v3.26.1
SEGMENT REPORTING
 12 Months Ended
Feb. 28, 2026
Segment Reporting [Abstract]  
SEGMENT REPORTING

Note 16 — SEGMENT REPORTING

 

The Company identifies reportable operating segments based on the structure of its operations and the financial information reviewed regularly by the Chief Operating Decision Maker (“CODM”), who is the Chief Executive Officer, to evaluate performance and allocate resources. The Company’s three reportable operating segments are as follows, all segments include software development services, licensing, and software-related service revenue, and intersegment revenue is recorded at cost and is eliminated in the consolidated statements of income and comprehensive income:

 

  ● SDV: relates to the development and sale of software systems designed for SDV, including IVI system software and other mobility-enhancing software products, conducted by Japanese subsidiaries.

 

  ● LBS: relates to the development and licensing of in-vehicle navigation software systems, and other geographic data-based services for B2B customers, mainly serving end users.

 

  ● Other: primarily comprises software development services conducted by overseas subsidiaries designed for SDV, and B2C mobile app services unrelated to in-vehicle navigation.

 

The CODM assesses segment performances and allocates resources based on profitability. The CODM evaluates operating performance and decides how to allocate resources based on segment profit or loss, which is equivalent to segment income from operations. Expenses included in segment operating profit consist principally of certain costs, such as purchases, personnel expenses, and R&D expenses, as well as direct selling and delivery costs and an allocation of certain shared services expenses. The CODM uses segment operating income (loss) to allocate resources to the Company’s segments in the Company’s annual planning process and to assess the performance of the Company’s segments, primarily by monitoring actual results versus the annual plan. From time to time, the Company may revise the measurement of each segment’s operating income, including any corporate overhead allocations, and presentation of significant segment expenses, as determined by the information regularly reviewed by its CODM.

 

Certain corporate expenses are not allocated to specific segments as these expenses are not controllable at the segment level. Such expenses include certain types of professional fees, and compensation to non-employee directors. These unallocated amounts are combined with total segment operating income to arrive at consolidated operating income as reported below in the reconciliation of segment operating income. Additionally, management has determined that it is not practical to allocate identifiable assets by segment since such assets are used interchangeably among the segments.

 

The below tables contain revenue and certain expenses regularly presented to the CODM in order to make decisions regarding the Company’s business, including resource allocation and performance assessments, as well as the current focus in compliance with ASC 280, Segment Reporting, for the periods presented:

 

                               
    For the Fiscal Year Ended
February 29, 2024		  
    SDV     LBS     Other(1)     Total  
    JPY     JPY     JPY     JPY  
    (In thousands)  
Revenue from external customers     11,382,408       6,046,972       87,351       17,516,731  
Intersegment revenue     -       -       513,779       513,779  
Total revenue     11,382,408       6,046,972       601,130       18,030,510  
Elimination of intersegment revenue                             (513,779 )
Total consolidated revenue                             17,516,731  
Less:                                
Purchases(2)     4,962,845       3,134,693       -       8,097,538  
Personnel expenses(2)     2,107,744       1,348,837       854,846       4,311,427  
R&D expenses(2)     557,557       157,897       245,486       960,940  
Other costs and expenses(3)     663,785       468,784       798,447       1,931,016  
Intersegment costs and expenses(4)     317,454       196,325       -       513,779  
Total costs and expenses     8,609,385       5,306,536       1,898,779       15,814,700  
Elimination of intersegment costs and expenses                             (513,779 )
Total consolidated costs and expenses                             15,300,921  
Segment operating income     2,773,023       740,436       (1,297,649 )     2,215,810  
Corporate expenses(5)                             (323,413 )
Total operating income                             1,892,397  
Interest expenses, net                             (36,978 )
Loss from disposal of long-lived assets                             (154 )
Gain from change in fair market value of equity securities                             71,165  
Gain from foreign currency exchange                             8,904  
Other income, net                             3,735  
Income before income tax provision                             1,939,069  

 

 
(1) Revenue and profit or loss from segments below the quantitative thresholds. None of those segments has ever met any of the quantitative thresholds for determining reportable segments.
(2) Represents the significant expense categories and amounts for each reportable operating segment that are regularly provided to the chief operating decision maker.
(3) Other costs and expenses include depreciation and amortization, rental fees, communication costs, and other administrative segment costs and expenses.
(4) Intersegment costs and expenses primarily arise from transactions between segments for the provision of software development services, R&D activities, and advertising and promotional services, and are eliminated in consolidation.
(5) Comprised primarily of expenses not allocated to reportable segments.

 

                                 
    For the Fiscal Year Ended
February 28, 2025		  
    SDV     LBS     Other(1)     Total  
    JPY     JPY     JPY     JPY  
    (In thousands)  
Revenue from external customers     14,685,172       6,168,720       265,412       21,119,304  
Intersegment revenue     711,487       675,197       3,796,576       5,183,260  
Total revenue     15,396,659       6,843,917       4,061,988       26,302,564  
Elimination of intersegment revenue                             (5,183,260 )
Total consolidated revenue                             21,119,304  
Less:                                
Purchases(2)     7,117,127       2,763,637       132,095       10,012,859  
Personnel expenses(2)     2,240,713       1,386,309       1,141,557       4,768,579  
R&D expenses(2)     722,948       226,056       108,693       1,057,697  
Other costs and expenses(3)     762,192       386,530       1,266,854       2,415,576  
Intersegment costs and expenses(4)     2,885,792       1,542,697       754,610       5,183,099  
Total costs and expenses     13,728,772       6,305,229       3,403,809       23,437,810  
Elimination of intersegment costs and expenses                             (5,183,099 )
Total consolidated costs and expenses                             18,254,711  
Segment operating income     1,667,887       538,688       658,179       2,864,593  
Corporate expenses(5)                             (704,292 )
Total operating income                             2,160,301  
Interest expenses, net                             (49,498 )
Loss from disposal of long-lived assets                             (1,370 )
Loss from change in fair market value of equity securities                             (44,352 )
Loss from foreign currency exchange                             (34,515 )
Other income, net                             5,981  
Income before income tax provision                             2,036,547  

 

 
(1) Revenue and profit or loss from segments below the quantitative thresholds. None of those segments has ever met any of the quantitative thresholds for determining reportable segments.
(2) Represents the significant expense categories and amounts for each reportable operating segment that are regularly provided to the chief operating decision maker.
(3) Other costs and expenses include depreciation and amortization, rental fees, communication costs, and other administrative segment costs and expenses.
(4) Intersegment costs and expenses primarily arise from transactions between segments for the provision of software development services, R&D activities, and advertising and promotional services, and are eliminated in consolidation.
(5) Comprised primarily of expenses not allocated to reportable segments.

 

                                         
    For the Fiscal Year Ended
February 28, 2026		  
    SDV     LBS     Other(1)     Total     Total  
    JPY     JPY     JPY     JPY     US$  
    (In thousands)  
Revenue from external customers     15,297,402       6,411,121       187,267       21,895,790       140,313  
Intersegment revenue     728,736       708,523       4,999,853       6,437,112       41,250  
Total revenue     16,026,138       7,119,644       5,187,120       28,332,902       181,563  
Elimination of intersegment revenue                             (6,437,112 )     (41,250 )
Total consolidated revenue                             21,895,790       140,313  
Less:                                        
Purchases(2)     7,246,955       2,799,773       937,765       10,984,493       70,391  
Personnel expenses(2)     2,392,731       1,389,956       1,623,960       5,406,647       34,647  
R&D expenses(2)     804,612       526,684       205,408       1,536,704       9,848  
Other costs and expenses(3)     528,416       193,148       474,639       1,196,203       7,666  
Intersegment costs and expenses(4)     3,758,250       1,735,058       944,123       6,437,431       41,252  
Total costs and expenses     14,730,964       6,644,619       4,185,895       25,561,478       163,804  
Elimination of intersegment costs and expenses                             (6,437,431 )     (41,252 )
Total consolidated costs and expenses                             19,124,047       122,552  
Segment operating income     1,295,174       475,025       1,001,225       2,771,743       17,761  
Corporate expenses(5)                             (407,735 )     (2,612 )
Total operating income                             2,364,008       15,149  
Interest expenses, net                             (42,785 )     (274 )
Gain from disposal of long-lived assets                             1,092       7  
Loss from change in fair market value of equity securities                             (112,100 )     (718 )
Gain from foreign currency exchange                             12,735       82  
Impairment loss on long- term investment                             (91,021 )     (583 )
Gain on bargain purchase                             106,805       684  
Other income, net                             83,557       535  
Income before income tax provision                             2,322,291       14,882  

 

 
(1) Revenue and profit or loss from segments below the quantitative thresholds. None of those segments has ever met any of the quantitative thresholds for determining reportable segments.
(2) Represents the significant expense categories and amounts for each reportable operating segment that are regularly provided to the chief operating decision maker.
(3) Other costs and expenses include depreciation and amortization, rental fees, communication costs, and other administrative segment costs and expenses.
(4) Intersegment costs and expenses primarily arise from transactions between segments for the provision of software development services, R&D activities, and advertising and promotional services, and are eliminated in consolidation.
(5) Comprised primarily of expenses not allocated to reportable segments.

 

Geographic Area Information

 

The Company operates primarily in Japan. All material revenue of the Company is derived from Japan. See Note 2 for information relating to revenue by geography.

 

Long-lived assets include property and equipment, net and operating lease assets, and management has determined that it is not practical to allocate these assets by segment since such assets are used interchangeably among the segments. Physical locations and values of the Company’s long-lived assets are presented below:

 

                       
    As of
February 28,
2025		     As of
February 28,
2026		     As of
February 28,
2026		  
    JPY     JPY     US$  
    (In thousands)  
Long-lived assets:                        
Japan     5,605,494       5,488,460       35,171  
International     181,990       195,642       1,254  
Total long-lived assets     5,787,484       5,684,102       36,425