Nextgen,Inc.

Business Details

A company that has led Japan's public telephone network IP transition (PSTN migration) since its early stages. Its strength lies in mastery of both carrier-grade quality (99.999% uptime) and global-standard internet technology, enabling direct sales to major telecommunications carriers as well as expansion into government agencies and general enterprises via capital and business alliance SI partners such as Exeo Group, Saxa, NEC Networks & System Integration, and Tsuzuki Denki. The business consists of two segments: the "Voice Communication Business" and the "Cloud DX Business."

Recent Overview

Achieved record-high profits for the second consecutive year, substantially increased dividends, and paid a special dividend

In FY2026 (ending March 2026), net sales reached ¥4,256 million (up 17.6% year on year), operating profit reached ¥328 million (up 25.2%), and net profit reached ¥292 million (up 42.7%), setting record highs at every profit level. Subscription-based business grew steadily, up 8.5% year on year, with additional contributions from key license business contract wins, expansion of DX construction projects, and hardware sales to specific customers. Order backlog also expanded 21.0% year on year to ¥2,525 million. Following record profits for two consecutive years, an annual dividend of ¥30, including a special dividend of ¥5, was paid. On April 1, 2026, the company absorbed its wholly owned subsidiary LignApps through merger, and from FY2027 (ending March 2027) will transition from consolidated to non-consolidated (parent-only) financial reporting. The non-consolidated earnings forecast for FY2027 (ending March 2027) is net sales of ¥4,500 million, operating profit of ¥350 million, and net profit of ¥280 million (with an annual dividend of ¥30 planned, including a ¥10 dividend commemorating the company's 25th anniversary).

Key Products

Growth Drivers

• Expanding replacement demand for cloud PBX (U-cube voice) as dedicated hardware PBX systems reach end of production (U-cube series up 35.5% year on year)
• Stable growth in subscription-based business (cloud services and maintenance services), up 8.5% year on year in the current period
• Rapid expansion of AI utilization needs driving increased demand for call recording and voice recognition solutions (U-cube rec, LA-6000) and an increase in replacement projects for aging equipment
• Progress in IP transition of the enterprise telephone system market driven by the liberalization of fixed-line number portability, expanding demand for NX-B5000 and U-cube friends
• Competitive advantage of NX-B5000 backed by Zoom Phone and Microsoft Teams connection certification (first among domestic vendors)
• Expansion of the Cloud DX business (up 17.7% year on year): continued order intake for BPM support for government-affiliated organizations, MVNO platform construction, and DX system development projects
• Growing technical demand accompanying the cloud migration, multimedia support, and capacity expansion of carrier core solutions for telecommunications carriers
• Consolidation of management resources and creation of synergies in the CPaaS and UCaaS domains through the absorption merger of LignApps

Risks

• Volatility risk from one-time-type business (bulk sales of large-scale projects): specification changes or delays in acceptance due to customer circumstances could cause significant quarterly earnings fluctuations
• Short-term sales volatility risk associated with the shift in sales structure toward subscription-based models
• Software asset impairment risk: potential impairment losses if the profitability of owned software declines significantly due to changes in the business environment (an impairment loss of ¥32 million was recorded two fiscal years ago)
• Difficulty securing highly specialized personnel: a shortage of engineers in the information and telecommunications field could constrain business expansion (fixed costs, primarily personnel expenses, continue to increase)
• Risk of price competition intensifying due to increased competition with major telecommunications carriers and overseas cloud service providers (Zoom, Microsoft, etc.)
• Risk of dependence on sales to specific customers: in the current period, the major customer (Japan Federation of Construction Skilled Workers) accounted for approximately 14.4% of net sales (¥612 million), and NTT DOCOMO Business accounted for approximately 10.5% (¥449 million)
• Changes in disclosed information and accountability to investors associated with the transition from consolidated to non-consolidated financial reporting from FY2027 (ending March 2027)
• Integration risk following the absorption merger of LignApps: potential disruption to systems, personnel, and customer service associated with the integration of the CPaaS and UCaaS businesses