System Integrator Corp. Q4 FY2026 earnings call

Core Strategic Priorities

• 2026 February Term marked the inflection point for profit growth, where years of structured engineer hiring and training efforts began to show positive financial impact, with gradual structural improvements in gross profit and operating profit.
• Diversify the business portfolio to reduce over-reliance on GRANDIT: grow mcframe, SAP and other ERP solutions to eventually reach 1 billion yen to 2 billion yen in revenue each, matching GRANDIT's scale, rather than shrinking GRANDIT itself.
• Adopt a focused domain strategy, concentrating resources on three core pillars: business-focused ERP, tool-focused Object Browser, and AI new business, with no future investment outside the intersection of these three areas.

Operational and Talent Initiatives

• Tracks engineer sales per hour as a core KPI, with a focus on improving per-employee productivity and added value; leverages AI internally to shorten delivery times and boost efficiency across development, sales and back-office operations.
• Aims to gradually increase the share of stable recurring stock revenue to 50% by 2032, creating a predictable revenue base to fund new business investment.
• Maintains an "AI-First" company-wide policy, building infrastructure and training to enable all employees to utilize AI for productivity gains, with ongoing investment in AI-enabled workflow systems and talent development.

New Business and M&A Progress

• Launched three new initiatives aligned with core domains: project management training (extension of existing OBPM project management business), enterprise performance management (EPM) tools, and AI-powered design Hub-AI connecting manufacturing design and supply chain operations.
• Achieved structured cross-selling opportunities: traditional products targeting mid-sized enterprises and new solutions targeting large enterprises now mutually refer customers, creating organic cross-selling flow within integrated account management.
• Completed the acquisition of an Osaka-based production management specialized firm in March 2026, which is fully aligned with the company's manufacturing-focused ERP target market; integration and synergy building is already underway.

ERP Business: GRANDIT, the core product, accounts for over 60% of total company revenue; manufacturing-focused mcframe and globally deployable SAP are smaller but growing segments. Total consolidated revenue for FY2026 February Term was approximately 5.5 billion yen, with operating profit of approximately 0.6 billion yen. Object Browser (SaaS Tool Business): a de facto standard database development/management tool adopted by 21,000 companies across Japan, operates with high profit margin and is a stable recurring revenue contributor. AI and New Business: the exited unprofitable 8-year visual anomaly detection business; newly launched AI drawing inspection automation has 1 full production deployment and 5-6 ongoing PoCs with large manufacturing clients, focused on early commercialization.

• For FY2027 February Term, management guides consolidated revenue of 6.3 billion yen (13% year-over-year growth), operating profit of 0.7 billion yen, and net profit attributable to parent shareholders of 0.4 billion yen. The company expects sustained annual growth of 10% to 13% going forward.
• The 11 yen per share dividend guidance for FY2027 represents a nominal decline from FY2026's 13 yen per share, driven by a one-off special equity gain from an affiliate that boosted FY2026 profits; the core 30% payout ratio policy is maintained. Management will announce a new shareholder return policy during FY2027, planning to introduce a progressive dividend system that gradually raises the payout ratio to 35% then 40% over the next 2-3 years, with a 30% lower bound.
• Mid-century long-term target for FY2033 February Term is 12 billion yen in total revenue, with an operating profit margin target of 17% to 20%.
• The 700 billion yen database tool market is expected to expand further as AI increases demand for structured data management.

• The company's prior 8-year investment in visual AI anomaly detection failed to achieve profitability, leading to a full exit from that business segment, highlighting past execution risk in new AI business development.
• Large complex legacy ERP projects are difficult to automate fully with AI today, but ongoing AI advancement could eventually disrupt this core market, though management notes this segment is currently less vulnerable to AI replacement than simpler software categories.
• New segments including mcframe, SAP and AI new business are still at an early small scale, and execution risk remains in growing these segments to the target size needed to diversify the portfolio.

The full Q&A exchange content was not included in the provided transcript, only Q&A topic headers are listed: progress update for SAP business, and progress update for process-related projects.