Blue innovation Co., Ltd.

Business Details

Centered on Blue Earth Platform® (BEP), the company provides four solutions: Inspection Solutions, Port Solutions, Education Solutions, and Next Solutions. It positions public infrastructure inspection (sewer systems, bridges, etc.) and disaster-prevention drone port systems as its two pillars of growth. Customers include electric power companies, local governments, and the construction industry, with a cumulative total of 773 client companies (as of end-March 2026). The company adopts a combined flow-type and stock-type revenue model that integrates hardware sales, leasing, monthly software subscription fees, and operational services.

Recent Overview

Inspection Solutions surged 96% year on year, driving net sales up 22.6% to ¥420 million

Net sales for the first quarter of the fiscal year ending December 2026 (January to March 2026) were ¥420 million (up 22.6% year on year). Inspection Solutions grew substantially to ¥296 million, driven by an increase in deployment projects in the public infrastructure sector, centered on sewer inspection. Meanwhile, gross margin declined due to a higher proportion of hardware sales, and continued upfront investment in R&D and recruitment expenses resulted in an operating loss of -¥72 million, roughly in line with the same quarter of the prior year. Cash and deposits decreased by ¥261 million to ¥726 million, and the equity ratio fell to 10.7%. There is no change to the full-year earnings forecast (net sales of ¥1,600 million, operating loss of -¥380 million).

Key Products

Growth Drivers

• Expanding demand for drone inspection amid the aging of social infrastructure (an increasing number of deployment projects, centered on the sewer and bridge sectors, drove 1Q Inspection Solutions sales up 96.3% year on year)
• Expansion of practical operational projects in the public infrastructure sector, driven by national and local government policies such as focused sewer inspection initiatives
• Growing adoption of BEP port and phase-free operations by national and local governments amid rising disaster-prevention needs
• Expansion of the scope of drone utilization following the lifting of the ban on Level 4 flight in December 2022 and the enforcement of Level 3.5 flight in December 2023
• Steady progress of PoC projects with government agencies and private companies under Next Solutions (up 260.7% year on year)
• Market expansion driven by continued government budget allocation in security-related fields
• Transition to a stock-type revenue model through the promotion of standardization and packaging (expansion of the cumulative number of client companies to 773)

Risks

• Risk that the transition to a high-profitability model will be delayed, as gross margin has declined due to a rising proportion of hardware sales, with the stock-type revenue ratio falling to 19.8% (from 27.0% in the same quarter of the prior year)
• Financial risk that additional fundraising will become difficult, as operating losses continue, the equity ratio has fallen to 10.7%, and cash and deposits decreased by ¥261 million in 1Q alone
• Financial structure risk stemming from fixed liabilities of ¥500 million in corporate bonds and ¥423 million in long-term borrowings, with total liabilities of ¥1,140 million substantially exceeding net assets of ¥141 million
• Risk that the recurrence of dispersed or delayed revenue recognition timing continues, given the ongoing flow-type, project-by-project revenue structure
• Risk that rebound declines from government-affiliated projects and large-scale projects have a significant impact on results, as seen in the 57.6% year-on-year decline in Port Solutions sales
• Risk of increased compliance costs due to changes in drone-related regulations and revisions to the Civil Aeronautics Act
• Risk of significant impact from reduced transactions given high revenue dependence on major customers