CREO CO.,LTD.

The core product "ZeeM," a corporate HR/payroll and accounting system, requires several months to over a year from sales negotiation to completed implementation. In recent years, as project scale has expanded, sales negotiation and implementation periods have tended to lengthen further, raising the possibility that order results (amount and timing) may deviate significantly from plans, or that revenue and profit recognition may shift into a different accounting period than planned. As a countermeasure, the company is promoting a shift of the revenue model toward a subscription model to raise the proportion of recurring (stock-type) revenue.

In the contract development business, contracts are primarily concluded on a lump-sum (ukeoi) basis. Development man-hours may exceed initial estimates due to development under new technical specifications or unexpected specification changes during development, potentially causing project costs to rise. Even projects initially expected to be profitable carry the risk of ultimately incurring losses. For projects above a certain scale, the company implements project management centered on a PMO (Project Management Office), addressing this risk by improving estimation accuracy at the time of order receipt and refining development techniques and methodologies.

Approximately 66% of the System Operation and Services segment's revenue comes from transactions with LINE Yahoo Corporation. Should the company change its management policies or switch to in-house development, this could significantly affect the segment's operating results. LINE Yahoo Corporation holds a 13.6% stake in the company, and the business relationship is currently stable, but concentration risk remains high. As a countermeasure, the company is working to diversify its client base and to disperse risk by diversifying and upgrading the types of outsourced work it handles.

Employees in the Support Services business work at client companies, the company's own offices, call centers, and similar locations, environments where personal information and confidential client information accumulate. Should confidential information be leaked, this could result in losses such as termination of outsourcing contracts, damage claims, and client attrition. The company thoroughly prevents leakage through the establishment of security policies and personal information protection policies, along with ongoing information security training for employees.

In the Support Services business, there is a risk that outsourced work from specific clients may be suspended or reduced due to clients bringing operations in-house as a result of organizational integration or similar changes. Where dependence on a specific client is high, suspension of outsourcing contracts could have a direct impact on business performance. The company works to enable smooth transitions of employees to work for other clients through skill development and reskilling, while also working to prevent cancellations by existing clients and to develop new clients through proposals for labor-saving using AI technology.

Against the backdrop of expanding DX investment, competition to recruit IT engineers has intensified. If recruitment does not proceed as planned or talent outflow exceeds expectations, this could hinder business expansion and the maintenance of service quality, potentially affecting business performance. The growth of the company's group is highly dependent on the continuous securing and development of excellent talent. The company aims to improve engagement and talent retention through building a comfortable working environment, promoting health-conscious management, hiring and promoting diverse talent, and developing talent through digital-related training and reskilling.