Systems Engineering Consultants (3741): FY2025 Results Summary — Record Sales, Operating and Ordinary Profit; Ninth Straight Year of Higher Sales and Profits

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Note: Systems Engineering Consultants (SEC) does not publish an English results presentation; this article is an English translation of the Japanese-language article on our sister site Investalk, which is based on the company’s Japanese-language IR materials (the results briefing materials for the most recent full fiscal year), with figures transcribed as reported. SEC’s fiscal year ends in March; following this site’s convention, the fiscal year ended March 2026 is classified as FY2025, while the body text and tables below keep the company’s own labels (FY3/2026 = fiscal year ended March 2026; FY3/2027 = fiscal year ending March 2027).

On May 25, 2026, SEC published its results briefing materials for FY3/2026. Net sales were 11,220 million yen (109.0% of the previous year), operating profit was 1,879 million yen (104.8%), ordinary profit was 2,062 million yen (108.9%) and net income was 1,509 million yen (112.3%). Net sales, operating profit and ordinary profit all reached record highs, marking the ninth consecutive year of higher sales and profits year on year. Orders received were 14,023 million yen (130.0% of the previous year) and the order backlog was 9,065 million yen (144.8%), both record highs, with orders received increasing year on year for the 11th consecutive year. IT demand was broadly firm overall, with increases in development related to contactless IC, in the medical field and for government agencies, and the company says it responded to changes in the demand structure from the perspective of optimizing across all BFs.

Full-Year Results (FY3/2026 Actual)

Cost of sales increased due to substantial increases in outsourcing costs, which rose to 4,115 million yen (up 9.2% year on year; outsourcing ratio to net sales of 36.7%, up 0.1% year on year), and purchases, which rose to 607 million yen (up 77.5%), as well as higher personnel costs from regular pay raises and base pay increases. Selling, general and administrative expenses increased due to higher labor costs resulting from an increase in new employees and from regular pay raises and base pay increases, and research and development expenses were 217 million yen (up 43.8% year on year). In non-operating income and expenses, subsidy income for research and development increased substantially to 109 million yen (up 179.2%). Net income was 112.3% of the previous year, as the tax burden rate declined owing to tax credits under the tax incentive to promote wage increases (a tax burden rate of 26.82% against a statutory effective tax rate of 30.62%).

Item	FY3/2026 (¥ million)	FY3/2025 (¥ million)	YoY (%)
Net sales	11,220	10,295	109.0
Cost of sales	7,893	7,224	109.3
Gross profit	3,326	3,070	108.3
Selling, general and administrative expenses	1,446	1,277	113.3
Operating profit	1,879	1,793	104.8
(Operating margin)	16.8%	17.4%	–
Ordinary profit	2,062	1,893	108.9
(Ordinary margin)	18.4%	18.4%	–
Net income	1,509	1,344	112.3

Achievement rates against the initial forecast (net sales of 10,700 million yen, operating profit of 1,840 million yen, ordinary profit of 2,010 million yen and net income of 1,395 million yen) were 104.9% for net sales, 102.2% for operating profit, 102.6% for ordinary profit and 108.2% for net income. As for its financial position, total assets were 12,435 million yen (up 659 million yen from the end of the previous fiscal year), net assets were 10,313 million yen (up 982 million yen) and the equity ratio was 82.9% (79.2% at the end of the previous fiscal year). As for cash flows, cash flows from operating activities were 1,697 million yen (▲250 million yen in the previous fiscal year), due in part to higher profit before income taxes; cash flows from investing activities were ▲46 million yen; and cash flows from financing activities were ▲561 million yen, due in part to an increase in dividends paid. Cash and cash equivalents at the end of the period were 3,321 million yen.

Results by Business Field (BF)

The company operates in four business fields (BFs): Social Infrastructure Systems, Space and Advanced Systems, Mobile Network and Internet. In the fiscal year under review, the Internet BF, the Social Infrastructure Systems BF and the Space and Advanced Systems BF increased, while the Mobile Network BF continued its downward trend. In the Internet BF, development related to contactless IC increased, and DX-related development for private-sector companies also increased. In the Social Infrastructure Systems BF, development in the medical and environmental fields and development for government agencies, including the judicial field, increased substantially. In the Space and Advanced Systems BF, research and development projects for autonomous vehicle driving remained firm, and development in the space and astronomy field increased.

Business Field	FY3/2026 Net Sales (¥ million)	Composition (%)	YoY (%)	FY3/2025 Net Sales (¥ million)	Composition (%)
Mobile Network	740	6.6	80.3	922	8.9
Internet	1,784	15.9	133.5	1,336	13.0
Social Infrastructure Systems	5,537	49.3	111.3	4,972	48.3
Space and Advanced Systems	3,158	28.2	103.1	3,064	29.8
Total	11,220	100.0	109.0	10,295	100.0

Orders received by BF were 889 million yen for Mobile Network (102.7% of the previous year), 1,809 million yen for Internet (125.4%), 7,950 million yen for Social Infrastructure Systems (145.0%) and 3,373 million yen for Space and Advanced Systems (112.6%), for a total of 14,023 million yen (130.0%). The order backlog was 328 million yen for Mobile Network (183.9%), 454 million yen for Internet (105.9%), 7,246 million yen for Social Infrastructure Systems (149.9%) and 1,034 million yen for Space and Advanced Systems (126.2%), for a total of 9,065 million yen (144.8%). Of the order backlog, the portion expected to contribute to net sales in FY3/2027 is 6,658 million yen (up 41.5% year on year), and the portion expected to contribute to net sales in FY3/2028 and later is 2,406 million yen (up 54.7% year on year).

Full-Year Forecast (FY3/2027)

For FY3/2027, the company plans increases in both net sales and profits with the aim of continued growth, targeting a 10th consecutive year of higher sales and profits. For net sales, it expects a demand environment similar to that of the previous fiscal year and will promote business centered on the social infrastructure field, led mainly by government agencies, forecasting an increase of about 5% year on year. Cost of sales is expected to increase due to higher personnel costs from an increase in the number of employees, regular pay raises and base pay increases, as well as higher outsourcing costs, and selling, general and administrative expenses are expected to increase due to higher labor costs from base pay increases and other factors and a substantial increase in research and development. Non-operating income and expenses are expected to increase due to factors such as higher subsidy income for research and development. Net income increased in the previous fiscal year owing to the application of the tax incentive to promote wage increases, but for the current fiscal year tax expenses are calculated at the statutory effective tax rate.

Item	FY3/2027 Forecast (¥ million)	FY3/2026 Actual (¥ million)	YoY (%)
Net sales	11,800	11,220	105.2
Cost of sales	8,160	7,893	103.4
Gross profit	3,640	3,326	109.4
Selling, general and administrative expenses	1,660	1,446	114.7
Operating profit	1,980	1,879	105.3
(Operating margin)	16.8%	16.8%	–
Ordinary profit	2,300	2,062	111.5
(Ordinary margin)	19.5%	18.4%	–
Net income	1,575	1,509	104.3

As for the initial assumptions by BF, the Social Infrastructure Systems BF and the Space and Advanced Systems BF are expected to increase. The Mobile Network BF is expected to decrease overall, despite development on large-scale projects for some major telecommunications carriers. The Internet BF is expected to decrease due to the optimization of personnel allocation with other BFs, although DX-related development for private-sector companies is expected to increase. The Social Infrastructure Systems BF is expected to increase as development in the medical and environmental fields and development for government agencies, including the judicial field, remain strong. The Space and Advanced Systems BF is expected to increase as research and development projects for autonomous vehicle driving and space-related development remain firm, in addition to an increase in development for national research institutions.

Shareholder Returns

The company uses a dividend payout ratio of 40% as its benchmark and has a policy of increasing the dividend every year compared with the previous fiscal year. For FY3/2027, it forecasts a dividend of 62 yen per share. The company carried out a stock split of two shares for each share of common stock effective October 1, 2025, and dividends per share in the materials are calculated on the assumption that the stock split took place at the beginning of FY3/2023.

Item	FY3/2025	FY3/2026	FY3/2027 (Forecast)
Dividend per share	52.5 yen	60 yen	62 yen
Payout ratio	41.7%	40.6%	40.2%

Key Themes for FY3/2027

For FY3/2027, under the banner of “Mastering advanced technologies and aiming for business growth through open innovation,” the company has set “research and development,” “higher added value” and “investment in human capital” as its key themes. In research and development, in addition to research and development completed in-house, it will actively promote alliances in cutting-edge technologies with universities, national and corporate research institutions, and hardware vendors, aiming to strengthen its core competencies in the “space field,” “robotics field,” “edge AI field” and “quantum computer field.” In higher added value, it aims to achieve higher unit prices and higher added value by working on cutting-edge real-time technologies, while also establishing a cyber-resilient environment and structure. In investment in human capital, it will strengthen technical education centered on AI, design thinking, data science, security and cloud, and strengthen the development of personnel who are also strong in hardware such as robots and FPGAs through personnel exchanges with hardware vendors.

As part of its AI initiatives, the company is working to fundamentally transform development styles on the front line by shifting SDM (SEC Software Development Methodology), its standardized development framework, into a mechanism executed not by people but by AI agents. As examples of individual research and development, the company cites: in the space field, the selection of its proposal under JAXA’s Space Strategy Fund program (second phase) for “elemental technologies contributing to the construction of lunar surface infrastructure,” and its provisional selection as a joint research partner in the 13th call for research proposals of the JAXA Space Exploration Innovation Hub’s “Moon to Mars Innovation”; in the edge AI field, the development and commercialization of a “real-time cystoscopy support system” being pursued jointly with Vesica Japan, a startup originating from the University of Tsukuba; and in the quantum computer field, its cooperation in developing an “all-domestic” superconducting quantum computer led by Osaka University and the selection of its proposal under the NEDO public solicitation project “Middleware Development for the Industrialization of Quantum Computers.”

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.