Cyber Security Cloud (4493) Q2 FY2026 Earnings Deep Dive Report

Cyber Security Cloud, Inc. achieved double-digit year-on-year growth in both revenue and profit for the second quarter of the fiscal year ending December 2026, demonstrating extremely steady progress against its full-year guidance. Against the backdrop of increasingly sophisticated and complex cyber threats driven by the proliferation of generative and frontier AI, corporate demand for security investment continues to rise. The company is maintaining robust growth by deploying solutions that combine proprietary products with high-level hands-on support.

This report extracts and analyzes key topics from the published earnings presentation materials, providing a comprehensive overview of the company's current performance, growth strategies, and new initiatives.

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1. Earnings Highlights and Progress Against Full-Year Plan

For the first half of the fiscal year ending December 2026 (January–June 2026), consolidated results were as follows: Revenue of 2.771 billion yen (+14.6% YoY) , Operating Profit of 619 million yen (+30.0% YoY) , Ordinary Profit of 649 million yen (+51.5% YoY) , and Quarterly Net Profit Attributable to Owners of the Parent of 447 million yen (+43.7% YoY) .

As shown in the performance overview slide above, the company is demonstrating extremely solid progress in line with its plans for both revenue and operating profit. Progress against full-year forecasts (Revenue: 6.0 billion yen, Operating Profit: 1.2 billion yen) stands at 46.2% for revenue, 51.6% for operating profit, 54.1% for ordinary profit, and 51.7% for net profit. In a SaaS business model, which typically tends to be second-half weighted, achieving an operating profit margin of 22.4% (+2.6pt YoY) and exceeding 50% progress in profit metrics underscores the high quality of the company's earnings structure.

Gross profit also grew to 1.849 billion yen (+18.8% YoY), indicating that profit expansion is outpacing revenue growth.

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2. Expansion of Recurring Revenue and ARR Trends

ARR (Annual Recurring Revenue) , the foundation of the company's growth, reached 5.274 billion yen (+15.5% YoY) at the end of the second quarter. With price revisions scheduled to take effect for multiple products starting in the third quarter, further accumulation of ARR is expected in the second half of the year.

The ARR trend slide visually demonstrates that the company's business foundation is not dependent on a single service but is expanding in a multi-layered manner through a group of core products .

• Shadan-kun : ARR of 1.726 billion yen (+6.0% YoY) . As the company's founding product, it continues to operate stably as a solid foundation.
• WafCharm : ARR of 1.825 billion yen (+10.2% YoY) . It continues to show steady growth as an automated WAF operation service for public clouds.
• Managed Rules : ARR of 799 million yen (+34.6% YoY) . It maintains a high growth rate driven by global demand via marketplaces such as AWS.
• CloudFastener : ARR of 427 million yen (+71.0% YoY) . It is growing rapidly as a full-operation security service for AWS environments, serving as the company's new growth driver.
• SIDfm : ARR of 292 million yen (+6.6% YoY) .
• webtru : ARR of 201 million yen (+23.5% YoY) .

Although one-off revenues have trended downward due to the reaction from large-scale projects recorded in the first quarter of the previous year, recurring revenue, the core of the business, has expanded to 1.257 billion yen on a quarterly basis , further accelerating the shift toward a high-quality stock business model.

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3. Analysis of Cost Structure and Investment/Personnel Trends

Operating expenses (Cost of sales + SG&A) for the second quarter totaled 1.12 billion yen. The main breakdown and factors for the increase are as follows:

1. Personnel Expenses (443 million yen) : Due to aggressive mid-career hiring and the intake of new graduates (5 members joined in April 2026), the headcount increased by 17 from the end of the previous fiscal year to 192 employees , leading to higher personnel costs.
2. Communication Expenses (270 million yen) : Increase in communication infrastructure costs due to the expansion of internal AI utilization and service platform enhancements.
3. Outsourcing Expenses (153 million yen) : Active utilization of external resources to accelerate M&A considerations and promote growth strategies.

Looking at the personnel composition, engineers account for a large proportion of the 192 employees, reflecting a thorough allocation of resources toward strengthening product development capabilities.

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4. Changes in the External Environment: Responding to Frontier AI Threats and Stricter Regulations

the biggest trend in the cybersecurity market is the acceleration and increased complexity of cyberattacks by frontier AI . As attackers exploit AI to rapidly identify vulnerabilities and execute attacks, traditional corporate defense measures are becoming insufficient.

In response, following the government's " YATA-Shield " policy (a security response package announced by the National Center of Incident Readiness and Strategy for Cybersecurity in May 2026), the Financial Services Agency and the Bank of Japan have requested financial institutions to address nine items related to AI threat response.

The slide above illustrates how the company's product lineup provides multi-layered support for the nine items requested by government and financial authorities . From addressing management issues and technical debt to adding patch application resources and implementing advanced defense measures, the company has established a position as one of the leading domestic players capable of consistently covering the entire scope of these requirements by integrating proprietary products like "CloudFastener," "SIDfm," "Shadan-kun," and "WafCharm" with high-level expert support. Orders for some projects have already been secured, and numerous negotiations are underway.

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5. Expansion into the New "Security for AI" Domain and Evolution of Existing Products

To address new risks in the AI era, the company is actively launching services in the "Security for AI" domain .

• New Product "AI MONBAN" (Launched June 2026) : An AI governance platform that visualizes, controls, and audits corporate AI usage between internal systems and AI models. Since its launch, inquiries from large enterprises have surged, and trial implementations are underway.
• "AI/LLM Application Vulnerability Assessment" (Released July 2026) : A diagnostic service that evaluates and visualizes risks hidden in AI systems built by companies.
• Functional Expansion of "Shadan-kun" (Neo type) and New Pricing Plans : The next-generation "Web/DDoS Security Type Neo," which features enhanced defense and operational management, was launched in June 2026. A new pricing plan starting at 80,000 yen per month for small-to-medium websites has been introduced to capture new customer segments previously deterred by price and to reduce churn rates.

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6. Capital Policy, Shareholder Returns, and Growth Strategy Toward 2030

To enhance sustainable corporate value, the company is implementing measures to strengthen shareholder returns and capital efficiency.

• Share Buybacks : Between May and July 2026, the company executed and completed a share buyback totaling 431.5 million yen (250,000 shares, 2.43% of total shares outstanding) .
• Increase in Employee Stock Ownership Plan (ESOP) Incentive Rate : To foster value sharing between employees and shareholders and encourage long-term participation, the ESOP incentive rate was significantly increased from 15% to 30% (effective from September 2026 contributions). This is a high level comparable to the top 100 listed companies.

Mid-to-Long-Term Growth Policy (2030 Goal)

Targeting 20 billion yen in revenue and 4 billion yen in operating profit by 2030 , the company aims to become the "No. 1 in Application Security." The four pillars to achieve this are as follows:

1. Expansion of Product Line : Expanding value provision across the entire value chain (Govern, Identify, Defend, Detect, Respond, Recover).
2. Deepening Value through Product x Operations : Expanding the number of high-unit-price customers (ARR of 10 million yen or more) from 48 at the end of 2025 to over 500 .
3. Concentrated Investment in AI Security : Promoting three themes: AI for Security, Security for AI, and AI-Native Organization.
4. Accelerating Overall Growth through M&A : Continuing M&A that adheres to strategic fit, growth potential, and financial discipline (past acquisitions like SIDfm and webtru are also growing steadily).

As described above, Cyber Security Cloud is not only expanding its current performance but is also advancing proactive investments and strategic approaches that accurately capture new security needs in the AI era, making its future growth trajectory a point of significant interest.