NSSOL Q1 FY2027: Revenue up 13.3% on solid IT demand, lifts full-year outlook

NSSOL posted revenue of ¥93.66 billion (+13.3% YoY), operating profit of ¥9.228 billion (+8.8%), and net profit attributable to owners of parent of ¥5.207 billion (+1.9%), achieving revenue and profit growth for the quarter. The performance was underpinned by steady enterprise IT investment, particularly from industrial and distribution sectors. Expanding generative AI solutions and the contribution from B-Prost, a non-life insurance systems subsidiary acquired in May 2026, also lifted results.

Gross profit margin improved to 26.5% from 25.4% a year earlier. Selling, general and administrative expenses rose 24.7% YoY, but higher revenue and the margin improvement kept the operating margin at 9.9% (versus 10.3% in the prior-year period). Currency fluctuations and inflation had a limited impact.

The company also announced an upward revision to its full-year forecasts, now projecting revenue of ¥419.0 billion (+9.9% YoY) and operating profit of ¥48.5 billion (+9.6%). Progress against these targets stands at 22.3% for revenue and 19.0% for operating profit after Q1.

NSSOL operates as a single IT services segment, providing end-to-end solutions from planning to development and maintenance. While detailed segment breakdowns are not disclosed, performance commentary highlights key areas:

Industrial and Distribution: Robust demand for DX and AI adoption, especially in manufacturing and logistics, drove revenue growth. The B2B expansion of the e-commerce platform "NS Eclipa" and the AI-driven development platform "NS Devia" were notable contributors.

Financial: The launch of the global market solution "OHACO" and the M&A of B-Prost's non-life insurance core system business provided a foundation. Although financial institutions are being selective with IT spending, NSSOL's high-value-added services remained steady.

Public and Other: AI utilization support through "NS Craft AI Factory" helped win projects such as an advanced airport safety management system. The launch of the corporate transformation brand "Corepeak" is strengthening the approach from upstream consulting to system implementation.

Stock-type businesses, including cloud and operations, also performed well. The next-generation platform refresh for the managed cloud service "absonne" is expected to underpin future growth.

NSSOL revised its consolidated forecasts for FY2027 (ending March 2027) upward from the initial outlook announced on April 27, 2026. The revision reflects the solid Q1 progress and a favorable demand environment. The new forecasts are:

The upward revision is modest but marks a reliable start to the first year of the 2025-2027 medium-term management plan. NSSOL also expects revenue and profit growth for the cumulative H1 period, putting a record full-year profit within reach.

Total assets at the end of Q1 stood at ¥413.828 billion, down ¥3.755 billion from the end of the previous fiscal year, as trade receivables decreased while contract assets and inventories increased. Cash and cash equivalents rose ¥6.156 billion to ¥114.954 billion, indicating ample liquidity.

Operating cash flow swung to a ¥14.595 billion inflow from a ¥19.251 billion outflow in the same quarter last year, driven by higher pre-tax profit, the absence of a ¥5.0 billion settlement payment made a year ago, and lower income tax payments. Investing activities generated a ¥2.09 billion inflow from sales of financial assets, while financing activities saw a ¥10.497 billion outflow mainly for dividend payments.

NSSOL's dividend policy targets a consolidated payout ratio of 50% to provide stable returns. For FY2027, the planned annual dividend is ¥87 per share (interim ¥43.5, year-end ¥43.5), up ¥2 from the previous year. The indicated yield is approximately 2.1% based on the July 30 closing price. No share buyback has been announced.

The earnings report highlights several risk factors:

• Global instability: Ongoing geopolitical tensions continue to cloud the economic outlook.
• Foreign exchange and inflation risks: A weak yen or rising material costs could pressure margins.
• Selective domestic IT investment: Some clients are tightening investment criteria, posing order variability risk.
• Technological change: Failure to keep pace with rapid advances in AI and cloud could erode competitiveness.

Talent acquisition also remains a challenge. Competition for highly skilled IT professionals is intensifying, necessitating stronger recruitment and training efforts.

AI and M&A are central to NSSOL's medium-term strategy. The company is leveraging its "NS Devia" AI-driven development platform, released in July 2025, to accelerate productivity improvements. Its "NS Craft AI Factory" is converting AI utilization support into concrete projects, such as the airport safety management system.

On the M&A front, NSSOL acquired B-Prost in May 2026, strengthening its domain expertise and customer base in non-life insurance systems. Aggressive M&A remains a key growth pillar, and further expansion of the business portfolio will be closely watched.