SYSTEM RESEARCH CO.,LTD.

Business Details

The company's only reportable segment. Composed of five business categories: SI Service Operations (contract-based system construction), Software Development Operations (quasi-delegation/dispatch-type on-site development), Software Product Operations (packaged software for SMEs), Product Sales (PCs and information equipment), and Other (website operation, SaaS). Major customers are in the manufacturing industry (automotive-related), with Toyota Systems Corporation being the largest customer, accounting for approximately 19.4% of net sales. As an independent company not affiliated with any manufacturer group, its strength lies in serving a wide range of industries without dependence on a manufacturer keiretsu.

Recent Overview

In FY2026 (ending March 2026), net sales and all profit items achieved double-digit growth, with the order backlog expanding sharply, up 81% year on year

Consolidated results for FY2026 (ending March 2026) showed net sales of ¥29,083 million (up 12.1% year on year), operating profit of ¥3,470 million (up 15.7%), and profit attributable to owners of parent of ¥2,610 million (up 18.9%), achieving double-digit growth across all items. Software Development Operations led growth at ¥16,603 million (up 16.5%), while Product Sales also expanded sharply to ¥887 million (up 116.4%) due to orders received for large-scale IT equipment sales projects. The operating margin improved to 11.9% (from 11.5% in the prior period), driven by a shift to higher-profitability projects through PRM (Project Risk Management) activities and the maintenance of high engineer utilization rates. The order backlog at period end expanded significantly to ¥6,710 million (up 81.1% year on year). Sales to Toyota Systems Corporation expanded to ¥5,661 million (19.4% of net sales). For FY2027 (ending March 2027), the company forecasts net sales of ¥32,276 million (up 10.9% year on year) and operating profit of ¥3,850 million (up 10.9%). According to the Bank of Japan's March 2026 Tankan survey, software investment plans rose 10.5% year on year, indicating that robust IT investment demand continues.

Key Products

Growth Drivers

• Solid trend in modernization and IT investment demand among major customers, primarily in the manufacturing industry (automotive-related)
• Robust IT investment across the information services industry overall, driven by DX (digital transformation) and AX (AI transformation) promotion and core system renewal needs (March 2026 Tankan survey: software investment plans up 10.5% year on year)
• Stable securing of continuous orders (stock business) from existing customers and high growth in Software Development Operations (up 16.5% year on year)
• Shift to higher-profitability projects and margin improvement through PRM (Project Risk Management) activities
• Improved visibility of future sales due to a significant buildup in the period-end order backlog of ¥6,710 million (up 81.1% year on year)
• Creation of new demand from expanding needs for operational efficiency and productivity improvement utilizing generative AI and Agentic AI

Risks

• Customer concentration risk due to concentrated sales to Toyota Systems Corporation (approximately 19.4% of net sales)
• Risk of reduced IT investment by manufacturing customers due to the impact of US trade policy (reciprocal tariffs)
• Risk of rising costs to secure and develop engineers due to IT talent shortages and intensifying recruitment competition
• Sluggish sales of packaged software for SMEs in Software Product Operations (down 15.9% year on year)
• Risk of major changes to the value-added structure of the existing IT business due to the advancement of AX
• Uncertainty over the economic outlook due to volatility in financial and capital markets and prolonged geopolitical risks (Middle East situation, etc.)