Fujitsu Medium-Term Management Plan Progress Update and FY2024 Consolidated Financial Results

I would like to introduce the outline of consolidated financial results. Page 3: Service solutions revenue and profits higher, both exceeded targets. Revenue 2,245.9 billion yen, up 5.1%. Japan revenue up 8%, driven by Fujitsu Uvance and modernization. Adjusted operating profit 289.9 billion yen, up 22%, margin 12.9%. Page 4: Total revenue 3,550.1 billion yen, up 2.1%. Adjusted operating profit 307.2 billion yen, up 16%. Profit for the year 240.9 billion yen, record high. Page 5: Revenue exceeded forecast by 80.1 billion yen, adjusted operating profit by 17.2 billion yen. Page 6: Segment results. Service solutions margin 12.9%, exceeded forecast. Hardware solutions profit roughly on par. Ubiquitous solutions exceeded forecast. Page 7: Device solutions classified as discontinued. Page 9: Service solutions details. Japan revenue up 8%, Fujitsu Uvance up 31%, modernization up 70%. Adjusted operating profit up 52.7 billion yen. Page 10: Waterfall chart: impact of higher revenue, improved profitability, higher expenses. Page 11: Orders in Japan up 5% for the year, CAGR 10% over two years. Enterprise up 6%, finance up 14%, public health down 2%, mission critical up 11%. Page 12: International orders: Europe down 7%, Americas down 12%, Asia Pacific up 34%. Page 13: Fujitsu Uvance revenue 482.8 billion yen, up 31%, exceeded target. Target for fiscal 25: 700 billion yen, 30% of service solutions. Page 14: Modernization revenue 296.9 billion yen, up 86%, exceeded target. Page 15: Profitability improvement: gross margin up 1.9 points, growth investment 42.1 billion yen. Page 16: Sub-segments: Global solutions revenue up 6.4%, profit down; Japan region revenue up 3.8%, profit up 47.1 billion yen, margin 19.9%; International regions revenue down 2.4%, profit up 13.6 billion yen, margin 4.1%. Page 17: Hardware solutions revenue 1,019.9 billion yen, profit down. That concludes my explanation.

In terms of unit volume, there was an impact from the pullback of last year's demand to accommodate new currency bills and last year's high profitability projects. An increase in unit volume of general purpose products in Japan covered these declines, but changes in product mix caused profitability to decline, exacerbated by higher cost of imported components due to currency movements in network products. There has been no significant change toward recovery in demand, so revenue continues to be very weak. On the other hand, we continue to invest in product development to achieve high speed, low latency, low power consumption under severe conditions. In terms of profit, we continued in fiscal 2024. Next, on the ubiquitous segment: revenue was 251.7 billion yen, down 7.9%; adjusted operating profit was 31.3 billion yen, an increase of 7.1 billion yen. Revenue outside Japan fell because we exited low-margin business in Europe in April 2024. By focusing on comparatively profitable business in Japan, profitability improved, resulting in lower revenue and higher profit. Below that is intersegment elimination and corporate: there was an increase in operating loss of 75.3 billion yen, with a decrease in expenses of 4.3 billion yen. We have continued to invest in mid- to long-term business growth to enhance our management foundation, such as advanced research in AI and quantum computing and our OneERP program. At the same time, by working to advance the optimal allocation of resources in a human resources portfolio, we were able to improve productivity. That concludes the explanation of segment results. I will now present an overview of business growth investment and transformation initiatives. Page 20. First, I will review the status of business growth investment. Overall business growth investment in 2024 was 218.2 billion yen, up 16.1 billion yen year-on-year, essentially in line with our plan. I have listed four representative investment areas. First, total investment of 41 billion yen to strengthen Fujitsu Uvance's modernization business and consulting, which are most immediately contributing to expansion of the business. These are mainly investments in development work, new offerings, and knowledge aggregation, enhancing resources including training. Acquisition-related activities such as making GK Software a 100% subsidiary are also included. Against the backdrop of these investments, these businesses have expanded and profitability has improved. Next is a total investment of 58 billion yen in advanced R&D in five key technologies such as AI and quantum computing. This includes the development of the Kozuchi AI platform, equity investment in Cohere Inc., the Monaka next-generation processor, and development of quantum computers. We are also moving ahead with internal implementation of problem-solving multi-AI agents. Our work on quantum computing was touched upon by CEO Tokita in his presentation. To add further sophistication to our service solutions business, we think it is extremely important to pursue technologies related to AI and quantum computing. We also made an investment of 55 billion yen in strengthening a management foundation to advance data-driven management. In the third quarter of fiscal 2024, we launched operations in Japan of our OneERP Plus global single instance program, and about 70,000 employees are using it. As a fourth area, we invested 40 billion yen in enhancing quality and security. These efforts include initiatives to use AI to promote predictive detection of problems and to enhance security countermeasures to combat security incidents. These initiatives take a variety of forms, some for short-term impact, others for mid- to long-term. While many of these initiatives are within each business segment, we want to position them as priority investments for the Fujitsu Group as a whole, and we are monitoring the implementation of investments as well as their impact. Page 21: I will explain our portfolio transformation and asset recycling initiatives. First, carve-out of non-core businesses. This took time, but we made great progress toward the objectives in fiscal 2024. Shinko Electric was completed in March 2025. After share consolidation, we expect closing during the first half of fiscal 2025. The sale of all shares of Fujitsu Optical Component was completed in April 2025. In February 2025, an agreement was concluded to sell FDK to CIC Technology Corporation of PA Group, and the sale was completed in March 2025. As a result, there will be carve-outs of all the businesses that have been part of the Device Solution segment, and the entire segment is now treated as discontinued operations. One more carve-out is an equity method affiliate, Fujitsu General. An agreement to sell Fujitsu General was concluded in January 2025, and after completing required procedures, closing is expected in the first half of fiscal 2025. We also reduced cross-shareholdings; the balance at the end of 2024 was 56.3 billion yen, a reduction of 65.8 billion yen compared to the end of fiscal 2022. We would like to continue examining the rationale for these holdings and work together with the share issuers. I will explain the adjusted items to operating items on page 22. In fiscal 2024, we made big advances in shifting resources, and we incurred about 40 billion yen of expenses related to this initiative. This page is a breakdown of core free cash flow and adjusted items. The business restructuring items include inflows or outflows from the sale of businesses. In fiscal 2024, there was an expansion in inflows because of the sale of cross-shareholdings. The structural transformation of business items include a portion of business structural expenses from business structure improvements in Europe that were allocated in fiscal 2023 and the cash outflows for expenses related to the resource shift I explained earlier. Optimization of the portfolio will also be pursued. As for the adjusted items of operating profit, there is also a one-time gain from the sale of Fujitsu Communication Services, structural transformation, and acquisition-related expenses. Last year we recorded 116 billion yen in business structural transformation expenses mainly for Europe, so there was an improvement of 73.8 billion yen compared to the previous year. As a result, operating profit before adjustment was 265 billion yen, up 115.7 billion yen from the previous year. Page 23: I will now review the status of cash flow and balance sheet. Page 24: Excluding one-time cash inflows and outflows, core cash flow was 233.6 billion yen, an increase in inflows of 36.3 billion yen. Progress has been made in reducing inventory and improving working capital. Towards the bottom of the table, free cash flow was 214.7 billion yen, an increase in inflows of 62.7 billion yen. In cash flow from operating activities, while progress has been made on improving working capital, there was an increase in one-time cash outflows. Cash flow from investing activities increased by 68 billion yen from the previous year due to an increase in inflows from the sale of cross-shareholdings and a decrease in outflows from the previous year's acquisition of GK Software. Cash flow from financing activities was negative 240.4 billion yen. We implemented a share buyback of 180 billion yen. Page 25 is a breakdown of core free cash flow and adjusted items. The business restructuring items include inflows or outflows from the sale of businesses. In fiscal 2024, there was an expansion in inflows because of the sale of cross-shareholdings. The structural transformation of business items include a portion of business structural expenses from business structure improvements in Europe that were allocated in fiscal 2023 and the cash outflows for expenses related to the resource shift I explained earlier. Page 26 shows the status of assets, liabilities, and equity. I will omit an explanation for this page. This concludes the financial results for fiscal 2024. I will now explain our earnings forecast for fiscal 2025. Page 28: For our earnings forecast for fiscal 2025, I will first start with Service Solutions. We forecast a continued steady increase in revenue and operating profit from fiscal 2024. Revenue is projected to be 2.33 trillion yen, an increase of approximately 4% from the prior year. In Japan, revenue is projected to increase 9%, primarily from digital transformation and modernization business. Outside Japan, we forecast negative impacts from foreign exchange movements and a decline in revenue in Europe. Adjusted operating profit is projected to be 360 billion yen, an increase of approximately 70 billion yen or 24% from the prior year. The operating profit margin is projected to be 15.5%, an improvement of 2.6 percentage points. For both absolute profit and profit margin, we are forecasting new record highs. Page 29: Next, consolidated total earnings forecast. Revenue is projected to be 3.45 trillion yen, down 2.8% from the prior year. Although revenue is projected to increase in Service Solutions, revenue is projected to decline in Hardware Solutions and Ubiquitous Solutions. Adjusted operating profit is projected to be 360 billion yen, up 52.7 billion yen or 17% from the prior year. The operating profit margin is projected to be 10.4%, an improvement of 1.7 percentage points. Adjusted profit for the year is projected to be 250 billion yen. Our plan calls for record high profits for both adjusted operating profit and profit for the year. Page 30 is information I just explained; I will omit it. Page 31 shows the trending consolidated total adjusted operating income from fiscal 2019 onwards. The bar graph shows consolidated total operating profit. The blue portion is Service Solutions. We plan to advance our efforts in transforming our business portfolio and steadily increase the ratio of operating profit from Service Solutions as we increase the consolidated total absolute profit amount. Page 32: Briefly, I will touch on adjusted items and gains or losses. Operating profit for fiscal 2025 is projected to be 360 billion yen both before and after adjustments. A one-time profit of 140 billion yen is projected in operating profit for the year, primarily from the projected profit from the sale of shares in Shinko Electric from discontinued operations and a projected gain from the sale of shares in Fujitsu General in equity earnings of affiliated companies. Profit for the year before adjustments is projected to be 390 billion yen for fiscal 2025. We plan to achieve record high amounts of operating profit before and after adjustments, adjusted profit, and profit for the year. Page 33 shows a graph broken down by business segment. I will explain the composition of these segments individually starting from the next page. Page 34: Starting with Service Solutions, revenue is projected to be 2.33 trillion yen, up 84 billion from the prior year. Adjusted operating profit is projected to be 360 billion yen, up 70 billion from the prior year, an increase of 24%. Adjusted operating profit margin for the segment is projected to be 15.5%, an improvement of 2.6 percentage points. I will briefly add additional explanation for each subsegment. Global Solutions revenue is projected to be 530 billion yen, up 3.7% from the prior year, primarily from an increase in revenue in the U.S. Adjusted operating profit is projected to be 27 billion yen, up 21.3 billion from the previous year. We anticipate that we will continue our efforts with growth investments, but the effects of higher revenue will continue to build and profitability will improve. Adjusted operating profit margin is projected to be 5.1%, leading to further improvement. Regions Japan revenue is projected to be 1.43 trillion yen, up 9%. We anticipate strong growth against the backdrop of demand for digital transformation and modernization. Adjusted operating profit is projected to be 306 billion yen, up 45.6 billion. The adjusted operating profit margin is projected to be 21.4%, an improvement of 1.5 percentage points. We will continue our efforts to improve productivity through initiatives including development work standardization and pricing strategies. By focusing our efforts on expanding automation through AI, we anticipate development speed and quality will continue to improve, which will link to sustainable improvement in profit margin. Regions International revenue is projected to be 530 billion yen, a decline of 10% from the prior year due to negative impact of foreign exchange movements and lower demand in Europe. On the other hand, adjusted operating profit is projected to be 27 billion yen, up 3 billion yen from the prior year. We anticipate making progress to see improved profit structure from the effects of our business portfolio transformation and plan for an operating profit margin of 5%. Page 35: A chart to break down the progress of Service Solutions toward our medium-term management plan. On the far left is fiscal 2022, the year prior to the start of the current MTMP; operating profit was 162.9 billion yen, operating profit margin was 8.2%. The orange bar shows an increase in revenue, yellow bar shows improvement in profitability, green bar shows an increase in investment, which is projected to lead to an increase in profit of 200 billion yen. We plan for operating profit for fiscal 2025 to be 360 billion yen, 2.2 times the actual operating profit for fiscal 2022. The progress towards MTMP and the increases and decreases in fiscal 2023 and 2024 overlapped with the explanation of the financial results, but within the plan to increase operating profit by 200 billion yen over a three-year period, it increased by 75 billion yen in fiscal 2023 and by 55 billion in fiscal 2024. Actual results for this two-year period achieved a total increase in operating profit of 130 billion yen. For fiscal 2025, the final year of MTMP, we anticipate an increase in revenue of 45 billion yen. Revenue in Japan will be driven by Fujitsu Uvance modernization and consulting and is projected to be up 9%. Outside Japan, our plan shows a 10% decline in revenue due to factors such as negative impacts from foreign exchange movements. In total, we anticipate revenue will grow by 4%. Next, in profitability improvement, we anticipate an increase of 40 billion yen. We will continue the efforts we have advanced until now in delivery transformations including development work standardization and pricing strategies. By increasing development automation and improving quality through the use of generative AI, we aim to increase the gross profit margin by 2%, continuing the 2% increase in both fiscal 2023 and fiscal 2024. The effects of human resource portfolio optimization implemented in fiscal 2024 are also included. Lastly, we anticipate investments for growth will increase by 15 billion yen. We plan to further increase investments in the Uvance modernization and consulting business. Combined, these three figures will total an increase of 70 billion yen. As a result, this will lead to achieving adjusted operating profit of 360 billion yen in fiscal 2025. Page 36: Transforming our portfolio. On the upper half of the page there is a bar graph showing increase in revenue; on the lower half there is a pie chart showing the ratio of revenue from each business compared to total revenue. Green is Uvance, blue is modernization, gray is conventional business, particularly systems integration. In fiscal 2025, we anticipate revenue for Uvance will be 700 billion yen in line with our plans, and revenue for modernization will be 330 billion yen, surpassing our initial plan. Modernization revenue is projected to be 231 billion yen with parts that overlap being excluded in the chart. Composition of revenue for Service Solutions as a whole for fiscal 2022 was 14% from a combination of Uvance and modernization, but in fiscal 2024 this became a combined 30%. We plan to increase it to a combined 40% in fiscal 2025 by further increasing added value and transforming our portfolio to meet market demand. We aim to achieve both growth in overall scale and improve profitability. Page 37 shows the trend for the financial results of Service Solutions. The background represents adjusted operating profit and the red dotted line shows the operating profit margin. Operating profit margin for fiscal 2019 was 5%; essentially in fiscal 2022 it exceeded 8%, a 3 percentage point improvement over the three-year period of our previous MTMP. In the three-year period of our current MTMP, we aim for further improvement of 7 percentage points for an operating profit margin of 15.5% in fiscal 2025. As you can see on the graph, in Service Solutions, our core business, through advancing our business portfolio transformation and human resource portfolio transformation, we have steadily increased its revenue base as well as strongly improved its business efficiency and productivity. Business strategies we have worked on until this point have certainly started to show results. We will thoroughly implement each measure in line with the medium-term management plan in fiscal 2025 as well. First, we will achieve our targets without fail, and above all we will work on sustainable improvement in corporate value. Page 38: I will briefly comment on our earnings outlook for the other segments besides Service Solutions. Hardware Solutions: revenue anticipated to be 965 billion yen, down 13.8%. Adjusted operating profit is projected to be 55 billion yen, a decline in profit of 6.3 billion yen accompanied by a decline in revenue. For System Products, we anticipate a decline in revenue due to negative impacts of exchange movements and a decrease in sales of externally sourced products including licensing revenue. For Network Products, we project an expansion in business from the next demand cycle that will only start from fiscal 2026 and beyond, so we must anticipate an increasingly difficult situation particularly in Japan. As a result, although we are making strong progress on improving business efficiency, we project that the segment's operating profit will fall below its sluggish figure for fiscal 2024. As we announced today, we will establish a new company for network business, Fujitsu Network, on July 1. We will concentrate all of our network-related business in Fujitsu Network. By concentrating the R&D of hardware and software, production, sales, implementation, support, and maintenance related to networks, we will offer high-quality and competitive network solutions globally. By clarifying management responsibilities as an independent company and accelerating management decision-making, while also quickly providing products that maximize the use of cutting-edge technologies and shifting to software technologies, Fujitsu aims to quickly respond to the rapidly changing business environment and generate new innovation through expanding to new markets including the AI data center market. Ubiquitous Solutions: revenue projected to be 225 billion yen, down 10.6% from the previous year due to factors such as a decline from the pullback of last year's large-scale deals. Adjusted operating profit of 20 billion yen, a deterioration of 11.3 billion yen. Intersegment elimination and corporate: we project an adjusted operating loss of 75 billion yen. We plan to proactively invest at the same level as the prior year, particularly in cutting-edge research for AI and quantum computing. I will now explain the changes from the MTMP. Consolidated revenue is projected to be down 340 billion yen from the MTMP, and adjusted operating profit projected to be down 60 billion yen, primarily due to Hardware Solutions. Service Solutions is the driving force; due to negative impacts of exchange movements, revenue is expected to decline primarily in Regions International. On the other hand, against the backdrop of the steady progress we have made up until now in profitability improvements, the decline in revenue is expected to be offset by higher profit, so we will be on track with the plan. Hardware Solutions: we anticipate that we will fall very short of our plan due to the protracted delay in the recovery of demand for next-generation network products. In our plan, we envisioned a scenario in which demand would fall sharply starting from fiscal 2022 and start to recover from the second half of fiscal 2024, recovering to roughly the same level in fiscal 2025. But we anticipate that this scheme will be significantly off the mark and are currently anticipating the required recovery to start from fiscal 2026. In Ubiquitous Solutions, profit is projected to increase despite a decline in revenue due to the scaling down of low-profit business. In intersegment elimination and corporate, we have incorporated investment in cutting-edge research that will lead to growth such as AI and quantum computing. Cash flows: page 41, core free cash flow is projected to be 235 billion yen. Although we anticipate an increase in cash outflows from corporate taxes, we project core free cash flow to be at the same level as the previous year. In major business areas, free cash flow is projected to be 380 billion yen, an increase of 165.2 billion yen. We anticipate a one-time cash inflow of approximately 300 billion yen from the sale of non-core businesses and a one-time cash outflow of approximately 150 billion yen from expenses related to investment and business structure transformation and acquisition-related investments. Page 43 shows the status of base cash flows. I will now explain capital allocation and shareholder return. The association of each cash flow is briefly shown at the top half of the page. On the right side, base cash flow takes into account free cash flow prior to growth investments, so it is the source of capital allocation. To rephrase for clarity, the base cash flow on the far right represents the primary source of capital allocation. From this, growth investments are cashed out, and what remains is free cash flow. After removing one-time cash inflows and outflows from free cash flow, we arrive at core free cash flow. The bottom half of the page shows each year's progress in cash flow. Looking at fiscal 2024 in the middle, core free cash flow was 233.6 billion yen. Free cash flow including one-time cash inflows and outflows was 214.7 billion yen, and base cash flow prior to growth investments was 386.6 billion yen. This is a large increase compared to the prior year fiscal 2023. But as I explained in the financial results portion, the main reason for this is progress made on improvements in working capital in addition to sales of cross-shareholdings. Similarly, looking at fiscal 2025 at the bottom, core free cash flow is projected to be 235 billion yen. In addition to one-time cash inflows and outflows of 145 billion yen, free cash flow is projected to be 380 billion yen, with base cash flow before growth investments projected to be 610 billion yen. The anticipated one-time cash inflows and outflows here are the total from a cash inflow of approximately 300 billion yen from the sale of non-core businesses and expenses related to business structural transformation and acquisition-related investments of about 150 billion yen. As a result, as shown on the right side, the total base cash flow for the three-year period of the current MTMP is anticipated to be 1.3 trillion yen, in line with the plan. Page 44 is the projection of overall capital allocation sourced from this base cash flow. First, the image on the left-hand side is the base cash flow I just explained. In fiscal 2025, we anticipate a cash inflow from the sale of non-core businesses will be added to the base cash flow, and there will be no change to our projection of achieving a base cash flow of 1.3 trillion yen in this three-year period. On the right side is essentially the distribution of this cash. Total sum allocated over this three-year period is 700 billion yen projected in growth investments and 600 billion in shareholder return, also in line with MTMP. Looking at base cash flow by year, in the actual results for fiscal 2024, the base cash flow on the left side, the source of capital allocation, was 386 billion yen. From this capital on the right-hand side, 218.2 billion yen was allocated to business growth investment, and 230.5 billion yen was allocated to shareholder returns. The total of these two allocations is 448.7 billion yen, so by fiscal year, base cash flow, in other words money above the cash we earned, was allocated. Like the prior year, temporarily insufficient capital was appropriated through borrowing. In this way, in capital allocation, having anticipated the total amount of cash earned over this three-year period, we plan to allocate capital according to demand for it. Even in the event that there is a significant change in cash inflow for a fiscal year due to factors such as the sale of non-core businesses like this year, we plan to implement capital allocation and stable shareholder return that anticipate the change. In fiscal 2025, we project 280 billion yen will be allocated to business growth investments and 220 billion to shareholder return. I will explain the breakdown of shareholder return on the following page. Page 45: Dividends. We plan to implement a stable and steady increase in dividends independent of business performance volatility. In fiscal 2025, dividends are projected to increase by 2 yen for the interim dividend, which will lead to 10 continuous years of increased dividends. Page 46: Shareholder returns. In fiscal 2025, we plan to implement a share buyback of 170 billion yen. As a result, combined with the projected dividends for fiscal 2025, the total amount of returns will be 222.4 billion yen. Total capital allocation over the three-year period is projected to be 600 billion yen with a total return ratio of 70%. After completing the share buybacks in fiscal 2025, we plan to cancel all such shares. Page 47: Changes in primary financial indicators. Each item is calculated using a base excluding one-time losses or gains. On the left side is adjusted EPS. In addition to operating profit from our core business, we are making progress in optimizing capital through stock buybacks, and EPS is steadily growing. In the middle, return on equity. From fiscal 2023, shareholder returns have expanded with higher cash inflow, essentially by proceeding with a contraction in capital. It appears to be slightly down on the right half of the graph, but that is in line with our expectations. On the right is adjusted ROIC, which is projected to be 12.1% from a strong increase in operating profit. Slide 48 shows market evaluation in the form of share price, price-to-earnings ratio, and price-to-book ratio. Each graph shows five years of trends up to fiscal 2024. Compared to the end of fiscal 2019, which marked the starting point for our previous MTMP, our share price has tripled, and both the P/E ratio and P/B ratio have roughly doubled. We recognize that clearly achieving our fiscal 2025 targets and demonstrating the ability to continually grow even further is extremely important to the continued growth of our corporate value. We will work to continue the same trend lines exhibited in these graphs. This concludes my presentation.