■Performance trends of Amiya ＜4258＞

1. Summary of financial results for the 2nd quarter of the fiscal year ending 2024/12

Financial results for the second quarter of the fiscal year ending 2024/12 were net sales of 2,235 million yen (up 31.6% from the same period last year), operating income of 259 million yen (up 23.2% from the same period), ordinary income of 276 million yen (up 2.9% from the same period), and intermediate net income attributable to parent company shareholders of 195 million yen (up 2.4% from the same period). Against the backdrop of large-scale security incidents, we obtained double inquiries from defense-related companies, automobile-related companies, etc. compared to the previous fiscal year, resulting in an increase in sales and profit. Sales promotion costs for ALogs of 17 million yen, large-scale compatible development costs of 5 million yen, labor costs of 24 million yen, and outsourcing costs of 13 million yen were incurred due to sales expenses and general and administrative expenses, and there was a slight increase of 9.6% compared to the same period last year, but they were absorbed by strong trends in sales, and operating profit reached a record high. Furthermore, the company moved to consolidated financial results from the 3rd quarter of the fiscal year ending 2023/12. The same period last year was based on a simple comparison of stand-alone and consolidated units by our company.

As for ARR, which is the main KPI, it is growing steadily to 960 million yen (up 28.0% from the same period last year) in the data security business and 1510 million yen (up 21.8% from the same period) in the network security business. As for sales channels, new agency agreements have been signed with four major companies: Hitachi Systems Co., Ltd., Hitachi Engineering Co., Ltd., Canon Marketing Japan ＜8060＞, and NSD ＜9759＞. Most recently, the conclusion of a sales agency agreement with NTT Communications Corp. was announced on 2024/8/20. With the start of all-subscription sales of the “ALOg Series,” which is our main product, we can expect further stability in the profit structure and an improvement in LTV.

By business, the data security business had sales of 926 million yen (up 53.5% from the same period last year) and segment profit of 375 million yen (up 33.5% from the same period). Sales of the “ALOg Series” have been strong as a cyber attack detection. A temporary decline in earnings was expected due to the shift of the fee structure to a subscription system for both the cloud version and the on-premise version, but product sales remained strong due to social circumstances such as large-scale security incidents. Further growth is anticipated in the future due to increases in contract unit prices and improvements in LTV. As for the order status, the number of orders received was secured as usual even after the transition to the subscription system, and for large-scale projects, it was obtained 3 times higher than the previous fiscal year.

The network security business had sales of 1,308 million yen (up 19.5% from the same period) and segment profit of 303 million yen (up 5.0% from the same period). Although multiple medium-sized projects have been carried over to the 3rd quarter or later, the SaaS model “Verona SASE” remained steady against the backdrop of rising demand for “zero trust,” which is an “always verify without trust” approach rather than the conventional “trust and then verify” approach. Demand for virtualized clouds that are not mediated by humans is irreversible and has maintained stable growth. Meanwhile, since the amount of profit remained a slight increase due to an increase in outsourcing costs associated with an increase in projects, we will begin improving efficiency and profitability as an improvement issue from the 3rd quarter onwards. Specifically, expansion of the organizational system by securing human resources can be cited. Currently, recruitment of new graduates is progressing smoothly, and 19 people were hired for the 2024/12 fiscal year, and it is expected that about 30 people will also be hired for the 2025/12 fiscal year. Meanwhile, mid-career recruitment is sluggish against the backdrop of the seller market due to labor shortages. Going forward, it is our policy to focus on securing human resources through M&A, based on recruitment through recruitment services as the basis.

Furthermore, the company is considering M&A, and is considering companies that have about 30 to 50 engineers, such as SIers, and have sales of 0.5 billion to 1 billion, and operating profit margins of about 10%. Also, regarding the impact of the exchange rate on purchase prices, price revisions were implemented in 2022/6 due to factors such as rapid depreciation of the yen, etc., and the transfer was carried out appropriately. The current exchange rate is also within the range of exchange rates at the time of price revisions. Since bulk purchases are carried out, even if affected by exchange rates, they are spotty and minor. Meanwhile, when the exchange rate of yen appreciates, the purchase price is reduced, which contributes to an increase in profit margins.

2. financial status

(1) Balance sheet

Total assets at the end of the second quarter of the fiscal year ending 2024/12 were 4,927 million yen, an increase of 1,150 million yen from the end of the previous fiscal year. This is due to an increase of 1,148 million yen in cash and deposits, and 5 million yen in investments and other assets. Total liabilities were 2,970 million yen, an increase of 980 million yen from the same period. This is due to an increase of 600 million yen in short-term loans, 213 million yen in contract liabilities, 78 million yen in long-term loans, etc. Total net assets were 1,956 million yen, an increase of 170 million yen from the same period. This is mainly due to an increase in retained earnings of 195 million yen, etc. Along with the increase in borrowings, the equity ratio decreased 7.6 points to 39.7%, and the interest-bearing debt ratio rose 36.2 points to 58.5%, but net cash was 1,914 million yen, an increase of 403 million yen from the previous fiscal year, and we believe that there are no short-term concerns when medium- to long-term growth due to business investment is taken into account.

(2) Cash flow statements

As for the cash flow for the second quarter of 2024/12, cash flow from operating activities amounted to 467 million yen. This was mainly due to an increase in funds due to an increase in contract liabilities of 213 million yen and depreciation and amortization expenses of 59 million yen. Cash flow from investment activities amounted to 13 million yen of expenditure. This is mainly due to a decrease in funds due to expenditure of 12 million yen due to the acquisition of tangible fixed assets, expenditure of 33 million yen due to the acquisition of intangible fixed assets, etc. Cash flows from financial activities amounted to 693 million yen in revenue. This is mainly due to the fact that while there was expenditure of 55 million yen due to repayment of long-term loans, there was an increase in funds due to income of 600 million yen due to short-term loans.

(Written by FISCO Guest Analyst Ryoji Mogi)