CRESCO LTD.

Business Details

The IT Services Business is subdivided into three categories by end-user industry: "Enterprise," "Financial," and "Manufacturing." It provides comprehensive services including enterprise systems, financial systems, embedded systems, AI systems, mobile systems, platforms, Agile Development, Nearshore Development, Offshore Development, RPA Implementation Support, Data Analytics, UX design consulting, as well as IT planning, development, and maintenance. This is the core segment, accounting for approximately 85.6% of consolidated revenue in FY2026 (ending March 2026).

Recent Overview

Driven by the Enterprise category, revenue and profit increased, but the Manufacturing category saw a revenue decline due to project cancellations and postponements.

In FY2026 (ending March 2026), the IT Services Business posted revenue of ¥55,365 million (up 2.4% year on year) and segment profit of ¥8,040 million (up 4.7% year on year). The Enterprise category saw a significant profit improvement of 31.9% year on year, driven by increased application development support in the information/communications/advertising field and the resolution of unprofitable projects from the prior period. Meanwhile, the Manufacturing category saw revenue decline 6.3% year on year and profit decline 9.0% year on year due to the impact of cancellations and postponements of manufacturer product development projects in the machinery/electronics field. The Financial category saw profit decline 7.7% year on year due to unprofitable projects arising at some consolidated subsidiaries.

Key Products

Growth Drivers

• Steady continuation of demand for renewal of existing systems, along with increased inquiries in the generative AI, cloud, security, and data analytics fields
• Expansion of application development support work in the information/communications/advertising field within the Enterprise category
• M&A effects from the consolidation of IS Techno Port Co., Ltd. (IBM i Business) and Apth Co., Ltd. (Manufacturing System Development) in October 2025
• Expansion of the addressable area in the Manufacturing segment and strengthened capabilities in the Nagoya region through the subsequent-event subsidiarization of Office-mation Co., Ltd. (control system development and solutions for local governments) in April 2026
• Strengthened development and proposal capabilities in the automotive/transportation equipment field through the establishment of the Mobility DX Business Division
• Strengthening of high-value-added solution partnerships, including UiPath's "Diamond" partner certification
• Consolidation of development sites and enhanced productivity and communication through the opening of "Teq-C"
• Expansion of engineering resources and improved order-taking capacity through the promotion of nearshore/offshore development

Risks

• Risk of cancellation or postponement of manufacturer product development projects in the machinery/electronics field within the Manufacturing category (due to the impact of protectionist trade policies and rising crude oil prices)
• Risk of unprofitable projects arising across categories, including the Financial category (due to miscommunication with customers, specification changes, insufficient development staff, etc.)
• Difficulty in securing and developing IT engineers (due to a declining working-age population and intensifying competition for talent)
• Pressure on profit margins from increased labor and outsourcing costs amid price and wage inflation
• Risk of customers curbing IT investment due to changes in the macroeconomic environment, such as Bank of Japan policy rate hikes
• Risk that concerns over substitution by generative AI in the IT/software industry—referred to as the "Anthropic shock" or "death of SaaS"—could affect stock prices and order intake
• Risk that rising crude oil prices amid Middle East tensions could lead energy-dependent client companies to select or curb IT investment projects