HOUSEI Inc.

Business Details

Comprised of three companies: the Company, AID Inc., and OmniXuttle Inc. (SEVEN&EIGHT SYSTEM Co., Ltd. was excluded from the scope of consolidation as of this quarter). The segment offers contract system development and maintenance for media businesses such as newspaper and publishing companies, system development for financial, manufacturing, and retail industries, and proprietary products and cloud services including the generative AI low-code development platform "imprai," as well as entertainment, AI English proficiency assessment, and smart warehousing. Its strength lies in prime-contractor one-stop solutions, and it handles large-scale projects.

Recent Overview

Despite lower sales, operating income increased significantly, up 184% year on year, due to improved gross margin and reduced SG&A expenses.

In the first quarter of FY2026 (ending December 2026), Domestic IT Business sales decreased to ¥1,121 million (down 6.1% year on year); however, due to improved gross margin and reduced SG&A expenses, segment operating income improved substantially to ¥76 million (up 184.4% year on year). Quasi-delegated contract and maintenance revenue increased to ¥566 million, expanding the recurring revenue base. SEVEN&EIGHT SYSTEM Co., Ltd. was excluded from the scope of consolidation, transitioning the segment to a three-company structure. New initiatives progressed, including the commencement of LOGIFLUX WMS sales in the Japanese market, expansion of Unmanned Store Solutions to 94 stores, and joint research on medical AI with Juntendo University.

Key Products

Growth Drivers

• Quasi-delegated contract and maintenance revenue expanded to ¥566 million (up 4.6% year on year), with the recurring revenue base steadily accumulating
• Horizontal expansion into new customers and industries is being promoted through the deployment of the generative AI platform "imprai" into fields such as healthcare (joint research with Juntendo University on automated generation of opinion statements)
• The number of stores using Unmanned Store Solutions expanded to 94 (double the 47 stores at the end of the previous fiscal year), accelerating the accumulation of maintenance and operation revenue
• The commencement of LOGIFLUX WMS sales in the Japanese market has secured a new growth axis by capturing demand for logistics digital transformation
• Improvements to the profit structure are progressing through improved gross margin and reduced SG&A expenses, which can be expected to provide profit leverage during a sales recovery phase

Risks

• Contract (ukeoi) sales decreased significantly to ¥433 million (down 11.3% year on year), and the risk of timing mismatches in revenue recognition due to shifts in the timing of large contract orders continues
• Product sales fell sharply to ¥32 million (down 59.7% year on year), and monetizing the proprietary product business remains a challenge
• The exclusion of SEVEN&EIGHT SYSTEM Co., Ltd. from the scope of consolidation has changed the business structure, and the loss of the consolidation effect from this business is affecting sales
• The mid- to long-term structural decline of the print media industry poses a continuing risk of erosion of the core customer base
• New initiatives such as LOGIFLUX WMS and medical AI are still in the launch phase, and the timing and scale of their sales contribution remain uncertain