Deterioration in Software Business Profitability Due to Higher Outsourced Processing and Other Costs
First written in FY2017-Q1. 16 of 25 entries say "Mitigated", first in FY2017-Q2. Latest entry: FY2024-Q1.
Japan System Techniques moved to the "Worse" side of this theme in 2023, 4 years after the typical company in this theme (2019).
The whole theme swung hardest in 2019: 3 of 8 companies on the "Worse" side.
1 other company's latest entry also says "Worsened".
- FY2024-Q1WorsenedAnnual report
「The main factor was that strong project inquiries from both new and existing customers resulted in higher revenue, but profit declined due to higher unit costs for personnel and subcontracting expenses.」
The DX & SI business generated higher revenue on strong project inquiries, but operating profit fell 5.8% year on year due to higher unit costs for personnel and subcontracting expenses. Deteriorating profitability caused by higher costs was again explicitly identified. - FY2023-Q2MitigatedAnnual report
「In this business, revenue increased 9.5% year on year to ¥6,870 million and operating profit increased 24.5% to ¥1,044 million. The main factors were the expansion of large-scale prime-contract projects among both new and existing customers in the former software business, and the recovery from the global semiconductor shortage that had continued since the previous year in the former systems sales business, which led to higher revenue from core equipment sales and improved profitability across the business.」
The DX & SI business, including the former software business, increased revenue by 9.5% and operating profit by 24.5%, driven by the expansion of large-scale prime-contract projects and the recovery of equipment sales, with profitability continuing to improve. - FY2022MitigatedAnnual report
「The number of large-scale, prime-contract new customer projects increased from the previous fiscal year, while orders from existing customers also remained firm. In addition, strong sales of the BankNeo Custody Management system for financial institutions, expansion of the ASEAN business centered on Malaysia, and lower development costs following the resolution of certain unprofitable projects significantly improved overall profitability. Revenue increased 13.3% from the previous consolidated fiscal year to ¥14,375 million, and operating profit increased 263.7% to ¥585 million.」
Lower development costs following the resolution of certain unprofitable projects were explicitly cited, and the software business reported higher revenue and profit. Operating profit increased 263.7% year on year, easing the impact of deteriorating profitability on actual results. - FY2022-Q3MitigatedAnnual report
「In this business, orders, including large-scale projects, continued to trend higher than in the same period of the previous year. In addition, strong sales of the BankNeo information-integrated system for financial institutions and the recovery of the ASEAN business significantly improved overall profitability. Revenue increased 22.9% year on year to ¥10,560 million, and operating results turned from an operating loss of ¥122 million to operating profit of ¥545 million.」
The software business turned from an operating loss of ¥122 million in the same period of the previous year to operating profit of ¥545 million, driven by increased orders for large-scale projects, strong BankNeo sales and the recovery of the ASEAN business. - FY2022-Q2MitigatedAnnual report
「In this business, the unprofitable commissioned development projects and the partial freeze on development investment, centered on major customers, caused by the spread of COVID-19, both began to subside from the current period onward. In addition, strong sales of the BankNeo information-integrated system license for financial institutions and the recovery of the ASEAN business significantly improved the profitability of the business as a whole. Revenue increased 26.0% year on year to ¥6,986 million, and operating results turned from an operating loss of ¥192 million to operating profit of ¥429 million.」
The unprofitable projects and frozen development investment from the same period of the previous year began to subside, while strong BankNeo license sales and the recovery of the ASEAN business also contributed. Revenue increased 26.0% year on year, and operating results turned from a loss of ¥192 million to a profit of ¥429 million. - FY2022-Q1MitigatedAnnual report
「First, in the software business (custom development of commissioned software), projects for the manufacturing, telecommunications, and financial, insurance and securities sectors, among others, each generated higher revenue. Revenue increased 26.1% year on year to ¥3,425 million, and operating profit was ¥161 million, compared with an operating loss of ¥148 million in the same period of the previous year.」
The software business reported a 26.1% year-on-year increase in revenue, and operating results turned from a loss of ¥148 million to a profit of ¥161 million. Deteriorating profitability caused by subcontracting and processing expenses was not cited in the performance explanation for the quarter and eased further on an actual-results basis. - FY2021MitigatedAnnual report
「In the software business (custom development of commissioned software), although projects for the services and distribution sector fell below the previous year, projects for the telecommunications, manufacturing, and financial, insurance and securities sectors, among others, each generated higher revenue. Revenue increased 5.0% from the previous consolidated fiscal year to ¥12,687 million, and operating profit increased 105.5% to ¥160 million.」
The software business reported higher revenue, and operating profit increased from ¥78 million in the previous year to ¥160 million. Higher costs including subcontracting and processing expenses were not explicitly cited in the performance explanation for the fiscal year, and the impact of deteriorating profitability on actual results eased. - FY2021-Q3WorsenedAnnual report
「First, in the software business (custom development of commissioned software), although projects for the financial, insurance and securities, manufacturing and telecommunications sectors exceeded the previous year, projects for the services and distribution and education sectors, among others, each generated lower revenue. Revenue fell 2.1% year on year to ¥8,593 million, and the operating loss widened to ¥122 million from ¥102 million.」
Revenue in the software business fell 2.1% year on year, and the operating loss widened from ¥102 million to ¥122 million. - FY2021-Q2WorsenedAnnual report
「First, in the software business (custom development of commissioned software), although projects for the financial, insurance and securities sectors exceeded the previous year, projects for the services and distribution, manufacturing and telecommunications sectors, among others, each generated lower revenue. Revenue fell 4.2% year on year to ¥5,543 million, and the operating loss widened to ¥192 million from ¥89 million.」
Although subcontracting and processing expenses were not directly mentioned, the software business reported lower revenue, and the operating loss widened from ¥89 million in the same period of the previous year to ¥192 million. - FY2021-Q1MitigatedAnnual report
「Projects for the manufacturing, telecommunications, and services and distribution sectors, among others, each generated lower revenue, and revenue remained broadly flat. However, lower costs including subcontracting and processing expenses resulted in revenue of ¥2,716 million, down 1.8% year on year, and an operating loss of ¥148 million, compared with an operating loss of ¥183 million in the same period of the previous year.」
Subcontracting and processing expenses changed from higher costs to lower costs, and the software business's operating loss narrowed from ¥183 million in the same period of the previous year to ¥148 million. - FY2020WorsenedAnnual report
「In the software business (custom development of commissioned software), although projects for the telecommunications sector fell below the previous year, projects for the services and distribution, financial, insurance and securities, manufacturing and university sectors, among others, each generated higher revenue. Revenue remained firm, but higher costs including selling, general and administrative expenses associated with business expansion, unprofitable projects and weak performance at certain subsidiaries resulted in revenue of ¥12,080 million, up 3.9% from the previous consolidated fiscal year, and operating profit of ¥78 million, down 83.7%.」
Although revenue increased, operating profit fell 83.7% year on year due to higher selling, general and administrative expenses and other costs, unprofitable projects and weak subsidiary performance. - FY2020-Q3WorsenedAnnual report
「First, in the software business (custom development of commissioned software), although projects for the telecommunications sector fell below the previous year, projects for the services and distribution, manufacturing and university sectors, among others, each generated higher revenue. Revenue remained firm, but higher costs including subcontracting and processing expenses resulted in revenue of ¥8,775 million, up 4.5% year on year, and an operating loss of ¥100 million, compared with operating profit of ¥350 million in the same period of the previous year.」
Higher costs including subcontracting and processing expenses continued, and despite higher revenue, results deteriorated from operating profit of ¥350 million to an operating loss of ¥100 million. - FY2020-Q2WorsenedAnnual report
「First, in the software business (custom development of commissioned software), although projects for the telecommunications and government sectors fell below the previous year, projects for the services and distribution, manufacturing, and financial, insurance and securities sectors, among others, each generated higher revenue. Revenue remained firm, but higher costs including subcontracting and processing expenses resulted in revenue of ¥5,786 million, up 5.3% year on year, and an operating loss of ¥89 million, compared with operating profit of ¥277 million in the same period of the previous year.」
Higher costs including subcontracting and processing expenses continued, and despite higher revenue, results deteriorated from operating profit of ¥277 million to an operating loss of ¥89 million. - FY2020-Q1WorsenedAnnual report
「First, in the software business (custom development of commissioned software), although projects for the telecommunications sector continued to trend lower in revenue than in the previous year, projects for the manufacturing, services and distribution, financial, insurance and securities, and government sectors, among others, each generated higher revenue. Revenue remained firm, but higher costs including subcontracting and processing expenses resulted in revenue of ¥2,765 million, up 4.6% year on year, and an operating loss of ¥183 million, compared with operating profit of ¥154 million in the same period of the previous year.」
Higher costs including subcontracting and processing expenses were again explicitly identified as a factor behind the operating loss, and despite higher revenue, results deteriorated from operating profit of ¥154 million in the same period of the previous year to an operating loss of ¥183 million. - FY2019MitigatedAnnual report
「In the software business (custom development of commissioned software), although projects for the telecommunications and government sectors fell below the previous year, projects for the manufacturing, services and distribution, and financial, insurance and securities sectors, among others, each generated higher revenue. Revenue increased 9.8% from the previous consolidated fiscal year to ¥11,622 million, and operating profit increased 8.1% to ¥484 million.」
Although subcontracting and processing expenses were not directly mentioned, the software business reported higher revenue and profit, with operating profit increasing 8.1% year on year. - FY2019-Q3MitigatedAnnual report
「First, in the software business (custom development of commissioned software), although projects for government agencies fell below the previous year, projects for the services and distribution, manufacturing, and financial, insurance and securities sectors, among others, each generated higher revenue. Revenue increased 15.1% year on year to ¥8,398 million, and operating profit increased 122.7% to ¥350 million.」
Although subcontracting and processing expenses were not directly mentioned, operating profit in the software business increased 122.7% year on year, and the impact of deteriorating profitability on actual results continues to ease. - FY2019-Q2MitigatedAnnual report
「First, in the software business (custom development of commissioned software), although projects for government agencies, among others, fell below the previous year, projects for the manufacturing, telecommunications, services and distribution, and education sectors, among others, each generated higher revenue. Revenue increased 13.9% year on year to ¥5,492 million, and operating profit increased 275.4% to ¥277 million.」
The software business reported higher revenue and profit, with operating profit increasing 275.4% year on year. Although subcontracting and processing expenses were not directly mentioned, the impact of deteriorating profitability has been further eased on an actual-results basis. - FY2019-Q1MitigatedAnnual report
「First, in the software business (custom development of commissioned software), although projects for the services and distribution and government sectors fell below the previous year, projects for the telecommunications, manufacturing and education sectors, among others, each generated higher revenue. Revenue increased 10.5% year on year to ¥2,644 million, and operating profit increased 170.6% to ¥154 million.」
Operating profit in the software business increased from ¥57 million in the same period of the previous year to ¥154 million, further easing the impact of deteriorating profitability caused by subcontracting and processing expenses, among other factors. - FY2018-Q3MitigatedAnnual report
「First, in the software business (custom development of commissioned software), although projects for the services and distribution, financial, insurance and securities, and government sectors, among others, continued to trend lower in revenue than in the previous year, projects for the manufacturing and telecommunications sectors each generated higher revenue. Revenue increased 2.5% year on year to ¥7,294 million, and operating profit increased 56.5% to ¥157 million.」
Although subcontracting and processing expenses were not directly mentioned, operating profit in the software business increased 56.5% year on year, and the impact of deteriorating profitability was eased on an actual-results basis. - FY2018-Q2WorsenedAnnual report
「First, in the software business (custom development of commissioned software), projects for the financial, insurance and securities sectors and government agencies, among others, fell below the previous year, while projects for the manufacturing, telecommunications, education, and services and distribution sectors each generated higher revenue. Revenue remained firm, but higher costs including subcontracting and processing expenses resulted in revenue of ¥4,823 million, up 7.2% year on year, and operating profit of ¥73 million, down 39.9%.」
Higher costs including subcontracting and processing expenses continued, and although revenue increased, operating profit fell 39.9% year on year. - FY2018-Q1MitigatedAnnual report
「First, in the software business (custom development of commissioned software), projects for the services and distribution, manufacturing, telecommunications, financial, insurance and securities, and education sectors each generated higher revenue. Revenue increased 22.9% year on year to ¥2,393 million, while operating profit was ¥57 million, compared with an operating loss of ¥82 million in the same period of the previous year, resulting in higher revenue and profit.」
The software business turned from an operating loss of ¥82 million in the same period of the previous year to an operating profit of ¥57 million, further easing the deterioration in profitability on an actual-results basis. - FY2017MitigatedAnnual report
「In the software business (custom development of commissioned software), although projects for medical institutions continued to trend lower in revenue than in the previous year, all projects for the services and distribution, financial, insurance and securities, telecommunications, government and manufacturing sectors, among others, generated higher revenue. Revenue increased 24.5% year on year to ¥10,058 million, and operating profit increased 93.5% to ¥394 million, resulting in higher revenue and profit.」
The software business reported higher revenue and profit, with operating profit improving by 93.5% from the previous consolidated fiscal year. - FY2017-Q3MitigatedAnnual report
「First, in the software business (custom development of contracted software), although projects for manufacturers and medical institutions, among others, continued to trend below the previous year, projects for the services and distribution, finance, insurance and securities, government agency, and telecommunications industries each increased revenue. Revenue was ¥7,114 million, up 24.5% year on year, and operating profit was ¥100 million, compared with an operating loss of ¥71 million in the same period of the previous year. Both revenue and profit increased.」
Although there was no direct mention of subcontracting and processing costs, the software business continued to turn from an operating loss in the same period of the previous year to operating profit, and the deterioration in profitability had eased further in actual results. - FY2017-Q2MitigatedAnnual report
「Projects for the services and distribution, finance, insurance and securities, government agency, and telecommunications industries each increased revenue, resulting in revenue of ¥4,501 million, up 16.7% year on year, and operating profit of ¥122 million, compared with an operating loss of ¥20 million in the same period of the previous year. Both revenue and profit increased.」
Although there was no direct mention of subcontracting and processing costs, the software business turned from an operating loss in the same period of the previous year to operating profit, indicating that profitability had improved in actual results. - FY2017-Q1First statedAnnual report
「Although projects for manufacturers and medical institutions, among others, continued to trend below the previous year, projects for the finance, insurance and securities industries, government agencies, telecommunications, and services and distribution industries each increased revenue. Revenue remained steady, but due to higher subcontracting and processing costs, revenue was ¥1,947 million, up 7.9% year on year, and the operating loss was ¥82 million, compared with an operating loss of ¥65 million in the same period of the previous year, resulting in higher revenue but lower profit.」
The software business increased revenue, while the operating loss widened due to higher subcontracting and processing costs, among other factors.