Otsuka Q3 FY2026: Sales and profits hit four-year highs

Otsuka booked revenue of ¥1.0943 trillion, operating profit of ¥69.6 billion and net income attributable to owners of the parent of ¥49.7 billion for January to September 2026. All three were higher than a year earlier, setting records for the nine-month period for the fourth consecutive year.

• Revenue: Up 8.8%, as Otsuka captured resilient corporate demand for IT investment.
• Operating profit: Up 4.7%. Higher gross profit outweighed an increase in selling, general and administrative expenses.
• Ordinary profit: Up 6.3%, also benefiting from increased non-operating income.
• Net income: Up 7.0%, supported by higher pretax profit.

Growth in revenue and profit moderated from the strong gains in 2025, but demand for corporate software investment, labor-saving tools, operational efficiency and security measures continued to support results. The operating margin was 6.4%. Revenue growth translated into higher profit, while rising selling, general and administrative expenses remain an area to watch. Four consecutive nine-month record highs point to the strength of Otsuka’s sales platform in turning broad IT demand into customer proposals.

Both businesses grew revenue, with Systems Integration outpacing Services & Support. The contrast was in segment profit: Services & Support fell short of the year-earlier level, showing that its sales growth did not translate directly into higher earnings.

Systems Integration reported revenue of ¥764.8 billion and segment profit of ¥58.4 billion. Package software posted strong growth, while a broad range of offerings, from consulting and design and development to network construction, supported sales. Continued corporate IT investment to improve productivity and competitiveness helped the core business drive overall growth.

Services & Support recorded revenue of ¥329.4 billion and segment profit of ¥21.6 billion. Recurring businesses, including the Tanomail online catalog and Tayoreru maintenance and support services, lifted sales. Profit nevertheless declined. The focus now is whether Otsuka can also improve profitability by enhancing service convenience and sales competitiveness.

Otsuka left its forecast for the year ending December 2026 unchanged. Nine-month progress stood at 79.3% of its revenue target, 73.9% of its operating profit target and 76.7% of its net income target.

The company made no changes to its most recently announced forecast. It expects corporate IT investment for AI adoption, security measures and productivity improvements to remain firm, while citing prolonged tensions in the Middle East, U.S. diplomatic and trade policies, and memory shortages as risks. Otsuka aims to meet its forecast by strengthening proposals such as AI solutions accessible to midsize and small businesses and tools that improve operational efficiency.

Total assets stood at ¥772.541 billion at the end of September, up ¥43.341 billion from the end of December 2025. The equity ratio was 52.4%, down from 54.1% at the previous fiscal year-end.

The decline in operating cash flow was mainly due to inventory movements shifting from a source of funds in the year-earlier period to a use of funds. Higher time-deposit placements increased the outflow from investing activities, and cash and cash equivalents fell ¥49.2 billion from the start of the year. Otsuka plans an interim dividend of 55 yen and a second-half dividend of 50 yen, raising the full-year payout from the previous year. The earnings release included no share buyback announcement, making the higher dividend the main feature of its shareholder returns.

IT investment demand remains firm, but Otsuka sees continued uncertainty in domestic and overseas economic conditions and procurement. The company’s challenge is to convert sales growth into profits and cash generation, particularly given lower operating cash flow and the trend in Services & Support earnings.

• Geopolitical risk: A prolonged conflict in the Middle East could constrain resource supplies and drive up prices, weighing on corporate investment decisions and economic conditions at home and abroad.
• U.S. policy and market volatility: U.S. diplomatic and trade policies, as well as swings in financial and capital markets, could affect the global economy and influence customers’ IT investment plans.
• Component shortages: Continued memory supply shortages could disrupt IT equipment procurement and deliveries, delaying system implementation projects.
• Inventory and cash flow: Higher inventory weighed on operating cash flow. A continued build-up could put pressure on capital efficiency.
• Services & Support profitability: Recurring businesses maintained revenue growth, but segment profit fell short of the year-earlier level. The test is whether Otsuka can sustain sales growth while improving profitability.