Dentsu Soken Q2 FY2026: Operating Profit Up 15.8%, All Profit Lines Grow

For the first half of FY2026, Dentsu Soken booked revenue of ¥88,649 million (+10.5% YoY), operating profit of ¥12,342 million (+15.8%), ordinary profit of ¥12,727 million (+14.6%), and net income attributable to owners of the parent of ¥8,888 million (+15.7%), achieving double-digit growth at every profit level.

The revenue increase was mainly driven by expansion in the Financial Solutions and Business Solutions segments, along with growth in system integration projects in the Communication IT segment. Despite higher personnel and R&D costs, gross margin improvement from system development and software products pushed the operating margin up 0.6 points to 13.9% (from 13.3% a year earlier).

The business environment remained supportive, with steady corporate DX-related investment. While the rapid evolution of AI may reshape the IT services industry, demand is expected to expand over the medium to long term. The company is in the second year of its “Social Evolution Implementation 2027” mid-term plan, focusing on doubling software product business productivity and leveraging AI in new product development processes.

Financial Solutions delivered revenue of ¥18,489 million (+13.0% YoY) and operating profit of ¥2,545 million (+33.6%). System development for trust banks and megabanks grew, while the lending solution “BANK・R” saw wider adoption by government-affiliated and regional financial institutions. The segment’s operating margin improved from 11.6% to 13.8%.

Business Solutions posted revenue of ¥15,627 million (+19.2%) and operating profit of ¥4,026 million (+37.4%). The integrated HCM “POSITIVE” expanded into trading companies and electric utilities, consolidated accounting “STRAVIS” into trading companies and real estate, and group consolidated accounting “Ci*X” into food industries. Higher proprietary product sales lifted the operating margin to 25.8% from 22.4%.

Manufacturing Solutions revenue was nearly flat at ¥30,989 million (-0.04%). While software sales and deployment centered on ALM/PLM grew, consulting services for transport equipment clients declined. Rising headcount and R&D costs caused operating profit to drop 22.7% to ¥3,187 million, with margin at 10.3%.

Communication IT revenue rose 19.1% to ¥23,543 million and operating profit surged 51.6% to ¥2,582 million. System development for the Dentsu Group and transportation sector expanded, pushing the operating margin to 11.0% from 8.6%.

Total assets at the end of the first half stood at ¥181,566 million, up ¥16,511 million from the previous fiscal year-end. Current assets grew on higher cash and deposits, while fixed assets increased primarily due to security deposits for the new office.

Liabilities rose ¥11,236 million to ¥76,132 million. Contract liabilities (deferred revenue) increased substantially to ¥26,365 million, indicating growth in maintenance and subscription-type services. The equity ratio fell to 58.0% from 60.7%, though the financial base remains solid.

On dividends, reflecting the 3-for-1 stock split effective January 1, 2026, the interim dividend was ¥22.5 per share (post-split basis), with the year-end forecast also set at ¥22.5 per share, bringing the full-year planned dividend to ¥45 per share (the previous full-year actual ¥120 was pre-split). No new announcements were made regarding share buybacks or dividend increases.

Cash and cash equivalents included ¥6,047 million in cash and deposits and ¥71,292 million in deposits with group companies, providing ample capacity for R&D and M&A investments.

Dentsu Soken left its full-year FY2026 consolidated forecasts, announced on February 12, unchanged.

The company expects revenue of ¥182.0 billion (+10.4% YoY), operating profit of ¥25.5 billion (+11.4%), ordinary profit of ¥26.1 billion (+10.5%), and net profit of ¥18.0 billion (+10.0%).

First-half progress rates reached 48.7% for revenue and 48.4% for operating profit, indicating solid advancement toward the full-year targets.

Under the mid-term plan “Social Evolution Implementation 2027,” the company is targeting FY2027 revenue of ¥210.0 billion, operating profit of ¥31.5 billion, an operating margin of 15.0%, and ROE of at least 18.0%. The first-half results show steady progress toward those goals.

As external risks, the company cited potential downward pressure on the domestic economy from Middle East tensions, US trade policy, and abrupt financial market fluctuations. It also noted that rapid advances in AI could disrupt existing business models in the IT services industry.

Business-specific risks include margin pressure from rising personnel and R&D costs, as seen in the Manufacturing Solutions segment. While expanding system integration projects boosts revenue, it raises the difficulty of project and cost management, contributing to profit declines in some segments.

On foreign exchange, the company recorded a ¥117 million forex loss in the first half, and exchange rate risk is becoming more apparent as overseas transactions increase. The company aims to mitigate risks by differentiating its proprietary solutions and driving productivity reforms through AI, while continuing to benefit from sustained DX demand.