Ascentech K.K.

Business Details

Comprises four business areas: virtual desktop, cloud infrastructure, cloud service, and Zero Trust Security. The company operates as a primary distributor for overseas manufacturers, including Cloud Software Group (CSG), handling import, sales, and maintenance of their products, while also developing and selling its proprietary "Resalio" brand products. Its main customers are financial institutions, healthcare providers, and local governments, and it delivers products to end users through more than 300 system integrator partners. In the first quarter of FY2027 (ending January 2027) (February to April 2026), the company posted a significant decline in both revenue and profit due to the drop-off from a large-scale project recorded in the same period of the prior year.

Recent Overview

Sharp decline in both revenue and profit in Q1 due to drop-off from a large-scale project and foreign exchange losses; full-year forecast unchanged

In the first quarter of FY2027 (ending January 2027) (February to April 2026), revenue was ¥3,410 million (down 45.5% year on year), primarily due to the drop-off from a large-scale virtual desktop software project recorded in the same period of the prior year. Operating profit was limited to ¥571 million (down 26.7% year on year), but the operating margin improved to 16.7% from 12.5% in the same period of the prior year. On the other hand, the company recorded a foreign exchange loss of ¥240 million, mainly due to fair value valuation of foreign-currency-denominated liabilities related to its strategic business alliance with CSG, resulting in a significant decline in ordinary profit to ¥363 million (down 68.2% year on year). The company announced new products, "Edge AI Array" and "SapiaBox," to strengthen its product lineup. The full-year forecast (revenue of ¥17,500 million and operating profit of ¥2,000 million) remains unrevised. A three-for-one stock split was implemented effective May 1, 2026.

Key Products

Growth Drivers

• Continued expansion of Remote PC Array adoption by local governments in response to the Ministry of Internal Affairs and Communications' new guidelines
• Progress in adoption of the high-margin Zero Trust Security product among large enterprises
• Expansion of the stock business (proprietary products and in-house maintenance services): Q1 revenue basis of ¥687,846 thousand, new orders basis of ¥795,164 thousand
• Growing demand for secure AI infrastructure driven by the progress of AI adoption (Edge AI Array, SapiaBox)
• Continued medium- to long-term demand for virtual desktop and Zero Trust Security products, driven by the entrenchment of hybrid work
• Horizontal expansion of industry-specific implementation examples for financial institutions, healthcare, and local governments

Risks

• Dependence on overseas manufacturers: changes in contractual relationships with CSG, Atrust, and others directly affect business performance
• Foreign exchange risk: import cost of procured products rises during yen depreciation (foreign exchange hedges are in place, but a foreign exchange loss of ¥240 million was recorded in Q1)
• Concentration risk from large-scale projects: revenue dependence on specific customers/projects (the drop-off from a large-scale project in the same period of the prior year was the main cause of the 45.5% revenue decline in Q1)
• Continued low equity ratio: 18.5% at the end of Q1 of FY2027 (ending January 2027) (mainly due to a sharp increase in accounts payable and long-term accrued liabilities associated with the establishment of CXJ)
• Full-year operating profit forecast for FY2027 (ending January 2027) is projected at ¥2,000 million, a 29.6% decrease year on year (due to the drop-off of large one-time gains)
• Risk of profit and loss fluctuations from fair value valuation of foreign-currency-denominated liabilities based on the strategic business alliance with CSG