ELEMENTS, Inc.

Business Details

The sole reportable segment operated by the ELEMENTS Group. Through the AI cloud platform "IoP Cloud," the company provides services under the categories of "Personal Authentication Solutions" and "Personal Optimization Solutions." Centered on its core online identity verification services "LIQUID eKYC" and "PolaRify eKYC," the company earns usage-based revenue under a BtoBtoC model. Boosted by the expansion of the eKYC market driven by the revised Act on Prevention of Transfer of Criminal Proceeds, both revenue and profit improved significantly in the first half of FY2026 (ending March... November 2026).

Recent Overview

H1 FY2026 (ending November 2026): revenue up 65.6%, operating profit turned significantly positive; full-year forecast revised upward

In the first half of FY2026 (ending November 2026) (December 2025 to May 2026), revenue was ¥2,799 million (up 65.6% year on year), EBITDA was ¥648 million (up 170.2% year on year), operating profit was ¥327 million (a significant improvement from ¥17 million in the same period of the prior year), and net income attributable to owners of parent for the interim period was ¥297 million (compared to △¥451 million in the same period of the prior year), representing a substantial improvement in earnings. In response, the company revised upward its full-year earnings forecast announced on January 14, 2026, raising revenue guidance to ¥5,600–5,700 million (from the previous ¥5,100–5,300 million) and operating profit guidance to ¥300–400 million (from the previous ¥0–200 million). Regarding the scope of consolidation, two companies were excluded: Admedica Inc. (liquidation completed) and ELEMENTS CLOUD Shikoku Inc. (equity ratio reduced due to a third-party allotment capital increase). On the financial front, repayment of interest-bearing debt progressed, and the equity ratio improved to 52.0% (from 44.2% at the end of the prior fiscal year).

Key Products

Growth Drivers

• Expansion of the scope of mandatory eKYC and market growth driven by the revised Act on Prevention of Transfer of Criminal Proceeds (market size projected to reach ¥24.8 billion in FY2027)
• Expanded adoption in CtoC sharing and matching services beyond the finance and telecommunications industries
• Continued expansion of demand for personal authentication and identity verification amid accelerating DX across society
• Incorporation of "PolaRify eKYC" and expansion of the customer base through the consolidation of PolaRify Inc. as a subsidiary (March 2025)
• Expansion into the identity authentication domain through LIQUID Auth's support for passkeys (FIDO2)
• Emergence of operating leverage as the growth rate of SG&A expenses was contained relative to the high revenue growth (up 65.6% year on year)

Risks

• Volatility in operating income/loss due to continued high levels of selling, general and administrative expenses (SG&A expenses were ¥1,849 million in H1 FY2026 ending November 2026)
• Risk of intensifying competition in the eKYC market and delayed response to technological innovation
• Risk of system failures or service outages due to dependence on AWS as key infrastructure
• Risk of information leakage associated with the large-scale storage of users' biometric and personal information
• Decline in revenue contribution associated with the downsizing or withdrawal from Personal Optimization Solutions businesses
• Risk related to responding to local regulations and cultural differences in overseas expansion (APAC)
• Remaining accumulated losses (retained earnings of △¥1,482 million as of end of May 2026) and the ongoing need to improve financial soundness
• Changes in the business portfolio and impact on the earnings structure due to the reduction in the scope of consolidation (exclusion of two companies)