TerraSky Co.,Ltd.

Business Details

Provides cloud consulting, integration, and ERP implementation support centered on Salesforce. Deploys diverse cloud services across the group, including SAP Cloud Migration by subsidiary BeeX, engineer dispatch by TerraSky Technologies, and Google Cloud utilization support by LibreSky. Backed by one of the largest numbers of Salesforce certified professionals in Japan, the company has built a structure capable of handling large-scale and complex projects.

Recent Overview

Sales up 20%, profit up 24%, continuing high growth; reduced outsourcing costs and improved subsidiary profitability boosted margins

In Q1 of FY2027 (ending February 2027) (March–May 2026), Solutions Business net sales were ¥7,356 million (up 20.0% year on year), and segment profit was ¥921 million (up 24.2% year on year). In addition to the sales contribution from the consolidation of KitAlive as a subsidiary, reduced outsourcing costs and a reduction in losses at Quemix and its Thai subsidiary (TerraSky Thailand) due to increased sales contributed to improved profit margins. Specific system implementation projects based on the capital and business alliance with NTT DATA also began in the prior fiscal year, and the effects of group-wide management efficiency measures (the merger of two subsidiaries and the dissolution of the U.S. subsidiary) are becoming increasingly apparent.

Key Products

Growth Drivers

• Continued expansion of domestic DX demand and the spread of cloud-first policies driving an increase in Salesforce implementation projects
• Acceleration of nationwide Salesforce business through the capital and business alliance with NTT DATA (concrete projects began in the prior fiscal year)
• Expansion of the SAP migration market driven by BeeX (cloud migration demand associated with the SAP 2027 issue)
• Creation of new demand in the Salesforce-related market through the deployment of Agentforce (Salesforce's autonomous AI agent)-compatible services
• Strengthened expansion into the Hokkaido and regional markets through the consolidation of KitAlive as a subsidiary
• Improved profitability through outsourcing cost reduction and group management efficiency measures (merger of subsidiaries, dissolution of U.S. subsidiary)
• Trend of reduced losses through sales growth at Quemix and its Thai subsidiary

Risks

• High dependence on the Salesforce market (the majority of sales are Salesforce-related): risk of business impact if changes occur in that market
• Chronic shortage of cloud engineer talent: risk of lost opportunities as hiring and training fail to keep pace with robust demand
• Risk that continued operating losses at Quemix and the Thai subsidiary will pressure segment profit (losses continue despite an improving trend)
• Impact of the spread of generative AI and Agentforce on SaaS in general: risk that demand for conventional cloud integration will change
• Risk of unprofitable projects: possibility of increased cost of sales due to unexpected increases in development man-hours under progress-based revenue recognition
• Risk of reduced IT investment by client companies due to rising resource and raw material prices from yen depreciation and geopolitical risks (Middle East and Ukraine situations)

Business Details

A segment that develops, sells, and maintains proprietary cloud services (mitoco, SkyVisualEditor, mitoco X, etc.). Centered on the groupware "mitoco" built on the Salesforce platform, the segment also offers the data integration service "mitoco X" and the cloud accounting service "mitoco ERP." The segment adopts a subscription-based revenue model and sells products both domestically and internationally. In Q1 of FY2027 (ending February 2027), the effects of the dissolution of the U.S. subsidiary and reduced outsourcing costs became apparent, and the segment turned profitable.

Recent Overview

Dissolution of the U.S. subsidiary and reduced outsourcing costs took effect, turning segment profit/loss positive in Q1

In Q1 of FY2027 (ending February 2027) (March–May 2026), net sales to external customers in the Products Business were ¥643 million (up 24.1% year on year). This was driven by year-on-year growth in subscription sales across all products, as well as implementation-related sales associated with ERP product sales. The effects of the dissolution of the U.S. subsidiary and reduced outsourcing costs in the prior fiscal year became apparent, and segment operating profit turned positive at ¥48 million (compared with a segment loss of ¥28 million in the same period of the prior year). In addition, mitoco won the "High Performer" award in the groupware category at the ITreview Grid Award 2026 Spring for the 16th consecutive time, continuing to enhance product recognition and credibility.

Key Products

Growth Drivers

• Continued year-on-year growth in subscription sales across all products
• Diversification of segment sales through implementation-related sales associated with ERP product sales
• Ongoing improvement in profit structure through the dissolution of the U.S. subsidiary and reduced outsourcing costs
• Enhanced recognition and credibility through mitoco's 16 consecutive ITreview Grid Award wins
• Expansion of cross-selling opportunities through integration with Salesforce AI features such as Agentforce
• Product bundling opportunities in Salesforce implementation projects through the capital and business alliance with NTT DATA

Risks

• Although the segment turned profitable, continued monitoring is needed to stabilize full-year profitability
• High dependence on the Salesforce platform, making the business susceptible to specification changes and price revisions by Salesforce
• Concern over the impact of generative AI on SaaS in general (risk of existing products being replaced by tools such as Agentforce)
• Continued amortization burden of intangible fixed assets such as software, risking a prolonged period before monetization is achieved
• Overseas expansion has been scaled back following the dissolution of the U.S. subsidiary, limiting the capture of global growth opportunities