DAIKO XTECH, Ltd.

Business Details

Comprises three categories: Product Solutions (41.1% of net sales), Software Solutions (52.2%), and Network Solutions (6.7%). Based on its partnership with the Fujitsu Group, the company develops in-house packages for the manufacturing and distribution industries as well as key solutions such as electronic contracts and procurement support. Under the medium-term management plan "CANVAS TWO," the company is pursuing LTV maximization through both its core business and key solutions. In April 2025, the company changed its name to DAIKO XTECH, Ltd.

Recent Overview

Net sales were flat, but operating profit fell 21% year on year due to one-time costs and increased human capital investment

In FY2026 (ending March 2026), net sales were ¥42,500 million (down 0.4% year on year), remaining roughly flat. Although Software Solutions grew to ¥22,191 million (up 6.8% year on year) and gross profit increased, additional costs associated with one-time project losses, R&D expenses for proprietary solutions, and increased selling, general and administrative expenses driven by enhanced employee compensation and training investment (¥8,785 million, up 7.8% year on year) squeezed profits, leaving operating profit at only ¥1,903 million (down 21.0% year on year). The company also recorded a full impairment loss of ¥218 million on goodwill related to Vertex Co., Ltd. On the other hand, BULiT Application, Inc. became a consolidated subsidiary in the second quarter, and both orders received and order backlog remained solid. For FY2027 (ending March 2027), the company forecasts net sales of ¥43,500 million and operating profit of ¥2,600 million (up 36.6% year on year), anticipating a recovery.

Key Products

Growth Drivers

• Continued growth in Software Solutions (steady increase in orders for modernization projects and stock-type businesses)
• Expansion of sales of in-house developed products in Key Solutions (Paperless, Industry, Security, etc.) (net sales up 3.9% year on year in the current period)
• Expansion of D-PaSS sales and strengthened collaboration with the Mobility Business Division through the consolidation of BULiT Application, Inc. as a subsidiary
• Acquisition of new business deals and expanded orders from existing customers through strengthened collaboration with the Fujitsu Group
• Sustained high level of corporate IT investment appetite driven by aging existing IT systems (response to the "2025 digital cliff"), labor-saving needs, and business automation needs
• Capital allocation strategy that continues M&A and growth investments while maintaining a stable dividend policy based on 3% DOE and financial soundness (equity ratio of 49.1%)

Risks

• Risk of recurrence of one-time project losses (additional costs were incurred in the current period, with the provision for loss on orders received expanding 165% year on year to ¥80 million)
• Elevated SG&A expenses and margin pressure due to continued human capital investment (compensation improvements and training investment) (SG&A expenses of ¥8,785 million in the current period, up 7.8% year on year)
• Continued decline in Product Solutions sales due to the policy of restraining hardware sales (down 6.6% year on year in the current period)
• Risk of underperformance against business plans at M&A subsidiaries such as Vertex Co., Ltd. (a full impairment loss of ¥218 million on goodwill was recorded in the current period)
• Risk of deteriorating IT investment sentiment among domestic companies due to U.S. trade policy trends and continued price inflation
• Risk of unexpected costs, such as the new recording of information security countermeasure expenses in non-operating expenses (¥32 million in the current period)
• Risk of changes in trading terms due to dependence on sales to the Fujitsu Group (¥1,371 million, accounting for approximately 3.2% of net sales in the current period)