NCS&A CO.,LTD. Q4 FY2025 earnings call

Business Environment

• Against the backdrop of the "2025 Cliff" warned by Japan's Ministry of Economy, Trade and Industry, activity to refresh legacy core enterprise systems has accelerated, and demand for DX (digital transformation) continues to grow across small and medium-sized enterprises driven by labor shortages and regulatory changes requiring digital adoption. IT investment overall remains steady amid improving employment and income conditions.
• Most of ＮＣＳ＆Ａ's current active projects are DX-related.

Core Product Updates

• REVERSE PLANET: A flagship visualization tool for legacy large-scale systems. It automates identification of code modification points, reduces reliance on senior engineer expertise, lowers the risk of correction oversights that cause system outages, and addresses growing demand for compatibility testing ahead of the October 2025 Windows 10 support end-of-life.
• AirsNeo: A migration tool that enables low-cost, low-risk migration of legacy systems to new environments without changing core logic, eliminating the need for full system rebuilds.
• Generative AI integration: In April 2025, ＮＣＳ＆Ａ released a generative AI-powered update to its ReverseNeo visualization solution. The tool automatically generates processing flow and program specification documents directly from existing source code, addressing the common problem of missing or outdated documentation for legacy systems. This capability also allows ＮＣＳ＆Ａ to now offer post-migration system maintenance services, which it previously declined due to documentation gaps.

Mid-Term Management Plan (2024-2026) & Strategic Priorities

• Four core basic policies: Strengthen existing businesses, create new businesses, invest in people, and return value to shareholders.
• New business development: The internal startup program, launched in FY2020, has accumulated 108 adopted proposals with multiple products commercialized. The company will expand the program to external collaborations to develop co-business with trusted partners that share mutual risk.
• Diversity, inclusion, and human resource targets:
  • Target of 20% female management ratio by 2026, up from 5.4% in April 2024 to 9.5% in April 2025, with a long-term goal of 50% gender parity.
  • Achieved 100% male parental leave acquisition in FY2024, and will maintain this target.
  • Target of 18 days average annual paid time off (current 17.2 days) and 10 hours average monthly overtime (current 10.5 hours).
  • Plans to launch a fully remote dedicated job role for independent employees in 2025, to support caregiving and parenting needs and allow employees to choose their work location.
• Investment strategy: With stable operating profit margin around 10% and ROE over 10%, ＮＣＳ＆Ａ will increase growth investment to improve corporate value, balancing business investment, human capital investment, and shareholder returns. Investment in human capital drives financial value growth, which creates social value that cycles back to strengthen ＮＣＳ＆Ａ's core value.

Sustainability & Operational Governance

• Recognized as a Certified Health and Productivity Management Outstanding Corporation 2025 for the second consecutive year.
• Achieved 3 years of 5.0% average salary increases as of June 2024.
• Added a menopause program to its femtech service launched in July 2024.
• Maintains strict compliance: Conducts mandatory anti-power harassment and anti-gender harassment training, and designates an annual company-wide Compliance Day for full staff training.
• 64 new graduate hires and 10 mid-career hires joined in April 2025, in line with plan.

ＮＣＳ＆Ａ divides its business into four product segments. Full-year 2025 March fiscal year total company revenue reached 20.493 billion yen. 1. In-house solution segment: Revenue was 5.407 billion yen, accounting for 27% of total company revenue, with strong growth driven by large migration projects as the company continues to prioritize expanding this segment. Data for the remaining three segments (system integration, equipment & packaged software, and contracted development) was not fully provided in the available transcript.

• For the full-year 2026 March fiscal year, ＮＣＳ＆Ａ guides: total revenue of 20.7 billion yen, operating profit of 2.25 billion yen, and a target operating profit margin of 10.9% (up from 9.7% actual in FY2025).
• The company maintained its mid-term plan target of 23.0 billion yen total revenue and 2.8 billion yen operating profit for the final fiscal year of the plan (FY2026 March).
• Dividend guidance was revised upward: full-year FY2026 dividend per share is guided to 44 yen, up from 40 yen, and ＮＣＳ＆Ａ will introduce an interim dividend starting in FY2026, maintaining a target consolidated payout ratio of 45% or higher.
• ＮＣＳ＆Ａ achieved four consecutive years of upward dividend revision through FY2025.

No explicit material risks or operational failures were discussed in the available portion of the earnings call transcript.

Q: How is ＮＣＳ＆Ａ progressing against mid-term management plan targets, particularly given the modest sales growth in FY2025 and the large planned jump to 230 billion yen in sales and 28 billion yen in operating profit by FY2026? Is this large target on track, or is it expected to be challenging to achieve? / A: The full answer to this question was cut off in the available transcript. Only the question was published, with no management response included in the provided text.