Record-high quarterly operating income of 1.0 billion yen in Q3 FY2024
Developing the growth potential and foundation of both businesses, aiming for Spin-Off Listing by the end of 2025
In Q3 (nine months) FY2024, both the DH Group and the AGEST Group Business performed well, achieving both steady sales growth and double-digit profit growth, with consolidated net sales of 30,414 million yen (YoY 106.1%) and consolidated operating income of 1,837 million yen (YoY 129.2%). In the first half of this year, the AGEST Group Business was affected by schedule changes in certain projects, resulting in a negative operating profit for Q1 FY2024, which may have caused some concern to our shareholders. However, in Q3 (Oct-Dec) FY2024, the AGEST Group Business improved its profitability and achieved a record-high operating profit margin of 6.9%, or 283 million yen, and the DH Group Business also achieved an operating profit margin of 11.2%, or 729 million yen, and consolidated quarterly operating income overall reached a record-high 1,012 million yen. We believe that our actual Q3 (Oct-Dec) results demonstrated the business growth potential we have envisioned.
We are preparing for “Spin-Off Listing” of AGEST Inc., a core subsidiary of the AGEST Group Business, within 2025, and as a part of initiatives for this, we shifted to a new management structure with two completely independent groups from the beginning of this FY2024. Since this new management structure was put in place, we have accelerated our growth strategy by focusing on the characteristics of each business: the DH Group Business supports the global expansion of game and entertainment content, while the AGEST Group Business pursues technological capabilities in the software testing area. As a symbolic example, the DH Group Business has jointly developed “ella” with Rozetta Corp. This “ella” is a unique game-specialized AI translation engine that expresses “emotion,” which has been difficult for conventional machine translation to handle. We launched new services using “ella” and we have already received orders for over 50 projects including trial cases. The “ella” translation service is highly evaluated by clients, and we believe it will become a strong uniqueness for the DH Group. Meanwhile, in the AGEST Group Business, the Group has been developing the use of AI in the software testing area, including the development of “TFACT,” a unique AI testing tool that can reduce testing man-hours by about 30%. We are planning to utilize TFACT in projects of NTT Resonant Technology Inc. and to conduct joint verification of test automation in conjunction with “Remote TestKit,” a cloud service provided by this company, that enables remote verification with actual equipment such as smartphone. The AGEST Group is moving forward to establish its own unique AI testing system.
As described above, we are pursuing growth strategies for both businesses in completely different directions, and the outcome of these strategies have become visible since Q3 (Oct-Dec) FY2024 as actual results for both. We are becoming more confident that we will be able to achieve further growth in each business even after our group will change to two independent company groups after Spin-Off. If all goes well, this FY2024 might be the last fiscal year with both the DH Group and AGEST Group as one consolidated group for a full year base. Q4 (Jan-Mar) FY2024 is an important one as the busy season for us, and by capturing such strong demand in the market, we would like to give momentum to our growth in the next fiscal year and beyond.
On April 19, 2025, we will be in the 25th year since the founding of our predecessor, DIGITAL Hearts Ltd. We have decided the plan to add a commemorative dividends of 2.0 yen to the original year-end dividends of this FY2024, and we have also resolved to implement a commemorative shareholder special benefit.
We will continue to manage the business by taking balance between the challenge of maximizing corporate value and the consideration of shareholder return as well. We hope that our shareholders will continue to support us.
February 6, 2025
President & CEO
Toshiya Tsukushi