a third party claims that the Group has infringed its intellectual property rights, the Group could face lawsuits seeking damages or injunctions, which may require significant time and expense to resolve and could force the Group to discontinue the relevant service. In response, the Group is strategically promoting analysis of competitors' technology trends, expanding intellectual property research, and early acquisition of rights related to its core business.