Fujitsu's AI-Driven Delivery Takes Center Stage as Uvance Hits 35% of Service Solutions

Fujitsu's first quarter of FY2026 was anything but routine. Revenue rose 3.9% to ¥779.3 billion, but the real story is the bottom line: adjusted operating profit jumped 56% to ¥54.9 billion, and the company reaffirmed its target of another record year. The engine is Service Solutions, which grew 6.7% and expanded its adjusted operating margin by 2.1 percentage points to 11.4%. Management credits AI driven delivery and the evolution of the ONE Delivery model for much of the improvement.

“We were able to continue making steady progress in improving profitability,” said Takeshi Isobe, CFO, in his prepared remarks. Indeed, gross margin in Service Solutions improved 1.5 points to 37.2%, and the company is now pushing what it calls the “AI Top Gun project” to concentrate advanced AI skills on large projects. The structure of the business is also shifting: modernization business revenue grew 29% year-on-year, while Uvance — the company's cross-industry digital transformation offering — saw orders soar 51% and revenue climb 31%.

Uvance now accounts for 35% of Service Solutions revenue, up from 29% a year ago. “Uvance for Finance and Uvance for Retail, which we launched last year, laid the foundation for the strong order situation,” — Takeshi Isobe, Executive or Senior Management · 2026-07-30 Isobe noted. The company's full-year Uvance revenue target is ¥840 billion, a 18% increase, and management expects further acceleration.

From FY 2026, this has changed to an industry-centered management approach that positions knowledge of industry domains at the core of our competitive advantage.

That shift from a region-based to an industry-based sub-segment structure is a strategic pivot absent from prior calls. The enterprise sub-segment, which covers automotive, manufacturing, and distribution retail, grew revenue 7.8% and profit 12%. The public sub-segment — defense, finance, healthcare, and government — grew revenue 6% but profit jumped 42%, helped by a 39% surge in orders in the mission-critical and national security area. “We won large-scale deal in defense-related sector. We posted double-digit growth last year, but we also exceeded that level this year,” — Takeshi Isobe, Executive or Senior Management · 2026-07-30 Isobe said.

The trajectory of the company's thinking on AI has also evolved. In the previous year's Q&A, Isobe described a strategic partnership with Cohere as a means to “strongly respond to the enterprise generative AI market” — Takeshi Isobe, Chief Financial Officer (CFO) · 2024-07-26. Now the focus is far more internal: turning AI on Fujitsu's own delivery process. “AI-driven delivery is a key measure that will significantly contribute to shorter delivery times and improved service quality,” Isobe said. “We are focusing on it as our highest priority initiative.” — Takeshi Isobe, Executive or Senior Management · 2026-07-30

The profitability improvement is not just a one-quarter miracle. The company has consistently cited labor-cost pass-through and pricing discipline in prior calls. In the 2024 Q&A, Isobe noted, “When we have similar deals and a lot of large number in which area is that going to be profitable from the time we receive the order, we determine that conventionally.” — Takeshi Isobe, Chief Financial Officer (CFO) · 2024-07-26 That discipline appears to be paying off: gross margin in the quarter was 37.2%, and while hardware solutions posted a small operating loss, management attributed it to a temporary timing issue in memory cost pass-through that they expect to recover in Q2.

Order intake in Japan rose 10% year-on-year, with growth across manufacturing, public, and healthcare. One area of softness was finance, where orders fell 9% due to a pullback in mission-critical system projects, but the company still saw broad demand. profitability improvement is clearly on track, and management reaffirmed its full-year forecast of ¥425 billion adjusted operating profit.

The strategic implications are significant. Fujitsu is moving from a broad-based IT services provider to a focused, industry-vertical, AI-embedded delivery engine. The Uvance and modernization pillars are both growing at 20-30%+, and the company's shift to industry-centered management suggests a long-term commitment to domain depth rather than geographic breadth. Risks remain — hardware profitability is volatile, and the memory cost pass-through needs to be managed — but the structural changes are real.

For a company that was largely reacting to external shocks in 2024 (CrowdStrike, Cohere partnerships, and system quality concerns), the current quarter shows a Fujitsu that is proactively reshaping its own operating model. The gain on the sale of a portion of Fujitsu Technology Park provided a modest one-time boost, but the core profitability improvement is organic. With orders up and record profits targeted, Fujitsu is no longer just a supplier of systems; it is positioning itself as the AI-driven delivery partner of choice for Japanese enterprises and public institutions.