ibis inc.

The advertising market is highly susceptible to fluctuations in economic conditions, and a sharp economic downturn could affect business performance through a decrease in advertising placements and ad unit prices. The company aims for a revenue structure that reduces dependence on the advertising market by strengthening the promotion of its subscription-based premium membership service, but since overseas sales account for approximately 40% or more of consolidated net sales, the impact of market fluctuations extends broadly.

The company's revenue composition is highly dependent on "ibisPaint". If competitors release attractive services or user interest declines, this could lead to a decrease in active users and a decline in advertising revenue and subscription sales. The company is working to activate users through feature improvements, new feature additions, and various promotions, but if these measures fail to be effective, it could have a material impact on business performance and financial condition.

Domestically, the company is subject to regulations such as the Unfair Competition Prevention Act, the Copyright Act, and the Worker Dispatching Act, while overseas it is subject to personal information protection regulations such as the GDPR (EU General Data Protection Regulation) and the CPRA (California Privacy Rights Act). The company has responded by establishing an EU representative and DPO and implementing in-app consent screens, but if overseas regulatory content changes, it may become difficult to conduct business as planned, potentially affecting business performance and financial condition.

The company provides services to overseas users through "Google Play" and the "App Store", and there is a risk that differences in user preferences and business customs by country could lead to service suspensions or unexpected business developments. Certain restrictions have arisen on services within Russia due to the impact of Russia's invasion of Ukraine, and a prolonged geopolitical risk causing economic deterioration could affect business performance and financial condition.

The company positions M&A and capital and business alliances as key means for business expansion, and conducts due diligence including experts, but there is a risk that significant changes in market conditions, failure of target companies to achieve plans, or financial, legal, or business issues difficult to detect during due diligence may come to light afterward. If such risks materialize, impairment of the acquisition price of shares or goodwill may occur, potentially having a material impact on business performance and financial condition.

The company utilizes AI technology (including generative AI) in mobile app and system development, but a delayed response to rapid technological evolution could lead to a decline in competitiveness and loss of business opportunities. This also entails technical and ethical risks such as security vulnerabilities, privacy violations, intellectual property infringement, and biased output. While the company is strengthening governance through the development of internal guidelines and employee training, the realization of such risks could damage its credibility and brand value.

The Mobile Business is highly dependent on platform operators such as Apple Inc. and Google LLC, and changes in these companies' business strategies or fee rates directly affect business performance. The company monitors trends through information gathering from industry associations and takes appropriate countermeasures, but its bargaining power against unilateral policy changes by platform operators is limited.

Due to transactions with overseas SSP operators and overseas users, overseas sales account for approximately 40% or more of consolidated net sales, and business performance is affected when the yen appreciates. The company formulates its business plan incorporating fluctuations in assumed exchange rates, but hedging measures in the event of a sharp yen appreciation beyond the assumed range are not explicitly stated in the securities report.

Securing and developing IT engineers such as mobile app development engineers and system engineers, as well as management personnel, is recognized as fundamental to sustainable growth, but intensifying competition for talent and changes in market needs may prevent recruitment from proceeding as planned. There is also a risk that the outflow of existing personnel could affect business performance, and in the Solutions Business, there is a structural challenge in which fixed personnel costs for IT engineer dispatch push up the cost ratio when idle man-hours occur.

The company handles personal information of app users and confidential information of customers, and if information leakage or unauthorized use occurs, there is a risk of damage to corporate image, claims for damages, and termination of transactions. Additionally, if confidential information such as source code is leaked or imitated, the app's competitive advantage could be undermined. The company addresses this through the appointment of a Chief Information Officer, the development of security regulations, and the operation of a personal information protection management system based on the Privacy Mark system, but risks of realization due to cyberattacks and other threats remain.