System Research (3771): FY2025 Results Summary — Record Net Sales and Operating Profit, Dividend Raised to 70 Yen

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Note: System Research’s fiscal year ends in March. In this article, FY2025 refers to the fiscal year ended March 31, 2026, which the company labels “FY3/26” in its Fiscal Year Ended March 2026 (FY3/26) Results Briefing. Labels in the text and tables below follow the company’s presentation.

SYSTEM RESEARCH CO., LTD., a Nagoya-based IT services company listed on the TSE Prime and NSE Premier markets, reported that net sales for FY3/26 increased by 12.1% year on year to 29,083 million yen, setting a new record, and that it also achieved record operating profit and ordinary profit. Operating profit rose 15.7% to 3,470 million yen, ordinary profit rose 15.8% to 3,551 million yen, and profit attributable to owners of parent rose 18.9% to 2,610 million yen. For FY3/27 the company forecasts net sales of 32,276 million yen (+10.9%) and operating profit of 3,850 million yen (+10.9%), and the dividend per share was 70.0 yen for FY3/26 (FY3/25: 60.0 yen).

Consolidated Results (Full-Year Actual)

Gross profit increased 12.2% to 6,763 million yen, with the gross profit margin unchanged at 23.2%. The operating profit margin improved to 11.9% (FY3/25: 11.5%), the ordinary profit margin to 12.2% (FY3/25: 11.8%), and the margin for profit attributable to owners of parent to 8.9% (FY3/25: 8.4%).

Item (Million yen)	FY3/25 Full year	FY3/26 Full year	YoY changes
Net sales	25,931	29,083	+12.1%
Gross profit	6,028 (23.2%)	6,763 (23.2%)	+12.2%
Operating profit	2,997 (11.5%)	3,470 (11.9%)	+15.7%
Ordinary profit	3,066 (11.8%)	3,551 (12.2%)	+15.8%
Profit attributable to owners of parent	2,194 (8.4%)	2,610 (8.9%)	+18.9%

On the consolidated balance sheet as of the end of FY3/26, cash and deposits were 8,429 million yen, total assets 19,458 million yen, and total net assets 13,485 million yen. Net cash provided by operating activities increased by 445 million yen year on year due to an increase in profit before income taxes; net cash used in investing activities decreased by 197 million yen due to a decrease in capital expenditures; and net cash used in financing activities increased by 299 million yen due to dividend payments.

Sales by Category

In the SI service business, SI services sales rose 3.9% to 10,890 million yen on increased orders for contract-based projects, and software development sales rose 16.5% to 16,603 million yen, supported by securing repeat orders. In the software products business, software products sales fell 15.9% to 354 million yen due to decreased sales of packaged software, while merchandise sales rose 116.4% to 887 million yen after the company received orders for the sale of large-scale IT equipment. Web services, etc. declined 6.4% to 347 million yen.

Business description	Sales field	FY3/25 Net sales (Million yen)	FY3/26 Net sales (Million yen)	Changes
SI service	SI services	10,480	10,890	+3.9%
SI service	Software development	14,248	16,603	+16.5%
Software products	Software products	421	354	-15.9%
Software products	Merchandise sales	410	887	+116.4%
Software products	Web services, etc.	371	347	-6.4%
Total		25,931	29,083	+12.1%

By customer, TOYOTA SYSTEMS CORPORATION was the largest at 5,661 million yen (19.4% of FY3/26 sales), followed by SCSK Corporation at 1,895 million yen (6.5%) and Toyota Tsusho Group at 1,792 million yen (6.1%). The company states that the TOYOTA Group accounts for approximately 30% of total sales.

FY3/27 Forecast and Medium-Term Management Plan

For FY3/27, the company forecasts net sales of 32,276 million yen (+3,192 million yen, +10.9%), operating profit of 3,850 million yen (+380 million yen, +10.9%), ordinary profit of 3,907 million yen (+355 million yen, +10.0%), and profit attributable to owners of parent of 2,836 million yen (+225 million yen, +8.6%).

Item (Million yen)	FY3/26 Results	FY3/27 Forecast	YoY change	YoY change (%)
Net sales	29,083	32,276	3,192	+10.9%
Operating profit	3,470	3,850	380	+10.9%
Ordinary profit	3,551	3,907	355	+10.0%
Profit attributable to owners of parent	2,610	2,836	225	+8.6%

Under its Medium-Term (3-year) Management Plan, the company targets consolidated net sales of 32,276 million yen in FY3/27 (plan), 36,150 million yen in FY3/28 (forecast) and 40,488 million yen in FY3/29 (forecast), with operating profit of 3,850 million yen, 4,374 million yen and 4,972 million yen, respectively. By operation category, the FY3/29 forecast includes 15,654 million yen for SI services and 22,942 million yen for software development. The plan calls for consolidated employees to increase from 1,757 in April 2026 to 1,800 in April 2027 (plan), 1,900 in April 2028 and 2,000 in April 2029 (forecasts). Under the “Next Vision 50th” initiative, the company aims to secure continuous profits, enhance corporate value and create employment opportunities.

Shareholder Returns

The company intends to maintain stable dividends to ensure that its shares are held in a long-term and stable manner, and targets a dividend payout ratio of 40% to increase distributions to shareholders. The dividend per share was 70.0 yen for FY3/26 (FY3/25: 60.0 yen), and the FY3/27 forecast is 70.0 yen. ROE was 20.6% in FY3/26.

Item	FY3/24	FY3/25	FY3/26	FY3/27 Forecast
EPS (Earnings per share)	117.81 yen	132.29 yen	157.49 yen	170.82 yen
ROE (Return on equity)	20.0%	19.6%	20.6%	19.8%
Dividend per share	40.0 yen	60.0 yen	70.0 yen	70.0 yen

On cash allocation, non-consolidated cash and deposits were ¥8.3 billion as of March 31, 2026. The company regards about ¥7.0 billion as the appropriate level of funds, described as an amount sufficient to maintain employment for approximately one year in a situation where orders received decrease by 50%, and positions about ¥1.3 billion for growth investments, shareholder returns and reduction in borrowings.

Topics: Generative AI and Recruitment

The company notes that the development of mission-critical systems, which accounts for 80% of its sales, falls into an area where generative AI has difficulties in producing desired results at present, as it requires a high level of expertise and arrangement skills. Its initiatives include expanding orders in upstream phases (consulting and design), where AI impact is limited, shortening lead times and reducing man-hours through AI utilization in development processes, and establishing the AX Promotion Office in April 2026. On human resources, non-consolidated new graduate recruitment reached 196 people joining in 2026, up from 171 in 2025.

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.