Risk of earnings volatility from a high-fixed-cost, low-variable-cost structure
First written in FY2018. 2 of 4 entries say "Worsened", first in FY2025. Latest entry: FY2026.
Data Applications moved to the "Worse" side of this theme in 2025, 2 years after the typical company in this theme (2023).
The whole theme swung hardest in 2020: 7 of 20 companies on the "Worse" side.
4 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「The company is generally ending new one-time sales for shipments from 1 April 2026 and transitioning to a subscription-based sales model. During the transition period, sales may temporarily slow before recurring revenue has had time to accumulate.」
In addition to the risk of earnings volatility in the software business, which has high fixed costs, the company specified the possibility that sales may temporarily slow during the transition period between ending one-time sales and accumulating recurring revenue. - FY2025Added uncertainty surrounding AI projectsAnnual report
「In the AI-focused media operation, AI consulting and contract-based systems development businesses conducted by the subsidiary 株式会社WEEL, requirements and project scale vary by project, and development is subject to uncertainty because these are advanced technology fields. Given these business characteristics, actual results may diverge from plans depending on the progress of AI projects and technical issues.」
In addition to the risk of earnings volatility caused by high fixed costs and low variable costs, the company specified the possibility of divergence between plans and actual results arising from the progress and technical issues of WEEL’s AI projects. - FY2020RestatedAnnual report
「The package software business has a high level of fixed costs, including personnel expenses, and a low variable-cost ratio. Accordingly, while the increase in earnings when sales rise tends to be larger than in other business formats, the decline in earnings when sales fall also tends to be larger, and earnings tend to fluctuate significantly.」
The company continues to disclose the risk of earnings volatility associated with the package software business’s high fixed costs and low variable costs. - FY2018First statedAnnual report
「Accordingly, while the increase in earnings when sales rise tends to be larger than in other business formats, the decline in earnings when sales fall also tends to be larger, and earnings tend to fluctuate significantly.」
The company states that earnings fluctuate significantly with changes in sales because the package software business has high fixed costs, including personnel expenses, and a low variable-cost ratio.