Thank you for joining us for NTT DATA's briefing session for the six months ended September 30th, 2025. I will serve as your facilitator. I'm Endo from IR. In terms of today's documents, please refer to our IR website presentation materials. それでは始めに。 First, let me introduce the speakers. 代表取締役社長。 Representative Director, President, and CEO, Mr. Sasaki. 代表取締役社長。 Representative Director and Senior Executive Vice President, Mr. Nakayama. 取締役常務。 Director and Executive Vice President, CSO, Mr. Nishimura. And Senior Vice President, Head of Finance Headquarters, Mr. Kusakabe. These are the four speakers. Today we will skip the earnings presentation and start with the Q&A session. Those of you here at the venue, please wait for the microphone after you have raised your hand. Those of you joining us remotely, please use the raise hand button of the web conference system. First, we'll take questions from the floor. Please raise your hand if you have a question. それでは。 On your first row, on the right-hand side from my side, please. SMBC Nikko Securities, my name is Kikuchi. Thank you very much for today. I have two questions. The first question is regarding the domestic Public & Social Infrastructure business. There were unprofitable projects, is what I've heard. So there are unprofitable projects with the government agency-related type of projects. It actually drags along. So what amount of this unprofitable project amount is recorded for the second quarter and the overall scale of the project? And what's going to happen of that for the second half of profit line for the Public & Social Infrastructure? Well, Public & Social Infrastructure recently was performing strongly. So there was one way of looking at it that it probably did increase to a peak, but there were more orders after that. But also including the treatment of unprofitable projects, what is your outlook for this business segment is what I'd like to know. Sasaki would like to answer your question. For the second quarter, what we posted for unprofitable business for public area was JPY 3 billion in total. Basically, in the past cases in several large-scale projects and within over several quarters, there was a track record that we have posted this unprofitable amount. But this time, we actually have visibility all the way to the risk. For the third quarter and fourth quarter, our assumption is that there are no further losses that will be made. And how we look at the market, we believe that it's going to be still strong. For this central, this Public & Social Infrastructure is central government and the local governments and also the Telecom & Utility. We believe that this is going to continue to steadily grow strong. We would like to continue to bring in that demand and further grow. As you have pointed out, for this fiscal year, on a year-on-year basis, profit-wise, it was a negative number. That means that it requires some measures to be injected. The SG&A, how that is spent towards the second half, we would like to thoroughly look into it and control it thoroughly so that we will be able to turn around for the remaining year and next year. Two projects and JPY 3 billion, looking at your scale of the business and comparing to the past, it's something that shouldn't be that worried about. Thank you very much. The second question, overseas, especially North America, you have quite a few orders of large-scale projects, was explained. What is the content of that? Recently, the continuing project of the existing customers, but also there's the expansion projects receiving the large-scale orders, was the explanation. So if that is the same way of thinking, so how are you evaluating the orders that you have received this time? And the last press conference, you said that you want the contribution from these orders to come about from the third quarter. But around what timing is that going to be recognized? NTT DATA, Inc., overall, there's a Chief Growth Officer person that is appointed now and the acquiring the large-scale projects or targeting at the large-scale accounts. To surely acquire them is the activities that are conducted under this Chief Growth Officer. And one more thing they're working on is a global practice, meaning they're not saying that to each region to do your best, but looking at it more like a global-wide perspective, like Global Security or Digital Workplace. These are several offerings and solutions, the offerings that utilize the Indian resources, accumulating the know-how of that. And we wanted to roll that out to several large accounts. And this initiative has been worked on in a full scale since last year. And finally, we have the CGO and the global practice initiatives being well combined. And especially in North America, it has enabled them to acquire large-scale orders or projects. So what's the content of it? It's like in cloud and security, is the large-scale project to cloud migration is one case. And the contract period is three to five years, multiple years. So it seems that the order received amount is larger. But from the second half of this fiscal year, it is going to be booked as net sales. From the third quarter net sales for North American region, it is going to exceed what it has achieved last fiscal year. The North American turnaround based on these orders received, we would like to surely pursue it. By having the net sales being recorded or posted, that means the gross profit is also going to increase. In North America, thorough initiatives are conducted in terms of reducing the SG&A. They will be able to surely accumulate the profit. If that is so, the expansion growth, so that means new orders you're receiving, yes, quite an amount. Yes. Thank you very much. はい、ご質問ありがとうございます。 Thank you for your question. Next question from the floor. If you have a question, please raise your hand. Then over there, please. Masuno from Nomura. I'd like to ask about overseas data center. In the press conference, I asked a question, why don't you accelerate even more than the current plan? And you said that you will carefully select partners and consider the approach in a balanced manner. But I feel like now we are at a stage where you can take on more risk. So what are your thoughts regarding taking on further risks to accelerate? What kind of reference do you take in order to make that decision? And now that you are 100% subsidiary, rather than relying on the cash from the sales to reach, I believe that you can take on more risk in that perspective as well. So becoming a 100% subsidiary of NTT, we are able to take action based on a bigger balance sheet, and we have the room to make investments with more leverage. I understand that. On the other hand, for cash allocation, there is data center, and there's also M&A, and also investment into fixed assets. So there are different investment targets. And especially with regards to M&A, in the age of AI, the rules of competition are changing. And so what kind of companies should we acquire in order to win in a global competition is something that we really need to strategize on. Over the next one to two years, the competitive landscape in the age of AI will start to emerge. And so we don't want to just bet on data centers. We would like to also consider M&A opportunities to have the optimal cash allocation. On the other hand, as you said, we have a reach, and we're able to do a cash cycle based on that. And we're also studying possibilities for utilizing third-party in making investments. So rather than leveraging our balance sheet, how much we can expand our investment, that is something that we continue to study. So in terms of considering the allocation into data center, what are the indices or the environmental factors that do you look at in order to make that decision? Is it the investment into North America? I also heard that India is more profitable. So is it the demand from India? Well, we have placed much importance on our communication with hyperscalers. The team's head is in North America, and the North American team is talking to the big techs on a day-to-day level. And so we're able to grasp the demand going forward very directly. And the team is making various investments. And we also look at other areas where we can complement that team and make the investment decision. Thank you very much. はい、ご質問ありがとうございます。 Thank you very much for your question. Are there any questions from the room, from the floor? If you do, please raise your hand. It seems that no further questions from the floor. So we would like to ask those of you participating online if you have any questions. First of all, Ueno-san from Daiwa Securities, please unmute and then ask your question. This is Ueno from Daiwa Securities. Can you hear my voice? Yes, we can hear you. The previous person asked the same question regarding page seven, excluding the two projects that were unprofitable, where it shows the operating profit trend that was 3 billion JPY. But with that, there's still a 2.5 billion JPY decline in profit. But if you look more in detail, on page six, net sales, the Public & Social Infrastructure, 22.6 billion JPY increase in net sales. So you are securing the increase in sales, but you have JPY 3 billion of a loss. But in other areas, there's about JPY 7.4 billion of a decline. What is the content of that remaining JPY 7.4 billion? Public & Social Infrastructure up to the operating profit. I would like to break down the declining factors. About JPY 3 billion of unprofitable projects exist. In addition to that, on a gross profit basis, about JPY 3 billion is added. So gross profit in total, JPY 6 billion. We experienced a JPY 6 billion decline. As you mentioned, the sales increased, but there's about 15% growth rate. However, excluding unprofitable projects, it's still JPY 3 billion decline in profit. Last year, there was one time large-scale, very profitable projects. So that not existing this fiscal year had the largest. That was the largest factor. And SG&A, there's an increase of about JPY 4 billion. And that also was a factor to push down the operating profit. So the JPY 4 billion in gross profit decline, and SG&A increasing by JPY 4 billion and JPY 10 billion. So a total of JPY 10 billion decline. So for SG&A activities and also the orders that demand is strong, we have to hire the engineers. And including the agent fee that is attached to hiring the people is also included in SG&A as well. But in a full year perspective, we would like to control these areas so that we'll be able to achieve the target. So I just want to confirm the breakdown. So unprofitability is JPY 3 billion, and there's an additional JPY 3 billion of gross profit because no large project that you've seen last year. And then there's SG&A and that's total of JPY 10 billion. Yes. So the impact of this to the second half. So there's a gross profit. The large project not being there is okay. But there's JPY 4 billion SG&A. You probably can recover that through sales increase. So if you just compare second half and second half, there's no remaining, right? For the SG&A, it depends on the order situation. But in the full year, we're aiming to achieve the full year target. Sorry to be very detailed, but just looking at the Enterprise, the BOJ short-term outlook, and looking at the other companies, the performance, the demand is extremely strong. But for you, the Enterprise net sales is that from JPY 279 billion-JPY 289 billion, so it's a 1.4% increase. So is it just that second half is lower or you're strong at the Social Financial, social infrastructure, Financial, and Enterprise? You're strong. So maybe you don't expect that much growth in Enterprise. But why is this growth rate so low? What is the factor behind it? The one thing is maybe I apologize for lacking the explanation. The payment, where this agent to collect the payment, their rate has changed. And there's about JPY 17 billion of that impact. And excluding this 7, if you reverse that 17 billion, it's a increase of about JPY 10 billion in revenue, JPY 20 billion. And towards manufacturing businesses, the demand is strong. So as a momentum, we are placed in a very good situation. So the net sales, from the gross, we change net. So include that. The Enterprise is having a strong growth then. Is this going to continue into the second half? Yes, we do expect it to continue. Okay. And also regarding the data center question, towards the holding companies and towards your companies, there's repeating questions regarding data center. Maybe this is a different angle way of looking at it. The AI, which is strong globally, honestly speaking, I think this area has risks. And honestly, you have to have a several trillion JPY fundraising capability or else NVIDIA is not even going to look at you. So regarding this AI area, you're not focusing that much. And the data center that's going to grow as a real business, you are focusing on the AI investment for the data centers. Is that a wrong way of looking at it, or are you going to invest in AI as well? We have an alliance with OpenAI as well. But the public large language model, we have no intention of creating something like that. So NVIDIA's GPU buying thousands of them and us creating a large-scale language model, we have no intention of doing that as well. But on the other hand, the private AI like Tsuzumi or Mistral AI, relatively small-sized model, we think that Enterprise customers will utilize that more than now. And we call it private AI. So in Tsuzumi too, it only requires one GPU. So as NTT already made the announcement, especially LLM that's strong in Japanese and finance and medical areas, it's already learning. And if the customers add a learning area, then the learning speed is extremely fast. So towards those customers that are in need for that, we rent out our data center space and also combine that with the public AI and have our customers utilize AI in this combined manner. And we believe that this can be rolled out globally as well. So conducting business with the hyperscalers. But in the private AI area, the government customers or manufacturing customers or finance industry customers, we would like to provide our service to them as well. So in that sense, regarding AI, including the infrastructure, we would like to become in a way that we'll be able to provide the service in a full-stack manner. That part, I highly evaluate that. Like IBM and Oracle being very strong is that instead of trying to develop a huge AI, but at the customer side, meeting the customer demands is enabling you more to make money. But the AI solution, like AI agent, something that will gain sales, not the data center, but with AI, you're mentioning Tsuzumi. But application-wise, are you already prepared or around what timing are you going to be able to record net sales? Well, the so-called AI agent, we are paying attention to that. Up to now, we have conducted many POC, and there are actual orders that we have received in this area. We believe that there will be a business growth in this area moving forward. We are sure about that. That is why even within the handout we wrote it; we are going to establish a new company making investments in Silicon Valley for AI agent as several offerings. There is something that will be made into a certain template. We would like to have a thorough analysis of the customer and developing an AI agent tailored to our customers. The AI services or computing services that are tailored to the customer needs will be something that we are going to provide. It is not that simply one can we are going to purchase packages and resell that, a lot of them. But instead of that, we are going to be on the customer's side and provide the service that is required. And as AI evolved, we will update our services also. And AI, at times, will actually not tell the truth or lie to you. So in order to provide a thorough service, a managed service of our services that are provided is going to become important. So we would like to establish a thorough business model to provide our services. At page 17, OpenAI-related business, JPY 100 billion. So an agent-related separate from them, in 2027, JPY 300 billion is what we aim for agent management. I believe that you were saying JPY 100 billion for overseas. Is that true? Yes. Okay, thank you very much. That concludes the question from Ueno. ありがとうございました。それ。 Thank you very much. Next question, please. We have passed the planned time, but we were also late in starting this session, so if there is a question, we will be happy to answer additional questions, and if you would like to ask another question, for those of you who have already asked a question, we are welcoming that as well. No questions? Either from the floor or from the remote participants, well, we see no hands, and this concludes the NTT DATA Group's earnings presentation. Thank you very much.