Samsung SDS (018260) Q1 2026 earnings summary

Executive summary

• Revenue for 1Q26 was KRW 3.35T, down 3.9% year-over-year, with operating profit at KRW 78B, a 71% YoY decline due to a one-time severance expense.

• IT Services revenue remained flat YoY, while Logistics revenue declined due to lower freight rates and volumes.

• Strategic focus on AI full-stack business, global expansion, and inorganic growth, including a KRW 1.2T convertible bond issuance with KKR.

Financial highlights

• Operating margin dropped to 2.3% from 7.7% YoY, but excluding one-time items, margin was 5.7%.

• Net income was KRW 92B, down 57.8% YoY.

• Gross profit margin fell to 11.8% from 15.6% YoY.

• EBITDA margin was 7.3%, with ROE at 3.7% for the quarter.

Outlook and guidance

• 2Q operating margin expected to recover to the 6% range.

• Cloud revenue targets double-digit growth in 2Q, driven by AX expansion and government-wide AI SaaS rollout.

• IT Services operating margin projected to recover to the high-11% range in 2Q.