■ Business Overview

1. Characteristics of the company

NSW <9739> develops four businesses: Enterprise Solutions, Service Solutions, Embedded Solutions, and Device Solutions, aiming to expand its DX-related business by leveraging technology synergy. A significant strength is possessing both Software and Hardware technology and know-how.

The accumulation of industry and business know-how cultivated in the Enterprise Solutions business, as well as system construction capabilities, service coordination ability from the Service Solutions business, and the foundation for providing infrastructure and platforms such as cloud environments, along with product development capabilities in embedded software and LSI design from the Embedded Solutions and Device Solutions businesses, including image processing technology, provides a backbone that can support customers in achieving DX through digital technologies centered around IoT and AI. This is a significant strength of the company, and leveraging these factors will lead to future growth.

※ LSI stands for Large-Scale Integration, referring to large-scale integrated circuits. Integrated circuits that incorporate numerous transistors, diodes, resistors, capacitors, and other Electronic Components into a single Semiconductor chip.

2. Business Activities

Looking at segment revenues and operating profit for the interim period ending March 2025, Enterprise Solutions accounted for 31.1% of revenue and 39.3% of operating profit, Service Solutions accounted for 28.1% of revenue and 8.7% of operating profit, Embedded Solutions accounted for 22.2% of revenue and 29.7% of operating profit, and Device Solutions accounted for 18.6% of revenue and 22.3% of operating profit. The relatively high profit margins of Embedded Solutions and Device Solutions are thought to be due to high technical entry barriers and the scarcity of companies of similar scale as independent operators in these fields. Furthermore, in Enterprise Solutions, efforts to improve profitability and suppress unprofitable projects have led to significant improvements in profit margins in recent years. Meanwhile, the relatively low profit margin of Service Solutions can be attributed to being an independent segment since the fiscal year ended March 2020, where strengthening operational capabilities for business expansion, upfront investment for new service deployment, and responding to unprofitable projects have influenced profitability.

Enterprise Solutions provides business solutions. Utilizing business know-how cultivated over many years in Manufacturing, distribution, financial and Insurance sectors, as well as government offices, the company offers optimal solutions to customers, ranging from consulting to system design, development, maintenance, and operation.

Service solutions provide IT services as well as IoT & AI services. In IT services, a variety of services support customers' systems, from server and network design that maximizes system performance, to building secure environments, and reliable operation and monitoring via urban and suburban Datacenters. Additionally, in IoT & AI services, leveraging strengths that can coordinate from devices to the cloud, the IoT platform "Toami" supports the creation of new business value for customers by facilitating the accumulation, analysis, and utilization of data.

Embedded solutions provide embedded system development and edge device solutions. In embedded system development, the embedded technology cultivated in the development of various products in automotive and industrial fields responds to product diversification, efficiency, and high-quality design with applications from middleware to driver development, offering various solutions aimed at smart technology. Furthermore, in edge device solutions, a rich design and development capability that can handle everything from embedded applications to LSI, along with alliances with various Sensor and device vendors, allows for proposing optimal IoT environments to customers with a low-cost small start.

Device solutions are engaged in the development of LSI and FPGA (integrated circuits that can be configured by the purchaser or designer after manufacturing). Solutions are provided according to requirements, covering high-level design, logical design and verification, logic synthesis, layout design, and manufacturing to testing. They are equipped to handle low power consumption design in fields such as image processing and communication control, as well as advanced processes.

By integrating the know-how from these four segments, there is great expectation for a new pillar of revenue in business areas centered on digital technologies such as IoT and AI related to DX (digital transformation). Currently, operations are being conducted as part of the revenue from existing segments, with a significant strength in the ability to handle essential application development and analysis services for IoT, as well as embedded apps including wireless and Sensor technology, and even LSI design, centered around the IoT cloud platform "Toami" which started sales in May 2013. "Toami" has over 100 cumulative implementation achievements focused on "IoT of products" and has expanded to over 30 alliance partners, with deployments in more than 30 countries worldwide. Furthermore, strong inquiries have been received for related services such as analysis services to make more effective use of data collected through IoT. Utilization records of "Toami" exist with companies such as PANASONIC CORP 【6752】, Nipron Co., Ltd., EXIO Group 【1951】, Tohoku Energy Service Co., Ltd., Watanabe Electric Industry Co., Ltd., Renesas Electronics 【6723】, NEC Networks & Systems Integration 【1973】, Rion 【6823】, and Japan Radio Co., Ltd.

(Written by FISCO guest analyst Nozomi Kokushige).