SERAKU Co., Ltd.

Business Details

This segment operates on two pillars: the SI domain, which handles IT infrastructure construction, operation, and maintenance, and the DX domain, which supports the introduction and adoption of cloud systems such as Salesforce and COMPANY. It also operates a 24/7/365 managed service through the IoT Cloud Support Center, and offers NewtonX (ChatGPT Utilization Support for Corporations). The company has also begun developing and providing AI Solutions centered on FDEs (Forward Deployed Engineers), providing integrated support from business process visualization to AI implementation at customer sites. This is the core segment, accounting for approximately 96% of consolidated net sales.

Recent Overview

Both net sales and profit rose modestly year on year, supported by solid IT investment demand.

In the nine months ended May 2026 (September 2025 to May 2026) of FY2026 (ending August 2026), segment net sales were ¥18,252 million (up 2.2% year on year) and segment profit was ¥2,062 million (up 0.4% year on year). The SI domain grew 3.0% on solid demand for cloud infrastructure migration and managed services, while the DX domain grew 0.4% owing to strengthened consulting on Salesforce and COMPANY projects. The company has also begun developing and providing AI Solutions leveraging the FDE model, driving higher added value. The full-year forecast remains unchanged, maintaining net sales of ¥27,400 million and operating profit of ¥2,850 million.

Key Products

Growth Drivers

• Continued expansion of IT investment demand accompanying corporate DX promotion and expanded use of generative AI
• Steady demand for cloud infrastructure migration and managed services
• Higher unit prices through strengthened consulting in the Salesforce and COMPANY domains
• Creation of new added value through the launch of AI Solutions business leveraging the FDE model
• Higher added value of services through expansion of AI utilization support services such as NewtonX
• Stable resource securing through development of in-house engineers' AI implementation capabilities and collaboration with business partners

Risks

• Rising recruitment costs and increased pressure on personnel expenses due to worsening IT talent shortage
• Risk of declining profit margin due to increased selling, general and administrative expenses
• Loss of competitiveness due to delayed response to advanced fields such as generative AI and cloud
• Decline in demand due to client companies curbing IT investment (owing to uncertainty in U.S. trade policy, overseas economic uncertainty, etc.)
• Risk of earnings deterioration due to decline in engineer utilization rates
• Intensifying competition accompanying the expansion of the FDE model by U.S. AI platform providers

Business Details

This segment supports DX in the agriculture, livestock, and fisheries sectors. In addition to platform services such as "Midori Cloud" for greenhouse horticulture and "Farm Cloud" for livestock, the segment also offers the produce distribution digitalization service "Midori Cloud Rakuraku Shukka," as well as IoT Solutions / AI & Data Science. The segment is in an upfront investment phase aimed at expanding sales to agricultural cooperatives (JA) and agricultural corporations nationwide. Although small in scale, accounting for approximately 0.9% of consolidated net sales, it is positioned as a strategic segment responsible for future revenue diversification.

Recent Overview

Net sales declined 17.5% year on year due to the reversal effect of a large-scale project in the same period of the previous year, and the loss also widened.

In the nine months ended May 2026 (September 2025 to May 2026) of FY2026 (ending August 2026), net sales were ¥166 million (down 17.5% year on year), and the segment loss was ¥99 million (widening from a loss of ¥78 million in the same period of the previous year). The main cause was the reversal effect from certain large-scale projects recorded in the same period of the previous year. The company continues to focus on expanding orders for solutions services, while continuing upfront investment for future business expansion, including expanding sales of "Midori Cloud Rakuraku Shukka."

Key Products

Growth Drivers

• Promoting expanded sales of "Midori Cloud Rakuraku Shukka" to agricultural cooperatives (JA) and agricultural corporations nationwide
• Continued focus on expanding orders for solutions services
• Demand for addressing industry-wide common challenges in produce collection and shipping operations
• Growing needs for DX in agriculture, livestock, and fisheries sectors
• Horizontal deployment of "Midori Cloud Rakuraku Shukka"'s core technology (package tracking, traceability) to industries beyond agriculture

Risks

• Prolonged upfront investment phase leading to an expanding trend in losses (nine-month cumulative loss of ¥99 million, an expansion compared to the same period of the previous year)
• Small scale of net sales (¥166 million for the nine-month cumulative period) combined with a 17.5% year-on-year decline, leaving an uncertain path to profitability
• Risk of sales fluctuations due to one-time factors such as large-scale projects in the same period of the previous year
• Agriculture and primary industries are susceptible to climate/weather risks and policy changes
• Constraints on development and service delivery capacity due to IT talent shortage
• Risk of intensifying competition with other companies and major agriculture-related platforms

Business Details

Led primarily by the consolidated subsidiary SERAKU Business Solutions Co., Ltd., this segment provides technology provision in the 3D CAD field, quality control technology such as testing and performance inspection, and various technologies related to construction and information communication. The company aims to expand its scale through engineer recruitment and training and geographic expansion, and has performed steadily through maintaining stable utilization rates and securing projects in new technology domains. Although small in scale, accounting for approximately 2.6% of total group net sales (nine months ended May 2026, FY2026 (ending August 2026)), it has achieved both increased revenue and substantial profit growth year on year.

Recent Overview

Increased revenue and substantially higher profit driven by strengthened engineer recruitment and training, with a significant improvement in profit margin.

In the nine months ended May 2026 (September 2025 to May 2026) of FY2026 (ending August 2026), net sales were ¥493 million (up 4.4% year on year) and segment profit was ¥42 million (up 137.6% year on year). The main drivers of the profit increase were focused efforts on engineer recruitment and training, together with progress in maintaining stable utilization rates and securing projects in new technology domains. The segment profit margin improved substantially, from approximately 3.6% in the same period of the previous year to approximately 6.9%. The company continues to expect further project acquisition across various domains and fields, and is working to expand its scale through improving engineers' added value via training and through geographic expansion.

Key Products

Growth Drivers

• Expansion of active engineer headcount through strengthened recruitment and training
• Progress in maintaining stable utilization rates and securing projects in new technology domains
• Improvement in engineers' added value and service unit prices through educational programs
• Expansion of order-receiving areas through geographic expansion (base expansion)
• Project acquisition leveraging business partner collaboration across the entire SERAKU group

Risks

• Continued difficulty in recruiting hardware-related talent compared to the IT/DX domain
• Business model risk of significant earnings volatility due to fluctuations in engineer utilization rates
• Limited scale benefits, as the segment accounts for only approximately 2.6% of total group net sales
• Risk of performance being affected by capital expenditure trends in the manufacturing and telecom construction industries
• Risk that the segment profit margin, still at a low level on a full-year basis, could be squeezed by rising costs