Revenue and profit increased in the first half of the fiscal year ending June 2026. Steadily advanced initiatives to strengthen our business foundation and drive growth

Both revenue and profit increased in the first half of the fiscal year ending June 2026, as we posted net sales of 8,352 million yen (up 10.8% year on year) and operating profit of 875 million yen (up 2.1% year on year). While sales were generally in line with the initial forecast, profit fell short of plan due to the impact of quality-related measures taken for a certain customer of our cloud services. We apologize for any concern this may have caused our shareholders. We note that the quality issues are in the final stages of resolution and plan to commence service in February. This project represents a critical scheme in light of the anticipated growth of our payment domain, and we are addressing it with a unified, company-wide effort to ensure a definitive resolution.

As for orders, both orders received and the order backlog fell below the previous year's levels, reflecting a decline following the large number of multi-year, recurring orders secured in the cloud services and security domains during the previous year. On a brighter note, in system development, orders increased year on year, including multiple orders for system renewal projects for major card companies. The situation in the sales and development divisions, which had been affected by quality-related issues, is gradually improving. In the second half of the fiscal year, we will further strengthen our proposal activities and focus on generating new business opportunities.

Progress status of the medium-term management plan

Under our three-year medium-term management plan running through the fiscal year ending June 2027, we are implementing various initiatives centered on three key pillars: "Strengthening the revenue base," "Enhancing our payment solutions and expanding business areas," and "Growth strategy in the security domain."

1. Strengthening the revenue base

To strengthen our revenue base, and in light of the recent quality issues, we have begun a thorough reassessment of our development processes, organizational structure, and quality management procedures, and are executing corrective actions. In addition, we are working to enhance our deliverables review process using AI agents and revamp our employee training programs.

Furthermore, in response to recent business expansion and the diversification of projects, we are centralizing system operation and infrastructure--previously managed on a project-by-project basis--across the entire company, and are working to standardize and automate these operations. Through such initiatives, we aim to enhance quality and productivity over the medium to long term as well as strengthen our revenue structure.

2. Enhancing our payment solutions and expanding business areas

In the payment domain, we are gradually migrating our flagship FEP products to new cloud-compatible versions, and we expect this to improve development productivity and maintenance efficiency.

Additionally, we are advancing initiatives to expand the value we provide through collaboration among payment service providers. We have made concrete progress in countermeasures against fraudulent card use, including enhancements to our integration with DNP's EMV 3-D Secure system and MATTE, JCB's web-based fraud information sharing service. Furthermore, in the cloud services, we are exploring the development of new solutions that integrate our FEP and acquiring services. We are working to make these services available as soon as possible so that they can contribute to revenue.

3. Enhancing added value and strengthening sales network in the security domain

In security domain, we are advancing with development for the renewal of our proprietary product "CWAT," and are working to improve functionality and enhance user convenience for the release in July.

We are also shifting away from a traditional product sales model focused on standalone endpoint solutions, and are promoting initiatives aimed at delivering more comprehensive security services, including expanding our lineup in the network security domain and establishing a 24/7 security monitoring and operations structure.

To our shareholders

As for shareholder returns, the interim dividend for the fiscal year ending June 2026 was set at 17 yen per share, in line with our initial forecast. There is no change to our year-end dividend forecast.

The landscape surrounding both the payment and security domains is evolving, requiring us to take a flexible approach to new technologies and business models. We view these as opportunities for growth and will actively strive to enhance the value we provide and further expand our business areas. We would appreciate your continued support and cooperation.

February 2026
Koji Kawakami
Chief Executive Officer, Representative Director