■Future outlook

1. Consolidated earnings forecast for the fiscal year ending 2024/7

As for the consolidated earnings forecast for the fiscal year ending 2024/7, according to the initial forecast, sales were 924 million yen, up 6.1% from the previous fiscal year, operating income was 43 million yen, up 3.5% from the same period, ordinary profit was 92 million yen, up 17.7% from the same period, and net income attributable to parent company shareholders was 61 million yen, up 1.1% from the same period. After that, a revised forecast was announced in 2024/3, and although sales and operating income did not change, ordinary profit increased 139.3% from the previous fiscal year to 187 million yen, and a significant increase that greatly exceeds the initial forecast is expected. Along with this, net income attributable to parent company shareholders is also expected to increase drastically to 127 million yen, up 110.5% from the same period.

Regarding sales and operating profit from the 3rd quarter onwards, strong demand for “My Class” is expected to continue, but orders have not been confirmed. Since advertisement revenue for “image analysis/AI” for smartphones is declining, there is a possibility that additional investment will be made in new businesses, so it is a policy not to change predictions in consideration of these uncertainties. Meanwhile, in the 3rd quarter, since it was expected that gains on the sale of investment securities and losses on the sale of investment securities would be recorded in connection with the sale of investment securities, ordinary income and net income attributable to parent company shareholders were revised upward.

2. growth strategy

The Media Seek ＜4824＞ Group aims for stable and continuous growth while adapting to market fluctuations by integrating various business divisions, reducing risk, and constructing an optimal business portfolio while constantly evolving. From the 2022/7 fiscal year, we are working to start new businesses, expand our business, and establish a stable profit base in fields where future growth is expected. In particular, in growing areas such as “image analysis/AI” and “braintech DTx,” we are strengthening our competitiveness in the market by developing unique technologies. Resources are flexibly and efficiently distributed across multiple businesses, new services incorporating the latest technology are developed, and the infrastructure of existing businesses is being maximized.

(1) Corporate DX

Looking at earnings forecasts for the fiscal year ending 2024/7, sales are expected to increase 10.7% from the previous fiscal year to 320 million yen, and segment profit is expected to increase 21.0% to 120 million yen. We will further improve our ability as an enabler* to realize practical DX solutions with technical capabilities familiar with business system and mobile development based on achievements and experience and consulting capabilities spanning over 20 years. By providing customers with everything from consulting to development/operation in one stop, we support in-house system production of companies from the initial stage, and aim to differentiate ourselves from system consulting companies, conventional SI vendors, etc. The policy for the 2024/7 fiscal year is to develop business centered on enterprise system consulting services.

※ It indicates an enterprise that has a certain core technology and is necessary to build a new system.

We will break away from the “asking for help” business, which has been mainstream in the past, promote a “co-creation SI model” that aims to improve corporate value and business growth, and aim to “build continuous and stronger relationships” with a view to capital alliances, etc. based on maintenance and quasi-delegation agreements.

(2) Image Analysis/AI

Looking at earnings forecasts for the fiscal year ending 2024/7, sales are expected to increase 0.7% from the previous fiscal year to 286 million yen, and operating profit is expected to increase 1.7% to 104 million yen. More than 10 years have passed since the service was provided for the “Iconit” developed by the company, and it has taken the bar code market by storm due to its overwhelming performance as an image recognition engine and penetration as a standard application. Aiming for a next-generation IoT platform based on this track record, we have added functions such as reading a wide variety of barcodes, support for 11 languages, and reading Poi activation*, notepads, loupes, and IC cards as new valuable services. A function that makes use of data read through questionnaires and sample distribution as points has also been added to Poi activity.

※ It is an activity to accumulate and use points that are accumulated when purchasing products.

In the 2024/7 fiscal year, we will promote and evolve and develop unique technology development that is market-competitive in the smartphone image recognition service market, which is a growth market, by combining image recognition technology with IoT tools equipped with camera functions based on the company group's “barcode reader/Iconit” platform.

(a) Iconit

In “Iconit,” we will promote advertisement optimization, functions that can monetize point site*1, and research and development of a “JAN code*2 processed food DB.” The “JAN Code Processed Food DB” is a compilation of information on JAN codes for processed foods sold in Japan, and information on product names, raw materials, nutritional components, allergens, etc. are described in the JAN code, and by centrally managing this information, it is possible to provide information necessary for consumers when selecting products, and prevent health hazards to consumers. A campaign utilizing user participation type Poi activity has started with the barcode reading function of the same application, and improvements have been made so that a lot of product information can be collected as quickly and in a timely manner as possible.

*1 A website operated by a success fee type advertising agency. It is also called a “pocket money site.”

*2 This is a so-called “barcode.”

Specifically, we have developed a system where users are asked to post JAN codes of processed foods read by users and photographed images of product panorama, product information, and nutritional components, and then grant Rakuten points after posting is completed. The collected images are stored in the product information database of the company's product review information service “MonoTalk” using the company's image analysis technology and AI, so that users of processed foods can easily grasp and search nutritional components and allergy information.

(b) Barcode Readers

Since developing barcode reader software embedded in mobile devices in 2003, research and development of image recognition technology has continued until now, and the quality of the reading performance of the company's barcode readers is at the highest level in the world. External licenses are also being provided for high-quality QR code/barcode reading software, and research and development is also underway, such as high-resolution medical images that can confirm even the details necessary for diagnosis, distributed databases of patient diagnosis results, treatment records, drug information, etc., distributed databases such as large-capacity CT images, etc., and “medical BC (blockchain)” to prevent data falsification, etc. By ensuring patient privacy and security by utilizing “medical BC,” it is possible to provide safe medical information without forgery or falsification. Since it can be applied to electronic medical records, medical information management systems, drug management, etc., it is one of the technologies that will receive more and more attention in the future.

(c) AI

In the AI field, business targets are everything from SNS analysis to trend prediction, and for the time being, we are proceeding with these studies for our own services, and after accumulating results, we aim to provide AI engines externally.

(Written by FISCO Visiting Analyst Hiroshi Nakayama)