Kudan technology now begins to reach the market

Business model aiming for high profitability

Kudan’s business model is based on software license income. The revenue structure of a project licence income can be divided into the first half of the preparation phase and the second half of the reaping phase.

In the first half, we help customers develop their own products using Kudan technology through development licences and support. Then, when the customer decides to adopt the Kudan technology and the project proceeds towards the launch of the customer product, the project achieves a milestone that we call customer commercialisation.

In the first half, the scale of the development and the support determines the scale of the license. In the second half for reaping, the product license can scale according to the scale of the sales of the customer products so that the profit margins can grow significantly as the technology becomes more widely used.

Customer productization begins to progress

As artificial Perception (AP) is an advanced technology for next-generation solutions, Kudan has been working on many customer development projects while developing its own technology. Finally, some projects have reached the milestone of customer commercialization from FY03/2023, as our business progress highlights.

By the end of FY03/2024, eight projects had reached customer commercialisation, and the number of projects heading for the reaping phase is increasing.

In robotics, our technologies are used in industrial autonomous mobile robots and large-sized delivery robots. In digital-twin applications, the technologies are used in a variety of digital twin mapping equipment, including handheld, drone-mounted and in-vehicle equipment, for applications such as infrastructure inspection, civil engineering surveying and autonomous driving maps.

Technology begins to reach end customers

In the penetration of Kudan technology, it is important that not only the direct customers adopt Kudan’s deep technology but also that secondary customers beyond them adopt the customer products and finally implement them for the end customer. Business is also progressing in this respect, and here is a case of a digital-twin solution in Europe.

Currently, there is a significant increase in the construction of new renewable energy infrastructure in Europe, and digital transformation (DX) initiatives are underway to make the management of infrastructure facilities significantly more efficient through digital-twinning. In this digital transformation (DX), integrated solutions incorporating Kudan technology are being introduced. For example, end-to-end asset management solution is made operational for end customers, using mapping equipment with Kudan technology embedded to generate digital-twins, and creating a database of facility management information based on that, and then integrating it into the end customer’s system. In these cases, Kudan is working with partners to build integrated solutions and implement them in renewable energy infrastructures in Europe.

In Europe, where new renewable energy infrastructure construction is growing exponentially in line with decarbonization and de-Russian natural gas policies, Kudan is working to drive large-scale digital twin projects for long-distance power grids, including large substations. Kudan is also working with government and public sector projects to ensure that end customers widely use the Kudan technology.

Development projects for future customer commercialisation are also in progress

While Kudan technology is beginning to reach the market in this way, we are also working on a number of development projects in order to continue and expand the commercialisation of Kudan technology by our customers in the future.

In robotics, we are working on a wide variety of robots, mainly industrial mobile robots, automatic driving and delivery robots, and we are also working on very advanced projects such as walking robots and space exploration robots, in recognition of our world-class technology.

About digital twins, we are working on digital-twin projects for smart cities in Japan, digital-twin projects with major European companies and national organizations, and numerous other mapping equipment projects.

These efforts aim to bear further fruit, to move towards commercialization and technology penetration, and to open the door to a near-future world with unparalleled advanced technology.

The transition of business phases has started

Having such business progress, we have an upturn in performance and growth: until FY03/2022, projects were generally in the preparation phase, but in FY03/2023 and FY03/2024, the business has reached a turning point as customer commercialization has started.

From FY03/2024, “product-related sales” from products that have achieved customer productisation account for the majority of sales. To move on to the reaping phase, in addition to continuous customer productization, Kudan aims to boost the progress and scale of customer products and achieve dramatic growth through the spread of Kudan technology.