CAC Holdings Corporation

Business Details

Through domestic subsidiaries such as CAC Corporation and Ark System Co., Ltd., the segment provides System Construction Services, System Operation & Management Services, and HR BPO Services. It serves a broad customer base spanning finance, pharmaceuticals, manufacturing, telecommunications, and other industries, and is expanding its digital products and services centered on AI and data utilization while incorporating newly consolidated subsidiaries through M&A. In Q1 FY2026 (ending December 2026), JEMS Co., Ltd. was newly consolidated.

Recent Overview

Sales slightly declined but margins improved; ¥1,903 million in goodwill recorded from JEMS's new consolidation.

Domestic IT sales in Q1 FY2026 (ending December 2026) were ¥9,618 million (down 0.3% year-on-year). While core subsidiaries were affected by progress in certain customers' insourcing and the winding down of large-scale projects, two newly consolidated companies from the previous fiscal year's M&A (Incurred Consulting Co., Ltd. and Recomot Co., Ltd.) contributed positively. Adjusted EBITDA rose to ¥1,123 million (up 12.8% year-on-year) due to cost reductions from the transfer of the R&D division and contributions from the two newly consolidated companies, with margin improving to 11.7%. JEMS Co., Ltd. was newly consolidated in this quarter, generating goodwill of ¥1,903 million (provisional value). Orders received were soft at ¥10,791 million (down 8.3% year-on-year).

Key Products

Growth Drivers

• Contribution to sales and profit from the new consolidation of JEMS Co., Ltd. (from Q1 FY2026)
• Continued earnings contribution from M&A subsidiaries consolidated in the prior fiscal year (Incurred Consulting Co., Ltd., Recomot Co., Ltd.)
• Continued cost reduction and margin improvement effects from the transfer of the R&D division
• Business diversification through AI Transformation, new business creation, and strategic M&A execution under Phase 2 (2026-2030)
• Steady sales growth in the finance and telecommunications sectors (finance up 9.4% and telecommunications up 15.7% year-on-year by industry)
• Strengthening of proprietary assets in the AI and data utilization domain and deployment of industry-specific solutions

Risks

• Risk of structural decline in outsourced projects due to progress in insourcing by certain customers (impact on sales continued this quarter)
• Uncertainty regarding future prospects due to declining orders received (¥10,791 million, down 8.3% year-on-year) and shrinking order backlog (¥11,263 million, down 4.8% year-on-year)
• Structural changes in customer needs accompanying rapid advances in AI technology, including generative AI
• Future impairment risk associated with expanding goodwill balance (¥6,625 million, up from ¥4,854 million at the end of the previous fiscal year; JEMS goodwill of ¥1,903 million is a provisional value)
• Downward pressure on operating income due to M&A-related expenses (companywide operating income for the quarter down 8.9% year-on-year)
• Softening demand in certain industries, such as declining sales to the pharmaceutical sector (¥1,637 million, down 14.3% year-on-year)