Conference Transcript - MWC 2026-08-19

Anna Berry, Conference Host

or a good afternoon wherever this finds you welcome to the 95th emerging growth conference and day one of our virtual conference i'm anna berry just a few notes today we're running until five eastern when we switch to the next company you might see a black screen for a moment don't go anywhere that's just us moving over to the next presenter our platform does work best on google chrome so if you're watching from an apple device you have to hit the play button to start the session now during each company's presentation today you can submit questions through our webcast module and we will attempt to address as many of these questions at the end of the presentation now all of our conferences they're uploaded to the emerging growth conference youtube channel so please subscribe youtube.com emerging growth conference now i'd like to introduce our first company we have micware limited trades on the nasdaq under the ticker mwc it's a japan-based provider of software development services and innovative i.t solutions mainly focused on the automotive and mobility sectors and is primarily engaged in the development and sale of in-vehicle infotainment systems covering multimedia navigation human machine interface telematics and driver assistance as well as navigation software and location information based smartphone applications So happy to welcome founder and CEO, Kenji Narishima, as well as the president of Micware North America, Takashi Harishima. Welcome, gentlemen. Happy to have you on the conference today.

Speaker 4

Oh, nice to meet you.

Anna Berry, Conference Host

Wonderful. The floor is yours. We're looking forward to hearing your presentation. And call me back when you're ready for questions.

Kenji Narishima, CEO

Okay. Good morning. And thank you for joining us today. My name is Kenji Narishima, and yes, this is my English. Like our software, it's always in development, but I promise it works when it matters most. I am the founder and CEO of Mikuya. Today, I'm also joined by Takashi Harishima, President of Mikuya North America, based in Columbia, Ohio. Arishima-san, will be your direct point of contact here in the U.S. going forward, working closely with our team in Japan to make sure your questions get answered quickly and clearly.

Takashi Harishima, Other

Thank you, Narishima-san. It's a pleasure to be here today. I look forward to serving as a direct line between our investors here and our team in Japan.

Kenji Narishima, CEO

We appreciate your time and interest in Mikya. Mikya is a Japan-based automotive software developer offering in vehicle infotainment, navigation software, and mobility solutions. Today, I'll provide an overview of our business, discuss our financial performance and share our future strategic priorities. Let me begin with five key reasons to invest in Mikua. First, Toyota and Honda, two of the world's largest automakers, are both our major customers and strategic shareholders. second we are leading automotive software company in japan with more than 20 years of industry experience third we are well positioned for the growth of software defined vehicle as we work to expand into next generation vehicle software first dynapranet our intelligent 3d platform design for the ai era is expected to create new recurring revenue opportunities and finally our strong profitability and cash generation provide a solid base for future growth now i would like to hand it over to takashi harishma president of mikya north america who will walk you through our company overview and financial highlights.

Takashi Harishima, Other

Thank you, Narushima-san. It's a pleasure to speak with you today. Let me begin by introducing Micware and providing an overview of our business and financial performance. Since our founding in 2003, we've grown into a leading automotive software company. Today, we have about 600 employees and more than 300 patents. We develop IVAI system, navigation software, and other mobility solutions for major automotive companies, such as Toyota, Honda, Daihats, and Denso. We believe that our long-term relationships with these companies reflect both our deep industry experience and strong technical capabilities. Today, we operate through six operating entities and 13 branch offices in Japan, with overseas subsidiaries in the United States, Thailand, and Germany. From our North American office, we also work closely with OEMs and partners to support our global business development. we currently operate through three business segments the first is software defined vehicles or sdb where we develop and provide next generation mobility software centered on ivi system software the second is location-based services or lbs which includes navigation software and location-based services dynapranet which narushima-san introduced earlier is part of this segment the third is other which includes software development services provided by our overseas city subsidiaries and b2c mobile app services most of our revenue comes from developing custom automotive software based on our IVEI platform. We also generate revenue through licensing our software modules to customers typically on a per-unit basis. Other revenue comes from maintenance support and B2C mobile app services. Now I'd like to touch on our financial highlights. Revenue increased by 19.9% from $116.9 million in fiscal year 2024 to $140.2 million in fiscal year 2025. In fiscal year 2026, revenue remained stable at $140.3 million. Software development services represented majority of our revenue accounting for about 80 percent of total revenue in each the past three years gross profit grew by over 38 percent from 35.5 million dollars in fiscal year 2024 to 49.1 million dollars in fiscal year 2025 and further to 51.6 million in fiscal year 2026. As a result, gross margin also increased by over 6 percentage points over the past two fiscal years. Adjusted operating profit increased from $13.5 million in fiscal year 2024 to $15.6 million in fiscal year 2026. while net income attributable to our ordinary shareholders increased from 9.1 million dollars to 10.3 million dollars over the same period beyond profitability we further strength our financial position cash and cash equivalence nearly doubled since fiscal year 2024 four showing strong cash generation from our core business at the same time total debt decreased from 40.3 million dollars as of february 2025 to 34.5 million dollars as of february 2026. overall there are three key takeaways first our gross margin reached a record 36.8 percent affecting sustainable profitability rather than just one north gate second operating profit continue to increase even as around the spending road by 40 percent this shows our ability to invest in innovation while maintaining profitability third our long-term oem relationships support repeat business and position as well as the sdb market expands with that overview of our business and the financial performance i'd now like to hand it back to narushima-san to discuss our long-term strategy and future growth initiatives.

Kenji Narishima, CEO

Thank you, Harishima-san. With this strong financial foundation, I'd now like to share our strategic direction. Micware started as a developer of car audio systems and car navigation systems. Over the years, we improved our technology and built long-term relationships with major OEMs. These strengths helped us become a leading IVEI software supplier in Japan. Today, we are entering the next stage of our growth. Our goal is to evolve from an automotive software company into a platform provider for next-generation mobility. To achieve this goal, our growth strategy is built around two main pillars. The first is MiCode, which we will further grow and expand our automotive software platform. The second is Dynoplanet, which will drive the growth of our spatial intelligence business. To execute this strategy, we plan to introduce a new organizational structure in September 2026, including the establishment of a new company-focused next-generation spatial intelligence. Our investment priorities reflect these two pillars strategies. We plan to allocate 30% of our capital to the SDV business to support our existing business mix-out platform. the remaining 70 percent will be invested in the lps business to support dynapranet platform create new growth opportunities and generate recurring revenue the next two slides will provide a closer look at each of these platforms. Let's begin with Mikot platform. Its modular design allows up to the use software across different vehicle projects while supporting different operating systems and devices and cloud functions. As a result, we can reduce development works, and make project timeline more predictable. Over the years, we have improved the platform through closed collaboration with OEM customers. While deepening long-term customer relationships, we expect MidCOT platform to begin contributing revenue in fiscal year 2027 our second pillar dynapranet platform formerly known as dynamic share street map and the marketplace opens a new area of growth for mikua dynapranet is next generation 3D platform that uses AI to combine location data with different type of digital contents. Its first products, Dynamic ShareMap combines location-based text, images, audio, video, and 3D content to create new value and support monetization. Another product is PressPort. a dynamic Dynaplanet application that allows users to see the view from a selected stadium seat before making a reservation. We view Dynaplanet as a long-term growth platform as adoption expands. We expect it to generate recurring revenue through broader commercial use and new monetization opportunities. We have clear strategies to grow both platforms. For Mikoto platform, we will continue to deepen our relationships with OEMs. aims while passing new customer opportunities we also plan to expand into aidas and autonomous driving software for dynapranet platform our focus is on expanding the platform and building recurring revenue we will pass b2b and government opportunities in japan and overseas In addition, we plan to generate revenue through transaction commissions and third-party licensing. Today, we have shared an overview of our two platform strategies, Mikko's platform and Dynapranet platform. In the first week of September, we will launch a new company, MicWare Spatia. Together with this launch, we plan to share more detail about our growth strategies and our future roadmap. So please stay tuned. MicWare is now entering an important stage of growth. As a NASDAQ-listed company, we are increasing our visibility in the global capital markets, while also moving Dynoplanet from the development stage towards revenue generation. At the same time, the growth SDP market is creating new opportunities for our core automotive software business. Our strong profitability allows us to continue investing in innovation and our IPO proceeds. While we support our long-term expansion plans, we believe Mikya is well-positioned to deliver sustainable long-term growth. this concludes my presentation and i'd now like to open the floor for any questions thank you wonderful thank you so much arigato let's jump into some questions so toyota and honda they're both major customers and shareholders so how should investors think about your customer concentration okay our relationships with toyota and honda a foundation of our business and we recognize that customer concentration is something we manage carefully in fiscal year 2026 Honda Group represented 50.6% of our revenue, Toyota Group 16.3% and Uni Electronics 11.4%. They said these are relationships built over more than 20 years of automotive software development and we view them to meaningful competitive advantage deep in sight into oem software requirement and the ability to develop at the path and quality the programmer demand Alongside Toyota and Honda, we also work with other OEMs, including Daihatsu and Matsuda, and we are gradually expanding our customer base. Over time, we expect new revenue drivers to broaden the base beyond our traditional customer relationship. First, MiCode is designed to increase software we use across different big projects and support and the broader range of OEM customers. Second, Dynapranet platform, our intelligent 3D platform for GAI era, open up B2B government and consumer-facing use cases that do not require a repo OEM relationship.

Anna Berry, Conference Host

And so why did you decide to go public now?

Kenji Narishima, CEO

And why did you choose NASDAQ rather than the Tokyo Stock Exchange? thank you over the past 20 years we have built strong relationships with most of the major japanese oat makers so for us the next step of growth is not just about expanding further in japan it's about taking midwear global we have already shared building the whole foundation for the expansion with operations in the united states and germany and thailand the next step is to increase our global visibility build relationships with international investor of partner and ultimately expand our business with customer around the world that is why we choose nasdaq the u.s capital markets offer access to a broad and diverse global investor base and And we believe Nasdaq is a strong platform for increasing our international visibility. We believe it provides greater opportunities for grocery companies like Mikya to be recognized by global investors. We also believe a NASDAQ listing can help us attract global talent and we expand internationally. So for us, the IPO was not simply about rising capital.

Takashi Harishima, Other

It was an important step in transforming Mikuya from a successful Japanese automotive software company into a global technology company thank you that makes a lot of sense now international revenue currently represents a relatively small portion of your business so what is your strategy for expanding overseas oh I will take this question so approximately 98.5 percent of our revenue comes from japan while the u.s currently accounts for approximately 1.4 percent of our total revenue so our international business is still very small however we already have operating bases in the united states thailand and germany and we are actively building the foundation for future international growth here in the u.s mikwe north america serves as our base for expanding our automotive software business and developing relationships with oems and partners in the north american market one of my key responsibilities as president of mikwe north america is to strengthen these relationships and identify new business opportunities in the new smart going forward our strategy is to leverage these existing overseas bases to deepen relationships with global oems and partners while pursuing new opportunities for both our automotive software business and Dynaplanet.

Anna Berry, Conference Host

Thank you. Talk a little bit more about Dynaplanet. What makes Dynaplanet different from traditional digital mapping platforms?

Kenji Narishima, CEO

Okay, traditional digital maps are generally designed to provide relatively static location information. Dynaplanet is intended to create and continue to update richer 3D spatial information using data such as images and video from everyday device. Our goal is to combine location data with text, image, audio, video and 3D contents in a single platform and create new services around that information. One advantage for Mikya is our background in automotive software and connected vehicles. We understand both the big side and the location data side which we believe gives us a differentiated perspective on how spatial data can be collected, processed, and commercialized. We believe this creates opportunities across multiple markets, including navigation, tourism, advertising, and other location-based services. Thank you.

Anna Berry, Conference Host

How are you progressing from an IVI Tier 1 software supplier to an SDV Tier 1 software supplier?

Takashi Harishima, Other

I will take this question. So we see this as evolution of our existing business rather than move into an entirely new market. our foundation is more than 20 years of ivi software development and long-term relationship with major odfs the next step is to expand both the scope of our software and our role within the vehicle development process we are strengthening micro platform as a reusable and scalable software platform, increasing our upstream participation with existing OEM customers and pursuing new OEM engagements. We are also working to integrate ADAS and autonomous driving capabilities into Muik Auto platform with the goal of expanding from cockpit and infotainment software into broader SDV software domain. So our strategy is to build on capabilities and customer relationships. We already have wide, gradually expanding the software domains in which Micware can create value. Thank you.

Anna Berry, Conference Host

Last question. How do you see Micware's revenue mix evolving over the next several years?

Kenji Narishima, CEO

Today, most of our revenue comes from customized software development for automotive OEMs. This reminds us of a strong and important foundation of our business. Going forward, however, we want to build a more scalable and diversity field revenue model in our automotive business microt platform is designed to increase software we use across multiple projects which can improve development efficiency and help us serve a broader range of oem customers we are also expanding into new software domains such as aidas and autonomous driving at the same time in our lbs business we are working to expand recurring revenue opportunities to do diner planet and other location based service so over time our goal is to combine the strengths of our existing customized software development business with more scalable platform based and recurring revenue streams thank you wonderful well thank you so much for your time today very interesting to learn about mcware and we would love to have you back on the conference to continue this conversation thank you both thank you all right all right everyone we'll be right back with our next presenter