■Medium- to Long-Term Growth Strategy for SOLIZE <5871>

1. Acceleration of Medium- to Long-Term Growth

In the company group, the plan is to combine the firm customer base in traditional areas with the revenue obtained there, launching new areas since 2020 to increase the certainty of growth. Traditional areas include design & simulation, digital prototyping, 3D printer installations, transformation consulting, etc. In addition, new areas consist of software & simulation, digital risks, digital manufacturing (mass production), SaaS products, etc., which are high-demand sectors with high growth potential. Responding to requests from customers to expand business areas, the company is broadening its range of offerings.

In the company group, prioritizing revenue expansion, the company is currently allocating costs to recruitment, M&A, etc. The goal is to expand revenue from the estimated 2024 fiscal year revenue of 22.7 billion yen to a scale of 300 to 50 billion yen as soon as possible. With the expansion of revenue scale, it is expected that profits at each stage will also increase. While there was little investment in the 2010s and it was difficult for new business initiatives to flourish, the 2020s have seen an increase in investments and R&D activities, leading to a decrease in profit margins from the 8-9% range to the 3-4% range. However, this has also supported competitiveness, aiming for revenue scale reduction relative to R&D burden.

To accelerate future growth, the following plans are in place:

2. Strengthening Recruitment

Looking at the trend of sales and gross profit in traditional areas, it can be seen that the company has been steadily building trust with customers and progressing smoothly. Since 2021, sales have been growing at double-digit rates each year, and the gross profit margin has also improved. Therefore, it can be said that the earning power is expanding.

The main source of this growth is the increase in the number of new hires. In the company, the majority of the sales and gross profit in the design business, with the number of engineers in the design business directly impacting performance. Therefore, aiming to increase the number of experienced hires and new graduate hires by those starting in April 2026, the company is pushing forward with the development of new application channels to increase the number of applications. Since 2020, various measures have been taken to increase the number of hires. As of the mid-term stage in 2024, the number of hires has exceeded 200, and by the end of the full term, it is expected to surpass the number of hires in 2023. Originally focusing on new graduate hires, the company faced a shortage of talent in areas such as interior and exterior automotive components in auto manufacturers post-COVID pandemic, resulting in increased requests for the company to handle these areas entirely, leading to an increase in hiring experienced professionals who can be immediately productive.

3. Expansion of new areas

In the group, by implementing medium- to long-term plans, the idea is to accelerate the expansion of the business model, namely to accelerate the growth of a business model that does not rely on human labor.

※ Read as 'nikku', referring to the amount of work one employee can do in a day.

As part of the expansion of fields, there is a software business such as embedded systems and third-party validation support. In recent years, the digital risk business in the cybersecurity field, which has been attracting attention, has reached a certain size as a stable business. Furthermore, in expanding the business model, there is an area of mass production using 3D printers such as small batch production parts first adopted in 'LEXUS' last year. 'LEXUS' is the top brand of Toyota Motor, and it is the first in Japan to supply parts produced in small quantities through 3D printing as genuine optional parts.

For further business growth, the company has decided to spin off the software business under the judgment that it is extremely important to carry out corporate branding, build a customer base, and pursue technology under swift management decisions. They are launching STELAQ and plan to start operations on January 1, 2025. They believe that by aligning corporate branding with the software business, they can accelerate growth. The software business, which started around 2021, has a high demand in automobile development. However, due to the struggles faced in adopting software-oriented operations different from the conventional SOLIZE image, they decided to spin it off.

(Written by FISCO guest analyst Nozomi Kokushige).