Business Overview 4. DX Regional Collaboration Project Signpost's DX and Regional Collaboration Project started in March 2022 with the establishment of the DX and Regional Collaboration Division. It aims to provide products and services that contribute to regional collaboration by collaborating with local financial institutions nationwide, utilizing its own DX technology and open innovation. In August 2022, it began working with Oita Made Co., Ltd., which was established with the investment of multiple companies in Oita Prefecture, including Oita Bank, to sell original products made in Oita Prefecture to both domestic and overseas markets and to match local companies and Signpost's products and services in order to promote the revitalization of Oita Prefecture's economy. In addition, in April 2024, it started offering DX support services for medium-sized and small businesses. As the first effort, it supports the creation of DX declaration by (The) Fourth Hokuriku Bank, Ltd. (Niigata City, Niigata Prefecture) to deploy DX declaration support services to the market. Furthermore, it will realize new solutions by commercializing its own technology and open innovation and promote regional collaboration through innovation.

Pacific Net's business segments are divided into the "IT Subscription Business", which is mostly composed of subscription-based services, the "ITAD Business", which deals with secure collection and data erasure of used IT equipment, proper processing services, etc., and the "Communication Device Business", which is involved in the manufacturing, sales, rental, maintenance, and support of the "Earphone Guide (R)". In terms of sales composition for the fiscal year ending May 2024, the IT Subscription Business accounts for 70.8%, the ITAD Business accounts for 25.8%, and the Communication Device Business accounts for 3.5%.

1. IT Subscription Business In the IT Subscription Business, the main businesses are providing subscription services for PCs used by corporations and government agencies, as well as providing IT services such as operation maintenance and cloud services. It is an outsourcing service that replaces the tasks of a company's IT department, and it continues to grow significantly against the backdrop of a shortage of IT personnel in companies. Unlike PC sales, which include maintenance services, providing PCs as subscription-based services generates recurring revenue and is less affected by changes in PC shipments and other environmental fluctuations. In addition, the high initial investment and the fact that revenue is recognized over time make it difficult for new entrants due to the need for specialized personnel and facilities. Based on these factors, Pacific Net positions the IT Subscription Business as the foundation for sustainable growth and is expanding its scale through focused investments. Furthermore, with the end of support for Windows 10 in October 2025 and the increasing demand for PC updates in companies starting in 2024, it represents an important opportunity for accelerated growth in the future.

2. ITAD Business ITAD stands for IT Asset Disposition, which refers to the proper disposal of IT equipment assets. The main businesses of the ITAD Business are data erasure and proper processing services for used IT equipment, as well as reuse and recycling sales. In order to prevent data leaks, the company conducts the collection and data erasure of equipment in a security environment of the highest level in Japan. Since the occurrence of a hard disk resale incident by a competitor in December 2019, corporate concerns about data leaks have been high. All collected equipment is reused and sold domestically, contributing to compliance and environmental issues. Against the backdrop of increased awareness among corporations and government agencies regarding data leaks, the company is committed to ensuring secure data erasure through its unique security policy, enhancing the security of its in-house technical center facilities, and educating employees involved in the operations.

Since July 2022, the company has been providing "LCM as a Service" (subscription-based service) to reduce the workload of corporate IT support and information systems departments. LCM stands for Lifecycle Management and is a system that centrally manages the entire lifecycle of IT assets, from introduction and initial setup to operation management and proper disposal, at seven state-of-the-art centers nationwide with the highest level of security in the industry. The company's strength lies in being able to build services tailored to customer PC usage and LCM operation challenges, as everything can be handled in-house. This service achieves high cost-effectiveness and visualization through monthly fixed and usage-based charges, and the effects are shared through monthly reports. Cloud services such as Microsoft 365 are also offered as options.

2. ITAD Business ITAD stands for IT Asset Disposition, which refers to the proper disposal of IT equipment assets. The main businesses of the ITAD Business are data erasure and proper processing services for used IT equipment, as well as reuse and recycling sales. In order to prevent data leaks, the company conducts the collection and data erasure of equipment in a security environment of the highest level in Japan. Since the occurrence of a hard disk resale incident by a competitor in December 2019, corporate concerns about data leaks have been high. All collected equipment is reused and sold domestically, contributing to compliance and environmental issues. Against the backdrop of increased awareness among corporations and government agencies regarding data leaks, the company is committed to ensuring secure data erasure through its unique security policy, enhancing the security of its in-house technical center facilities, and educating employees involved in the operations.

2. ITAD Business ITAD stands for IT Asset Disposition, which refers to the proper disposal of IT equipment assets. The main businesses of the ITAD Business are data erasure and proper processing services for used IT equipment, as well as reuse and recycling sales. In order to prevent data leaks, the company conducts the collection and data erasure of equipment in a security environment of the highest level in Japan. Since the occurrence of a hard disk resale incident by a competitor in December 2019, corporate concerns about data leaks have been high. All collected equipment is reused and sold domestically, contributing to compliance and environmental issues. Against the backdrop of increased awareness among corporations and government agencies regarding data leaks, the company is committed to ensuring secure data erasure through its unique security policy, enhancing the security of its in-house technical center facilities, and educating employees involved in the operations.

Since June 2022, the company has been operating "Secure Trace", which automatically generates evidence of complete data erasure (detailed data for each device) and stores it for 10 years, for the used IT equipment collected from customers. This is a groundbreaking system that digitally links the data erasure information of used IT equipment collected from customers to the actual equipment, regardless of whether a data erasure certificate is issued or not.

Furthermore, starting from November 2022, we have launched the "Disposal Management BPO Service" to solve the issues related to the disposal of used IT equipment. Although we have only provided this service to certain large companies in the past, we have now accumulated expertise and made preparations in terms of digital management and other business aspects, so we have decided to offer it more widely. In large companies with a large number of equipment and locations, used IT equipment is disconnected from the internal network after replacement, which has posed significant challenges in terms of the workload, cost burden, and risks such as data leakage associated with equipment and traceability management. This service not only handles all aspects of the collection and proper disposal of IT equipment at the time of disposal, but also achieves digital management and visualization of traceability and erased data, which were previously challenges. Our staff, who have expertise and high technical capabilities regarding IT equipment, customize the service according to the actual business situation and challenges of each customer.

3. Communication Device Business

In the Communication Device Business, Kennet, which holds a high domestic market share in guide receivers, provides manufacturing, sales, rental, maintenance, and support for the "Earphone Guide(R)". The "Earphone Guide(R)" is a wireless guide device the size of the palm of the hand, consisting of a transmitter and multiple receivers, and it has the ability to transmit clear audio to the other party even through a mask or at a low volume within a range of approximately 100 meters. It has a leading market share in the travel-related market, mainly used for tourist guides, interpretation at international conferences, noisy factory tours, art museums, and museums. Recently, it has also been increasingly adopted at World Heritage sites in Japan. In addition, most recently, in January 2024, the Guide Receiver "Earphone Guide(R) KR-400" was adopted as an information tool for the brewery tour organized by Akashi Sake Brewery & Marine Distillery Visitor Center (Akashi City, Hyogo Prefecture).

(Writer: FISCO analyst Tomoichi Murase)