NEC (6701) Q1 2025 earnings summary

Executive summary

• Q1 FY ending March 2025 revenue was JPY 690.3 billion, down 2.3% year-on-year, with adjusted operating profit rising to JPY 12.7 billion from JPY 0.5 billion, driven by IT Services and Social Infrastructure.

• Non-GAAP net profit reached JPY 10.5 billion, an improvement from a loss of JPY 1.3 billion year-on-year; EBITDA increased to JPY 46.3 billion from JPY 38.0 billion.

• Net loss attributable to owners was JPY 5.8 billion, improving from a JPY 7.4 billion loss in the prior year.

• Segment reporting was revised from Q1 FY25/3, with prior periods restated for comparability.

Financial highlights

• IT Services revenue grew 8.4% year-on-year to JPY 418.3 billion; Social Infrastructure revenue increased 2.8% to JPY 219.2 billion.

• Adjusted operating profit margin for IT Services rose to 3.5%; Social Infrastructure margin improved to 1.5%.

• Gross profit rose to JPY 190.2 billion from JPY 187.4 billion year-on-year.

• Non-GAAP EPS turned positive at JPY 4.0, up from JPY -0.5 year-on-year.

• Structural reform expenses totaled JPY 3.6 billion, including JPY 1.5 billion for domestic IT and JPY 2 billion for international IT services.

Outlook and guidance

• FY ending March 2025 revenue forecast is JPY 3,370 billion, up 3.1% year-on-year, with adjusted operating profit forecast at JPY 255 billion (7.6% margin).

• Non-GAAP net profit forecast at JPY 165 billion; EBITDA expected at JPY 380 billion.

• Dividend per share projected at JPY 140.

• Continued focus on DX initiatives and business transformation through BluStellar.