■Performance trends of Laboro.AI <5586>

1. Overview of performance for the fiscal year ending September 2024

(1) P/L

For the fiscal year ending September 2024, the results were revenue of 1,515 million yen (up 10.7% from the previous period), operating profit of 183 million yen (down 11.2%), ordinary profit of 183 million yen (down 5.2%), and Net income attributable to Shareholder of 133 million yen (down 4.3%).

Although revenue increased compared to the previous period, it decreased by 8% compared to the plan. The expansion of the system to execute the projects was delayed more than anticipated, resulting in a weak landing in the third quarter that could not be covered in the fourth quarter. The gross profit margin was 67.0%, improving by 2.1 percentage points compared to the previous period, maintaining a high level. Since revenue fell short of expectations, the gross profit amount was 1,015 million yen (up 14.3%), while selling, general and administrative expenses, mainly due to an increase in personnel, reached 832 million yen (up 22.2%), leading to a decrease in operating profit compared to the previous period.

Although there was a decrease in profit for the entire year, the delay in internal system improvements became apparent in the third quarter, which was the main factor. The demand itself is steadily expanding, so it cannot be said that the results were a significant concern. In fact, the revenue for the third quarter (accounting period) was 369 million yen (down 3.4% year-on-year), and operating profit saw a decrease of 55.4%, while in the fourth quarter (same), revenue was 432 million yen (up 23.8%) and operating profit was 86 million yen (up 120.5%), showing a recovery trend.

(2) Customer conditions

a) Composition ratio by scale

For the fiscal year ending September 2024, the breakdown of customers by revenue scale shows that over 1 billion yen accounts for 8.7 billion yen (58% share, up 38.3% from the previous period), between 500 million yen and 1 billion yen accounts for 2.19 billion yen (14% share, down 42.4%), between 100 million yen and 500 million yen accounts for 3.27 billion yen (22% share, up 6.5%), and under 100 million yen accounts for 970 million yen (6% share, up 90.2%). In particular, the number of customers over 1 billion yen increased to 6 companies (3 more than the previous period), indicating the establishment of a stable customer base.

b) Revenue from existing and new customer types

Revenue breakdown by customer type shows that existing customers generated 1283 million yen, new customers generated 225 million yen, and product sales amounted to 6 million yen. A total of 20 new customers were acquired during the fiscal year (with 9 in the 4th quarter alone), driving revenue growth. Due to resource constraints resulting from delays in establishing the system, proposals for separate projects to customers whose AI engine development has reached a certain point could not be sufficiently conducted, leading to a slight reduction in revenue from existing customers.

※ Sales of voice corpus (LaboroTVSpeech), etc.

c) Transition of the number of employees

The number of employees, which is an important KPI, has been steadily increasing. As of the end of September 2024, the total number of employees reached 78 (an increase of 14 from the previous period), with a breakdown of 31 engineers (up 7), 25 solution designers (up 8), 15 others (unchanged), and 7 Company Executives (down 1).

Although the hiring of solution designers has progressed, there have been occurrences of turnover mainly among new hires, necessitating further enhancement of human resource management aimed at training and retaining the recruited personnel, resulting in a number that fell short of the initial plan (88 at the end of the period). The timing for the joining of accepted engineers was delayed until the first quarter of the fiscal year 2025, resulting in a mild downturn in hiring predominantly in the second half.

Cash and cash equivalents are abundant relative to the revenue scale.

2. Financial Status

As of the end of September 2024, the financial situation shows current assets of 2,109 million yen (a decrease of 305 million yen compared to the end of the previous period). In major categories, cash and deposits decreased by 420 million yen, and accounts receivable and contract assets decreased by 114 million yen. Fixed assets amounted to 481 million yen (an increase of 406 million yen from the previous period), with details showing tangible fixed assets of 59 million yen (an increase of 18 million yen) and investments and other assets of 422 million yen (an increase of 388 million yen). The increase in investments and other assets was due to the inclusion of shares of affiliated companies, including X-AI.Labo (a joint venture) totaling 390 million yen. Consequently, total assets amounted to 2,591 million yen (an increase of 101 million yen).

Current liabilities stood at 200 million yen (a decrease of 42 million yen), with the main reasons for fluctuations being an increase of 9 million yen in accounts payable and a decrease of 5 million yen in accrued expenses. As a result, total liabilities were 200 million yen (a decrease of 42 million yen). Total net assets amounted to 2,391 million yen (an increase of 143 million yen), primarily due to an increase in retained earnings of 134 million yen attributed to net income for the period attributable to shareholders of the parent company.

As of the end of September 2024, cash and deposits amount to 1,523 million yen, indicating that funds are ample relative to the scale of the business.

3. Cash Flow Situation

For the cash flow in the period ending September 2024, cash flow from operating activities was an income of 4 million yen. Major income sources included a recorded net income before tax adjustments of 183 million yen and depreciation expenses of 26 million yen, while the main expenditure was an increase in accounts receivable of 114 million yen. Cash flow from investment activities resulted in an expenditure of 434 million yen, mainly due to the acquisition of shares of affiliated companies costing 390 million yen. Cash flow from financing activities yielded an income of 9 million yen, mainly from the issuance of stocks due to the exercise of subscription rights, resulting in a cash and cash equivalents decrease of 420 million yen, with an ending balance of 1,523 million yen.

(Written by FISCO guest analyst Noboru Terashima)