■ Performance trends of TradeWorks <3997>

1. Overview of the cumulative performance for the second quarter of the fiscal year ending December 2024

The consolidated performance for the second quarter of the fiscal year ending December 2024 showed a 20.7% increase in revenue compared to the same period last year, reaching a record high of 19.39 billion yen. However, the operating loss increased to 188 million yen (compared to a loss of 25 million yen in the same period last year), ordinary loss increased to 189 million yen (compared to a loss of 21 million yen), and the net loss attributable to the parent company's shareholders for the quarter increased to 194 million yen (compared to a loss of 16 million yen).

Although the revenue decreased by 8.4% year-on-year due to the timing impact of the financial solution business, the revenue increased due to the addition of 387 million yen in revenue from the subsidiary Pegasus System, which was acquired in the previous period. Looking at the revenue by type, the addition of Pegasus System's SES business was the main reason for the increase, with stock-type income growing by 36.9% to 1.379 billion yen, and flow-type income decreasing by 6.5% to 560 million yen.

The factors affecting the change in operating profit included a profit increase of 59 million yen due to the revenue increase, while the gross profit margin decreased by 118 million yen, and there was a decrease of 104 million yen due to fixed cost increases. The gross profit margin significantly declined from 17.9% to 11.7% year-on-year. This was mainly due to the addition of low-profit revenue from Pegasus System, as well as the provision of 33 million yen for losses on unprofitable projects, and the increase of fixed costs (rent, depreciation, utilities, management expenses, etc.) by 29 million yen due to the relocation and expansion of the head office and subsidiaries in March 2024. In addition, selling and administrative expenses increased by 103 million yen year-on-year, including the allocation of 24 million yen for bad debt, an increase in personnel and outsourcing expenses by 30 million yen, and increased fixed costs due to data center usage fees and head office relocation.

Regarding Pegasus System, the main business is the SES business, which has a stable revenue but a low operating profit margin of around 3-4%. Including the goodwill amortization of 12 million yen, the impact on consolidated operating profit is considered to be minor. Additionally, a special loss of 47 million yen was recorded due to the deterioration in the performance of investee companies.

The company is actively expanding its engineering workforce, with the number of engineers reaching 220 at the end of the second quarter of the fiscal year ending December 2024, an increase of 19 from the previous period. The TradeWorks had 114 engineers, an increase of 10 (including 11 new graduates), Ajo had 43 engineers, an increase of 4, and Pegasus System had 63 engineers, an increase of 5.

(Written by FISCO guest analyst, Jo Sato)