DIGITALIFT Inc.

Business Details

Under the mission of "Moving business forward, and beyond," the segment covers the front-end, mid-end, and back-end of marketing through three service areas: ① Marketing Growth Design, ② Content Equity Enhancement, and ③ Data Growth Acceleration. It provides total services to a diverse range of clients, from strategy formulation through execution, and is focused on improving its earnings structure through operational efficiency centered on the utilization of AI. From the first quarter of FY2026 (ending September 2026), the segment name was changed to "Marketing Consulting Business" (no change in actual operations).

Recent Overview

Gross profit margin improved by approximately 10 percentage points due to a significant reduction in cost of sales, with operating profit up 2,531% year on year

In H1 FY2026 (ending September 2026) (October 2025 to March 2026), net sales grew only modestly to ¥1,763 million (up 3.0% year on year), while cost of sales was significantly reduced from ¥1,284 million to ¥1,151 million, resulting in gross profit increasing 43.2% from ¥426 million to ¥611 million. The improvement in earnings structure driven by a review of the client portfolio and operational efficiency centered on AI utilization proved successful, resulting in substantial profit improvement, with operating profit of ¥119 million (up 2,531.0% year on year) and interim net profit attributable to owners of parent of ¥70 million (up 3,294.5% year on year). There has been no change to the full-year earnings forecast (net sales of ¥4,321 million, operating profit of ¥210 million), and approximately 57% of the full-year operating profit forecast had been achieved by the interim stage.

Key Products

Growth Drivers

• Continued expansion of the internet advertising market (2025 internet advertising expenditure up 10.8% year on year, accounting for 50.2% of total advertising expenditure)
• Improved earnings structure through review of the client portfolio (gross profit margin: 24.9% in the same period of the prior year → 34.7% in the current period)
• Reduction in cost of sales through operational efficiency centered on AI utilization
• Parallel pursuit of new customer acquisition and enhanced value provided to existing customers
• Expansion of revenue scale through cross-selling between the advertising/consulting domain and the branding/media domain
• Creation of group synergies through M&A (consolidation of Webcocolor Inc. as a subsidiary)

Risks

• Risk of revenue dependence on specific customers (Hakuhodo DY Media Partners accounted for 19.5% of net sales in the prior fiscal year)
• Pricing pressure from intensifying competition and new entrants in the internet advertising market
• Impact on advertising targeting methods from strengthened privacy protection regulations
• Risk of advertisers cutting budgets due to deteriorating macroeconomic conditions, such as a weaker yen and rising prices, and prolonged geopolitical risk
• Impairment risk related to the goodwill balance of ¥64 million (as of the end of March 2026)
• Risk of profit pressure from increased selling, general and administrative expenses (¥422 million in the same period of the prior year → ¥491 million in the current period)
• Risk of rising interest rates related to interest-bearing debt balance, including ¥500 million in short-term borrowings