SUNCORPORATION

Business Details

Centered on the equity-method affiliate Cellebrite DI Ltd. (Israel), this segment develops, manufactures, and sells mobile data transfer devices, digital forensic solutions, and related services for criminal investigation agencies and other bodies. In Japan, Sun Corporation handles domestic sales, offering Cellebrite products as well as threat intelligence and active cyber defense-related products. The segment also undertakes a commissioned project from the Ministry of Internal Affairs and Communications (research, development, and demonstration of multi-source integrated disinformation/misinformation detection technology). The revenue model is being shifted toward a subscription-based recurring revenue business.

Recent Overview

Net sales increased 8.2% year on year, but profitability declined due to deteriorating order terms

Net sales for the full year of FY2026 (ending March 2026) reached ¥1,293 million (up ¥97 million, or 8.2%, year on year), achieving revenue growth. In addition to forensic solutions and intelligence solutions, the commissioned project from the Ministry of Internal Affairs and Communications for "research, development, and demonstration of multi-source integrated disinformation/misinformation detection technology" contributed. On the other hand, segment profit decreased to ¥141 million (down ¥24 million, or 14.6%, year on year) due to deterioration in some order terms. Equity in earnings of affiliates rose sharply to ¥4,969 million (up ¥4,464 million year on year) against the backdrop of Cellebrite's expanding performance, becoming a major factor boosting consolidated ordinary income.

Key Products

Growth Drivers

• Expansion of recurring revenue driven by increased order value in the subscription business
• Acquisition of new customers through the full-scale rollout of InsEYEts in the Japanese market (from April 2024)
• Creation of cross-sell opportunities through newly offered products such as TRM Labs and Cybersixgill
• Rising demand for digital forensics among law enforcement agencies amid the explosive growth in digital evidence volumes
• Business expansion into the active cyber defense and threat intelligence domains
• Revenue diversification through commissioned projects from public institutions such as the Ministry of Internal Affairs and Communications

Risks

• Decline in profit margin due to deterioration in order terms (segment profit down 14.6% for the full year of FY2026 (ending March 2026))
• Continued rise in the difficulty of data extraction and analysis due to advancing smartphone security and increasing data volumes
• Cellebrite's (equity-method affiliate) business performance and share price fluctuations significantly affecting Sun Corporation's equity in earnings and gains/losses on equity fluctuations
• Foreign exchange risk (Cellebrite is an Israeli company, and foreign-currency-denominated transactions occur)
• Instability in orders due to budget constraints and fluctuating procurement cycles at law enforcement agencies
• Risk to Cellebrite's (based in Israel) business continuity due to escalating tensions in the Middle East