Summary

Metareal Corporation is a company that develops its business centered on specialized AI translation services. Its flagship automatic translation tool, “T400,” supports highly specialized fields such as pharmaceuticals, legal, finance, chemistry, machinery, and patents. With approximately 6,000 client companies, one of its key characteristics is the integration of AI technology with human translation services. Metareal’s business model is characterized by flexible service provision tailored to customer needs and a strong focus on specialization, and it adopts a SaaS model. Its business segments are divided into the AI business, the HT (Human Translation) business, and the Metaverse business, with the AI business growing primarily around the automatic translation software “T400.” Recently, development of a new AI platform has been progressing, raising expectations for future business expansion. The HT business provides high-quality translation services, while the Metaverse business aims to deliver new experiences by integrating AI with VR and AR technologies. Metareal possesses competitive advantages, particularly in its specialization and adoption of cutting-edge AI technologies, which have earned strong customer trust.

The market environment is expanding alongside the advancement of digital transformation and globalization, and progress in AI technology is promoting diversification in translation services. In terms of performance, the company recorded revenue of ¥4,292 million in fiscal year 2022, which declined to ¥4,178 million in fiscal year 2023, with a forecast of ¥4,085 million for fiscal year 2024. Operating profit increased from ¥515 million in fiscal year 2022 to ¥746 million in fiscal year 2023, but is expected to decrease to ¥117 million in fiscal year 2024, which may raise concerns among investors regarding the company’s medium- to long-term vision. Metareal is focusing on AI and Metaverse businesses and is strengthening its presence in the medical field through a joint research agreement with the National Cancer Center. In its medium-term management plan, the company intends to concentrate resources on the AI and Metaverse businesses, with particular investment planned for the “Metareal AI” project. Its new business strategy is focused on deepening the AI business and expanding the Metaverse business, especially through product development for the pharmaceutical industry. Metareal is also strengthening its ESG initiatives and aims to achieve transparent corporate management. In its shareholder return policy, the company seeks to enhance corporate value through stable dividends and share buybacks, while maintaining financial soundness and thorough risk management. To achieve sustainable growth, it is essential to implement appropriate measures against performance volatility, industry-specific risks, regulatory and compliance risks, and supply chain risks. Metareal is a company expected to continue growing through diverse approaches across multiple fields.

1. Overview of FY2023 Performance

Metareal Corporation’s performance in fiscal year 2023 recorded revenue of ¥4,178 million, representing a decrease to 97.3% compared with the previous year. This is considered to be influenced by investments in the AI and Metaverse businesses. Revenue in fiscal year 2022 was ¥4,292 million, showing year-on-year growth of 103.2%, but turned to a decline in fiscal year 2023. Operating profit surged from ¥515 million in fiscal year 2022 to ¥746 million in fiscal year 2023, but is forecast to decline significantly to ¥117 million in fiscal year 2024. This increase in operating profit was driven by the effects of cost control and operational efficiency improvements; however, there are concerns that investments in new projects are impacting short-term profitability. Net income attributable to the period improved from ¥30 million in fiscal year 2022 to ¥534 million in fiscal year 2023, but is expected to decrease to ¥299 million in fiscal year 2024, potentially causing investors to harbor concerns about the company’s medium- to long-term vision. Metareal is placing greater emphasis on new projects and advancing initiatives to strengthen its presence in the AI and Metaverse businesses. In particular, the joint research agreement with the National Cancer Center signals a strengthening of its presence in the medical field. Overall, while Metareal continues strategic investments aimed at future growth amid significant performance fluctuations, challenges remain regarding short-term earnings stability.

2. Earnings Outlook for the Fiscal Year Ending March 2024

The earnings outlook for the fiscal year ending March 2024 forecasts revenue of ¥4,085 million, operating profit of ¥117 million, ordinary profit of ¥118 million, and net income attributable to owners of the parent of ¥299 million, all of which are expected to decline year on year. In particular, revenue decreased to ¥4,178 million in fiscal year 2023, representing 97.3% compared with the previous year, and this decline has influenced the outlook. The background to this decrease is considered to include investments in the AI and Metaverse businesses, and future growth will require the acquisition of new orders and swift responses to market needs. Although operating profit surged to ¥746 million in fiscal year 2023, it is expected to fall sharply to ¥117 million in fiscal year 2024, heightening concerns about profit stability. In particular, investments in new projects within the AI business may impact short-term profitability. Metareal is advancing measures to strengthen its presence in the medical field through a joint research agreement with the National Cancer Center, which is expected to contribute to future performance. Amid changes in the market environment, enhancing competitiveness—especially in the AI field—has become a critical issue. Metareal has demonstrated its commitment to sustainable growth by focusing on technological innovation and the development of new markets. For investors, it is important to carefully assess performance trends and regularly monitor the execution and results of the company’s growth strategy.

3. Medium- to Long-Term Growth Strategy

Under its corporate mission of “liberating humanity from constraints of place, time, language, and physical limitations,” Metareal Corporation has formulated a medium-term management plan and aims for growth focused on the AI business, HT (Human Translation) business, and Metaverse business. In particular, within the AI business, the company is building a structure to meet customer needs through the provision of industry-specific solutions, while advancing the development of “T-400,” specialized in document generation and translation, and the generative AI platform “Metareal AI.” Through these initiatives, Metareal aims to enter the entire process of specialized document creation and deepen relationships with customers. The HT business functions as a stable revenue base, while the Metaverse business is expected to support long-term growth initiatives.

As part of its concrete investment plan, the company plans to invest ¥4,800 million in the AI business, ¥700 million in the HT business, ¥500 million in the Metaverse business, and ¥2,000 million in M&A activities, aiming to differentiate itself from competitors through the introduction of the latest servers and data processing equipment. The new business strategy centers on deepening the AI business and expanding the Metaverse business, particularly through the development of the AI product “Rakuyaku” for the pharmaceutical industry and the creation of new business models utilizing digital twin technology. Through these measures, growth in revenue and profit in the short to medium term is expected, with KPIs set such as increases in the number of new customers and usage frequency. Risk factors include the speed of technological innovation, intensifying market competition, and changes in regulations, all of which require flexible responses. Metareal aims to realize sustainable growth by establishing a highly transparent risk management framework and earning the trust of investors.

・In fiscal year 2023, Metareal Corporation recorded a decrease in revenue to 97.3% compared with the previous year, while operating profit increased sharply; however, although the company continues strategic investments aimed at future growth, challenges remain regarding short-term profit stability.

・The earnings outlook for the fiscal year ending March 2024 is expected to decline year on year, with investments in the AI and Metaverse businesses in particular having an impact, and operating profit projected to decrease significantly.

・Based on its medium-term management plan, Metareal Corporation aims for growth focused on the AI, HT, and Metaverse businesses, investing ¥4,800 million in the AI business in particular, and expects short- to medium-term growth in revenue and profit through the development of the AI product “Rakuyaku” for the pharmaceutical industry and the creation of new business models utilizing digital twin technology.

Business Overview

1. Overview of the Business Model

Metareal Corporation operates its business primarily around specialized AI translation services. Its flagship product, the automatic translation tool “T400,” supports highly specialized fields such as pharmaceuticals, legal, finance, chemistry, machinery, and patents, contributing to improved operational efficiency. This product has been adopted by approximately 6,000 companies and is characterized by the seamless integration of AI technology with human translation services. In addition, the company provides a unified AI platform called “Metareal AI,” which enables a wide range of industry-specific translation solutions.

A notable feature of Metareal’s business model is its flexible service offering tailored to customer needs and its strong focus on specialization. In particular, the company adopts a SaaS (Software as a Service) model, allowing customers to select and use only the functions they require. This structure enables the company to respond precisely to individual customer needs. Furthermore, the newly added Metaverse business aims to provide new communication experiences utilizing digital environments and is also expected to serve as a future growth engine.

2. Main Business Segments

Metareal consists primarily of three segments: the AI business, the HT (Human Translation) business, and the Metaverse business, each with distinct characteristics and growth strategies.

1. AI Business:
The automatic translation software “T400” provides industry-specific solutions, with a particular focus on specialized fields such as healthcare, legal, and finance. Alongside advances in AI technology, this segment accounts for the majority of the company’s revenue. Recently, the development of a new AI platform has been progressing, raising expectations for future business expansion.

2. HT Business:
This segment provides traditional professional human translation services and has particular strengths in legal and medical translations. By ensuring high-quality translations, this segment continues to make a stable contribution to profitability.

3. Metaverse Business:
This new segment offers platforms that integrate AI with VR and AR technologies, working to provide new experiences in digital environments. In particular, it creates opportunities for communication that transcend physical distance between remote users, and continued growth is expected.

These businesses are mutually interconnected and support Metareal’s growth by delivering comprehensive value that addresses the diverse needs of its customers.

3. Market Position and Competitive Advantages

Metareal holds a strong competitive position in the automatic translation market. Its key strength lies in its specialization in professional translation fields, enabling it to provide high-quality services through proprietary AI technology and advanced domain expertise. As a result, the company has earned customer trust and successfully differentiated itself from competitors.

The factors supporting Metareal’s competitive advantages include the following:

1. **Focus on Specialization**:

   By concentrating on specific fields such as pharmaceuticals, legal, and technical domains, the company provides translation services backed by deep expertise, allowing it to meet customer needs with high accuracy.

2. **Adoption of Advanced AI Technology**:

   Through its proprietary AI platform “Metareal AI,” the company enhances translation accuracy and efficiency, and this technological advantage serves as a clear differentiator from competitors.

3. **Diverse Service Offerings**:

   By integrating different segments—AI-based services, human translation services, and the Metaverse business—the company delivers consistent value to customers, further strengthening customer trust.

Through these strengths, Metareal maintains sustainable competitiveness within the translation market while seeking additional growth opportunities.

4. Market Background

The translation market in which Metareal operates has been rapidly expanding alongside the advancement of digital transformation and globalization. In particular, the maturation of AI technologies has led to improvements in machine translation accuracy and promoted the diversification of translation services.

1. Growing Demand for Multilingual Support:
As corporate globalization progresses, the need to support multiple languages in overseas transactions and customer communications is increasing, driving higher demand for translation services across the industry.

2. Advances in AI Technology:
Developments in machine learning and natural language processing have contributed to greater efficiency and higher quality in translation, making AI-based solutions an attractive option for customers.

3. Acceleration of the Digital Shift:
The spread of remote work following the COVID-19 pandemic has increased the importance of communication in digital environments, expanding the potential of Metareal’s Metaverse business.

4. Intensifying Market Competition:
While new entrants and technological innovation continue to advance, competition among companies is intensifying. Even with its technological advantages and specialization, Metareal operates in an environment that requires flexible strategies.

These factors present growth opportunities for Metareal, and the market environment is expected to remain an area of interest going forward.

5. Key Growth Areas to Watch

Metareal’s future growth is expected to be driven particularly by developments in the AI business and the Metaverse market. The newly stated goal of developing “translation AI that requires no human post-editing” could become a significant source of future competitiveness. In this context, initiatives such as the development of the pharmaceutical-industry-focused product “Rakuyaku” and efforts in the Metaverse business deserve attention.

With regard to the Metaverse business, the provision of new digital experiences utilizing AR and VR technologies is anticipated, holding the potential to create new value even within conventional business models. Through these initiatives, Metareal is expected to pursue the acquisition of new customers and the development of new markets simultaneously.

Furthermore, from an investor perspective, the execution of a stable dividend policy with careful consideration of risk management—supported by strategic decision-making by management—will be an important point of focus. As a result, interest is likely to grow in the future impact of the company’s growth strategies.

Through its multifaceted approach across diverse fields, Metareal is a company expected to achieve sustainable growth going forward.

Performance Trends

1. Overview of Recent Performance

Metareal Corporation has exhibited particularly high volatility in its performance in recent years. In fiscal year 2022, revenue reached ¥4,292 million, representing growth of 103.2% compared with the previous year. However, in fiscal year 2023, revenue declined to ¥4,178 million, marking a decrease to 97.3% year on year. This decline is likely attributable to investments in the AI and Metaverse businesses. Revenue for fiscal year 2024 is forecast at ¥4,085 million, indicating that stable growth is not currently expected.

Operating profit surged from ¥515 million in fiscal year 2022 to ¥746 million in fiscal year 2023, but is projected to fall sharply to ¥117 million in fiscal year 2024. This increase in operating profit is considered to be the result of effective cost management and operational efficiency improvements; however, there are concerns that investments in new projects are negatively affecting short-term profitability.

Net income for the period improved significantly from ¥30 million in fiscal year 2022 to ¥534 million in fiscal year 2023. However, it is expected to decline to ¥299 million in fiscal year 2024, which may cause investors to harbor concerns about the company’s medium- to long-term vision. Metareal is placing greater emphasis on new projects and is advancing initiatives to strengthen its presence in the AI and Metaverse businesses. In particular, the joint research agreement with the National Cancer Center signals a strengthening of its presence in the medical field.

2. Revenue Trends and Market Environment

An analysis of Metareal’s revenue shows an increase from ¥4,004 million in fiscal year 2021 to ¥4,292 million in fiscal year 2022, followed by a decline to ¥4,178 million in fiscal year 2023. This fluctuation in revenue is thought to be influenced in particular by a decrease in new orders in the AI and Metaverse businesses. Changes in the market environment and resulting shifts in customer demand are also considered contributing factors.

For fiscal year 2024, revenue is forecast at ¥4,085 million, raising concerns about a slowdown in growth. In response, the company must rapidly address new technologies and evolving market needs, and Metareal needs to work to secure new orders amid intensifying competition. In this context, a particularly important focus within its growth strategy is strengthening competitiveness in the AI field. Responding to new business opportunities driven by generative AI technologies may become a key challenge.

3. Operating Profit and Its Background

An examination of Metareal’s operating profit shows a sharp increase from ¥515 million in fiscal year 2022 to ¥746 million in fiscal year 2023. Contributing factors include appropriate cost management and the implementation of operational efficiency measures, with reductions in selling, general and administrative expenses playing a significant role. However, operating profit is expected to decline to ¥117 million in fiscal year 2024, raising concerns about earnings stability.

Furthermore, to contain extraordinary losses, it is necessary to carefully monitor asset management and the progress of new projects. As corporate performance fluctuates in the short term, employee productivity and organizational flexibility become critical factors supporting growth. In terms of ordinary profit as well, investments aligned with new strategic visions are having an impact, making risk management for profit preservation increasingly important.

4. Detailed Income Statement Analysis

A detailed analysis of Metareal’s income statement reveals significant fluctuations in revenue, profit margins, and cost structures. While revenue in fiscal year 2022 was ¥4,292 million, it declined to ¥4,178 million in fiscal year 2023. This decrease is attributed to a temporary suppression of demand in the AI business. At the same time, the cost of sales declined, providing evidence of effective cost control and efficient operations.

As a result, operating profit increased substantially from ¥515 million in fiscal year 2022 to ¥746 million in fiscal year 2023, and the operating margin also improved, indicating a positive directional trend. However, with operating profit expected to decline going forward, it will be necessary to pursue revenue stability and further strengthen the management of selling, general and administrative expenses, as well as overall business strategy.

5. Cash Flow Statement Analysis

An analysis of the cash flow statement provides visibility into Metareal’s operating, investing, and financing activities. Cash flow from operating activities amounted to ¥116 million in fiscal year 2023, remaining stable. This stability is supported by improvements in revenue and operating profit, suggesting the company’s ability to secure operating funds. Cash flow from investing activities totaled ¥665 million, indicating capacity for future investments, which is expected to support corporate growth.

In addition, borrowing levels in financing activities have been kept under control, demonstrating the company’s financial soundness through the effective use of equity capital. From a cash flow perspective, Metareal is evaluated as operating in a steady and prudent manner, with these factors contributing positively to its growth potential.

6. Medium- to Long-Term Performance Outlook and Market Strategy

While Metareal anticipates a slight decline in fiscal year 2024, it continues to expect growth in the AI and Metaverse businesses. In particular, the company is required to respond swiftly to technological innovation in its products and changes in market conditions. The expansion of specialized AI solutions and Metaverse-related services represents a key element of its future growth strategy and is expected to differentiate the company from competitors.

As markets mature, maintaining a competitive advantage over rivals will require strong product performance and a deep understanding of market needs. Accordingly, the development of new target markets and the strengthening of marketing initiatives will become increasingly important.

7. Advice for Investors

While Metareal offers growth potential in the AI and Metaverse fields, these opportunities are accompanied by inherent risks. Investors should therefore exercise particular caution when evaluating future performance trends. It is advisable to continue closely monitoring how corporate transformation and new project initiatives contribute to financial results, and to regularly assess the execution and outcomes of growth strategies.

Goal setting based on past performance and flexible strategies that respond to market changes will be required, with transparent management serving as a key factor. Investment decisions made with a long-term perspective, rather than focusing solely on short-term profits, will enable Metareal to achieve sustainable growth.

Although Metareal’s performance trends are influenced by many variables, rational investment decisions based on appropriate information gathering and analysis are expected. Overall, expectations for Metareal’s future remain high, with particularly strong interest in its advanced businesses such as AI and the Metaverse.

Medium-Term Management Plan / Growth Strategy

1. Overview of the Medium-Term Management Plan

Metareal Corporation’s medium-term management plan is based on its corporate mission of “liberating humanity from constraints of place, time, language, and physical limitations,” and aims to pursue growth by focusing on the AI business, the HT business, and the Metaverse business. In particular, within the AI business, the company seeks to build a structure that responds to customer needs by providing industry-specific solutions through contract development and joint development. Concrete initiatives include the development of “T-400,” specialized in document generation and translation, and the generative AI platform “Metareal AI.” Through these efforts, Metareal aims to enter the entire process of specialized document creation, deepen relationships with customers, and achieve short- to medium-term growth. The HT business is positioned as a stable revenue base, while the Metaverse business is viewed from a long-term growth perspective. Management is also making R&D investments and is preparing to introduce digital twin technologies to the market by leveraging “Gaussian Splatting” technology.

From an expert perspective, clearly identifying growth domains and allocating resources accordingly is a critical factor in enhancing corporate competitiveness. In particular, demand for digital solutions that transcend time and physical constraints is expected to increase further, making appropriate targeting and a deep understanding of customer needs essential. For investors, it is important to remain mindful of the points at which strengthening the AI business and advancing the Metaverse business translate directly into tangible improvements in profitability.

2. Investment Plan and Priority Initiatives

Metareal’s investment plan is designed to achieve short- to medium-term growth by concentrating resources primarily on the AI and Metaverse businesses. Specifically, the company plans to invest ¥4,800 million in the AI business, ¥700 million in the HT business, ¥500 million in the Metaverse business, and ¥2,000 million in M&A activities. These figures indicate capital expenditures aimed at differentiation from competitors, including the introduction of state-of-the-art servers and data processing equipment.

As part of efforts to strengthen R&D, substantial investment has been allocated to the “Metareal AI” project, with the goal of advancing AI tool development and enhancing specialized document creation support services. In the Metaverse business as well, the company aims to expand its market presence by deepening the use of VR and CG technologies through collaboration with STUDIO55 Co., Ltd.

In terms of capital procurement, risk management that considers not only maintaining liquidity through equity capital but also the use of borrowings is required. Experts emphasize that the quality of growth-oriented investments contributes directly to corporate stability and improved profitability. For investors, transparent disclosure of specific investment targets and initiatives will serve as an important basis for assessing potential future returns.

3. New Businesses and Segment-Specific Growth Strategies

Metareal Corporation’s new business strategy is centered on deepening the AI business and expanding the Metaverse business. In the AI business, the company aims to provide highly specialized services for specific industries such as pharmaceuticals, legal, and finance, with the deployment of the “Metareal AI” platform at its core. In particular, the product known as “Rakuyaku” is positioned as a specialized AI solution for the pharmaceutical industry, designed to improve operational efficiency and strengthen customers’ competitiveness.

In contrast, within the Metaverse business, the company seeks to foster interaction among customers in digital spaces through a service named “Dokodemo Door,” thereby creating new forms of business. In particular, plans are underway to deliver practical solutions for the construction and manufacturing industries by leveraging digital twin technologies. Experts point out that the development of new businesses promotes diversification of revenue sources and contributes to risk dispersion. From this perspective, investors should maintain expectations for Metareal’s new businesses while closely monitoring the degree to which tangible results are achieved.

4. Expected Results, Benefits, and KPIs

Within Metareal’s medium-term management plan, the expected outcomes are growth in revenue and profit over the short to medium term. Revenue from the AI business, in particular, is expected to stabilize cash flow at an early stage through the deployment of industry-specific products and services. For the Metaverse business, the establishment of a growth foundation through the provision of new communication platforms is anticipated, with KPIs such as increases in the number of new customers and usage frequency being set.

Specifically, setting KPIs related to sales targets for “Metareal AI” and “Rakuyaku,” as well as growth in users of the Metaverse platform, will be critical. This approach is expected to present investors with concrete and clear growth projections, thereby enhancing credibility. At the same time, numerous risk factors exist, making it essential to respond sensitively to competitor movements and market changes. Experts emphasize that monitoring these KPIs is key to understanding the actual performance and growth outcomes relative to the company’s stated objectives.

5. Approach to Risk Factors

Metareal may face numerous risk factors in advancing its growth strategy, particularly intensifying market competition and the need to respond to rapid technological change. Technologies such as AI and the Metaverse evolve at a fast pace, and in an environment of frequent change, adaptability is essential. Without continuous technological innovation to differentiate itself from competitors, the risk of losing competitive advantage increases.

In addition, human resource management and cultural integration during organizational reform or business integration represent further risk factors, necessitating appropriate personnel allocation and communication strategies. Experts note that by establishing a transparent risk management framework, a company can earn the trust of investors. Investors, in turn, are encouraged to carefully observe how the company addresses these risks with a calm and objective perspective.

6. Execution Framework

Metareal Corporation is advancing organizational reforms and management integration while aiming to build an efficient execution framework, with a strong focus on delegating authority and developing human resources. By renewing its management team and bringing in personnel with diverse backgrounds, the company seeks to create an environment that fosters innovation.

Furthermore, by establishing a structure in which each business division can independently formulate and execute strategies, Metareal enables rapid decision-making. According to experts, strengthening the execution framework is essential for improving organizational performance and creating a clear path toward achieving strategic goals. Such an approach also signals to investors the company’s commitment to sustainable growth, thereby enhancing confidence in investment decisions.

Metareal clearly demonstrates its commitment to continued challenges toward the future, grounded in a medium-term management plan and growth strategy designed to flexibly respond to technological evolution and achieve sustainable growth. As the execution of each initiative is directly linked to the company’s performance, investors should continue to closely monitor future developments.

News & Topics

1. Rosetta Corporation Announces New Vision: “Creating Translation AI That Requires No Human Post-Editing”

On December 4, 2025, Rosetta Corporation, a consolidated subsidiary of Metareal Corporation, announced a new vision: “Creating translation AI that requires no human post-editing.” This vision is based on the company’s mission to “liberate Japan from the shackles of linguistic handicaps” and aims to revolutionize translation operations through full automation.

Rosetta has continuously pursued technological innovation, having released the statistical machine translation system “Jukkō” in 2006 and declared the achievement of “95% accuracy translation AI” in 2015. The company’s track record enhances the credibility of this new vision and has raised expectations among investors. As this vision has the potential to significantly impact the entire translation industry, closely monitoring industry trends will likely become an important part of investment strategies.

2. Initiatives Focused on Specific Domains

In pursuing its new vision, Rosetta has announced that it will initially focus on areas such as manuals for the IT and telecommunications industry and instruction manuals in the manufacturing sector. These fields have high demand for translation, and full automation of traditionally human-dependent translation processes is expected to significantly improve operational efficiency. This approach is anticipated to deliver benefits including reduced errors, higher productivity, and greater flexibility in responding to client needs.

Junichi Goishi, Representative Director of Rosetta, has expressed confidence that while this vision may traditionally be seen as difficult to achieve, the integration of recent generative AI technologies with accumulated expertise significantly increases its feasibility. If this technology succeeds, it is expected to have spillover effects into other domains as well. For investors, tracking the progress of these concrete initiatives will become increasingly important.

3. Strengthening of Management and Organizational Renewal

In line with its new vision, Rosetta is strengthening its management team and advancing organizational restructuring. In particular, the return of founder Junichi Goishi to direct management underscores the company’s commitment to accelerating growth. The company is also pursuing the recruitment of talented external personnel, especially strengthening executive-level positions such as CFO and CSO. These efforts aim not only to enhance organizational capabilities but also to establish a foundation for performance recovery.

Based on its new management strategy, Rosetta is also promoting the codification of shared values across all employees and the strengthening of internal controls, thereby enhancing corporate stability. For investors, a key point of interest will be how management strategies contribute to performance, making it necessary to assess their short-term impact on results.

4.  Financing and Reassessment of Growth Strategy

In 2024, Metareal acquired a 55% stake in STUDIO55 Co., Ltd. and raised funds to strengthen its Metaverse business. This move utilizes medium- to long-term borrowing and financing methods and represents part of an investment strategy aimed at future growth. While this initiative contributes to Metareal’s overall growth strategy, its short-term impact on cash flow cannot be ignored.

In fiscal year 2023, cash flow from operating activities recorded inflows of ¥61,468 thousand, while cash outflows from investing activities amounted to ¥132,981 thousand. This financing is particularly significant for new businesses and technological development and is essential for shifting toward areas with higher revenue potential.

5. Joint Research on the Creation of Clinical Trial-Related Documents

In 2024, Metareal began a joint research project with the National Cancer Center focused on creating clinical trial-related documents using AI. This project conducts research on document generation using generative AI and is expected to have an impact on the global medical industry. In particular, AI technology contributes to improved efficiency in document creation and responds to growing needs within the healthcare sector.

This research strengthens the linkage between the company’s AI technology and the medical industry, and its success could further enhance credibility. How the outcomes of this initiative contribute to future revenue and profit will be closely watched and is expected to become an important indicator for investors.

6. Strengthening ESG Initiatives

Metareal is strengthening its initiatives related to ESG (Environmental, Social, and Governance), demonstrating a commitment to enhancing operational transparency through the use of AI and advanced technologies. Through these efforts, the company aims not only to increase corporate value but also to enhance trust among investors and business partners.

ESG initiatives have become an indispensable element of corporate growth, and for investors, ESG considerations are increasingly important criteria in company selection. Accordingly, close attention should be paid to Metareal’s ongoing ESG efforts.

7. Competitive Environment and Market Changes

Metareal’s new vision holds growth potential in an increasingly competitive translation market. As demand for industrial and medical-related translation rises, flexible responses centered on the company’s technology and policies are required. Amid ongoing advancements in AI technology across the industry, Metareal is expected to further secure competitive advantages and contribute to improved performance.

However, competitors are also intensifying their efforts toward technological innovation, making it essential for Metareal to consistently stay ahead. To ensure sustainable growth, effective strategies will be required. If initiatives aligned with the new vision succeed, improvements in performance are likely to be realized.

8. Recommendations for Investors

Rosetta’s new vision of “creating translation AI that requires no human post-editing” represents a transformative shift in the translation industry, and expectations for its realization are high. New challenges built on the company’s past achievements present attractive opportunities for investors seeking enhanced competitiveness and performance growth.

At the same time, risks and challenges remain, and investors must carefully assess the evolving situation. In particular, successful development of AI technology could have a direct impact on stock prices. Therefore, it is important to closely monitor developments related to technological innovation while making informed investment decisions. While expectations for these new challenges are high, the outcome remains uncertain, and investors should adopt a stance that supports growth strategies involving change while maintaining prudent risk management.

Company Overview

1. Basic Information (Company Profile, Headquarters, etc.)

Metareal Corporation is a company headquartered in Chiyoda-ku, Tokyo, providing language solutions specialized in a wide range of professional fields, with a primary focus on AI-powered translation services. Founded in 2000, the company develops and operates online automatic translation software for fields such as pharmaceuticals, legal affairs, finance, chemistry, machinery, and patents. Under the leadership of Representative Director Junichi Goishi, Metareal is committed to delivering high-quality translation services and focuses on providing innovative solutions utilizing AI technologies.

Its main products include the unified AI platform “Metareal AI” and the automatic translation service “T400.” In particular, “T400” has been adopted by more than 6,000 companies and is recognized for its high level of translation accuracy. The company is also engaged in the Metaverse business, operating platforms based on VR technology. In 2021, the company changed its corporate name from Rosetta to Metareal and was listed on the Tokyo Stock Exchange Growth Market, achieving further growth. Through these initiatives, Metareal aims to strengthen its influence both domestically and internationally and respond to growing demand.

2. History and Key Milestones

Metareal’s history dates back to 2000, when it began as an internal venture within Nova Co., Ltd. Initially focusing on translation and interpretation services, the company began developing AI-powered machine translation in 2004 and simultaneously changed its name to Rosetta. In 2006, it released its first AI translation engine, “Jukkō,” followed by the launch of corporate translation support tools in 2008. The commercialization of “T-400,” which adopted neural network technology for the first time in the industry, was achieved in 2017, leading to rapid growth.

In 2021, the company once again changed its name to Metareal and went public, marking a new chapter in its history. Subsequently, in 2023, it publicly released the AI platform “Metareal AI” and initiated joint research with the National Cancer Center in the medical field. These key milestones illustrate the company’s path of growth and technological innovation and are expected to lead to further improvements in performance going forward.

3. Organizational Structure and Key Management

Metareal’s organizational structure is divided into three main segments: the AI business, the HT (Human Translation) business, and the Metaverse business, each with specialized functions. Representative Director Junichi Goishi embodies the company’s vision and strategy, and under his leadership, the organization continues to grow as a unified whole. Mr. Goishi brings extensive industry experience and is responsible for making critical management decisions.

In addition, CFO Yoshiyuki Kamaya oversees transparent financial management and plays a key role in ensuring the company’s financial soundness. The management team includes experts in AI technology and translation-related fields, contributing to the promotion of technological innovation and the strengthening of market competitiveness. In particular, clear responsibility has been assigned to the heads of each business division, enabling efficient operations and effective cross-functional collaboration.

This solid organizational structure forms the foundation that allows Metareal to respond flexibly to changes in the market environment and achieve sustainable growth.

4. Business Description and Structure

Metareal’s business operations are broadly divided into three areas: the AI business, the Human Translation business, and the Metaverse business. In the AI business, the company provides innovative language solutions to support corporate global expansion, centered on the automatic translation service “T400” and the unified AI platform “Metareal AI.” In particular, T400 supports a wide range of specialized fields and is highly regarded for its translation accuracy.

The Human Translation business provides traditional services delivered by professional human translators and is capable of handling projects that require a high level of expertise, thereby addressing diverse client needs. Meanwhile, the Metaverse business develops platforms that leverage VR technology to provide new experiences and enhance user engagement. These businesses complement one another and serve as key drivers supporting the company’s growth.

5. Geographic Expansion and Market Strategy

Metareal’s services are deployed not only within Japan but also in overseas markets. In fields such as healthcare and legal services, compliance with international standards and multilingual support are essential, making a global perspective indispensable. In response, Metareal differentiates itself from competitors by leveraging its technological capabilities and domain expertise to deliver fast, high-quality translation services.

From a market strategy perspective, the company emphasizes deeply understanding the needs of its existing customer base and continuously developing new features and services to meet those needs. As AI-driven automation of translation continues to advance, Metareal aims to remain at the forefront of this transformation. Through these strategies, the company seeks to establish a strong presence in international markets and achieve sustainable growth.

6. ESG and Sustainability Initiatives

Metareal places strong emphasis on ESG (Environmental, Social, and Governance) and sustainability initiatives. Fulfilling corporate social responsibility is an important aspect of modern business, particularly in the ethical application of AI and digital technologies. Metareal has positioned the realization of a sustainable society as part of its vision and is engaged in businesses that consider environmental impact and contribute to solving social challenges.

Specifically, the company is implementing measures to reduce environmental burden, promote the utilization of diverse human resources, and establish governance structures that ensure transparent corporate management. These efforts are intended to enhance evaluations from investors and pave the way for sustainable growth.

Metareal aims to contribute to the creation of a sustainable future by promoting corporate activities aligned with evolving social needs and changes.

As outlined above, Metareal Corporation clearly demonstrates its commitment to strengthening competitiveness within the industry and achieving sustainable growth through innovation in AI translation services. In the next chapter, business performance and market trends will be examined in greater depth to provide information necessary for investment decision-making.

Shareholder Returns

1. Significance of Shareholder Returns and the Company’s Strategic Perspective

Shareholder returns are a core management issue for companies and a fundamental means of earning investor trust. Metareal Corporation positions returns to shareholders as an important element of its management strategy and adopts a multifaceted approach that includes dividends and share repurchases. Enhancing corporate value through shareholder returns also serves as a foundation for long-term growth. Specifically, stable dividends raise shareholder expectations and contribute to share price stability as well as shareholder loyalty.

From an expert perspective, strategically incorporating shareholder returns is also important from a financing standpoint. By demonstrating a clear commitment to returning profits to shareholders, a company is more likely to earn favorable evaluations from other investors, making capital raising easier. Accordingly, shareholder returns are not merely a financial obligation but are closely linked to a company’s overall growth strategy.

For investors, a company’s shareholder return policy is a key consideration in long-term investment decisions. Companies with stable dividends are often perceived as lower risk and more reliable. Therefore, Metareal’s shareholder return policy is an important factor that warrants close attention in future investment evaluations.

2. Metareal’s Dividend Policy and Its Background

Metareal’s dividend policy is based on securing retained earnings while distributing profits in line with business performance. While the company emphasizes stable growth, it also keeps shareholder returns in mind, requiring flexible judgment on dividend payments depending on profit levels. A review of past dividend history shows periods of stable dividend payments, as well as instances—such as in 2022—when dividends were suspended due to a challenging business environment. These decisions were largely influenced by specific projects and cost-related factors.

According to expert opinions, maintaining stable dividends requires management to remain sensitive to business progress and changes in the operating environment. Investors, in particular, tend to value a company’s sustainable growth strategy and look forward to consistent dividend policies, making it essential for management to formulate policies carefully.

From the investor’s perspective, transparency and consistency in dividend policy provide reassurance. Accordingly, Metareal is expected to clearly articulate its future dividend policy in order to meet shareholder expectations and demonstrate its commitment to shareholder value.

3. Share Repurchase Policy as a Means of Shareholder Returns

Metareal positions share repurchases as a tool to enhance corporate value. While share buybacks provide direct returns to shareholders, they also reduce the number of shares outstanding, which can contribute to share price stability. To foster strong market confidence, the company maintains a flexible policy regarding the acquisition and retirement of treasury shares, supported by an organizational framework that allows implementation based on resolutions of shareholders’ meetings.

From an expert standpoint, share repurchases are not only aimed at short-term share price increases but also serve as an important signal of a company’s financial health. In addition, improvements in earnings per share (EPS) represent a clear benefit for shareholders and contribute to long-term corporate value enhancement.

However, share repurchases must be approached with caution. If they involve external financing, there is a risk of impairing financial soundness, making imprudent buybacks a potential risk for the company. Investors need to assess whether share repurchases are being executed in a manner aligned with the company’s overall strategy and whether they truly contribute to long-term value creation.

4. Total Payout Ratio and Its Significance

The total payout ratio is an indicator of how much profit a company returns to shareholders. Metareal also bases its policies on this concept, taking a comprehensive approach that considers both dividends and share repurchases. Achieving an appropriate balance between the need for retained earnings and shareholder returns is key to maintaining financial stability while promoting growth.

Experts note that focusing on the total payout ratio allows companies to demonstrate responsiveness to shareholder expectations while enhancing transparency in capital policy, thereby increasing overall corporate credibility. This, in turn, facilitates the building of long-term relationships with shareholders and makes future capital raising easier.

For investors, the total payout ratio is an important source of information and a useful indicator for understanding the alignment between shareholder returns and the company’s financial strategy. How Metareal maintains its total payout ratio and delivers shareholder returns while pursuing sustainable management is a point that deserves careful attention.

5. Relationship Between Financial Soundness and Shareholder Returns

A stable financial foundation is a prerequisite for shareholder returns. Metareal is working to strengthen its financial position by improving its equity ratio. While there have been instances in the past where financial conditions deteriorated due to impairment losses, improvement plans have been formulated going forward. Only when a stable environment capable of generating consistent earnings is in place can trust from shareholders be enhanced.

From an expert perspective, a sound financial base increases the feasibility of shareholder returns and also works in the company’s favor from a financing standpoint. Lower borrowing costs and the ability to maximize investment opportunities make sustained growth more achievable.

For investors, analyzing how a company’s financial strength contributes to shareholder returns is important for portfolio management. A solid financial position creates an environment in which investors can continue investing with confidence, making Metareal’s future progress a subject of positive expectation.

6. Risk Management and Shareholder Returns

When implementing shareholder return measures, the importance of risk management cannot be overstated. Companies are required to comply with regulations and assess market risks accurately in order to manage risks appropriately. Proper risk management helps prevent situations that could adversely affect shareholder return policies.

Effective risk management on the company’s part translates into trust from investors. In particular, a highly transparent risk management framework enhances shareholder confidence and forms the foundation for appropriate profit distribution.

Investors need to pay close attention to how a company manages risks and how those risks may affect shareholder returns. A sound risk management system is a key factor supporting sustainable corporate growth and is therefore an essential aspect to understand.

Through its shareholder return initiatives, Metareal seeks to achieve sustainable growth, with financial strengthening and risk management continuing to play critical roles in this process.

Looking ahead, how Metareal integrates these elements into its shareholder return policies and responds to investor expectations will be a key focus. As the relationship between the company and its shareholders deepens, investors should continue to monitor future developments closely.

Business Risks

1. Factors Affecting Performance Volatility

Metareal faces a wide range of factors that may cause fluctuations in its business performance. In particular, its revenue structure relies on three core pillars: AI-powered translation services, the HT (Human Translation) business, and the Metaverse business. Each of these businesses serves different market needs and is closely linked to industry-specific conditions and market trends, resulting in a significant impact on overall performance.

Demand fluctuations are especially influenced by the fact that Metareal’s primary customers are concentrated in industries such as pharmaceuticals, legal services, and IT. Economic cycles and changes in legal and regulatory frameworks within these industries can lead to shifts in demand. During economic downturns, companies tend to reconsider outsourcing translation services, which could pose a substantial risk of declining revenues for Metareal. Accordingly, monitoring external economic indicators and trends in related industries is essential for maintaining stable performance.

The speed of technological innovation is another critical factor. Rapid advancements in AI technology increase the risk that competitors will adopt new technologies more quickly. Unless Metareal continuously pursues cutting-edge technologies, it faces the risk of technological obsolescence and loss of competitiveness. Sustained investment in technological development is therefore indispensable.

Changes in legal and regulatory frameworks can also have a major impact on performance. In particular, tighter regulations related to AI businesses may lead to increased operating costs and pressure on profit margins. The ability to adapt swiftly to new laws and regulations is crucial, requiring constant monitoring of regulatory developments.

An increasingly competitive environment is another area of concern. With new market entrants and competing products from public research institutions, price competition may intensify. Under such market conditions, customer attrition becomes more likely, potentially having a negative impact on revenue.

In summary, Metareal’s performance is influenced by a wide range of internal and external factors. As such, rigorous risk management and flexible responses to customer needs are essential. This approach is necessary to prepare for changes in the market environment and constitutes a critical strategy for future performance growth.

2. Industry-Specific Risks

The translation and AI-related industries in which Metareal operates are exposed to several inherent risk factors. These risks mainly stem from the rapid pace of technological innovation, changes in legal regulations, intensifying competition, and shifts in market conditions.

First, the speed of technological innovation accelerates competition within the industry. Because translation services rely heavily on AI technologies, the emergence of new technologies and algorithms can significantly alter competitive dynamics. If Metareal fails to adopt the latest technologies, it risks losing its competitive edge in the market. Continuous investment in research and development is therefore essential, as falling behind may lead to a decline in performance.

Second, changes in legal regulations pose a substantial risk to businesses. In particular, the strengthening of laws related to data privacy and information security may impose additional costs and regulatory burdens on operations, making recovery difficult. Companies must be adequately prepared to respond to such changes in the legal environment.

Third, intensifying competition represents another major risk. As new AI-driven businesses emerge, differentiation from traditional translation services becomes increasingly difficult. If companies fall into price competition, profit margins may be compressed, potentially harming long-term performance. In such circumstances, enhancing the intrinsic value of services and establishing strategies to deliver unique added value become critical.

Finally, market trends cannot be overlooked. Global economic conditions and changes in legal systems can directly affect Metareal’s performance. Economic crises or geopolitical developments, in particular, may influence customer demand, making it essential to continuously analyze market trends and implement service strategies aligned with evolving customer needs.

To address these industry-specific risks, Metareal must implement effective countermeasures and make sustained efforts to achieve long-term growth. Failure to do so could result in a loss of competitiveness and diminished market presence.

3. Financial and Management Risks

Although Metareal continues to grow, various financial and management-related risks remain latent. Key risk factors include capital structure, diversity of funding sources, and the robustness of corporate governance.

A decline in the equity ratio requires particular attention. While the equity ratio has improved to approximately 39.8%, it remains below optimal levels, and a full recovery will take time. Excessive reliance on debt financing may increase interest burdens during periods of rising interest rates, thereby exerting pressure on profitability. Strengthening equity capital and maintaining an appropriate capital structure are therefore urgent challenges.

Flexibility in funding is another risk factor. As Metareal raises funds through bank loans and bond issuance, it may face higher interest rates and increased financing costs during economic downturns. There is a possibility that funding costs could exceed those of competitors, making cash flow management increasingly important.

From a management perspective, governance is also a key concern. While transparency has improved through the involvement of outside directors and auditors, insufficient internal controls may heighten risks related to regulatory compliance and misconduct. In particular, the impact of technological bias and data imbalance on governance in AI-based data management cannot be ignored.

These financial and managerial risks are closely interrelated. By establishing an appropriate risk management framework, Metareal should aim to achieve sustainable growth. Especially in capital policy and financing, strategies that can flexibly respond to changes in the economic environment are required.

4. Regulatory and Compliance Risks

Metareal’s business environment involves numerous risks related to changes in laws and regulations. For companies operating internet-based businesses, fluctuations in legal and regulatory frameworks can have a significant impact on operations and profitability. As new regulations are expected to be introduced in the future, companies must develop systems capable of adapting accordingly.

Failure to comply with applicable regulations may result in fines or legal sanctions, potentially disrupting business continuity. If Metareal were to be affected, it could lead to a loss of customer trust and increased operational risks. Therefore, investors need to closely monitor Metareal’s compliance framework and understand its approach to regulatory adherence.

From an investor perspective, it is important to understand how Metareal mitigates legal risks. Securing personnel with legal expertise and strengthening internal audit systems are essential measures to enhance compliance. Such efforts allow investors to make more confident judgments regarding the company’s stability and sustainability.

5. Supply Chain Risks

Metareal’s business operations are also subject to supply chain-related risks. When data or human resources used for AI translation are sourced from overseas, geopolitical risks and international developments may have a direct impact. Increasing complexity in the supply chain may result in higher operating costs or delivery delays.

In particular, events such as the COVID-19 pandemic and natural disasters have had severe impacts on supply chains and are recognized as significant risk factors that can hinder corporate growth. To address such situations, it is necessary to secure multiple suppliers and adopt flexible contractual strategies to mitigate risks.

Demand fluctuations also play a major role. Given the strong demand from pharmaceutical and legal sectors, sudden changes in customer needs require rapid response. Enhancing supply chain flexibility necessitates efficient internal processes and strong leadership.

By establishing appropriate preparedness against supply chain risks, Metareal can strengthen its resilience to changes in the external environment and build a foundation that supports sustainable growth.

End of the chapter

This chapter has provided a detailed analysis of the various business risks faced by Metareal, including performance volatility factors, industry-specific risks, financial and management risks, regulatory and compliance risks, and supply chain risks. These risks are interrelated and collectively influence corporate growth, making them critical considerations for investors.

In the next chapter, specific measures to address these risks and their implementation status will be examined in detail.