NEC (6701) Investor Day 2024 summary

Progress and targets for IT services

• IT Services segment exceeded forecasts in March 2024, with sales of JPY 1.914 trillion and an operating profit margin of 9.6%.

• Adjusted operating profit target for March 2026 raised to JPY 220 billion, with OPM of 11%, both above previous targets.

• IT Services revenue is projected to reach JPY 2 trillion by March 2026.

• Domestic IT business growth is driven by BluStellar and improved project management, targeting JPY 184 billion OP and 10.9% OPM by March 2026.

• International IT business aims for JPY 310 billion in sales and 11.6% OPM by March 2026.

BluStellar business and growth strategy

• BluStellar, a new DX brand, is a core growth engine, targeting JPY 493.5 billion in revenue and 11.4% adj. OP margin by March 2026.

• Revenue contribution from BluStellar in public and enterprise BUs is projected to rise sharply, with CAGR over 34% for both.

• Shift to high-margin products (AI, consulting, security, PaaS) is underway, aiming for these to exceed 50% of BluStellar sales by March 2026.

• Productivity improvements through generative AI and automation are reducing costs and enhancing delivery speed.

• Consulting-based business, led by ABeam, targets JPY 165 billion in sales and 12.9% OPM by March 2026, focusing on value creation and technology-driven innovation.

International business and structural reforms

• Digital Government and Digital Finance segments leverage acquisitions and alliances (e.g., BlackRock) to expand cross-selling and SaaS offerings.

• Revenue CAGR of 8.9% expected from March 2022 to March 2026, with effective order backlog rate improving to 84%.

• Profitability improvements driven by cost efficiency, offshore expansion, SaaS margin gains, and divestment of low-profit businesses.

• Software revenue ratio targeted to rise from 79% to 83%, and offshore personnel from 32% to 40% by March 2026.

• International markets see continued growth in digital government and finance, especially in Europe and APAC.