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Presentation materials for financial results4011Headwaters Co.,LtdInformation and Communications, Services and Others

Supplementary Explanatory Materials for the Second Quarter Financial Results for the Fiscal Year Ending December 2026

The three-segment structure became fully operational following the absorption-type merger of BBDイニシアティブ, resulting in substantial increases in consolidated net sales and operating income. However, interim net income attributable to owners of the parent was negative due to one-time losses, including a loss on step acquisition associated with the integration.

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¥ thousand
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Conditional
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Contents of this document

Supplementary materials to the earnings reportSecond quarter of the fiscal year ending December 20268 items taken from the company’s own explanation
Financial Results Figures (The key points of this material are explained below)
Net Sales¥3,351,490 thousand+204.6%
Operating profit¥271,799 thousand
Ordinary income¥129,600 thousand
Net income¥-191,987 thousand
Gross Profit Margin44.9%
Operating profit margin8.1%
Selling, general and administrative expenses¥801,406 thousand
Results for the three months of the current quarter
Net Sales
¥2,089,090 thousand
YoY_pct (same quarter)232.4
Gross margin
¥937,912 thousand
Gross Margin44.9%
Selling, general and administrative expenses
¥801,406 thousand
Operating profit
¥136,506 thousand
Operating profit margin6.5%
Progress against full-year forecast　通期の予想に対して、いまどこまで進んだかの割合です。
Net Sales39.2%
Enterprise AI Solutions43.1%
AI Workflow Engineering32.8%
DATA & AI Engine25.2%
Operating profit36.0%
Ordinary income20.9%
What the company explained in this material
Breakdown of Factors Affecting the ChangeReasons cited by the Company for the change in the figures.
  • Increase in SG&A expenses from Q1¥369,774 thousand
  • Equity-method investment loss¥79,000 thousand
  • Interest expenses¥21,000 thousand
  • Loss on step acquisition¥207,000 thousand
Assumptions Underlying the Business OutlookThe assumptions used by the company in preparing its forecast.
  • 3Q cumulative revenue¥5,910,000 thousand
  • Gross MarginAround 45%
  • Q3 operating marginAbove 8%
New initiatives
  • Absorption-type merger with BBDイニシアティブ and implementation of PMI
  • Launch of AI-Rule as Code solutions
  • Rollout of the AI engineering OS “SAIDDar”
  • Verification of the effectiveness of applying AI agents to operations at JRE MALL
  • Domestic-first partnership collaboration with Clay Inc.
Key KPIsA metric the company considers important as a management benchmark.
  • Total employees637 People
    Year on year against the same period last year+347 people
  • Monthly revenue per employee¥1,093 thousand
  • Customer Base216 companies
  • Revenue per customer¥9,672 thousand
  • Number of DATA＆AI Engine contracts3,116 Engagements
  • DATA＆AI Engine ARR¥1,586,751 thousand
Unit price and quantity metricsThese figures show sales broken down by price and volume.
  • Customer Base216 companies
  • Revenue per customer¥9,672 thousand
  • Number of DATA＆AI Engine contracts3,116 Engagements
  • Monthly revenue per employee¥1,093 thousand
Segment results
  • Enterprise AI Solutions
    Net Sales2,366,740
    Year-on-year (%)149.4
  • AI Workflow Engineering
    Net Sales863,862
    Year-on-year (%)439.4
  • DATA & AI Engine
    Net Sales341,798
    Year on year against the same period last yearNo comparison because the segment was newly established
Number of employees
Number of Employees637 People
Change during the periodNet increase of 236 people from the previous quarter. +347 people from the same quarter of the previous year
Hiring planHiring focused primarily on high- to mid-level talent
Acquisition of treasury shares
Reference was made to the purchase of treasury shares associated with the settlement of fractional shares of less than one share resulting from the absorption-type merger. Amount, number of shares and period: Not disclosed
Contents of this document
ItemDetails
Document typeSupplementary materials to the earnings report
Fiscal Period CoveredSecond quarter of the fiscal year ending December 2026
Net Sales¥3,351,490 thousand (YoY +204.6%)
Operating profit¥271,799 thousand
Ordinary income¥129,600 thousand
Net income¥-191,987 thousand
Gross Profit Margin44.9%
Operating profit margin8.1%
Selling, general and administrative expenses¥801,406 thousand
Results for the three months of the current quarterNet Sales ¥2,089,090 thousand / Gross margin ¥937,912 thousand / Gross Margin 44.9% / Selling, general and administrative expenses ¥801,406 thousand / Operating profit ¥136,506 thousand / Operating profit margin 6.5%
Progress against full-year forecastNet Sales 39.2% / Enterprise AI Solutions 43.1% / AI Workflow Engineering 32.8% / DATA & AI Engine 25.2% / Operating profit 36.0% / Ordinary income 20.9%
Segment resultsSegment Enterprise AI Solutions / Net Sales ¥2,366,740 thousand / Year-on-year (%) ¥149.4 thousand, Segment AI Workflow Engineering / Net Sales ¥863,862 thousand / Year-on-year (%) ¥439.4 thousand, Segment DATA & AI Engine / Net Sales ¥341,798 thousand / Year on year against the same period last year No comparison because the segment was newly established
Breakdown of Factors Affecting the ChangeFactors Increase in SG&A expenses from Q1 / Amount ¥369,774 thousand, Factors Equity-method investment loss / Amount ¥79,000 thousand, Factors Interest expenses / Amount ¥21,000 thousand, Factors Loss on step acquisition / Amount ¥207,000 thousand
Key KPIsIndicator name Total employees / Value 637 People / Year on year against the same period last year +347 people, Indicator name Monthly revenue per employee / Value ¥1,093 thousand / Year on year against the same period last year Not disclosed, Indicator name Customer Base / Value 216 companies / Year on year against the same period last year Not disclosed, Indicator name Revenue per customer / Value ¥9,672 thousand / Year on year against the same period last year Not disclosed, Indicator name Number of DATA＆AI Engine contracts / Value 3,116 Engagements / Year on year against the same period last year Not disclosed, Indicator name DATA＆AI Engine ARR / Value ¥1,586,751 thousand / Year on year against the same period last year Not disclosed
Unit price and quantity metricsIndicator name Customer Base / Value 216 companies, Indicator name Revenue per customer / Value ¥9,672 thousand, Indicator name Number of DATA＆AI Engine contracts / Value 3,116 Engagements, Indicator name Monthly revenue per employee / Value ¥1,093 thousand
Number of employeesNumber of Employees 637 People / Change during the period Net increase of 236 people from the previous quarter. +347 people from the same quarter of the previous year / Hiring plan Hiring focused primarily on high- to mid-level talent
Assumptions Underlying the Business OutlookItem 3Q cumulative revenue / Value ¥5,910,000 thousand, Item Gross Margin / Value Around 45%, Item Q3 operating margin / Value Above 8%
Acquisition of treasury sharesReference was made to the purchase of treasury shares associated with the settlement of fractional shares of less than one share resulting from the absorption-type merger. Amount, number of shares and period: Not disclosed
New initiativesAbsorption-type merger with BBDイニシアティブ and implementation of PMI, Launch of AI-Rule as Code solutions, Rollout of the AI engineering OS “SAIDDar”, Verification of the effectiveness of applying AI agents to operations at JRE MALL, Domestic-first partnership collaboration with Clay Inc.
Items this document does not state (12)
Full-year earnings forecastSelf-assessment against the planNumber of stores and locationsRisk amount incorporated into the outlookMedium-term management plan targetsFinancial targetsAnnual DividendPayout ratioCapital expendituresOrders received and order backlogMarket Size / ShareKey points of the Q&A

These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.

The reasons the company gives

The company's own explanation, not something inferred from the numbers.

In addition to incorporating the performance and personnel of BBDイニシアティブ following the absorption-type merger effective 1 May 2026, growth in Enterprise AI Solutions and expanding demand for AI and AI-driven development contributed to higher revenue. Operating income was affected by increases in personnel expenses and costs related to the absorption-type merger. The interim net loss was attributable to extraordinary losses, including a ¥207 million loss on step acquisition.

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Supplementary Explanatory Materials for the Second Quarter Financial Results for the Fiscal Year Ending December 2026 | Headwaters Co.,Ltd (4011) timely disclosure | Komori