QAs from earnings release meetings and others

May 14, 2026：4Q25 Financial Results Briefing (Online)

(*)This is a summary of questions and answers took place at the Briefing.
Abbreviations: FY26 stands for a fiscal year ending March 31, 2027, 1Q26 stands for the first quarter of FY26, NW Services stands for Network Services, SI stands for Systems Integration, and YoY stands for Year over Year.

Question: Could you explain, for FY26, why you expect NW Services margin to be at the same level as FY25 and SI gross margin to improve slightly?

Answer: For NW services, its business model allows for gradual improvement of gross margin through economies of scale along with its revenue growth. However, mainly due to recent cost increases driven by inflation and the impact of relatively lower-margin mobile device sales (slightly over \1.5 billion in 1Q26), we expect FY26 margin to be at the same level as FY25. For SI, we expect a slight improvement in gross margin, mainly reflecting the accumulation of system operation and maintenance, which is monthly recurring monthly.

Question: While FY25-end SI order backlog increased YoY, your FY26 SI revenue growth outlook appears conservative. Could you explain your expectation for FY26 systems construction revenue?

Answer: Of the order backlog for systems construction as of the end of FY25, we expect approximately \22.0 billion to be recognized as revenue in FY26, compared to approximately \15.0 billion recognized in FY25 as revenue from the order backlog at the end of FY24. Our FY26 system construction revenue outlook is based on this order backlog as well as new orders we aim to win in FY26.

Question: With rising prices for servers and other equipment, what impact do you expect on gross profit?

Answer: For SI, we expect such impact to be limited as we prepare quotations on a project-by-project basis, incorporating appropriate margin on top of procurement and other costs. For NW services, we expect such impact to be limited in the short-term as servers and other equipment are mainly used to maintain our own service infrastructure and depreciated over four years, in general. We intend to address this cost pressure by improving our infrastructure utilization efficiency and continuously optimizing pricing for each service.

Question: Could you provide FY26 earnings outlook for Sensiphia, a joint venture with Sony Semiconductor Solutions Corporation?

Answer: Sensiphia, established in February 2026, is currently in start-up phase. While we expect a loss due to upfront investments in FY26, given its capital size of \559 million, we do not expect such loss to be material.

Question: Could you explain your relationship with NTT and KDDI, your major shareholders?

Answer: As a service provider, we use infrastructure such as fiber networks, mobile networks, data centers of telecom carriers including NTT and KDDI. We maintain cooperative relationships with them as both business partners and shareholders. Through ongoing discussions and collaboration, we have developed value-added businesses, including Full-MVNO mobile services.

Question: Regarding the shareholding by Oasis Management Company Ltd., could you comment on any proposals and your response status?

Answer: We are aware of their filing of large shareholding reports and amendment reports. We would like to refrain from making any comments regarding communications with individual shareholders.