NEC Corp Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
NEC Corp's Q1 2026 earnings call, held on July 29, 2025, revealed a 3.7% increase in revenue and a 2.5 times increase in non-GAAP operating profit year-on-year. The company's domestic IT sector, particularly BluStellar, showed strong profitability. While maintaining its full-year forecast, NEC reported strong performance in IT Services and Social Infrastructure.
Key Financial Results
Revenue for Q1 was ¥715.7 billion.
Non-GAAP operating profit was ¥40 billion.
Revenue year-on-year increased by 3.7%.
Non-GAAP operating profit increased 2.5 times compared to last year.
Adjusted operating profit stood at ¥41.7 billion, an increase of ¥29 billion from the previous year.
Adjusted OP of ¥1.7 billion was acknowledged through asset sales.
Business Segment Results
IT Services and Social Infrastructure both saw an increase in revenue and profit.
IT Services: Strong bookings in the public sector drove revenue increase. BluStellar and public enterprise showed strong profitability enhancements.
International DGDF: KMD's termination of low-profit business resulted in a revenue decrease, but operating profit increased due to reversal impact from restructuring expenses.
Domestic IT Services: BluStellar saw a 14.4% year-on-year increase in revenue and contributed ¥4.1 billion in profit.
Social Infrastructure: Telecom services IT domain trended robustly, and OP increased due to reduced development costs and bringing forward some projects. ANS saw an increase in both revenue and OP due to steady project delivery.
Industry Trends and Dynamics
High demand for DX (Digital Transformation) is driving improvement in revenue and profit for BluStellar.
Strong bookings for public sector.
DX demand continues to be strong.
Macroeconomic Environment
Due to changes in the macroeconomic environment, including tariffs, no changes were made to the full-year forecast, despite Q1 actuals exceeding the plan.
Growth Opportunities and Strategies
Emphasis will continue to be placed on profit and steadily propel forward.
Plan to increase investment to capture future businesses for ANS.
Expansion of partnership business and acquisition of large projects based on multiple BluStellar scenarios.
Financial Guidance and Outlook
No changes from the announcement made on April 28.
Expect a decrease in revenue for domestic IT due to the transfer of sales functions of business PCs and termination of some businesses of NEC platforms.
Expect improvement in profitability centering around BluStellar, and expect adjusted OP to increase.
Adjusted OP of international DGDF is expected to increase due to Avaloq's profitability improvement and elimination of one-off expenses from FY March 2025.
Factoring in the shift to software, expect a decline in equipment sales in telecom services, leading to a fall in revenue.
Elimination of one-off expenses in submarine systems incurred in FY March 2025 will push up both revenue and adjusted OP.
