マクニカホールディングス株式会社 (3132) Q1 2027 Earnings Call Transcript

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Macnica Holdings, Inc.: Financial Results Briefing FY2026 First Quarter Results (Transcript including Q&A)

July 27, 2026 Presenters: Makoto Okawara, Director

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■FY2026 First-Quarter Performance Highlights

Makoto Okawara (hereinafter referred to as Okawara): Thank you very much for joining today’s earnings presentation of Macnica Holdings. My name is Makoto Okawara, and I am a Director of Macnica Holdings, Inc. I would like to begin with a brief overview. Let me start with the performance highlights for the first quarter. Looking at our results by segment, the overseas operations of our Semiconductor Business have been on a growth trajectory since last year and continued to perform extremely well. We are also continuing to see gains in our overseas market share, as well as increased demand, particularly in AI-related applications. One particularly noteworthy development this quarter was the very strong performance of the semiconductor business in Japan, especially in the industrial equipment and automotive markets. As a result, both net sales and profit recorded doubledigit growth. The cybersecurity business continues to perform extremely well, led primarily by endpoint security. In the first quarter, sales increased 9% quarter on quarter and 36% year on year, demonstrating continued solid growth. Meanwhile, in the CPS Solutions Business, the market environment for our autonomous electric bus business, which we have been developing for local governments since last year, has remained challenging. Bus deployments have continued to be delayed, and performance therefore fell short of our plan. Although sales increased in other areas, including smart manufacturing, the segment recorded an operating loss of ¥2.6 billion. This represents a ¥700 million widening of the loss compared with the same period of the previous year. Taking these segment-level developments into account, we have left our full-year FY2026 forecast unchanged. The outlook for each segment is also shown on the slide. In the Semiconductor Business, we are beginning to see a recovery in Japan, and we naturally believe there is potential for performance to exceed our current expectations. At the same time, as has been widely noted in the market, the shortage of memory products is becoming increasingly severe. We recognize the risk that this may cause customers’ manufacturing activities to slow and may also adversely affect their purchasing capacity for semiconductors other than memory products. At present, this risk has not materialized. A related challenge is the continued lengthening of lead times for semiconductors themselves. This trend is being observed

across a wide range of product categories, including analog and power semiconductors, and may ultimately cause some of our business to be pushed back to later periods. After taking all of these factors into consideration, we believe that risks to semiconductor growth will remain during the current fiscal year. We expect the Cybersecurity Business to continue performing steadily. Based on this overall assessment, we have maintained our full-year forecast.

■Net Sales by Segment

Okawara: This slide shows the year-on-year changes in net sales. Overall net sales increased 39.7%. The Semiconductor Business and the Cybersecurity Business grew by 40% and 36%, respectively. Both segments therefore delivered very strong results.

■Semiconductor Business: Net Sales by Application

Okawara: I will now explain the performance of the Semiconductor Business by application. Please refer to the year-onyear percentage changes shown in the table on the right-hand side of the slide. Most application categories performed well. In particular, industrial equipment and automotive—two of our core markets—recorded very strong growth of 77% and 31%, respectively. A notable aspect of this performance is that the figures include a recovery in the Japanese market. By contrast, sales in the computer category declined year on year. This was because we secured several large orders in the same period of the previous year, resulting in exceptionally strong performance at that time. Sales remained strong in the current period but decreased slightly compared with the previous year. The majority of sales in the computer category are related to the data center business. Although this area continues to deliver strong, sustained growth over the medium term, the number of customers and projects is smaller than in the industrial equipment and automotive markets. As a result, the business tends to experience greater quarter-to-quarter volatility. The year-on-year decline this quarter therefore primarily reflects the impact of the high comparison base in the same period of the previous year. Looking ahead, however, we expect the business to continue generating solid growth.

■Semiconductor Business: Net Sales by Product Category

Okawara: I will now discuss the year-on-year change in Semiconductor Business sales by product category. Please refer to the percentage changes shown in the table on the right-hand side of the slide. Memory products are not a primary area of focus for us, so the absolute sales amount is relatively small. Nevertheless, the category recorded a high growth rate. This increase also reflects higher prices and resulted in substantial year-on-year growth. This was followed by analog products and microcontrollers, which are among our core product categories. As shown on the slide, both categories continued to grow steadily. As with the computer application segment discussed earlier, both PLDs and Others recorded declines. This was attributable to particularly strong demand from data centers in the same period of the previous year, resulting in a year-on-year decrease this fiscal year due to the high comparison base. The Others category includes servers and related products.

■Cybersecurity Business: Net Sales by Product Category

Okawara: I will now explain the performance of the Cybersecurity Business. As in previous presentations, the figures are divided into software and hardware. Software—particularly our SaaS business—now accounts for approximately 80% of the total and continues to achieve strong growth. In hardware, demand remains solid for products from certain vendors, particularly in overseas markets, and the category continues to grow. Our services business primarily consists of maintenance services related to hardware, and this area is also delivering resilient growth. Overall, the Cybersecurity Business continues to grow, led by software.

■Performance by Segment

Okawara: This slide shows net sales, operating profit, and progress against the full-year plan for each of our three business segments. Please refer to it for further details. That concludes my presentation. Thank you very much.

Question and Answer: ■Breakdown of First-Quarter Growth Drivers in the Semiconductor Business

Questioner: As you mentioned, the Semiconductor Business delivered very strong growth in the first quarter, particularly in the automotive and industrial equipment markets. Performance also appears to have increased substantially compared with the fourth quarter. You explained that the recovery in Japan contributed to growth alongside the overseas business. Could you provide a qualitative breakdown of the respective contributions from underlying demand, business transfers, and foreign exchange effects, if any? Okawara: With regard to the foreign exchange impact on sales, the yen moved into the ¥160 range during the current fiscal year. There was therefore some impact, but I would not say it was particularly significant. With regard to the breakdown between sales-channel transfers and underlying demand, the contribution from sales-channel transfers was again on the order of ¥10 billion in the first quarter. Nevertheless, underlying demand was the largest contributing factor, followed by sales-channel transfers, while the impact of foreign exchange rates was relatively limited.

■PLD Growth Rate

Questioner: You mentioned that PLD sales were particularly high in the first quarter of the previous fiscal year. Although PLD sales also increased somewhat compared with the fourth quarter, their growth appears slower than that of analog products. Was this due to factors specific to Altera, and could similar effects continue from the second quarter onward? Or should we simply understand that the year-on-year decline reflects the high level of sales in the first quarter of the previous fiscal year, with no significant change in the underlying business environment? Okawara: PLD growth may appear somewhat weaker than that of analog products and microcontrollers. However, this is largely because analog products benefited the most from sales-channel transfers within the product-category breakdown. Excluding this effect, we do not believe there was any significant difference in performance among analog products, PLDs, and microcontrollers.

■Current Risks and Future Concerns Regarding the Memory Shortage

Questioner: You mentioned the memory shortage as a future risk, which I assume is one of the reasons you have not revised the full-year earnings forecast. Now that the second quarter is underway, are you already seeing an impact from the shortage? Or should we understand it primarily as one of the risk factors for the future? Okawara: It is difficult to make a definitive assessment, but we would characterize it primarily as the latter, namely, a potential future concern. That said, we do not believe the impact has become significant at this point. We would ask you to view this strictly as a risk assessment regarding the outlook.

■Progress in the Cybersecurity Business

Questioner: You explained that the Cybersecurity Business performed well in the first quarter. Progress against the fullyear plan appears relatively high. How do you assess the current situation? We understand that demand for cybersecurity measures remains extremely strong. At the same time, customers are facing higher costs due to factors such as the weaker yen. We also recognize that some SaaS implementations were brought forward in the past. Given these factors, should we consider the possibility that the pace of growth may slow as a result of the business environment or cost pressures? Okawara: We do not currently have a sense that foreign exchange movements or other factors are holding back or delaying the business. The business environment remains favorable. With regard to the depreciation of the yen, a rapid weakening of the currency can sometimes have a negative impact. At present, however, the effects are emerging only gradually, and we do not see this as a concern. Overall, we believe there are currently few factors that warrant concern regarding the operating environment for this business.

Questioner: Is it therefore fair to say that the first-quarter results are tracking somewhat ahead of the full-year plan? Okawara: Yes, that is correct. To be candid, I think it is fair to say that the results were better than we had anticipated.

■Business Transfers and Underlying Demand in the Semiconductor Business

Questioner: You mentioned that business transfers in the Semiconductor Business amounted to tens of billions of yen. Did these transfers relate to the industrial equipment market or the automotive market? Okawara: The contributions from the automotive and industrial equipment markets were broadly similar, although automotive was slightly larger. In terms of geography, overseas markets accounted for the larger share. Questioner: Should we understand that the transfers in the automotive and industrial equipment markets overseas each amounted to tens of billions of yen? Okawara: The combined amount for the automotive and industrial equipment markets was on the order of tens of billions of yen. Questioner: What is the underlying demand situation in the industrial equipment market? Okawara: Underlying demand is strong both in Japan and overseas. Questioner: Is it correct to understand that the improvement is being driven less by the completion of inventory adjustments and more by a recovery in underlying demand? Okawara: I believe those two factors are probably closely related. In the automotive market in particular, judging from the business performance of OEMs and Tier 1 suppliers, our customers’ businesses themselves are not necessarily growing substantially. We therefore believe that the completion of inventory adjustments has been the more significant factor. In the industrial equipment market, we have a stronger sense that our customers’ businesses themselves are growing. At

the same time, the completion of inventory adjustments is also having an effect. We believe the strength in this market reflects a combination of both factors. Questioner: With concerns being raised about memory shortages, is it possible that customers are bringing forward purchases to build business continuity planning, or BCP, inventories? Okawara: We are seeing this in orders rather than in actual procurement. As lead times are becoming longer, we have a sense that customers are placing orders for delivery at later date earlier than they otherwise would. Questioner: So, the earlier-than-usual orders have not affected sales, but they are already included in your order intake. Is that correct? Okawara: Yes, that is correct.

■Growth Drivers in the Cybersecurity Business

Questioner: Growth in the Cybersecurity Business was relatively moderate in the previous fiscal year but has accelerated significantly since the beginning of the current fiscal year. You explained at the previous earnings presentation that quarterly results can fluctuate. Did temporary factors—such as price increases associated with the weaker yen or multiyear contracts—contribute to the recent growth? Okawara: The growth was not driven by temporary factors such as multiyear contracts or the weaker yen. However, my impression is that we had a considerable number of large-scale projects in the first quarter. Questioner: Did those include projects involving CrowdStrike, one of your key offerings? Okawara: Yes, those projects were included.

■Orders for Autonomous Buses and the Full-Year Plan

Questioner: In the CPS Solutions Business, you explained that orders for autonomous buses were weak. Are results substantially below your original plan or expectations, or do you believe the shortfall can be recovered in the second half? Given that the segment recorded nearly half of its projected full-year loss in the first quarter, could you explain your current assessment? Okawara: As shown on the slide, our full-year plan assumes an operating loss of ¥5.6 billion. This compares with an operating loss of ¥7.9 billion in the previous fiscal year. The largest factor behind the expected improvement in our plan is a recovery in bus sales. Accordingly, future performance will largely depend on the extent to which sales recover. To be candid, if we regard our original target as 100%, my current sense, including the outlook from here, is that we are at approximately 80% to 90% of that level. Navya Mobility, which provides autonomous-driving vehicles overseas, has a sales pipeline involving multiple international customers. However, its Middle East business has come to a complete standstill due to the current situation involving Iran. Since the Middle East accounted for a significant portion of the pipeline, this has resulted in a decline. The business in Japan has also not progressed as much as we had expected, and we recognize that we have not yet been able to advance it sufficiently. As I mentioned, progress is therefore currently at approximately 80% to 90% of our original expectations. We intend to continue making every effort to improve the situation.

■Drivers of Semiconductor Order Growth and Longer Lead Times

Moderator: We have received the following question: “Order intake is extremely strong. Given concerns about the supply of memory and other products, does the order intake appear to include orders that customers have brought forward?” Okawara: Yes, we believe it does. Total order intake in the first quarter was very strong at ¥576.5 billion. This represents an increase of approximately ¥130 billion from ¥443.2 billion in the previous quarter. We estimate that approximately one-third of this increase may reflect orders for future requirements that customers placed earlier than usual in anticipation of longer lead times.

■Factors Behind the Improvement in the Operating Margin and the Outlook

Moderator: We have received the following question: “The first-quarter operating margin was 4.2%. Could you explain the factors behind the improvement and your outlook going forward?” Okawara: The Semiconductor Business was the largest contributor to the improvement—or recovery—in the operating margin. The Semiconductor Business recorded an operating margin of 4.1%, recovering from approximately 3% in the previous fiscal year. I believe this is one of the most significant positive aspects of these results and a point we can particularly emphasize. Two to four years ago, when our performance peaked following the COVID-19 disruption, the Semiconductor Business generated an operating margin of approximately 6%. The margin subsequently declined to around 3%, reflecting the downturn in the business as well as increases in the costs associated with the infrastructure supporting our operations. Over the medium to long term, we are confident that we can restore the operating margin to approximately 5%. The recovery to around 4% this quarter therefore represents a very positive result. The primary factor behind the improvement was the 40% year-on-year increase in sales, which enabled us to benefit from economies of scale. In Japan in particular, we had made advance investments and hired additional personnel. As sales increased, we were able to handle the higher business volume without a corresponding increase in costs. This operating leverage was a major factor behind the profit recovery. The recovery in Japan was another contributing factor. As we have explained previously, the Japanese business generates a higher profit margin than the overseas business. The recovery in Japan has already made a certain contribution, but we believe its full impact is still to come. Accordingly, as the Japanese business continues to recover, we expect our target operating margin of approximately 5% to come back into view.

■Drivers of the Recovery in the Japanese Semiconductor Business

Moderator: We have received the following question: “You identified the recovery in the Japanese market as one of the factors behind the increase in Semiconductor Business sales. Could you explain the specific drivers of this recovery?” Okawara: We believe the recovery in Japan has been driven primarily by an increase in underlying demand and the completion of customers’ inventory adjustments. In the automotive market, we believe inventory adjustments have been largely completed. We can also say that demand for industrial equipment is recovering. The industrial equipment segment is highly diversified, and there is no single area showing particularly strong growth. However, we believe that demand related to the semiconductor supply chain is increasing very significantly. Other areas are also growing steadily. However, semiconductor manufacturing-related demand is particularly strong because Japan has a broad supply chain including component-related businesses.

■Overseas Market Share Gains by Region and Application

Moderator: We have received the following question: “In which regions and applications are you gaining overseas market share and seeing stronger demand?” Okawara: The countries and regions concerned are geographically diverse, including Taiwan, Hong Kong, and mainland China. We are expanding our market share as a result of the transfer of business from a specific semiconductor supplier. While Taiwan and mainland China account for the majority of this growth, we are seeing increases across a broad range of countries and applications, including industrial equipment and automotive applications. Taiwan, in particular, has a very large semiconductor supply chain-related business, as does Japan, and we believe the growth there has been especially notable.

■Expansion of AI- and Data Center-Related Projects

Moderator: We have received the following question: “Looking at order growth by application, are industrial equipment and automotive driving the increase, as they are in net sales?” Okawara: I would not say the increase is limited to those areas, as AI- and data center-related projects are also becoming significantly larger. In fact, the scale of our AI- and data center-related business is currently expanding considerably. I mentioned earlier that approximately one-third of the increase in orders may be attributable to longer lead times. We estimate that AI-related demand may also account for roughly one-third of the increase. The appropriate conclusion, therefore, is that order growth is not limited to the industrial equipment and automotive markets.

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