Fines, Inc. FY2026 Full-Year Earnings Deep Dive Report

1. Earnings Overview and Key Highlights

Fiscal Year 2026 marked a pivotal transformation for Fines, Inc., as the company transitioned to a consolidated reporting structure starting in the fourth quarter, incorporating its group subsidiaries. Against the revised earnings forecast, the company reported net sales of ¥2,758 million (+0.4% vs. plan) , operating profit of ¥127 million (-3.0% vs. plan) , ordinary profit of ¥132 million (-2.7% vs. plan) , and net profit attributable to owners of the parent of ¥58 million (-28.1% vs. plan) . While sales and operating/ordinary profits were largely in line with projections, net profit showed a variance due to adjustments in corporate tax and other factors.

The following 10 points summarize the key takeaways from this earnings report:

1. Performance in line with revised plans and transition to consolidated reporting : Transitioned to consolidated financial statements, including group companies, starting in Q4.
2. Maintenance of a robust financial foundation : Total assets expanded to ¥3,543 million (+¥805 million YoY) following consolidation, maintaining a high level of safety with an equity ratio of 62.2% .
3. Upward trend in recurring customers and revenue : Recurring customer base reached 7,894 companies , with recurring revenue growing to ¥185 million/month .
4. Retention of the core "Video Cloud" contract base : Active contracts grew steadily to 6,450 (+813 YoY) .
5. Rapid expansion in "DX Consulting" : Active contracts reached 1,363, with the segment's share of total sales rising to 30.2% .
6. Expansion of problem-solving product lineup : Broadened value proposition through offerings such as Raise, SNS operation agency services, AIO Navi, and HR-related services.
7. Upfront investment phase to strengthen recurring business : Planning approximately ¥500 million in investments for FY2027 to drive a fundamental transformation of the revenue structure.
8. Successful PMI of M&A subsidiaries (Orupla, Nexil) : Completed organizational setup for the HR business and transitioned to the group synergy creation phase.
9. Full-scale AI adoption and productivity gains : 16 AI agents/apps are now operational, achieving a monthly reduction of 971 man-hours .
10. Ambitious FY2027 targets : Projecting significant growth with net sales of ¥4,200 million (+52.3% YoY) and operating profit of ¥300 million (+136.2% YoY) .

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2. FY2026 Performance Trends and Financial Foundation Analysis

Earnings Highlights and Segment Status

Looking at the sales composition for FY2026, Video Cloud business accounted for ¥1,727 million (+1.6% vs. plan), DX Consulting for ¥692 million (-1.6% vs. plan), and HR-related business for ¥277 million (-2.4% vs. plan).

Reviewing key non-consolidated indicators, the number of recurring customers has increased consecutively from 5,241 in Q1 FY2024 to 7,894 in Q4 FY2026. Consequently, quarterly recurring revenue has climbed from ¥102 million to ¥185 million , demonstrating a clear shift away from a flow-dependent model.

Financial Soundness

On the balance sheet, while intangible fixed assets and liabilities increased due to consolidation, the company maintains a healthy cash and deposit balance of ¥1,740 million . With total assets of ¥3,543 million and net assets of ¥2,214 million, the equity ratio of 62.2% confirms that the company possesses sufficient financial flexibility to continue growth investments and M&A activities.

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3. Business Portfolio Transformation and Recurring Revenue Strategy

Fines is aggressively pursuing a structural shift toward a recurring business model , moving away from its traditional flow-based sales model to secure long-term, stable recurring revenue.

[Significance and Background of Slide 12: Evolution of Business Portfolio and Sales Composition] The slide above provides the most critical data reflecting how the company's management reforms have impacted its revenue structure. Looking at the top chart, the DX Consulting segment's share of sales doubled from 16.0% (¥117 million) in FY2024 to 30.2% (¥192 million) in FY2026 . Furthermore, the bottom chart shows that the share of recurring revenue has risen significantly from 15.9% to 29.0% . This is clear evidence of the company's shift from one-off sales to recurring services that provide continuous value to customers, serving as a foundation for future stability.

Progress of New Services and Upfront Investment Roadmap

Accelerating this transition are new offerings launched in Q3, such as SNS short-form video operation agency services and AIO Navi . As of the end of FY2026, the company secured 107 cumulative orders for SNS short-form video services and 536 for AIO Navi, achieving a monthly recurring revenue increase of ¥22 million .

To capitalize on this momentum, the company has designated FY2027 as a full-scale "Growth Investment Phase."

[Significance and Background of Slide 14: Strengthening Recurring Business: Progress of New Services] The slide above is a strategic roadmap detailing the investment and recovery timeline for the company's revenue model transformation. Fines plans to reinvest cash flow from existing services into growth areas. Specifically, the company has committed to approximately ¥500 million in growth investments for FY2027 (including sales partner acquisition, strengthening sales structures, and product feature enhancements). While this will incur upfront costs, the company aims to build a structure where accumulated recurring revenue covers fixed costs, targeting profitability in the recurring business by FY2028 . This slide is essential for understanding the reasons behind short-term profit fluctuations and the mid-to-long-term vision for monetization.

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4. Progress in Group Synergies and AI-Driven Management Reform

PMI Progress of Group Companies (Orupla, Nexil)

To address the "labor shortage"—the greatest challenge facing SMEs—the company acquired Orupla, Inc. and Nexil, Inc. Having completed the establishment of management monitoring systems and the consolidation of administrative departments (PMI) between January and March 2026, the group has now transitioned to the business promotion phase . By combining Fines' web marketing and sales acquisition capabilities with the HR and recruitment solutions of the two subsidiaries, the group is driving synergies such as cross-selling across their respective customer bases.

Overwhelming Productivity Gains via Internal AI Adoption

Active approaches are also being taken to transform internal operations. As a result of promoting AI usage across marketing, sales, production, customer success, and administration, 16 AI agents and apps are now operational . This has achieved a reduction of 971 hours (nearly 1,000 hours) in monthly operational man-hours . The resources generated are being redirected toward improving consulting quality and executing new initiatives.

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5. FY2027 Earnings Forecast and Mid-to-Long-Term Growth Potential

FY2027 Consolidated Earnings Forecast

With the full-scale transformation of its business model and the full-year contribution of group companies, Fines has announced a plan for significant growth in both sales and profit for FY2027.

[Significance and Background of Slide 18: FY2027 Earnings Forecast] The slide above is a critical outlook indicating that Fines is entering a new growth phase. The company has set ambitious targets for FY2027: net sales of ¥4,200 million (+52.3% YoY) and operating profit of ¥300 million (+136.2% YoY) . This is supported by a "two-pillar" structure: aiming for ¥3,000 million in sales from the existing DX business (Fines standalone) and ¥1,200 million from the HR business (Orupla/Nexil) . Despite absorbing ¥500 million in upfront investments, the company plans to improve its operating margin from 4.6% in the previous year to 7.1% (+2.5pt) , symbolizing the success of its business transformation.

Growth Potential in the SME DX Market

The SME market (companies with fewer than 100 employees), which accounts for over 98% of Japanese businesses (approx. 3.62 million companies), struggles with delayed digitalization and a shortage of IT talent. The SME DX market (SAM) is projected to reach ¥1.407 trillion by 2030 , yet Fines' current market share is only 0.19% (7,894 contracted customers) . This indicates vast untapped potential for future expansion.

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6. Conclusion and Overall Assessment

FY2026 was a year in which Fines, Inc. completed the restructuring of its business foundation for mid-to-long-term leaps , including the transition to a consolidated reporting structure, the acquisition of HR businesses, the launch of new recurring products, and operational reform through AI.

Starting in FY2027, the company will shift into an expansion phase, targeting ¥4.2 billion in sales and ¥300 million in operating profit while executing ¥500 million in investments. The speed at which the company can stabilize its revenue structure through recurring income and generate synergies with the HR segment will be the most important indicator of its future corporate value growth.