Business results summary

Amount of Sales

5,178 One million yen

YoY change rate 9.5 % OFF

Operating income

△680 One million yen

YoY change rate -

Ordinary profit

△618 One million yen

YoY change rate -

Net income attributable to owners of parent company

△657 One million yen

YoY change rate -

Net income per share

△16.70 Yen

YoY change rate 38.8 % OFF

Business results

Based on our corporate philosophy of ``Achieving Bright Value - Providing solutions that do not overlook risks and opportunities hidden in records, and realizing fairness in the information society,'' our group uses an artificial intelligence (AI) engine developed in-house. We utilize advanced information analysis technology using KIBIT to provide necessary and appropriate information in various fields such as our original business, international litigation support, fraud investigation, manufacturing, finance, retail, distribution, and medical fields. We are contributing to the realization of a fair world where people can meet each other and to solving social issues.


■The activity status of each business during the current third quarter consolidated cumulative period is as follows.

(AI solution business)
Life science AI field AI drug discovery field
“Drug Discovery AI Factory” (hereinafter referred to as DD-AIF), which is an AI drug discovery area in the life science AI field, has received inquiries from many pharmaceutical companies after starting full-scale service in July 2023. In October, we received multiple orders, including a contract for drug repositioning (diversion of existing drugs to other diseases) from Maruishi Pharmaceutical Co., Ltd.
Additionally, in the upstream process of the drug discovery process, while the use of AI for the purpose of compound search and optimization is progressing, there is an issue in the use of AI for target molecule search, which requires advanced natural language processing technology. It became.¹⁾
In response to such issues, our company aims to improve the customer experience by shortening the time, increasing the quantity, and increasing the accuracy of hypothesis generation based on advanced analysis and evidence using natural language processing AI (KIBIT) equipped with unique algorithms. We continually make proposals that help improve the efficiency of drug discovery research and increase the probability of success.
While implementing these proposals, based on the hypotheses derived from the dry research (data analysis using computers and AI), we are considering the next stage of wet research (biological tests using cells, animals, etc.). We have received many requests to outsource verification as well. In order to meet these customer needs, in November 2023, we entered into a basic partnership agreement with Axcelead Drug Discovery Partners Co., Ltd., which has the platform functions necessary for drug discovery. Through this partnership, both companies will efficiently operate the cycle of constructing hypotheses through dry research and verifying them through wet research, thereby further improving the development of drug discovery research and business of client companies and the quality of medical care. We will continue to contribute to its improvement.
1) Ministry of Health, Labor and Welfare: Regarding the use of AI in drug development, https://www.mhlw.go.jp/content/10601000/000926770.pdf

Life science AI field AI medical device field
The conversational disease diagnosis support AI program in the AI ​​medical device field is progressing smoothly with development, with the main target diseases being dementia, depression, schizophrenia, and ADHD. Until now, we have proposed large-scale projects to multiple major pharmaceutical companies for each major disease. We have concluded a strategic business partnership agreement. For other diseases, through collaboration and alliances, we aim to quickly obtain manufacturing and sales approval in Japan as a medical device that uses the world's first natural language processing AI.

Business intelligence field
In the business intelligence field, strong demand is expected to continue as companies promote DX, and sales are trending steadily. In addition, we have obtained a patent for the technology used in the fraud detection system "KIBIT Eye" announced in March 2023, and based on this patented technology, KIBIT Eye's analysis results scoring and highlighting functions have been developed. We have implemented basic functions necessary for auditing, such as display functions such as display functions, retuning of teacher data in standard functions, etc.
Regarding customer awareness regarding the prevention of fraud risks, the number of applicants for the fraud countermeasure study sessions held by our company reached a record high, confirming the attitude and need of each company to strengthen their efforts. As social demands are expected to become stronger, we expect this market to continue expanding. Through the provision of KIBIT Eye, we will continue to strive to expand our pipeline with the aim of supporting and realizing comprehensive audits.

economic security field
In the area of ​​economic security, against the backdrop of an increasingly tense international situation such as the Israeli-Palestinian issue and the Taiwanese presidential election, procurement risks for companies and sanctions risks due to regulations in each country are increasing.
During the third quarter of the current consolidated cumulative period, the need for visualization of supply chain risks among private companies continues to expand, and efforts are being made to avoid import suspensions by the U.S. Customs and Border Protection Agency and to stabilize procurement from overseas. We provided support using analysis using "KIBIT Seizu Analysis." Our proprietary technology is also used by government agencies and think tanks to support optimal economic security measures through multifaceted analysis and visualization of supply chains and shareholder control networks.
We will continue to pursue research and development while paying close attention to the changing social situation, and strive to expand our business by providing optimal solutions.

(Legal tech AI business)
The Legal Tech AI business is actively promoting marketing activities such as our portal site "FRONTEO Legal Link Portal", study sessions, and webinars. As a result of these activities, the number of inquiries and orders from our clients, law firms and companies, has steadily increased, but it takes a certain amount of time for these effects to materialize, and sales and operating income Both prices have been weak. We will continue to increase our marketing and sales activities and strive to recover profits.

Financial situation summary

Financial situation

(assets)
Total assets decreased by 674,811 thousand yen compared to the end of the previous consolidated fiscal year, to 8,470,418 thousand yen. Current assets decreased by 434,801 thousand yen compared to the end of the previous fiscal year to 3,228,337 thousand yen. This was mainly due to a decrease in accounts receivable-other by 258,674 thousand yen, while accounts receivable and contract assets increased by 534,827 thousand yen.
Fixed assets decreased by 240,009 thousand yen compared to the end of the previous fiscal year to 5,242,081 thousand yen. This was mainly due to an increase of 69,966 yen in tools, furniture and fixtures, a 63,841 yen decrease in goodwill due to normal amortization and exchange rate effects, a 64,803 yen decrease in customer-related assets, and normal amortization and impairment accounting. This was due to a decrease of 203,708 thousand yen in software.

(liabilities)
Total liabilities decreased by 295,999 thousand yen compared to the end of the previous fiscal year, to 3,799,178 thousand yen.
Current liabilities increased by 417,284 thousand yen compared to the end of the previous fiscal year to 2,626,458 thousand yen. This was mainly due to an increase in short-term loans payable of 600,000 thousand yen due to borrowings.
Fixed liabilities decreased by 713,284 thousand yen compared to the end of the previous fiscal year to 1,172,720 thousand yen. This was mainly due to a decrease in long-term loans payable of 643,344 thousand yen due to transfer to current liabilities.

(Net assets)
Total net assets decreased by 378,811 thousand yen compared to the end of the previous fiscal year to 4,671,239 thousand yen. This was mainly due to the recording of a quarterly net loss attributable to owners of the parent company, while foreign currency translation adjustments increased due to the impact of the weaker yen.