Japan Business Systems, Inc.

Business Details

Provides an integrated offering from customers' cloud DX planning through cloud infrastructure design and construction centered on Microsoft cloud products such as Azure, M365, and D365, Modern Workplace Solution, security environment implementation, and application development (including CRM/ERP). Through an integrated sales-and-delivery structure that deepens customer relationships, the segment has achieved higher revenue per customer and expanded projects, and it is the core engineering services segment driving improvement in the group's overall profit margin. It is also focusing on in-house development support, generative AI utilization support, and global projects.

Recent Overview

Projects expanded mainly through relationships with major existing customers, driven by in-house development support, generative AI, and global projects, resulting in a 12.9% year-on-year increase in revenue.

In the interim period of FY2026 (ending September 2026) (October 2025 to March 2026), ongoing relationships centered on major existing customers drove project expansion. The segment made progress in winning projects related to in-house development support, generative AI utilization support, and global projects, resulting in revenue of ¥15,976 million (up 12.9% year on year) and segment profit of ¥3,252 million (up 9.0% year on year). The profit margin declined slightly from 21.1% in the same period of the prior year to 20.4%, reflecting an increase in the allocation of company-wide costs (the adjustment amount expanded from ¥(1,601) million to ¥(1,893) million year on year).

Key Products

Growth Drivers

• Deepening customer relationships and increasing revenue per customer through an integrated sales-and-delivery structure (expanding the number of projects per customer)
• Progress in winning new projects across industries including financial services and manufacturing
• Growing demand for cloud utilization and AI utilization in the business IT and AI domains following the emergence of generative AI
• Expanding demand for overall optimization of siloed cloud environments and cybersecurity support
• Strengthened specialized structure for core business system implementation through the establishment of SureBizCloud Co., Ltd.
• Expanding response to comprehensive global support needs, including customers' overseas locations

Risks

• Rising costs of securing and developing talent amid a worsening engineer shortage
• Risk of profitability deterioration due to increasing complexity of project management (there is a track record of recording provisions for losses on orders received)
• High dependence on Microsoft products, making the segment susceptible to changes in Microsoft's product strategy and partner policies
• Risk of quarterly earnings volatility depending on the timing of large-project orders
• Operational risk and country risk associated with expanding global operations
• Downward pressure on segment profit margin from increased allocation of company-wide costs

Business Details

Provides an integrated offering of maintenance, operation, and improvement of cloud environments including Azure/M365/D365, delivered as either engineering services or managed services. It is a recurring-revenue business model centered on continuous-contract maintenance and operation revenue, backed by a stable transaction base with existing customers. The segment also offers a Proprietary Cloud Service that adds proprietary functionality to Microsoft's cloud licenses. It addresses global operation support needs both domestically and overseas, and project generation through referrals from the Cloud Integration Business is also a growth driver.

Recent Overview

Increased revenue and profit driven by promotion of cloud utilization among existing customers and expansion of global operation support

In the interim period of FY2026 (ending September 2026) (October 2025 to March 2026), in addition to an increase in projects accompanying the promotion of cloud utilization among existing customers, expanding demand for operation support both domestically and globally led to revenue of ¥11,733 million (up 10.4% year on year) and segment profit of ¥2,113 million (up 30.0% year on year). Profit growth (30.0%) significantly exceeded revenue growth (10.4%), and the segment profit margin improved from 15.3% in the same period of the prior year to 18.0%.

Key Products

Growth Drivers

• Continuous increase in projects accompanying deepening cloud utilization among existing customers
• Generation of new projects through referrals from the Cloud Integration Business
• Expanding domestic and global operation support needs
• Increase in cloud operation and improvement projects driven by expanding DX demand following the emergence of generative AI
• Stable revenue base supported by the recurring-revenue business model

Risks

• Rising costs of securing and developing talent due to an engineer shortage
• Risk of delayed response to rapid technological changes in the cloud market
• Impact of pricing and product strategy changes by major cloud vendors (such as Microsoft)
• Risk of declining demand for outsourced operations as customers advance in-house cloud operations
• Intensifying entry of competitors into the managed services market

Business Details

A business that procures licenses for Microsoft cloud products such as Azure/M365/D365 and IT-related equipment from manufacturers and resells them. It also handles related equipment for hybrid cloud environments composed of on-premises, private cloud, and public cloud. Cloud license revenue has a stable recurring-revenue business model based on regular contract renewals. In the interim period (first half) of FY2026 (ending September 2026), segment revenue was ¥58,662 million, accounting for approximately 68% of total company revenue of ¥86,377 million.

Recent Overview

Large-scale product sales demand and public-sector projects drove a 54.8% year-on-year increase in first-half revenue

Segment revenue for the interim period of FY2026 (ending September 2026) (October 2025 to March 2026) was ¥58,662 million (up 54.8% year on year), and segment profit was ¥1,750 million (up 17.0% year on year). In addition to stable provision of Microsoft licenses supported by customers' continuous cloud utilization, product sales grew significantly due to temporary large-volume demand accompanying major customers' promotion of cloud utilization and public-sector projects continuing from the prior period. Profit growth remained relatively modest compared to the sharp expansion in revenue, and the segment profit margin declined from approximately 3.9% in the same period of the prior year to approximately 3.0%. The full-year earnings forecast has been revised upward to revenue of ¥216,500 million (up 25.4% year on year), attributed mainly to spot demand in the L&P business.

Key Products

Growth Drivers

• Progress in upselling and cross-selling Microsoft cloud licenses to existing customers
• Continuation of temporary large-volume product sales demand accompanying major customers' promotion of cloud utilization
• Continued winning of large public-sector projects (carried over from the prior period)
• Sustained increase in cloud license demand driven by expanding DX investment across the domestic IT market overall
• Growing demand for cloud utilization in the business IT and AI domains following the emergence of generative AI

Risks

• The resale business has a low profit margin, and its high share of revenue constrains improvement in the company-wide operating profit margin (segment profit margin of approximately 3.0% in the interim period of FY2026 (ending September 2026))
• Major customers' temporary large-volume product sales demand and public-sector projects have low reproducibility and carry a risk of dropping off
• Risk of worsening procurement terms due to changes in Microsoft's pricing policy and sales channel policy
• As a matter of company policy, there is a plan to reduce the L&P business's share of revenue from 70% to 60% by FY2028, which is expected to result in a slowdown in segment growth
• If dependence on major customers is high, changes in those customers' investment plans could directly affect performance
• Risk of curtailed IT investment by customer companies amid growing uncertainty in the global economy

Business Details

The 'Others' segment is a business segment not included in the three reportable segments of the Cloud Integration Business, Cloud Service Business, and License & Products Business, and mainly includes Real Estate Leasing. Both revenue and profit account for an extremely small share of the consolidated total, and the segment plays a role complementary to the group's core businesses. In the interim period of FY2026 (ending September 2026) (October 1, 2025 to March 31, 2026), revenue from external customers was ¥4 million, and segment profit was ¥1 million, a slight decrease from the same period of the prior year (revenue of ¥5 million, segment profit of ¥3 million).

Recent Overview

In the interim period of FY2026 (ending September 2026), revenue was ¥4 million and profit was ¥1 million, a slight decrease year on year.

In the interim period of FY2026 (ending September 2026) (October 1, 2025 to March 31, 2026), revenue from external customers in the 'Others' segment was ¥4 million (¥5 million in the same period of the prior year), and segment profit was ¥1 million (¥3 million in the same period of the prior year). Both revenue and profit declined year on year, but the absolute amounts are extremely small, and the impact on consolidated performance is minor. The business consists of real estate leasing and other activities, continuing to serve as a stable source of recurring revenue.

Key Products

Growth Drivers

• Stable recurring revenue from real estate leasing income

Risks

• Revenue scale is extremely small, limiting its contribution to group performance
• Limited detailed disclosure of business content makes individual analysis by investors difficult