XNET Corporation

The securities report explicitly states that cancellations among existing customers, primarily for the securities management system, are minimal, and the monthly subscription-based contract structure raises switching costs for customers. Core revenue continued to expand, rising 4.7% year on year to ¥4,936 million, and the core revenue ratio to total revenue remained at a high level of 87.2%.

In FY2026 (ending March 2026), the operating margin reached 18.0%, significantly exceeding the previous medium-term management plan target of 15.0%. Under the model in which the same application is shared across multiple customers, incremental costs from adding customers are limited, structurally enabling a high margin to be maintained. Over the past five fiscal years, the operating margin has generally remained above 15%.

Unlike typical IT companies that operate under a division-of-labor structure, the company's employees are trained as multi-skilled talent capable of delivering a one-stop value chain spanning front-, middle-, and back-office functions. The securities report explicitly states that this accumulation of industry-specialized expertise and operational know-how is a source of competitive advantage, and against the backdrop of a shortage of IT talent among institutional investors, this has led to continued expansion of the monthly AMO Service.

Building on core revenue of ¥4,936 million in FY2026 (ending March 2026) (up 4.7% year on year), the new medium-term management plan "Next STEP 2029" (FY2026-FY2029) sets a target of achieving core revenue of ¥5.6 billion in FY2030 (ending March 2030). The company will continue to grow revenue across all services—Application Service, AMO, and SO—while maintaining a high core revenue ratio of 87.2% of total revenue.

While SO (Smart Outsourcing) Service for investment trust and investment advisory companies remains solid, SO (Smart Outsourcing) Service for the life and non-life insurance industry is also gradually expanding in scale. Preparations for implementation are currently underway with multiple companies, and as an external factor, increased demand for loans from institutional investors amid changes in the interest rate environment is providing a tailwind for the SO (Smart Outsourcing) Service.

Provision to the life and non-life insurance industry is expanding steadily, and adoption by regional banks is also increasing. In terms of market environment, recent changes in the interest rate environment have increased the importance of loans as an asset management tool for institutional investors, and further business expansion is expected.

During the new medium-term management plan period, the company will actively pursue investment in human capital (recruitment and development of specialized personnel, and enhancement of compensation systems) and in systems (strengthening the Application Service platform). The adjusted operating profit target for FY2027 (ending March 2027) is ¥3,545 million (compared with actual results of ¥3,461 million for the current period). While this will put pressure on profits in the short term, the aim is to strengthen medium- to long-term service competitiveness and expand customer acquisition.

The company has shifted its dividend structure to a two-tier system consisting of a base dividend (¥50 per year) and an extra dividend (¥20 per year), and has set a dividend payout ratio target of 50%-100% for the first time. The annual dividend forecast for FY2027 (ending March 2027) is ¥70 (payout ratio of 65.0%). Shareholder-friendly measures such as early dividend payment and advance announcement of dividends have also been introduced, aiming to improve the company's evaluation by the capital markets.