MKSystem Corporation

Business Details

Targeting labor and social security attorney offices, labor insurance affairs associations, and general corporations as primary customers, this segment provides business software via the ASP (Application Service Provider) model to support procedures such as social insurance, labor insurance, and payroll calculation. Centered on the flagship product line, the Shalom Series, the segment also offers satellite cloud services such as Mynabox and eNEN (Web Year-End Tax Adjustment System). Stock-type ASP service revenue accounts for the majority of earnings, serving as the revenue foundation for the entire group. In FY2026 (ending March 2026), cost reductions and a review of outsourcing expenses were effective, resulting in stable operating profit recorded throughout the full year.

Recent Overview

Cost reductions drove a turnaround from operating loss to ¥232 million profit, achieving ROE of 32.7%

In FY2026 (ending March 2026), revenue grew steadily to ¥2,419 million (up 1.5% year on year). Reductions in outsourcing processing costs and IDC-related expenses within cost of sales, along with the curbing of server and support costs, were effective, resulting in operating profit of ¥232 million (versus a loss of △¥65 million in the prior period), a significant swing to profitability. ASP service revenue expanded to ¥2,264 million (up 2.0% year on year), and System Construction Service revenue also grew to ¥87 million (up 10.9%). In March 2026, the 'Shalom Security & AI Support Office' was opened on the second floor of the head office building, with investments made to enhance system stability and customer convenience. As a mid- to long-term initiative, the company announced plans to promote the phased development of 'AI Shalom.'

Key Products

Growth Drivers

• Improvement of revenue structure through continued curbing of server costs, support costs, and outsourced processing costs
• Expansion of business efficiency needs in the labor and social security attorney market and general corporate market, driven by work-style reform and telework promotion
• Active promotion of upselling to higher-tier plans and cross-selling of related products
• Continued expansion of demand for electronic filing and form automation driven by the spread of cloud services and SaaS
• Increased demand for compliance-related systems due to legal reforms and strengthened personal information protection requirements
• Strengthening mid- to long-term competitiveness and enhancing added value through continued investment in 'AI Shalom'

Risks

• Intensifying price competition due to successive new entrants from competitors
• Cost-front-loading risk from delays in developing new products such as 'AI Shalom'
• Risk of increased costs and delayed response to regulatory changes
• Risk of information security incidents and personal data leaks (e.g., related to My Number management)
• Risk of difficulty maintaining development and support capabilities due to labor shortages
• Risk of earnings impact from high dependence on ASP services in the event of customer cancellations or price declines