Record quarterly Tobila Phone Biz unit sales of 916 and record net additions of 2,538 Tobila Phone Cloud billable IDs; a JPY 20 special dividend marking the 20th anniversary demonstrates that growth investment and shareholder returns can coexist

Summary

9M revenue reached JPY 2,636M (127.1% YoY) with operating income of JPY 755M (99.4% YoY). Led by the Solutions business, revenue hit a record high, and progress rates at every profit line exceeded 95%, running ahead of initial plan. On the call, management disclosed figures not included in the presentation deck: standalone 3Q Biz unit sales of 916 and net additions of 2,538 Cloud billable IDs, both quarterly records. The Nagoya head office relocation was completed on August 31, with related costs to be booked in 4Q. Management also revised upward its target level of on-hand liquidity from the JPY 2B assumed at the time of the medium-term plan, while clarifying a capital allocation priority of growth investment → liquidity buffer → shareholder returns. A JPY 20 commemorative dividend was declared to mark the company's 20th anniversary.

Key Points (Results Takeaways and Growth Actions)

• Management Strategy And Market View
  • Substantial migration headroom remains from on-premise systems in the cloud PBX market; Tobila and Prodelight agree on jointly expanding the market itself.
  • Mandatory customer-harassment countermeasures are a demand tailwind, but not all companies are expected to complete compliance by the deadline, so demand should persist after enforcement begins.
  • As fraudsters increasingly leverage AI, AI is equally essential on the countermeasure side—an issue management views as one to address jointly with telecom carriers.
  • The CFO explicitly stated that achieving Medium-Term Management Plan 2028 is the central priority, and that the company will not shy away from making necessary investments.
• Recent Business Progress And Drivers
  • Tobila Phone Biz series 3Q unit sales of 916 marked a quarterly record, bringing the cumulative total to 8,588 units (disclosed verbally on the call).
  • Tobila Phone Cloud billable IDs stood at 17,399 at end-3Q, with quarterly net additions of 2,538—also a record (net additions disclosed verbally on the call).
  • The slight decline in the mobile business was primarily driven by lower revenue from 280blocker following a revision to its sales and operating strategy this fiscal year.
  • For the mobile monthly-users × unit-price model, the April 2026 price revision contributed a full three months from 3Q, lifting revenue to 103.7% QoQ.
• Key Strategic Initiatives And Inflection Points
  • Acquired 100,000 Prodelight shares (5.948% of voting rights); concrete synergies are under discussion, including at the CEO level of both companies.
  • Completed the Nagoya head office relocation on August 31; the Tokyo office move was completed in January, with relocation costs booked in 4Q.
  • Added J:COM as a Cloud distributor, expanding the channel to four partners alongside SKI, Crops, and No.1.
  • Declared a JPY 20 commemorative dividend marking the 20th anniversary, revising the year-end dividend forecast to JPY 40 per share.

Outlook and Strategy

• Full-year guidance is unchanged at revenue of JPY 3,366M and operating income of JPY 785M. Progress rates (revenue 78.3%, operating income 96.2%) are ahead of initial plan, but concentrated 4Q investment should bring the full year broadly in line with guidance.
• 4Q investment comprises continued hiring, new product development, Nagoya head office relocation costs, and a corporate website renewal tied to the 20th anniversary. 4Q operating income is expected to fall below the 3Q level of JPY 269M.
• Permanent headcount reached 138 at end-3Q (+24 vs. end-FY), with 5 hires in August and 5 in September, tracking toward the full-year plan of 155. Next fiscal year's hiring will enter an adjustment phase with an eye on landing the medium-term plan, though management does not intend to cut it to zero; internal discussions are ongoing.
• Tobila Phone Biz units sold in 2021–2022 will reach the end of their 5–7 year license terms around 2027–2028. Rather than automatic renewal, the company aims to sign new contracts including replacement handsets, with usage fees prepaid.
• Capital allocation priority: growth investment first, then securing funding for growth investment and on-hand liquidity, then shareholder returns. M&A is positioned as an investment in the future; buybacks and additional dividends will be considered thereafter.
• The ordinary dividend is based on a 35% payout ratio; if the calculated amount exceeds JPY 20, the company will set the ordinary dividend at that level (e.g., JPY 21 or JPY 22).

Positive Factors

• Solutions business 9M revenue of JPY 1,139M (179.0% YoY) has already surpassed the prior full-year result of JPY 899M.
• Of standalone 3Q revenue of JPY 962M, recurring revenue accounted for JPY 733M (127.2% YoY), with both flow and stock revenue expanding.
• Cloud's average monthly churn rate remains below 1%, with direct-sales enterprise deals driving net ID additions.
• Prepaid Biz license fees are recognized on a straight-line basis over the contract term with no additional selling costs, and the CFO noted that fulfillment costs are relatively immaterial as servers and other infrastructure are shared with other services.
• The fixed-line business benefited from nuisance-call blocking becoming a standard service, generating 9M revenue of JPY 256M (156.8% YoY), a 115.6% progress rate against full-year guidance of JPY 221M.
• Special fraud losses reached JPY 181.6B in 1H 2026 and continue to grow, underpinning demand for countermeasures across both mobile and fixed-line.

Concerns and Risks

• Mobile 9M revenue of JPY 1,240M represents just a 71.0% progress rate against full-year guidance of JPY 1,745M, with the impact of the 280blocker strategy revision ongoing.
• Relocation costs, hiring, and development are concentrated in 4Q; the full-year OPM is planned at 23.3%, down from 32.0% in the prior year.
• SG&A personnel expenses expanded to JPY 166M in standalone 3Q and are expected to rise further in 4Q, extending the front-loaded fixed cost burden.
• Synergies with Prodelight remain at the discussion stage, with the timing and scale of any earnings contribution undetermined.
• The equity ratio stood at 45.6% (▲2.7pt vs. end-FY), reflecting expansion in current liabilities on higher contract liabilities.
• On the JPY 400M FY10/2028 target for the new Sagitore business, the CFO acknowledged it will not be easy.

Performance Highlights

9M revenue was JPY 2,636M (127.1% YoY), EBITDA JPY 892M (100.1% YoY), operating income JPY 755M (99.4% YoY), recurring profit JPY 771M (101.0% YoY), and net income JPY 516M (100.1% YoY). Standalone 3Q delivered revenue of JPY 962M (137.0% YoY) and operating income of JPY 269M (115.6% YoY), representing growth in both sales and profits. Growth investment under Medium-Term Plan 2028 implies a full-year earnings decline YoY, but stronger-than-expected revenue is keeping profits ahead of initial plan.

Segment Results

• Tobila Phone Biz cumulative units sold: 8,588 (+50.8% vs. 5,695 a year earlier; estimated in this report)
• Tobila Phone Biz standalone 3Q units sold: 916 (quarterly record; disclosed verbally on the call)
• Tobila Phone Cloud billable IDs: 17,399 (+68.0% vs. 10,354 a year earlier; estimated in this report)
• Tobila Phone Cloud standalone 3Q net ID additions: 2,538 (quarterly record; disclosed verbally on the call)
• Standalone 3Q recurring revenue: JPY 733M (+27.2% YoY)
• Standalone 3Q OPM: 28.0% (vs. 33.2% a year earlier)
• Permanent headcount: 138 (+24 vs. end-FY; full-year plan of 155)
• Cash and deposits: JPY 4,301M (+JPY 565M vs. end-FY)

Q&A List

• Q: How sustainable is the growth in the Solutions business going forward?
  A: Both Tobila Phone Biz and Cloud have expanded steadily through 3Q. This was not driven by any large one-off deal, but by broader demand growth—customer-harassment countermeasures on one hand, and accelerating cloud migration for PBX on the other. We have concurrently built out our sales organization, so we believe demand, unit sales, and sales capacity are moving in sync. We do not view this as a one-off; we intend to capture this trend and drive further sales expansion.
• Q: Profit progress rates are high. Could you explain the investments planned for 4Q and the expected full-year landing?
  A: Progress rates exceed 95% at every profit line. That said, we intend to invest substantially in 4Q, so we are leaving full-year guidance unchanged. Planned spending covers ongoing hiring, the Nagoya head office relocation (booked in 4Q), initiatives toward new product development, and the corporate website renewal tied to our 20th anniversary. These are not sudden decisions—they follow the plan set at the start of the year, and we will execute it as planned. The relocation timing was always slated for 4Q, so we always expected 4Q to carry substantial investment at a meaningful scale. On top of that, we will pull forward investments toward the medium-term plan wherever possible, and we aim to deliver the guidance announced at the start of the year.
• Q: Given the priority on growth investment, why declare a commemorative dividend now?
  A: Our policy is unchanged: growth investment comes first, and where headroom exists, we also advance shareholder returns. Under the medium-term plan, we will continue investing in talent, sales capacity, products, and new businesses—growth investment remains the first priority, and we will fully execute what we planned for this fiscal year. Within that, the Solutions business in particular has grown beyond our expectations. Considering our future investment plans and our cash position, we judged that funds could be allocated to shareholder returns. Consistent with our policy of returning capital after making growth investments, we decided on this JPY 20 commemorative dividend.
• Q: On the capital and business alliance with Prodelight, what is the current progress and what synergies do you envisage?
  A: Concrete synergies are exactly what the two companies are discussing right now. Precisely because they are not easy to realize, we believe concluding an alliance that includes a capital relationship carries real significance, and we have held multiple substantive discussions including at the CEO level. The cloud PBX market both companies participate in should grow considerably from here, and we share the view that the first priority is migrating on-premise systems to cloud PBX. Moreover, while we and Prodelight sell similar cloud PBX offerings, we each have different strengths in go-to-market approaches. There are many possibilities—sharing those strengths, or making development more efficient where we are building the same things—and we are actively discussing how to turn these into genuine synergies. If a collaboration materializes, we will disclose it.
• Q: If results beat guidance and a 35% payout ratio implies a dividend above JPY 20, what happens to the ordinary dividend?
  A: Our dividend policy during the Medium-Term Management Plan 2028 period is first and foremost a 35% payout ratio. However, if a 35% payout would fall below JPY 20—say JPY 18—our primary policy is to set a JPY 20 floor. Conversely, if a 35% payout exceeds JPY 20 and works out to JPY 21 or JPY 22, we would set the ordinary dividend at JPY 21 or JPY 22. On top of that, we are adding a JPY 20 commemorative dividend this time. This does not represent a change to our dividend policy; the policy stands, and this commemorative dividend simply expresses our appreciation to shareholders.
• Q: I believe you indicated that if this year's hiring plan is met, hiring would moderate next year. Is that policy unchanged?
  A: Plans for next fiscal year and beyond are precisely what we are discussing now. Since we have front-loaded hiring, the question is how much it will actually moderate, but we do expect to enter an adjustment phase to some degree with an eye on landing 2028. That said, going straight to zero is hard to envisage, so we are internally discussing exactly where "moderate" lands. We will disclose next year's plans in due course.
• Q: I understand customer-harassment countermeasures are becoming mandatory. Are you seeing any change in business phone demand?
  A: Yes, mandatory customer-harassment countermeasures are just beginning—under the Labor Measures Comprehensive Promotion Act, as we understand it. We are receiving inquiries from companies that need to comply and want to adopt Tobila Phone Biz, so we see this mandate as one factor behind the steady increase in Biz unit sales. At the same time, our research suggests that not all companies will complete compliance by the deadline. We do not expect demand to fall sharply just because the mandate takes legal effect, and we intend to serve this demand fully.
• Q: Mobile appears to be tracking behind plan. Are there any revenue drivers in 4Q?
  A: First, the Security business overall remains solid, growing above 100% YoY. Within it, mobile has lagged somewhat while fixed-line has offset that as of 3Q. The shortfall versus plan reflects in part revenue declines at 280blocker. We are in the process of revising part of our strategy there, so it looks weak against plan, but we had factored in a certain level of impact from that strategy change. Rather than pointing to a specific 4Q driver, we see signs of change in the mobile and Security business even as it remains stable—AI, for example, and other blocking capabilities. We have yet to firm up the timing, but we do not intend for mobile to keep deteriorating simply because it has shrunk relative to plan.
• Q: On Tobila Phone Biz renewals: I understand most contracts run 5–7 years with the bulk of fees received upfront. When existing customers reach the end of their contract term, what is the typical renewal structure? Will it be another multi-year contract with prepaid license fees?
  A: Your understanding of Biz cash flows and fee structure is correct. When a 5–7 year license term expires, a new contract is initiated—existing contracts do not renew automatically. Since customers will have used Biz for 5–7 years, we believe it is better to provide new hardware as well, so we intend to have customers sign an entirely new contract rather than a simple extension. As a new contract, it would similarly run 5–7 years with usage fees received upfront.
• Q: Do you expect meaningful cash inflows from contract renewals starting around FY10/2027 or FY10/2028?
  A: Tobila Phone Biz sales expanded materially around 2021 and 2022, so yes, some of these renewals will begin around 2027–2028. How much converts into new contracts is something we will work on from here. We want to continue providing the service, and we believe demand exists given mandates such as customer-harassment countermeasures. We cannot say how it will play out yet, but we will work to ensure continuity.
• Q: On the future cost of contract liabilities: contract liabilities now exceed JPY 3B, most of which relates to prepaid Tobila Phone Biz license fees. Can you give any indication of the costs required to fulfill these contracts? Is it fair to assume that ongoing service delivery costs after hardware provision are relatively small versus the deferred license revenue?
  A: Ongoing service delivery costs after hardware provision are essentially software-related costs. These are not dedicated to Tobila Phone Biz alone—server locations and capacity, for example, are shared with our other service lines. As to whether they are small relative to license revenue, yes, you should consider them small. That is because they are shared service delivery costs spanning multiple services, and we aim to generate solid profit from our software. We hope that provides the clarity you need.
• Q: On capital allocation: cash and deposits have risen to roughly JPY 4.3B and may continue to accumulate. Considering operating liquidity needs and future growth investment, what cash level does management consider appropriate?
  A: As the balance sheet shows, we are generating cash steadily. On how much on-hand liquidity to maintain, when we released the medium-term plan about two and a half years ago we indicated roughly JPY 2B. Circumstances have changed, so we are revising that upward—it will be above JPY 2B—but at present we recognize that we hold cash beyond our liquidity requirement.
• Q: If cash accumulates well above that level, how would you prioritize buybacks, additional dividends, and M&A?
  A: Our policy on cash deployment is growth investment first, then securing funding for growth investment and on-hand liquidity, and then shareholder returns—we intend to follow that order. Of the three options you raise—buybacks, additional dividends, and M&A—M&A falls under investment in our future growth, and if a suitable opportunity arises we will invest. If, factoring that in, we judge shareholder returns to be feasible, we would consider buybacks or additional dividends. This commemorative dividend reflects exactly that thinking.
• Q: How confident are you in reaching the Sagitore revenue target of JPY 400M in FY10/2028?
  A: I take this as a question about our new business overall. The answer is that we will work toward the target we set at launch. Not just for Sagitore but for Biz and Cloud as well, we have set out numerical targets, and none of them will be easy. We have set the targets, so we will do what we can to reach them.
• Q: Tobila Phone Biz prepaid service revenue is recognized over the contract term. Does it flow almost entirely to gross profit with no additional costs?
  A: For Biz prepaid service revenue, we recognize revenue over the 5–7 year contract term. There are no additional costs incurred to earn that revenue. On gross profit, the cost side consists of software service delivery—server costs and the like—but we do not need to spend again on advertising to generate that revenue; it is recognized under the contract signed at the outset. Costs are not incurred on a per-unit basis but rather at the company-wide level: large shared servers, software licensing fees, intangible assets, and so on.
• Q: Other businesses are growing, but the core Security business's mobile segment declined slightly. Is this one-off or a structural plateau?
  A: We view mobile as a stable-growth business. This time, breaking out Security and Solutions, and then mobile and fixed-line within Security, mobile shows a slight decline. As noted at the outset, this partly reflects revisions to the sales and operating strategy for 280blocker, which we had anticipated to a certain degree. We do not see this continuing indefinitely. On special fraud and emerging fraud countermeasures, if fraudsters are using AI in their attacks, then countermeasures must use AI as well—an issue for carriers as well as for us. Mobile declined in 3Q, but we certainly do not view continued decline as acceptable; we see this as a business that should generate stable cash while delivering stable growth, and that is what we intend to achieve.