System D Inc.

Business Details

The company develops in-house packaged software specialized in six areas—school administration, public education, public accounting, wellness, pharmacy, and software engineering—and provides it in both on-premises and cloud formats. It adopts a hybrid model combining flow revenue from license fees, customization, and implementation support with stock revenue from support services and cloud services. In the first half of FY2026 (ending March 2026), both flow and stock revenue expanded, and sales increased 9.2% year on year.

Recent Overview

Both sales and operating profit exceeded the prior-year period, with stock revenue expanding to surpass flow revenue for the first time

In the first half of FY2026 (ending March 2026) (November 2025 to April 2026), Software Business sales were ¥2,943 million (up 9.2% year on year), and segment operating profit was ¥882 million (up 3.8% year on year). Stock revenue increased 11.0% year on year to ¥1,473 million, slightly exceeding flow revenue of ¥1,471 million. On the other hand, the company recorded an impairment loss of ¥37 million (attributable to the Software Business), resulting in an 8.1% year-on-year decline on a net income basis. There has been no change to the full-year earnings forecast, which remains at sales of ¥5,541 million and operating profit of ¥1,028 million.

Key Products

Growth Drivers

• Continued accumulation of stock revenue (support and cloud services): in the first half of FY2026 (ending March 2026), this increased 11.0% year on year to ¥1,473 million, expanding to a scale exceeding flow revenue
• Demand for migration to next-generation products: continued delivery of "Campus Plan Smart" upgrade projects and the launch of nationwide sales activities for "School Engine One" targeting public schools
• Demand for regulatory system compliance in the public accounting field: launch of PPP new version 6.0 (supporting changes to the public accounting system) and expansion into the facility management field through the "fmSMART" business transfer
• Expansion of cloud-based service adoption at new facilities: accelerated rollout to large-scale facilities, including the installation of "Smart Hello Ticket" at Tokyo Skytree
• New expansion into the financial sector: development of new markets through the expanded lineup of document management systems for financial institutions and other offerings in the software engineering business
• Promotion of AI utilization: launch of a new AI service proof-of-concept trial with a school corporation, and development by Nakamura Bokujo Co., Ltd. to implement AI functionality into packaged software

Risks

• Since the functionality and quality of packaged software directly affect business performance, development delays or quality issues pose a risk of materially impacting earnings
• In the first half of FY2026 (ending March 2026), an impairment loss of ¥37 million was recorded in the Software Business, and the risk of failing to recover development investment continues to exist
• High dependence on niche markets specialized in specific industries and operations, creating risk that shrinkage of target markets or regulatory changes could affect demand
• Costs arising from responding to changes in the public accounting system: increased development and support costs associated with adapting the PPP product to new version 6.0
• Rising costs of securing and developing human resources: risk of increased personnel and outsourcing costs for AI talent development and next-generation software development (selling, general and administrative expenses expanded 16.3% year on year to ¥687 million)
• Concentration risk in flow revenue projects: high dependence on delivery of large-scale projects at fiscal year-end and the start of the fiscal year, creating a risk that project delays or cancellations could affect half-year performance