Revenue hit a 2Q record high of JPY 1,164M, driven by security consulting and the ITOCHU partnership, though listing-related costs weighed on profits; the focus shifts to the pace of earnings recovery in H2

Key Positives From The Results

Revenue grew +14.2% YoY to a record high on a 1H cumulative basis, with all three domains delivering top-line growth. KPIs also tracked favorably, with client count reaching 822 (+15% YoY) and professional-firm referrals totaling 1,244 (+15% YoY), validating the effectiveness of the customer acquisition model anchored in the professional-services ecosystem.

• Revenue Of JPY 1,164M (+14.2% YoY)
  , a record high on a 1H cumulative basis. Synergies with the ITOCHU Group drove order expansion among large and mid-cap corporates
• 2Q Standalone OPM Of 12%
  , up from 7% in Q1. Listing-related costs are non-recurring, leaving room for margin recovery in H2
• withDX Platform Launched Commercially In January 2026
  , partnering with ~100 professional-service firms and expanding client touchpoints beyond the Tsuji Hongo Group
• Equity Ratio At 76.0%
  (vs. 60.4% at prior FY-end, +15.6pt), with the IPO materially strengthening the capital base
• Growing Security Consulting Orders
  . Amid increasingly sophisticated cyber threats, this is establishing itself as a structural growth area

Key Concerns From The Results

Operating income fell -25.0% YoY to JPY 114M as SG&A rose JPY 74M (+18.9% YoY). The main drivers—JPY 30M in listing-related costs and JPY 14M in recruitment/training expenses—are largely non-recurring, but with headcount up by 34 and fixed costs rising accordingly, the gross profit margin declined to 50.4% (-3.5pt YoY), warranting close attention to cost management trends.

• Gross Profit Margin Of 50.4%
  (vs. 53.9% prior year, -3.5pt). Outsourcing and personnel cost increases pressured gross margins, with cost growth outpacing revenue expansion
• Operating CF Of JPY 61M
  (-JPY 31M YoY, -33.5%). A JPY 86M corporate tax payment weighed heavily, temporarily dampening cash generation
• Unauthorized Access-Related Loss Provision Of JPY 71M
  carried over unchanged from prior FY-end. The timeline for resolution and loss crystallization remains unclear
• Full-Year Net Income Guidance Of JPY 302M Versus 1H Actual Of JPY 78M
  (25.9% progress rate)—a low level that assumes heavy H2 weighting, setting a high bar for achievement

Focus Areas / Items To Monitor Going Forward

• The pace of growth in withDX's affiliated professional-service firms (currently ~100) and the conversion rate from referrals through those firms to actual revenue. The extent to which the platform business contributes to earnings from H2 onward is key to the medium-term growth story
• Whether listing-related costs (~JPY 30M cumulative through 1H) taper off from Q3, and the timing at which the 34-person headcount investment translates into improved productivity and revenue growth in H2
• The pipeline size and unit pricing of large-enterprise engagements sourced through the ITOCHU Group partnership, and the degree to which consulting domain margins can improve

Key Financial Highlights

Revenue reached a record high on a 1H cumulative basis. However, operating income declined -25.0% YoY as cost increases—JPY 30M in listing-related expenses, JPY 14M in recruitment/training costs, and JPY 32M in other SG&A—exceeded the JPY 36M increase in gross profit. On a 2Q standalone basis, revenue of JPY 602M and operating income of JPY 73M (12% OPM) represented a clear improvement from Q1 (JPY 40M, 7%).

Performance By Business Segment

Progress Versus Full-Year Guidance

Against full-year revenue guidance of JPY 2,913M, 1H cumulative revenue was JPY 1,164M (40.0% progress); against operating income guidance of JPY 428M, 1H came in at JPY 114M (26.7%). Both are below prior-year progress rates (revenue 48.1%, operating income 47.9%). Management maintained guidance unchanged, implying H2 must deliver revenue of JPY 1,749M and operating income of JPY 313M. The prerequisites for achieving this H2-weighted profile are the drop-off in listing-related costs, materialization of headcount investment benefits, and a build in security and large-enterprise engagements.

• In the prior fiscal year (FY09/2025), H2 (Q3+Q4) revenue totaled JPY 1,103M, exceeding H1's JPY 1,020M, confirming an H2-weighted pattern. Consulting engagements tend to see acceptance concentrated around fiscal and calendar year-ends
• While the drop-off in listing-related costs provides room for a lower SG&A ratio in H2, the extent to which cost levels can actually decline remains uncertain given ongoing human capital investment in headcount growth and recruitment/training expenses

Changes To Guidance

No revision to guidance. The full-year forecast published on December 19, 2025 was maintained: revenue of JPY 2,913M (+37.2% YoY), operating income of JPY 428M (+33.8% YoY), and net income of JPY 302M (+78.8% YoY).

Commentary On Shareholder Returns

The FY09/2026 dividend forecast remains JPY 0.00 per share at year-end (JPY 0.00 annually), unchanged from the prior year. The zero-dividend policy continues. Given the company's recent listing, priority is presumably being given to growth investment.

Financial Position

The IPO-related public offering of JPY 588M (primary offering + third-party allotment) materially strengthened the capital base. Interest-bearing debt was halved to JPY 92M, with net cash of JPY 1,370M effectively placing the company in a debt-free position. The equity ratio stands at a robust 76.0%.

News Released Alongside The Earnings Announcement

None

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• Hongo Holdings: 0.00% → 38.07% (filed 2026/01/27, obligation date 2025/12/19) — Pure investment purpose
  EDINET Large Shareholding Report
• ITOCHU Corporation: 0.00% → 23.12% (filed 2025/12/26, obligation date 2025/12/19) — Strategic investment under capital and business alliance
  EDINET Large Shareholding Report