ELEMENTS (5246) Q2 2025 earnings summary

Executive summary

• Quarterly revenue reached a record ¥974 million, up 26% year-over-year, driven by strong LIQUID eKYC and digital ID wallet sales to local governments.

• Revenue for the six months ended May 2025 rose 39.9% year-over-year to ¥1,690 million, driven by expansion in core AI cloud services and digital transformation demand.

• EBITDA was ¥148 million, with operating income at ¥31 million; excluding Polarify-related costs, adjusted EBITDA was ¥221 million and operating income ¥103 million.

• Net loss attributable to shareholders was ¥452 million, mainly due to a ¥659 million impairment loss at Ad Medica.

• The company acquired Polarify as a subsidiary during the period, expanding its business scope.

Financial highlights

• Cumulative revenue for the first half was ¥1,690 million, up 40% year-over-year; cumulative EBITDA was ¥239 million, and operating income was ¥17 million.

• Gross profit for the quarter was ¥750 million (+11% YoY), with a gross margin of 77.0%, down due to digital ID wallet projects.

• SG&A expenses rose 32% YoY to ¥719 million, mainly due to Polarify integration costs.

• Total assets increased to ¥5,977 million, up ¥1,061 million from the previous year-end, mainly from goodwill and receivables.

• Cash and equivalents decreased by ¥689 million to ¥2,057 million at period-end.

Outlook and guidance

• Full-year revenue guidance was raised to ¥3,815–4,000 million, reflecting strong business momentum.

• Full-year EBITDA is forecast at ¥150–275 million, with an operating loss of ¥225–350 million and a net loss of ¥725–850 million expected due to impairment charges.

• Per-share net loss guidance revised to ¥29.52–33.59.