ELEMENTS (5246) Q2 2024 earnings summary

Executive summary

• Q2 FY2024 revenue increased by 89% YoY to ¥776 million, driven by strong personal authentication solutions and Admedica M&A.

• EBITDA and operating income were positive for the fourth consecutive quarter, with EBITDA at ¥206 million and operating income at ¥130 million.

• Net income attributable to shareholders was ¥55 million, a significant turnaround from a loss in the prior year.

• LIQUID eKYC authentication volumes reached a record high, with 237 client companies now using the service.

• The company continues to expand its AI cloud platform, with strong demand for digital transformation and authentication solutions.

Financial highlights

• Q2 revenue: ¥776 million (+89% YoY); personal authentication solution revenue: ¥766 million (+112% YoY).

• Gross profit: ¥673 million (+108% YoY); gross margin improved by 7.5 points to 86.7%.

• SG&A expenses decreased by 8% YoY to ¥543 million; SG&A ratio at 70%.

• EBITDA improved by ¥314 million YoY to ¥206 million.

• Cash and cash equivalents at quarter-end were ¥2,338 million, down ¥403 million from the previous year-end.

Outlook and guidance

• Full-year revenue forecast revised upward to ¥2,450–2,615 million (+26–35% YoY).

• Full-year EBITDA forecast raised to ¥275–350 million; operating income expected to be ¥0–75 million.

• Net income guidance: loss of ¥200 million to profit of ¥150 million.

• Company plans to strengthen upfront investment in new products that could become a second business pillar.