CUBE SYSTEM INC.

Business Details

Cube System Inc. is a single-segment company that provides system solution services through three business models: Digital Business, SI Business, and Enhance Business. Its major customers are Nomura Research Institute (39.9% of revenue) and Fujitsu (21.0% of revenue). Centered on the public sector, financial sector, and energy sector, the company's strengths lie in cloud migration (Lift & Shift), DX promotion, and the stable operation and derivative development of core systems. In FY2026 (ending March 2026), expanded orders for SI and digital services in the public and energy sectors drove results, with revenue of ¥18,498 million and operating income of ¥1,558 million.

Recent Overview

SI Business and Digital Business expanded sharply, improving the operating margin to 8.4%

In FY2026 (ending March 2026), the SI Business (revenue of ¥7,731 million, up 23.9% year on year) and the Digital Business (revenue of ¥1,315 million, up 62.7% year on year) expanded significantly in the public and energy sectors. Meanwhile, the Enhance Business contracted, with revenue of ¥9,451 million (down 16.4% year on year), as the company intentionally reviewed and reduced less profitable projects. Net income also benefited from a decrease in personnel costs due to a change in the discount rate used for retirement benefits and a gain of ¥462 million from the sale of policy-holding shares, resulting in a substantial increase in net income to ¥1,564 million (up 24.0% year on year). Although some unprofitable projects occurred in large-scale projects, the company achieved higher profitability in business geared toward prime contractors. For FY2027 (ending March 2027), the company forecasts revenue of ¥20,000 million (up 8.1% year on year) and operating income of ¥1,800 million (up 15.5% year on year). The company has newly established an AI Promotion Office and plans to advance business transformation and productivity improvements through the implementation and operation of AI technology.

Key Products

Growth Drivers

• Expanded orders for SI Business and Digital Business in the public and energy sectors (SI Business up 23.9% year on year, Digital Business up 62.7% year on year)
• Rapid expansion of consulting and advanced technology support projects within the Digital Business
• Continued growth in demand for AI and cloud utilization (DX investment and Lift & Shift demand)
• Productivity improvements and creation of new services through AI technology implementation and operation by the AI Promotion Office established in FY2026
• Promotion of higher profitability and resource optimization in business geared toward prime contractors
• Expansion of production capacity and development capabilities through the opening of the Shinagawa Innovation Hub (over 400 seats)
• Diversification of revenue sources through the launch of new services such as H・CUBiC (human capital support service) and an AI-based automatic ordering system
• Expansion into new areas through one-stop services with system integrators and the establishment of new collaborative styles with system integrators

Risks

• Risk of revenue concentration on two major customers (Nomura Research Institute and Fujitsu), which together account for approximately 60.9% of revenue
• Risk of lost order opportunities due to IT talent shortages, and rising personnel costs from intensifying competition for talent acquisition
• Risk of unprofitable projects arising from insufficient organizational capacity and productivity on large-scale projects (some occurred during the current period)
• Temporary downward pressure on revenue scale from the intentional scaling back of the Enhance Business
• Risk of lost opportunities as advances in cutting-edge AI affect the company's traditional competitive advantages in software development
• Risk of clients curbing IT investment due to global economic uncertainty and rising prices stemming from factors such as U.S. policy changes and heightened tensions in the Middle East
• Forecast for FY2027 (ending March 2027) projects net income attributable to owners of parent to decline 4.1% year on year to ¥1,500 million (reflecting the absence of prior-period extraordinary gains, among other factors)
• Risk of failing to achieve medium-term management plan targets (operating margin of 10.5%, ROE of 14%)