HEROZ ASK ARR surpasses JPY 200M and operating income improves +70.7%; full-scale launch of AI BPaaS strategy through Variosecure's conversion to wholly owned subsidiary now in focus

Key Positives From The Results

Operating income of JPY 523M (+70.7% YoY) and EBITDA of JPY 1,025M (+29.2% YoY) demonstrate accelerating profit growth. Excluding JPY 114M in M&A-related expenses, underlying operating income reached JPY 637M (+108% YoY)—effectively doubling—confirming improved profitability across both the AIX and AI Security segments.

• HEROZ ASK ARR Surpassed JPY 200M:
  ARR grew from JPY 100M (Oct 2025) to JPY 200M (Apr 2026), with ~430 cumulative corporate adoptions. Achieved monthly contribution profit breakeven at end of April
• AIX BtoB Revenue Accelerating:
  Full-year BtoB revenue grew +20.6% YoY, with Q4 standalone accelerating to +39.2% YoY. Active project count also rose +39.0% YoY in Q4
• AI Security Segment Solid:
  Revenue of JPY 2,842M (+6.6% YoY) with segment profit of JPY 929M (+17.8% YoY). Recurring revenue ratio at 87.6% and churn rate of 0.81%, maintaining a stable revenue base
• BtoC (Shogi Wars) At Record Levels:
  Q4 revenue +5.7% YoY. Premium user count reached all-time highs; cumulative games played exceeded 1.1 billion
• Cash Flow Expansion:
  Operating CF expanded to JPY 592M (vs. JPY 219M in prior year). Maintained JPY 3,367M cash balance while repaying JPY 555M in long-term borrowings

Key Concerns From The Results

Revenue of JPY 6,424M (+8.3% YoY) shows signs of decelerating growth, down from +22.5% in the prior year. Even adjusting for the Strategit divestiture (JPY 329M in revenue), organic growth remains limited. FY27 guidance implies just +5.8% topline growth, warranting close attention to the pace at which HEROZ ASK and the AI BPaaS initiative begin contributing meaningfully to revenue.

• AIX Segment Profit Declined:
  Segment profit of JPY 696M (−10.2% YoY), weighed down by upfront investment in hiring and organizational buildout
• Non-Operating Headwinds:
  JPY 119M in non-operating expenses—including JPY 30M in crypto-asset valuation losses and JPY 11M in investment securities losses—pressured recurring profit. Volatility risk from ~JPY 100M in crypto holdings persists
• FY27 Net Income Guidance Down −20.2% YoY:
  Primarily driven by the lapse of JPY 311M in Strategit sale gains. Even on an underlying basis, achieving JPY 300M (vs. ~JPY 164M adjusted) represents +82.2% growth whose attainability remains unproven
• Goodwill At JPY 1,789M (21.1% Of Total Assets):
  Amid an aggressive M&A posture, impairment risk resilience requires ongoing monitoring
• Dilution Risk From Share Exchange:
  The Variosecure full acquisition is expected to entail issuance of ~2.56M new shares via share exchange

Focus Areas / Items To Monitor Going Forward

• HEROZ ASK ARR Growth Sustainability:
  From JPY 200M ARR as of April 2026, how far can this scale by FY27-end? The churn rate's temporary uptick to 1.27% in Q4 and its subsequent trajectory will be pivotal in determining the SaaS business's profit contribution
• Post-Variosecure Integration Synergy Timeline:
  Following the effective date of full subsidiary conversion (June 30, 2026), the schedule for realizing concrete synergies—quantitative margin improvement from joint procurement and AI Cowork service deployment
• AKM Consulting Consolidation Impact (From May 2026):
  Contribution to FY27 results relative to the JPY 105M acquisition cost; revenue/profit scale of the BAKUNAGE business and progress on joint "AI BPaaS" development

Key Financial Highlights

Gross margin edged up to 45.5% (vs. 45.3%, +0.2pt). SG&A ratio improved −2.9pt to 37.3% (from 40.2%), driving the OPM expansion. The swing to net profit was primarily attributable to the JPY 311M gain on Strategit share sale booked as extraordinary income, supported by total income taxes of just JPY 79M (effective tax rate 11.3%) and deferred tax asset recognition (−JPY 99M tax adjustment).

Performance By Business Segment

Progress Versus Full-Year Guidance

Against revised full-year guidance (announced December 2025: revenue JPY 6,400M, operating income JPY 500M), actuals exceeded plan across all metrics—revenue at 100.4%, operating income at 104.6%, and EBITDA at 102.6%. The net income revision announced June 9, 2026 (JPY 50M → JPY 376M), reflecting the Strategit sale gain and tax adjustments, was also exceeded. All items beat plan, reinforcing confidence in guidance credibility.

• BtoB revenue is heavily weighted toward Q4 (Feb–Apr). In FY26, Q4 standalone BtoB revenue was +39.2% vs. FY25, maintaining this pronounced pattern

FY27 Guidance

FY27 (fiscal year ending April 2027) guidance assumes the Variosecure full acquisition, consolidation of AKM Consulting, and full-scale rollout of the HEROZ ASK Cowork initiative, projecting YoY revenue and operating income growth. Net income appears to decline on a headline basis due to the lapse of the Strategit disposal gain, but on an underlying basis (excluding ~JPY 211M after-tax gain, implying ~JPY 164M adjusted FY26 net income), this represents +82.2% YoY growth.

• Revenue: JPY 6,800M (+5.8%)
• EBITDA: JPY 1,300M (+26.7%)
• Operating Income: JPY 800M (+52.9%)
• Recurring Profit: JPY 700M (+71.4%)
• Net Income: JPY 300M (−20.2%)
• EPS: JPY 19.73 (−20.3%)

Commentary On Shareholder Returns

FY26: No interim or year-end dividend (JPY 0.00 annual). FY27 forecast also JPY 0.00 (continued zero dividend). No change to the policy of prioritizing growth investment. The shareholder benefit program remains in place, with shareholder benefit provisions of JPY 20M (vs. JPY 18M in prior year).

Financial Position

Debt repayment progressed and the equity ratio improved to 58.7% (from 56.1%, +2.6pt). Long-term borrowings were reduced by JPY 539M to JPY 831M (from JPY 1,371M), strengthening the balance sheet. However, goodwill of JPY 1,789M (vs. JPY 1,896M in prior year) remains a material item on the balance sheet.

News Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

None