MetaReal Corporation

Business Details

Positioned at the intersection of "industry-specific verticalized AI agents × global support for Japanese companies," the segment builds on AI translation (machine translation) to provide specialized document AI and business creation AI for industries such as pharmaceuticals, manufacturing, legal, patents, and finance. It is mainly operated by Rozetta Corporation, which has a customer base of over 6,000 companies. The business is undergoing a shift from conventional SaaS toward task-execution AI (SaS) and on-site AI implementation services (FDE). "Fully Automatic Translation AI (Autonomous AI)" is positioned as the top-priority area, with efforts underway to expand SaS adoption across the entire translation industry.

Recent Overview

Orders received fell sharply by 31% year on year, and losses widened in Q1

In Q1 FY2027 (ending March 2027) (March to May 2026), AI Business revenue fell sharply to ¥583 million (down 16.2% year on year), and orders received fell to ¥643 million (down 31.0% year on year). While cost reductions from the structural reforms initiated in the prior fiscal year progressed, they were offset by a combination of increased one-time costs related to generative AI and temporary upfront expenses aimed at reducing network and maintenance costs, causing the segment loss to widen to ¥26 million (versus a loss of ¥20 million in the same period of the prior year). Effective July 1, 2026, MetaReal and Rozetta were reorganized into a "small elite team plus AI" structure. The number of words used by the core-needs user segment of the Fully Automatic Translation AI continues to trend upward.

Key Products

Growth Drivers

• Positioning "Fully Automatic Translation AI (Autonomous AI)" as the top-priority area and creating new revenue sources through SaS-based expansion to translation companies and translators
• Concentrating on the "development of customer-specific plugins for architectural BIM/DX systems" field in collaboration with STUDIO55 Co., Ltd., and improving development process efficiency through AI technology integration
• Transitioning from SaaS to task-execution AI (SaS) and on-site AI implementation services (FDE) to achieve higher added value and improved gross margins
• Creating customer value starting from aggressive development investment in T-4OO, and cross-selling generative AI and AI agent services by leveraging the existing customer base of over 6,000 companies
• Reducing fixed costs and improving profitability through the "small elite team plus AI" organizational restructuring, and generating synergies with AI technology through the acquisition of specialized customer bases and technical know-how via M&A strategy

Risks

• Downward pressure on revenue if the significant decline in orders received (¥643 million in Q1 FY2027 (ending March 2027), down 31.0% year on year) continues
• Risk of declining profit margins during the structural reform transition period, due to factors such as increased one-time costs related to generative AI and upfront expenses for reducing network and maintenance costs
• Risk of losing existing customers due to intensifying competition with major tech companies and general-purpose AI services in the generative AI market
• Risk to the revenue model transition if the shift toward SaS and FDE does not proceed as planned
• Risk of additional impairment losses due to deteriorating profitability of development projects

Business Details

The HT (Human Translation) Business, centered on Globa Inc., provides outsourced services in human translation, interpretation, language education, and related fields. While the AI Business is in a growth investment phase, this segment is positioned as the cash cow supporting the group's overall revenue base. Translation & Interpretation Services and the Crowdsourcing Business form the core, with a training business also being operated. The majority of revenue is recognized from services transferred at a point in time.

Recent Overview

Revenue and profit declined due to lower orders received, though margins were largely maintained

In Q1 FY2027 (ending March 2027) (March to May 2026), the HT Business saw revenue decline to ¥166 million (down 14.0% year on year) and segment profit decline to ¥30 million (down 19.3% year on year), due to lower orders received. The profit margin fell slightly to 17.9% from 19.2% in the same period of the prior year, but remained at a double-digit level. The full-year forecast remains unchanged, with revenue of ¥712 million (up 0.5% year on year) and segment profit of ¥115 million (down 7.6% year on year).

Key Products

Growth Drivers

• Steady underlying demand for human translation (projects requiring high expertise and quality standards)
• Cross-selling opportunities within the group through a complementary relationship with the AI Business
• Maintaining profit margins through optimization of the cost structure

Risks

• Structural decline in demand for human translation due to the accelerating adoption of AI translation/machine translation
• Risk of shrinking business scale if the declining trend in orders received continues
• Intensifying price competition in translation and interpretation services and rising costs of securing personnel
• A projected decline in profit for the full year FY2027 (ending March 2027), with segment profit expected to decrease 7.6% year on year

Business Details

This segment integrates cutting-edge technologies such as AI, AR, VR, 5G/6G/7G, 4K/8K/12K video, wearable devices, and robots, aiming to realize a world where people can interact, live, and work "anytime, anywhere, with anyone." In Q1 FY2027 (ending March 2027), investment was reduced following a shift toward a longer-term perspective. Short- to medium-term growth initiatives have shifted to the AI Business, with the Metaverse Business positioned as being in a long-term investment phase. As a long-term strategy, "Reality Metaverse × AI" is positioned as a priority area, with plans to continue development and validation leveraging cutting-edge AI technology.

Recent Overview

Investment was reduced following a shift toward a longer-term perspective, and the loss narrowed significantly year on year

In Q1 FY2027 (ending March 2027) (March to May 2026), as a result of reduced investment following the shift to a 10±5-year long-term outlook, revenue came to ¥27 million (down 23.3% year on year). Meanwhile, the segment loss narrowed significantly to ¥8 million from ¥25 million in the same period of the prior year. The full-year forecast calls for revenue of ¥98 million (down 13.0% year on year) and an operating loss of ¥32 million. As a long-term strategy, the company has positioned "Reality Metaverse × AI" as a priority area and intends to proceed with development and validation leveraging cutting-edge AI technology.

Key Products

Growth Drivers

• Positioning the long-term strategy of "Reality Metaverse × AI" as a priority area, and continuing development and validation leveraging cutting-edge AI technology
• Expansion of the Gaussian Splatting-based digital twin auto-generation AI contract development solution
• Narrowing of losses and progress in business efficiency through reduced investment
• Accumulation of a technological foundation in preparation for the long-term emergence of the metaverse market
• Future synergy creation through integration with AI technologies within the group (such as Rozetta)

Risks

• Risk of continued losses over an extended period, as management judges that metaverse adoption will take at least five years and possibly up to ten years
• Reduced allocation of management resources to the Metaverse Business due to the shift of short- to medium-term growth initiatives to the AI Business
• Risk of delayed market emergence for the metaverse due to delays in the development of hardware and communications infrastructure
• Risk of delayed technology development and a widening technology gap with competitors due to reduced investment
• Risk of additional impairment losses due to deteriorating profitability of existing development projects