■Performance trend of CRI Middleware <3698>

4. Performance forecast for the fiscal year ending September 2025

The company anticipates steady growth in its performance forecast for the fiscal year ending September 2025, projecting revenue of 3,360 million yen (a 6.1% increase compared to the prior fiscal year), operating profit of 384 million yen (a 4.2% increase), ordinary profit of 394 million yen (a 2.8% increase), and net income attributable to shareholders of the parent company of 312 million yen (a 2.5% increase).

The Japanese economy is expected to gradually strengthen a positive feedback cycle from income increases to spending expansion against a backdrop of a relaxed monetary environment while overseas economies continue to experience slow growth. Additionally, corporate earnings are expected to show an improving trend as domestic and foreign demand slowly increases. In this environment, the company will continue to develop a research and development system aimed at businesses and markets forecasted for growth, focusing on expanding its business base and creating group synergies. Continuous investment will also be made in the technology development of the online communication middleware "CRI TeleXus," and the development of new products that integrate real-time processing technology and technology related to video and still images will also be promoted. As key initiatives outside of TeleXus, the company plans to restructure the infrastructure of the overseas gaming market, including China and Europe and the United States, to accelerate business development overseas and promote the expansion of new products such as "CRI Glassco," "CRI SOLIDAS," and "CRI Clovis," as well as begin research and development investments for the launch of new cloud solutions.

In terms of performance forecasts by segment, revenue from the gaming business is projected at 1,840 million yen (a 9.7% increase compared to the prior fiscal year), and revenue from the enterprise business is projected at 1,520 million yen (a 2.0% increase). Although the shift from the gaming business to the enterprise business will be advanced further, it appears that there will be a transitional phase in each sector, and the enterprise business seems to have slightly conservative assumptions.

As key initiatives for the gaming business, the company will focus on the expansion of the new product "CRI Clovis" in middleware/tools, and plans to increase the adoption of "CRIWARE" through the alliance effect with Yamaha <7951>'s spatial audio "Sound xR." In particular, with the rising demand for voice chat as community and lifestyle games become more vibrant, there are plans to strengthen sales to increase the number of titles that adopt "CRI TeleXus." As a result, sales in middleware/tools are expected to reach 1,460 million yen (a 15.1% increase compared to the prior fiscal year). Among middleware/tools, there is strong demand for the company's video middleware in both the Chinese and European and American markets, and it plans to position these as leading products for aggressive marketing. While refining direct sales capabilities, contracts will be signed with multiple dealers for the time being, aiming for expansion through direct sales and dealerships in China and North America, while in Europe, sales will focus on dealerships. Consequently, overseas sales in middleware/tools are projected to be 280 million yen (a 77.6% increase). In sound production, the company intends to leverage local connections through its local corporation in China to focus on increasing orders from Chinese companies where demand for Japanese voice actors is high. Additionally, the company aims to enhance the visibility of TwoFive by restarting events that were paused due to the COVID-19 pandemic. As a result, revenue from sound production is expected to be 380 million yen (a 6.9% decrease).

As key initiatives for the enterprise business, the embedded sector will proceed with selection and concentration, ending the loan machine business for amusement machines and shifting management resources to growth areas, targeting increased orders in the karaoke business and the expansion of new products "CRI SOLIDAS." Additionally, while reinforcing non-gaming applications with the currently focused "CRI TeleXus," various inquiries have already been received, and a large project contract is anticipated in the third quarter. As a result, sales in the embedded sector are expected to reach 800 million yen (a 7.4% increase compared to the prior fiscal year). In the mobility sector, the voice product "CRI ADX-AT" and the high-priced graphic product "CRI Glassco" will both complete software investments by the fiscal year ending September 2024. Therefore, "CRI ADX-AT" is expected to enter the profit recovery phase, leading to an increase in license revenues, while "CRI Glassco" is also expected to enter the recovery phase later. Plans are in place to promote the expansion of models that adopt "CRI Glassco." Consequently, revenue in the mobility sector is projected to reach 380 million yen (a 48.2% increase). In the cloud solutions sector, the completion of several large-scale system development contracts that were solicited has significantly impacted revenue; however, the volume of orders for contracted work will be adjusted, with a strategic shift towards licensed business planned. For this purpose, new product research and development investments that consolidate real-time processing technology and technology related to video and still images will begin, targeting a release by the fiscal year ending September 2026. Therefore, revenue in the cloud solutions sector is expected to reach 340 million yen (a 30.5% decrease).

(Written by Fisco Guest Analyst Hitoshi Miyata)