ALPHA SYSTEMS INC.

Business Details

Composed of three areas: Communication System Development (nodes, mobile networks, network management), Open System Development (public sector, distribution/services, finance, information & communications, etc.), and Embedded System Development. Major customers are NTT DATA (net sales of ¥7,204 million) and Fujitsu (¥4,356 million). The company's strength lies in its proprietary-staff-based development structure, offering contract software development backed by high technical capability and organizational strength. This reporting segment accounts for over 90% of both consolidated net sales and profit.

Recent Overview

Finance, information & communications, and embedded systems drove strong growth; order backlog up 16.2% year on year, indicating a favorable outlook

In FY2026 (ending March 2026), net sales in the Software Development Related Business segment were ¥39,477 million (up 6.7% year on year), and segment profit was ¥4,711 million (up 9.6% year on year). Finance (+31.7%), information & communications (+18.8%), and embedded systems (+18.6%) drove strong growth. Meanwhile, Communication System Development declined 0.8% due to decreases in node (-8.5%) and mobile network (-14.5%). Orders received were ¥40,848 million (up 9.4% year on year), and the order backlog was ¥9,843 million (up 16.2% from the end of the prior period), indicating a favorable order environment going forward. The forecast for the next period (FY2027, ending March 2027) is ¥41,500 million (up 5.1% year on year). Two major customers are disclosed: NTT DATA (¥7,204 million) and Fujitsu (¥4,356 million); LINE Yahoo was excluded from the major customer disclosure for the current period.

Key Products

Growth Drivers

• Continued solid growth in corporate IT investment aimed at strengthening competitiveness
• Expanding development demand driven by full-scale adoption of AI technology for business creation and process transformation
• Progress in modernization of IT systems utilizing AI and cloud in the public and financial sectors
• Rising software development unit prices amid a widening IT talent supply-demand gap and wage increases
• Continued strong growth in the financial field (payment relay systems, financial cloud infrastructure), with orders received up 33.2%
• Expanding demand in the information & communications field for in-house systems and AI R&D for telecom carriers, with orders received up 44.7%
• Continued solid demand for embedded systems (automotive, measurement/control equipment)
• Order backlog in the public sector expanded significantly, up 42.0% from the end of the prior period, expected to contribute to next period's sales

Risks

• Risk of continued declining sales trend in Communication System Development (node, mobile network) (node -8.5%, mobile network -14.5%)
• Rising recruitment and outsourcing costs due to widening IT talent supply-demand gap, pressuring profit margins
• Risk of sales concentration in major customers NTT DATA and Fujitsu (combined approximately 28.4% of net sales in the current period)
• Risk of delayed response to changes in development processes driven by rapid advances in AI technology
• Risk that economic uncertainty stemming from trade policy and other national policy trends could suppress IT investment
• Risk of deteriorating profitability on large-scale projects requiring provisions for losses on order backlog
• Downward pressure on next period's sales due to a decline in orders received in the distribution/services field (-3.6%) and a shrinking order backlog (-8.2%)