Key Positives From The Results
The AI Solutions segment delivered record-high H1 results with revenue of JPY 2,427M and operating income of JPY 122M. Consolidated operating income swung from a loss of JPY 49M in the year-ago period to a profit of JPY 70M. Improved profitability in AI Integration and successful capture of generative AI demand were the primary drivers.
- AI Integration Per-Capita Monthly Revenue: Rose +27.1% from JPY 1,296K to JPY 1,647K; BP gross margin also improved from 13.4% to 15.8%
- Facial Recognition Attendance App "Alroku for LINE WORKS": Surpassed 4,000 IDs; AIZE cumulative IDs exceeded 150K, expanding the recurring revenue base
- SG&A Reduction: Declined from JPY 1,003M to JPY 845M (−15.7% YoY); non-amortization of goodwill under IFRS also contributed
- Engineering Headcount Decline Bottoming Out: Shift toward increased contract-based man-hours; 39 new graduates hired, creating room for expanded utilization in H2 and beyond
- GPU Server Segment Gross Profit: Increased +11.5% YoY with gross margin improving from 47.4% to 56.5%, reflecting progress in pivoting toward AI development-use GPU servers
Key Concerns From The Results
The GPU Server segment booked impairment losses of JPY 23M due to a decline in cryptocurrency prices, resulting in a segment loss of JPY 52M. Cryptocurrency volatility remains a source of uncertainty for consolidated earnings. Operating CF deteriorated to −JPY 149M from +JPY 59M in the year-ago period, warranting close attention to working capital management.
- GPU Server Segment Revenue: JPY 388M (−6.5% YoY); cryptocurrency mining income depressed by market deterioration
- Contract Liabilities Decline: Decreased JPY 188M from JPY 437M to JPY 249M, indicating a shrinking order backlog on a deferred-revenue basis
- Operating CF Negative: −JPY 149M, primarily driven by the JPY 188M decline in contract liabilities and JPY 43M in corporate tax payments
- Cash And Cash Equivalents Decline: Fell JPY 420M from JPY 1,914M to JPY 1,493M; diminished financial flexibility warrants monitoring
- Engineering Revenue: JPY 794M (−16.4% YoY); lingering impact of prior-period headcount reductions
Focus Areas / Items To Monitor Going Forward
- Conversion rate from AI Lab contracts to AI contract-based projects within AI Integration. The transition from one-off development to recurring revenue will be a key determinant of medium- to long-term earnings stability
- Progress in the GPU Server segment's business model pivot from cryptocurrency mining to AI development-use GPU server sales, and the risk associated with fluctuations in cryptocurrency holdings
- Impact of cost increases from the 39 new graduates who joined in April on H2 earnings, and the probability of achieving the full-year operating income target of JPY 81M
- Trends in the proportion of prime contracts and average project value in AI Integration
- Disclosure of MRR and churn rate for "Alroku for LINE WORKS" and "AIZE Biz"
- Quantitative outlook for cryptocurrency holding balances and potential valuation loss risks
- Mid-career hiring fulfillment rate and H2 utilization rate outlook for the Engineering business
- Pipeline status for AI development support services in the GPU Server segment
- M&A strategy in terms of target scale (reportedly at 4–5x EBITDA multiples) and financing methods
- Expected scale and timeline of core system development for a major trading house-affiliated logistics company
- Specific timeline for revenue contribution from the partnership with LIMNO
- Utilization rate and revenue contribution outlook for the data center in Arkansas, US
- Potential for additional accrual of performance bonuses (JPY 42M provisioned) in H2
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 2,809M | +2.7% |
| Gross Profit | JPY 889M | −0.4% |
| Operating Income | JPY 70M | Loss of JPY 49M in prior year |
| Interim Profit Before Tax | JPY 54M | Loss of JPY 55M in prior year |
| Interim Profit Attributable to Owners of Parent Company | JPY 36M | Loss of JPY 53M in prior year |
| Basic EPS (Interim) | JPY 4.32 | −JPY 6.43 in prior year |
| Diluted EPS (Interim) | JPY 4.28 | −JPY 6.43 in prior year |
| Interim Comprehensive Income | JPY 32M | Loss of JPY 59M in prior year |
Gross profit margin came in at 31.7% (−0.9pp YoY), a marginal decline. The most significant change was the swing to operating profit, driven by SG&A cuts (−15.7% YoY). Prior-year comparisons are on an IFRS-reclassified basis.
Performance By Business Segment
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| AI Solutions | JPY 2,427M | +4.3% | JPY 122M | +16.9% | 5.0% |
| GPU Server | JPY 388M | −6.5% | −JPY 52M | Loss of JPY 154M in prior year | - |
- AI Integration + AI Products: Revenue of JPY 1,643M (+18.3% YoY). Driven by expanding generative AI-related development demand (RAG development, AI-driven development, drawing estimation AI, etc.) and rising engineer unit prices
- GPU Server Sales (Gross Profit Basis): Gross profit up +11.5% YoY; gross margin improved from 47.4% to 56.5%. The shift toward AI development-use GPU server sales proved effective
- Engineering: Revenue of JPY 794M (−16.4% YoY). Revenue decline persisted due to lingering effects of prior-period headcount reductions; the decline has recently bottomed, and the company is now in a hiring acceleration phase
- Cryptocurrency Mining: Mining income depressed by deteriorating cryptocurrency market prices; impairment losses of JPY 23M booked based on end-February market prices
Progress Versus Full-Year Guidance
Revenue progress at 48.1% is roughly in line with the plan. Operating income progress of 85.8% and net income progress of 98.3% indicate an upside trajectory on the profit front. However, the company opted not to revise guidance, citing the anticipated personnel cost increase from the 39 new graduates who joined in April and ongoing volatility in the GPU Server segment.
| Item | Value (2Q Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 2,809M | JPY 5,837M | 48.1% |
| Operating Income | JPY 70M | JPY 81M | 85.8% |
| Net Income Attributable to Owners of Parent Company | JPY 36M | JPY 36M | 98.3% |
- A performance bonus provision of JPY 42M was accrued in 2Q to smooth quarterly earnings. H2 profit levels are expected to trail H1 due to cost increases associated with new graduate hires
Changes To Guidance
No guidance revision. The full-year plan announced on October 15, 2025 (revenue JPY 5,837M, operating income JPY 81M, net income JPY 36M) was maintained. The decision reflects consideration of H2 new graduate-related cost increases and GPU Server segment volatility.
Commentary On Shareholder Returns
The dividend forecast for FY2026/8 remains unchanged at JPY 0.00 per share at year-end (JPY 0.00 annually). No mention of share buybacks.
Financial Position
Steady debt reduction (−JPY 555M vs. prior fiscal year-end) and accumulated retained earnings improved the equity ratio attributable to owners of parent from 25.2% to 28.6%. However, retained earnings remain negative at −JPY 726M, indicating the company is still in the process of normalizing its financial position.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Cash Equivalents | JPY 1,493M | −22.0% vs. prior FY-end |
| Total Assets | JPY 4,779M | −9.9% vs. prior FY-end |
| └ Total Current Assets | JPY 2,517M | −13.8% vs. prior FY-end |
| └ Total Non-Current Assets | JPY 2,261M | −5.0% vs. prior FY-end |
| Goodwill | JPY 650M | Flat vs. prior FY-end |
| Total Equity | JPY 1,366M | +2.4% vs. prior FY-end |
| Interest-Bearing Debt (Current) | JPY 526M | Bonds and borrowings (current) |
| Interest-Bearing Debt (Non-Current) | JPY 878M | Bonds and borrowings (non-current) |
| EBITDA | JPY 180M | Operating income JPY 70M + depreciation JPY 110M |
News Released Alongside The Earnings Announcement
None
Major Announcements During The Quarter
- 2026/01/21Group company Zero Field's data center in Arkansas, US commenced full-scale operations with 10MW power capacity, capable of serving large-scale customers Triple Eyes Group Company Zero Field's U.S. Arkansas Data Center Commences Full-Scale Operations
- 2026/01/29Commenced collaboration with SIOS Technology to jointly develop multi-factor authentication solutions leveraging facial recognition Triple Eyes and SIOS Technology Commence Collaboration on Multi-Factor Authentication Solutions Leveraging Facial Recognition
- 2026/03/05Co-developed an automation system with BEX to streamline automotive design operations, targeting approximately 4,000 hours of annual man-hour reduction Triple Eyes Co-Develops Automation System with BEX to Streamline Automotive Design Operations
- 2026/03/25Launched "AT20," a next-generation talent development platform, featuring AI-driven development courses as flagship content Redefining "Creators" in the AI Era: Triple Eyes Launches Next-Generation Talent Development Platform "AT20"
Large-Shareholding Filings / Material Proposals Over The Past Year
- Trust Up: 5.47% → 4.45% (2025/02/27) — Pure investment by PROCESS UNIT FUND Investment Limited Partnership
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