Message from the President

I would like to take this opportunity to express my gratitude to our shareholders and investors for their continued support.

In the fiscal year ended December 31, 2024, the Japanese economy recovered moderately despite stagnation in some sectors. Looking ahead, this gradual recovery seems likely to continue with the help of various government policies and improvements in employment and income conditions. On the other hand, there is a risk that a downturn in overseas economies associated with continued high interest rates in Europe and the United States, ongoing stagnation in China’s real estate market, and other factors, could put downward pressure on the Japanese economy. Furthermore, attention must be paid, for example, to the effects of rising prices, policy developments in the US, geopolitical tensions in the Middle East, and fluctuations in financial and capital markets.

In the markets served by the Cyberlinks Group (the “Group”), investment in digital transformation (DX) and digitalization has been robust due to changes in the social structure stemming from population decline, coupled with the need to respond to diversifying lifestyles and work styles triggered by the COVID-19 pandemic.

The food retail industry remains in a challenging environment marked by rising costs, including higher procurement prices and utility prices. At the same time, consumers become more cost-conscious and hesitant to spend amid prolonged high prices. From a medium- to long-term perspective, the industry faces the risk of market contraction due to a declining population, alongside challenges such as intensifying competition across business and industry boundaries, competition among existing companies to open new stores, labor shortages, and rising labor costs. To navigate this challenging business environment, it is essential to advance efforts to improve productivity, for example by promoting DX to improve the efficiency of store operations and optimizing supply chain by collaborating with wholesalers and manufacturers.

In addition, in response to the so-called “2024 problem” in logistics (referring to the impact on the logistics industry of new or revised regulations related to truck drivers), there is a growing movement to improve logistics efficiency across the barriers between companies through collaboration and shared use of resources in non-competitive areas.

Government and municipal offices are expected to achieve progress on DX in accordance with the “Municipal Digital Transformation (DX) Promotion Plan” proposed by Japan’s Ministry of Internal Affairs and Communications (MIC). Specifically, the government has outlined a policy to migrate and standardize municipal core administrative systems used by local governments, utilizing the Government Cloud by the end of March 2026. In addition, the integration of the My Number Card with health insurance cards and driver’s licenses, along with broader efforts to promote the card’s adoption and use, is expected to enhance public services and accelerate administrative efficiency.

Furthermore, business practice reforms triggered by the COVID-19 pandemic have led to a dramatic increase in the need for “trust services” that serve as a data distribution infrastructure essential to efforts aimed at moving various paper-based or face-to-face communications into cyberspace. Accordingly, simple and highly reliable services are expected to rapidly proliferate.

In the mobile phone sales market, the number of units sold in stores is on a downward trend due to the lengthening replacement cycle caused by the high prices of mobile devices and to increased sales through online shops and sales of used devices. The environment also remains challenging with respect to store count and size, as companies continue to pursue market-driven strategies focused on selective store openings and operational efficiency. Looking forward, we expect to see business opportunities such as expanding demand for 5G services and device replacement demand in preparation for the planned end of 3G services in March 2026.

Navigating these circumstances in a manner consistent with its brand concept, “LINK Smart: Moving into the Era of Hands-Free Connectivity,” the Cyberlinks Group has proactively proposed safe, secure, low-cost, high-quality, and highly functional cloud services based on “shared cloud” (i.e., a shared infrastructure for cloud services).

In addition, under the vision of “WorkSmart: Every individual plays a leading role in creating a healthy, vibrant, and rewarding workplace,” in fiscal 2024 we raised salary levels by up to 8.1% (companywide average of 3.5%) and renovated our head office. We will continue to invest in human capital, including through measures to improve employee compensation in a stable and continuous manner.

Regarding future economic trends, diversified lifestyles and work styles have taken root in the wake of the COVID-19 pandemic, and the development of new business models is accelerating in all industries. To maintain and strengthen their competitiveness, companies are rapidly proceeding with DX, and investment demand, especially in cloud services and AI, continues to grow. In addition, government agencies and local governments are expected to continue investing to improve productivity and operational efficiency, against the backdrop of MIC’s “Municipal Digital Transformation (DX) Promotion Plan.”

Meanwhile, in the labor market, demand for human resources with digital expertise continues to grow with the progress of DX, and the information services industry, including the Cyberlinks Group, is facing the challenge of securing or developing such talent. These conditions demand initiatives to secure talent by fostering rewarding work environments and enhancing efficiency in system development, such as through the proactive adoption of low-code and no-code platforms for rapid application development. Efforts aimed at reducing the number of people required for operations through workflow automation are also important.

In this business environment, based on its “Transformation 2025” medium-term management plan for FY2021 through FY2025 (revised version as of February 2023), the Group will work to achieve greater growth by enhancing and actively developing safe, secure, low-cost, and high-quality cloud services based on “shared cloud” (shared infrastructure for cloud services), in a manner consistent with its brand concept, “LINK Smart: Moving into the Era of Hands-Free Connectivity.”

We will continue to strive for further business expansion and continuous improvement of corporate value to meet the expectations of our shareholders and investors. We humbly ask for your continued support as we move forward.

March 2025
Cyberlinks Co., Ltd.

President　Naoki Higashi