■Future Prospects for BB Systems ＜4447＞

● Earnings forecast for the fiscal year ending 2025/9

As for the earnings forecast for the fiscal year ending 2025/9, we plan that sales will increase 10.0% from the previous fiscal year, operating income will increase 4.9% to 380 million yen, ordinary profit will increase 3.8% to 376 million yen, and net income will increase 0.1% to 256 million yen. The company positions the 2025/9 fiscal year as “a year to solidify the foundation for sustainable growth and accelerate preparations for growth,” and aims to increase sales and profit and renew the highest profit for 7 consecutive terms. We will continue to actively enhance human resources and expand our profit base by demonstrating synergy between the secure cloud system business and the emotional system business.

In the secure cloud system business, we will promote human resource recruitment/development strategies and high value-added product sales strategies. Regarding human resource recruitment/development strategies, the Tokyo office, which is essential, will be expanded to a 4-person system (currently 2 people) from 2025/4 due to new hires, but 1 of the hires will become an SE, and the plan is to back up sales expansion from the technical side. Also, we are planning to hire 8 new graduates in 2025, which will double compared to the previous semester. As for increasing the strength of new graduates, it is anticipated that it will be possible to handle small-scale projects within 1 year, so it can be said that the situation of new graduate recruitment and human resource development is going well. Also, as described later, the 2025/9 plan aims to acquire a large number of medium-sized projects. In such projects, young engineers who have become effective are particularly expected, and further profit margin improvements due to reduced outsourcing costs can be seen along with sales expansion (*Note, in the initial plan, outsourcing costs are scheduled to increase slightly from the previous fiscal year, but development projects in the customizer area are only anticipated). As a result, the target number of employees for the end of the 2025/9 fiscal year is 79, an increase of 14 compared to the previous fiscal year.

As for high value-added strategies for manufactured product sales, it is handled in line with customer demand, such as software that prevents intrusion of attacks, encrypted storage, backup software, etc. in line with customer demand, but currently, the company is working on the development of package solutions that provide total support from prevention to damage recovery. In addition to customizing according to the time axis for each customer, update support, etc. are also planned, and it is also expected that long-term contracts with customers will lead to a stable profit base. On the customer side, introduction has been simplified, and there are many advantages in being able to recover quickly from damage, and it is easier to efficiently proceed with customer negotiations with standardized products as an entry point for customer contact even for sales promotion activities. The service is expected to begin in early 2025, and if progress progresses as scheduled, it will contribute to earnings expansion for the 2025/9 fiscal year. Furthermore, it is a policy to diversify projects and diversify profit periods and management risks by actively acquiring medium-sized projects with a minimum development period of 1 month to about half a year. We received an order for core system migration for the food manufacturing industry based in Kyushu in the 2024/9 fiscal year, but since there are many food manufacturing companies in the same area, it seems to be a dominant target.

Regarding the emotional systems business, we will continue to advance measures targeting the disaster prevention market, space sector, tourism demand and regional revitalization, sports science and senior markets, aiming for a drastic increase in sales and a surplus transition. As for the disaster prevention market, we are proceeding with the production of hybrid disaster prevention drill content. It is a system that can participate in 3D space disaster prevention drills from both the internet and MetaWalkers, and was realized in collaboration with companies that own disaster prevention-related content (the stage where sample creation was completed in the test space). Since wearing VR goggles is inappropriate for disaster drills, there is a high possibility that disaster prevention drills will be provided in the form of converting disaster prevention content in the metaverse space to MetaWalkers, which can be brought closer to real situations, and if realized, nationwide sales expansion will also be in view. Furthermore, in connection with the National Land Resilience Plan, academics at Tohoku University are paying attention to MetaWalkers, and they are also participating in the disaster prevention consortium CORE, which consists of 114 companies (as of 2024/3) with Tokio Marine & Nichido Fire Insurance (8766) as founders, building relationships with other companies and gathering knowledge about disaster prevention. In fact, there are challenges, such as receiving voices of collaboration from major companies, and I would like to pay attention to the full-scale expansion of MetaWalkers utilization in the disaster prevention area.

In the space field, the development period was short since it was a limited-time exhibition for the space elevator experience realized in the 2024/9 fiscal year, and since it was not possible to pursue high accuracy, they are searching for relationships with companies that can collaborate on long-term development. The relationship obtained this time can be said to be a major achievement for the 2024/9 fiscal year, and with proposed sales triggered by this, I would like to actively participate from demand creation to expand the possibilities of the metaverse and use it as a clue to contributing to profits. In terms of tourism demand and regional revitalization, top sales were carried out to a certain mayor, and the possibility of MetaWalkers content based on historical figures with ties was proposed. In tourism at famous tourist sites, tourist routes are often standardized. In order to expand tourism demand, the company wants to expand tourism demand by introducing rare spots, etc. that tourists find attractive by reproducing a realistic environment with MetaWalkers, and creating a mechanism for tourists to actually go to the site.

As for sports science, the training system based on industry-academia collaborative joint research, which has continued to be developed until now, has almost been completed, and it seems that there have also been applications for inspection from people representing Japan in rugby at the collaborating partner Kyushu Sangyo University. We will continue to focus on building relationships with experts and discovering potential demand at usage sites. Regarding the senior market, the company has also found particularly high potential, and under the concept of “e (electronic) × r (real) sports,” which activates the “body” and “brain” through VR, they would like to realize the provision of a training environment aimed at improving physical function and recovery with MetaWalkers. In addition, as mental care support, measures to promote health are also effective by providing experiences on MetaWalkers, such as world heritage sites and hometown scenery that you want to visit, and improving psychological satisfaction.

There is a possibility that the direction of business development will expand in the emotional systems business, centering on the “metaverse,” where social interest is growing in particular. However, it is also true that the metaverse itself takes time to penetrate society. The company held a financial results briefing for the fiscal year ending 2024/9 in a metaverse environment and communicated with each other in real time. There are also voices wishing for regular briefings to be held on the metaverse, and it seems that they are feeling a challenge. Since the metaverse is still a new area in terms of business, trial and error continues at the company, but by guaranteeing anonymity and identity authentication at the same time, business expansion can be expected.

In February 2022, a joint demonstration test of a distribution system for the corporate metaverse using Pedy began with Day Software Co., Ltd. Pedy provides guarantees equivalent to NFTs (those using private blockchain) with its own technology, and it is possible to distribute a wide range of art, industrial products, etc. From the viewpoint of identity authentication or transaction authentication, an authenticity guarantee function is essential in EC etc. utilizing the metaverse, and collaboration is being promoted. Currently, MetaWalkers have been further reproduced in the metaverse, and an environment has been constructed to a state where users can enter by issuing admission tickets, and we are in the process of examining how to use it. It is expected to go well with the entertainment area, such as live performances by artists and fan meetings where core fans gather.

(Author: FISCO Analyst Tomokazu Murase)