NSD CO.,LTD.

Business Details

Provides software development and system consulting services to financial institutions such as banks, insurance companies, and securities firms. Key affiliated companies include NSD itself, NSD-DX Technology Co., Ltd. (renamed NSD AI Technology Co., Ltd. from April 2026), Art Holdings Co., Ltd. (dissolved via absorption-type merger in April 2026), NSD International, Inc., and Chengdu Renben Xindong Technology Co., Ltd. Revenue has been driven by core banking system replacement projects centered on major banks and the expansion of existing projects, making this the largest segment, accounting for approximately 30% of the NSD Group's total net sales.

Recent Overview

Achieved 8.0% year-on-year sales growth driven by core banking system replacements at major banks and expansion of existing projects

In FY2026 (ending March 2026), despite the wind-down of a large insurance company project, orders from major banks grew significantly due to core banking system replacement projects and the expansion of existing projects, resulting in net sales of ¥35,073 million (up 8.0% year on year) and operating profit of ¥6,774 million (up 7.1% year on year). Remaining performance obligations (order backlog) at period-end stood at ¥14,023 million, up 31.4% from the prior year-end, expanding the revenue base for the next period and beyond.

Key Products

Growth Drivers

• Continued expansion of core banking system replacement projects and existing projects at major banks
• Favorable order environment amid expanding DX investment by financial institutions
• Growth in demand for cloud-based DX-related system development
• Enhanced added value in the DX/AI field through collaboration with group companies such as NSD AI Technology Co., Ltd. (formerly NSD-DX Technology Co., Ltd.)
• Improved visibility of next-period revenue due to remaining performance obligations of ¥14,023 million at period-end (up 31.4% year on year)

Risks

• Risk of dependence on specific customers/projects, such as the wind-down of a large insurance company project
• Risk of margin deterioration due to occurrence of unprofitable projects (cost estimation errors in contract-based agreements)
• Risk of fluctuations in financial institutions' IT investment restraint or core system replacement cycles
• Risk of rising personnel acquisition costs due to engineer shortages
• Impact of US trade policy and financial/capital market volatility on customers' IT investment plans

Business Details

A segment providing software development and system consulting services mainly to companies in manufacturing, commerce, and other industries. Key affiliated companies include NSD, NSD-DX Technology Co., Ltd., Art Holdings Co., Ltd., and FSK Co., Ltd. The segment has continued to expand sustainably by capturing DX/AI-related development demand. In FY2026 (ending March 2026), steady orders from automotive-related manufacturers combined with improved profit margins contributed to operating profit growth of 17.7% year on year, the highest growth rate among all segments.

Recent Overview

Steady orders from automotive-related manufacturers and margin improvement drove the highest profit growth rate among all segments

In FY2026 (ending March 2026), steady orders from automotive-related manufacturers led to net sales of ¥28,286 million, up 10.3% year on year. Operating profit rose 17.7% year on year to ¥4,410 million, the highest growth rate among all segments, driven partly by margin improvement. The operating margin improved by 1.0 percentage point, from 14.6% in the prior period to 15.6%. Order backlog stood at ¥5,368 million, down slightly from ¥5,496 million at the prior year-end.

Key Products

Growth Drivers

• Steady orders from automotive-related manufacturers contributing to continued sales expansion
• Continued rise in demand for DX/AI-related system development (growth of the DAS business)
• Margin improvement: effects of strengthened project management and profitability enhancement measures (operating margin improved from 14.6% to 15.6%)
• Expansion of projects utilizing new technologies, such as automating production planning and algorithmizing shelf placement in warehousing/logistics
• Enhanced upstream process capability through strengthened consulting functions

Risks

• Risk of dependence on capital investment trends among automotive-related manufacturers (concerns over reduced manufacturing IT investment due to US trade policy/tariff impacts)
• Constraints on development capacity due to IT personnel shortages
• Uncertainty in total cost estimates for contract-based agreements (risk of unprofitable projects)
• Risk of margin decline due to intensifying price competition with competitors
• Order backlog declined slightly from the prior year-end (from ¥5,496 million to ¥5,368 million), somewhat reducing visibility of future sales

Business Details

Provides software development and system consulting services to infrastructure companies in telecommunications, transportation, and electricity/gas/water utilities, as well as to public sector bodies. In FY2026 (ending March 2026), orders from telecommunications companies as well as public sector bodies and electricity/gas/water utilities grew significantly, achieving increased sales. However, the impact of some unprofitable projects limited the extent of profit growth. Key affiliated companies include NSD, NSD-DX Technology Co., Ltd., Art Holdings Co., Ltd., and FSK Co., Ltd.

Recent Overview

Increased sales driven by order growth from telecommunications, public sector, and electricity/gas/water utilities, but unprofitable projects pressured margins

In FY2026 (ending March 2026), orders from telecommunications companies as well as public sector bodies and electricity/gas/water utilities grew significantly, achieving net sales of ¥24,200 million, up 7.8% year on year. Meanwhile, operating profit growth was limited to ¥4,759 million, up 4.5% year on year, partly due to the impact of some unprofitable projects, and the operating margin declined from 20.3% in the prior period to 19.7%. Remaining performance obligations increased to ¥6,515 million (from ¥6,072 million at the prior year-end), maintaining the order base for the next period. Efforts related to next-generation DX initiatives for water utilities are ongoing.

Key Products

Growth Drivers

• Expansion of existing projects and increased new DX investment among public sector bodies
• Continued need for core system renewal in telecommunications and electricity/gas/water utilities
• Expanded orders from transportation industries such as rail and aviation
• Creation of new projects through next-generation DX collaboration agreements with water utilities
• Enhanced added value through utilization of DX/AI and other new technologies, and strengthened proposal-based consulting

Risks

• Risk of margin pressure from some unprofitable projects (materialized in FY2026 (ending March 2026))
• Risk of fluctuations in total cost estimates for contract-based agreements (affecting progress-based revenue recognition)
• Risk of declining order unit prices for public sector projects due to budget constraints and intensifying bidding competition
• Risk of rising personnel acquisition costs due to engineer shortages
• Risk of reduced customer IT investment due to domestic economic downturn stemming from US trade policy and worsening Middle East conditions, among other factors

Business Details

Provides IT infrastructure/network construction, system consulting, and system maintenance/operation services. Main customers are financial institutions such as banks and public sector bodies, with orders centered on infrastructure construction projects across various industries. Key affiliated companies include NSD, Art Holdings Co., Ltd., FSK Co., Ltd., and NSD International, Inc. Among the four segments in the System Development Business, this segment has the smallest sales scale but maintains a stable order base.

Recent Overview

Steady progress in infrastructure projects for financial institutions and the public sector drove increases in both net sales and operating profit

In FY2026 (ending March 2026), steady orders for infrastructure construction and other projects across various industries, centered on financial institutions such as banks and public sector bodies, resulted in net sales of ¥13,296 million (up 7.2% year on year) and operating profit of ¥2,309 million (up 6.6% year on year). The operating margin remained largely flat at 17.4%, compared to 17.5% in the prior period, maintaining stable profitability. Remaining performance obligations rose slightly to ¥2,875 million from ¥2,856 million in the prior period.

Key Products

Growth Drivers

• Continued expansion of orders for infrastructure construction projects from financial institutions such as banks and public sector bodies
• Growing demand for IT infrastructure renewal and cloud migration amid corporate and public institution DX promotion
• Expansion of business foundation through the NSD Group's M&A strategy (e.g., Art Holdings)
• Diversification of the customer base through capture of cross-industry infrastructure construction demand

Risks

• Risk of margin pressure due to delays in major projects at subsidiaries
• Rising personnel costs and difficulty securing staff due to IT engineer shortages
• High dependence on large-scale projects in infrastructure construction, creating performance volatility risk from project completion or delay
• Smallest sales scale among the four segments of the System Development Business, limiting scale benefits

Business Details

Provides system-based services and sells system products, offering solutions ranging from highly versatile offerings to business-specific solutions. Key affiliated companies include Noza Co., Ltd. and Shareholders Relation Service Co., Ltd. (Stellas Co., Ltd. was renamed NSD Digital Solutions Co., Ltd. in April 2026). Covers diverse areas such as security products, shareholder benefit services, medical/healthcare, logistics, and human resources, forming part of the DAS business and serving as a priority focus segment. In FY2026 (ending March 2026), operating profit expanded sharply, roughly doubling year on year, with a substantial improvement in profitability.

Recent Overview

Operating profit roughly doubled year on year, driven by medical DX special demand, sharp growth in security orders, and acquisition of a large shareholder benefit service client

Full-year net sales for FY2026 (ending March 2026) were ¥17,707 million (up 15.0% year on year), and operating profit improved substantially to ¥1,488 million (up 92.6% year on year). The main factors were: (1) special demand related to government-promoted medical DX, (2) a sharp increase in security product orders driven by expanding security enhancement needs among public sector bodies and others, and (3) the acquisition of new large clients in the shareholder benefit service. Remaining performance obligations also increased by ¥438 million from the prior year-end to ¥3,300 million, confirming an accumulation of orders. Separately, Stellas Co., Ltd. was renamed NSD Digital Solutions Co., Ltd. in April 2026.

Key Products

Growth Drivers

• Continued capture of special demand related to government-promoted medical DX
• Sharp growth in security product orders driven by expanding security enhancement needs among public sector bodies and private companies
• Capture of new demand through expanded provision of the generative AI-utilizing solution "BizInsight"
• Acquisition of large clients and expansion of the existing customer base in the shareholder benefit service
• Concentration of group-wide resources and investment as a priority segment within the DAS (DX/AI/Solution) business
• Expanded product lineup through strengthened collaboration with group subsidiaries such as NSD Digital Solutions Co., Ltd. (formerly Stellas Co., Ltd.)

Risks

• Risk of a downturn if temporary demand such as medical DX special demand subsides
• Short-term profit pressure from upfront investment in developing new solutions and strengthening sales capabilities
• Risk of procurement cost fluctuations due to dependence on external procurement for security products, among others
• Risk of intensifying competition and delayed response to technological change in emerging fields such as generative AI
• Remaining performance obligations balance (¥3,300 million) is relatively small compared to the System Development Business segments, resulting in lower visibility of future sales
• Risk of margin decline in some solutions (project-level revenue management is important)