Growing Contracted Development Focused on Automotive and Other Fields

「In addition to these software and system development areas, the scope of the System Solutions Business expanded from the current consolidated fiscal year to include digital musical instrument software development, industrial robot control development, business application development including production and quality control systems, and development for broadcasters conducted by 株式会社モアソンジャパン, enabling the business to offer a broader range of services.」

「In addition to our existing mobility development, including automotive ECUs and CDCs and railway-vehicle software, and embedded software development for digital home appliances and industrial equipment, the scope expanded during the fiscal year to include digital musical instrument software development, industrial robot control development, business application development such as production and quality management systems, and development for broadcasters by Moaxon Japan.」

「In addition, the reporting segment for EVC-related development (*) changed from the Engineering Solutions Business to the System Solutions Business from the current interim consolidated accounting period.」

「The Group's software development covers mobility development, including software for automotive ECUs and CDCs and railway vehicles, and embedded software development for digital consumer electronics and industrial equipment. From the current consolidated fiscal year, the scope also expanded to include digital musical instrument software development, industrial robot control development, business application development including production and quality control systems, and development for broadcasters conducted by モアソンジャパン.」

「From the current interim consolidated accounting period, the company changed the classification of the ERP Business, formerly included in the System Solutions Business segment, to the Engineering Solutions Business segment in order to align its internal organizational structure with its disclosed segment classifications.」

「In the automotive sector, in addition to an increase in orders for new in-vehicle projects that leverage the company's strength in in-vehicle development technologies, the company is also focusing on winning orders for software-defined vehicle projects.」

「In the core embedded systems development business, revenue increased as the company focused on high-value-added areas, particularly the in-vehicle sector, in addition to development for digital consumer electronics, where demand remained strong. As a result, revenue for the nine-month period ended the third quarter of the current consolidated fiscal year amounted to ¥3,192 million, up 23.0% year on year, and segment profit amounted to ¥654 million, up 41.4% year on year.」

「In the core embedded systems development business, revenue increased mainly in the digital consumer electronics and automotive sectors against a backdrop of strong demand for consumer electronics and in-vehicle systems. However, revenue from contract hardware development was slightly below the initial forecast because of delivery delays resulting from production capacity constraints at the contract manufacturer. The delivery delay issue at the contract manufacturer is already expected to be resolved, and the company believes it will not affect achievement of the full-year revenue plan. In addition, to improve profitability, the company worked to increase the per-person-month rate for dispatched and quasi-mandate contracts, improve estimate accuracy and strengthen man-hour management for contract work. These measures were effective, and the segment profit margin improved year on year. As a result, revenue for the six-month period ended the second quarter of the current consolidated fiscal year amounted to ¥2,046 million, up 20.3% year on year, and segment profit amounted to ¥396 million, up 26.9% year on year.」

「The core embedded systems development business increased revenue, mainly in the digital consumer electronics and automotive sectors, against a backdrop of strong demand for consumer electronics and in-vehicle systems. However, contract development of hardware continued to face difficulties in procuring components. In the ERP business, ログイン株式会社, which became a wholly owned subsidiary in January 2023, contributed to earnings. As a result, revenue for the three-month period ended the first quarter of the current consolidated fiscal year amounted to ¥931 million, up 14.7% year on year, and segment profit amounted to ¥128 million, down 4.8% year on year.」

「In the automotive sector, the company converted strengthened efforts by major automobile manufacturers in areas such as in-vehicle software development into orders, and the business performed well. In addition, the company continued making a broad range of proposals to existing customers, including horizontal deployment of its existing technologies, while pursuing new business based on its core technologies. As a result, revenue for the consolidated fiscal year amounted to ¥3,804 million, up 34.2% year on year, and segment profit amounted to ¥697 million, up 32.0% year on year.」

「The business performed well as a result of increased revenue in the digital consumer electronics and automotive sectors. To further expand revenue, the company continued making a broad range of proposals to existing customers, including horizontal deployment of its existing technologies, while pursuing new business based on its core technologies. As a result, revenue for the nine-month period ended the third quarter of the current consolidated fiscal year amounted to ¥2,594 million, up 29.1% year on year, and segment profit amounted to ¥462 million, up 33.8% year on year.」

「In addition to steady progress in development projects in the automotive-related sector, development projects in the digital consumer electronics sector expanded in scale, and the business performed well. To further expand revenue, the company is making a broad range of proposals to existing customers, including horizontal deployment of its existing technologies, while continuing to pursue new business with major manufacturers and growth companies based on its core technologies. As a result, revenue for the six-month period ended the second quarter of the current consolidated fiscal year amounted to ¥1,701 million, up 25.0% year on year, and segment profit amounted to ¥312 million, up 28.5% year on year.」

「In addition to steady progress in development projects in the automotive-related sector, development projects in the digital consumer electronics sector expanded in scale, and the company also began a large-scale development project for a new business partner. As a result, the business performed well. To further expand revenue, the company will make a broad range of proposals to existing customers while pursuing sales activities to establish new relationships with major manufacturers. As a result, revenue amounted to ¥812 million, up 13.1% year on year, and segment profit amounted to ¥135 million, up 4.1% year on year.」

「As in the previous consolidated fiscal year, demand for system development has increased as customers have moved into full-scale DX investment, and the company's system development projects have recovered. ... The company has continued to focus on developing new customers, including major automobile manufacturers, to solidify its business foundation and further expand its operations.」

「Against a backdrop of rising demand for system development, the order environment has improved, and inquiries in the automotive and semiconductor manufacturing equipment sectors are increasing. The company strengthened efforts to recruit mid-career personnel and expand its network of partner companies to secure development resources. As a result, revenue amounted to ¥2,010 million (¥1,890 million in the same period of the previous year), and segment profit amounted to ¥346 million (¥269 million in the same period of the previous year).」

「Amid a recovery in demand for system development and rising semiconductor demand, all three sectors—automotive-related, digital consumer electronics and semiconductor manufacturing equipment—recovered. In addition, following the capital increase in June this year, the company strengthened its efforts to win development projects from major manufacturers and worked to improve the utilization rate of its development personnel, among other measures to increase profits. As a result, revenue amounted to ¥1,360 million (¥1,295 million in the same period of the previous year), and segment profit amounted to ¥243 million (¥185 million in the same period of the previous year).」

「In addition to the recovery in development projects in the core automotive-related sector, orders remained firm in the software fields of digital consumer electronics and electronic components and in hardware fields including semiconductor manufacturing equipment. ... In June, a capital increase raised capital to more than ¥300 million, removing the company from the scope of the Subcontracting Act and allowing it to pursue the development of new major customers more actively. As a result, revenue amounted to ¥718 million and segment profit to ¥129 million.」

「From the third quarter of the current consolidated fiscal year, the company changed the name of the reporting segment formerly called the "Contract System Development Business" to the "Digital Solutions Business." In addition, following a review of its businesses, the company decided to include the IoT/M2M business, formerly included in the "Engineering Solutions Business," in the "Digital Solutions Business."」

「In this segment, development had been suspended as a result of the spread of COVID-19, but development restarts gained momentum in the second quarter. In the digital consumer electronics sector, development projects continued without cancellations as remote development became established. In the semiconductor manufacturing equipment sector, the impact of COVID-19 on semiconductor demand was limited, and business continued to perform well, as it had in the first quarter. However, in the automotive-related sector, as in the first quarter, some development projects were reviewed or postponed as a result of the impact of the spread of COVID-19 on the automotive industry. As a result, segment revenue amounted to ¥1,271 million. In addition, segment profit amounted to ¥185 million following reductions in nonessential expenses.」

「The company aims to achieve steady growth, leveraging its strength in integrated software and hardware system development and focusing primarily on automotive and digital consumer electronics.」