LIFULL Co.,Ltd. FY2026 Q3 Earnings Report

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Executive Summary

Cumulative results for Q3 FY2026 showed increases in both revenue and profit, with the earnings base steadily expanding around the core platform business. Revenue was ¥21.98B (+4.4% YoY), Operating Income was ¥3.24B (+7.9%), and Profit Before Tax was ¥3.31B (+11.5%), confirming growth in profit. Meanwhile, Net Income attributable to owners of the parent fell sharply to ¥2.09B (-52.5% YoY). This was primarily due to the reversal of the one-time ¥2.91B profit from discontinued operations recorded in the previous year; on a continuing-operations basis, basic EPS improved from ¥11.70 to ¥16.65.

Factors Affecting Performance

【Revenue】Revenue was ¥21.98B (+4.4% YoY), with the core HOME'S segment growing to ¥6.46B (+5.1%), driving overall performance. Other segments were nearly flat at ¥0.62B (+0.3%). HOME'S accounts for 91.2% of revenue, indicating a high degree of reliance on a single business.

【Profitability】Operating Income was ¥3.24B (+7.9% YoY), and the Operating Margin improved by approximately 0.4pt YoY to 14.7%. However, Operating Income in the HOME'S segment declined to ¥1.03B (-17.3% YoY), with the segment margin falling to 16.0%, suggesting that higher costs, including promotional expenses and personnel expenses, exceeded revenue growth. Profit Before Tax was ¥3.31B (+11.5% YoY), temporarily boosted by a ¥0.14B gain on the sale of equity-method investments. Meanwhile, the effective tax rate was high at 36.5%, limiting Net Income to ¥2.09B (-52.5% YoY). The sharp decline in Net Income was attributable to the reversal of the previous year's ¥2.91B profit from discontinued operations. Accordingly, the increase in revenue and profit at the operating level must be distinguished from the decline in Net Income. Overall, both revenue and profit increased.

Segment Analysis

The reporting segments consist of HOME'S-related businesses and Other Businesses. HOME'S-related businesses recorded revenue of ¥20.04B (+4.5% YoY) and segment profit of ¥3.63B (+5.8%), representing increases in both revenue and profit. However, within the disclosed “LIFULLHOMES” sub-segment (revenue of ¥6.46B and profit of ¥1.03B), the segment margin declined to 16.0%, reflecting the burden of promotional spending in the most recent quarter. Other Businesses, including websites for searching nursing homes and care facilities, generated revenue of ¥0.62B (+0.3% YoY), while the segment loss widened to ¥0.15B, making it a factor weighing down the Company-wide profit margin.

Key Financial Indicators

【Profitability】The Operating Margin improved to 14.7% from 13.9% in the previous year, while the gross margin remained high at 94.6%. In contrast, the Net Profit Margin declined sharply to 9.7% from 20.4% in the previous year. This reflected the reversal of the uplift from the previous year's profit from discontinued operations; on a continuing-operations basis, profitability is trending upward. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥3.58B, exceeding Net Income of ¥2.09B, indicating solid cash support from operating activities. 【Investment Efficiency】ROE was 7.4%, while property, plant and equipment increased significantly by +59.0% YoY, indicating that investment is preceding improvements in asset efficiency. 【Financial Soundness】The Equity Ratio was high at 65.8%. Cash and deposits of ¥10.16B were broadly in line with interest-bearing debt of ¥9.74B (short-term debt of ¥0.99B + long-term debt of ¥8.75B), indicating a conservative financial foundation.

Cash Flow Analysis

Cash flow from operating activities was ¥3.58B, up +9.9% YoY, maintaining a level above Net Income of ¥2.09B. Cash flow from investing activities was -¥3.85B, reflecting the prioritization of growth investments, including acquisitions of property, plant and equipment and investment property (¥2.25B) and the execution of loans (¥2.36B). As a result, free cash flow (OCF + investing cash flow) was slightly negative at -¥0.27B. Cash flow from financing activities was -¥0.30B, with dividend payments of ¥1.33B being the primary outflow, while proceeds from and repayments of short- and long-term borrowings largely offset each other. Cash and cash equivalents at period-end were ¥10.16B. Although the Company is in an investment-led phase, liquidity remains ample and no significant funding concerns are evident.

Quality of Earnings

The primary source of profit during the period was recurring income from operating activities in the continuing businesses, with Operating Income showing steady growth of +7.9% YoY. However, Profit Before Tax included a ¥0.14B gain on the sale of equity-method investments, which should be evaluated separately as a one-time factor. Net non-operating financial income and expenses were a modest -¥0.05B, with a limited impact on overall results. OCF exceeded Net Income (OCF of ¥3.58B versus Net Income of ¥2.09B), indicating solid cash support for earnings. However, a decrease in accounts payable (-¥0.46B) and an increase in inventories (-¥0.09B) somewhat constrained cash generation from working capital. Overall, the quality of recurring earnings is good, although working capital efficiency requires attention.

Earnings Forecast and Guidance

Against the full-year forecast (Revenue of ¥29.30B, Operating Income of ¥3.90B, EPS of ¥19.5, and dividend of ¥6.72), cumulative Q3 progress rates were 75.0% for Revenue and 83.1% for Operating Income. Compared with the standard progress rate of 75% after nine cumulative months, Operating Income is progressing ahead of schedule, apparently reflecting cost controls and temporary non-operating income. Revenue is progressing broadly in line with the plan. It is also noted that the earnings forecast and dividend forecast were revised during the quarter.

Shareholder Returns

The full-year dividend forecast is ¥6.72 per share, resulting in a Payout Ratio of approximately 34.5% against the full-year forecast EPS of ¥19.5. No dividend was paid as of Q2, indicating a dividend structure centered on the year-end dividend. Dividend payments during cumulative Q3 amounted to ¥1.33B, a significant increase from ¥0.09B in the same period of the previous year, due to differences in the timing of dividend payments. No share buybacks were conducted during the period, and shareholder returns are centered on dividends.

Risk Factors

1. Business concentration risk: HOME'S-related businesses account for 91.2% of revenue, creating a structure in which changes in market conditions and the competitive environment for a single business could significantly affect overall performance. In addition, the business's Operating Margin declined to 16.0%, confirming that higher costs, including promotional and personnel expenses, are exceeding revenue growth.

2. Cash conversion trends: Although OCF exceeds Net Income, decreases in accounts payable and increases in inventories are constraining cash generation from working capital. Changes in working capital efficiency require monitoring.

3. Pressure on free cash flow from investment-led spending: Investing cash flow was -¥3.85B due to acquisitions of property, plant and equipment and investment property, as well as loan disbursements, resulting in slightly negative free cash flow of -¥0.27B. Capital efficiency may fluctuate depending on the scale and timing of future investments.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The Company's profitability is significantly above the industry median.

Growth and Capital Efficiency

The Revenue Growth Rate is below the industry median, positioning the Company relatively unfavorably in terms of growth momentum.

Source: Compiled by the Company

Key Earnings Highlights

1. While increases in revenue and profit at the operating level were confirmed, the sharp decline in Net Income was due to the reversal of the previous year's profit from discontinued operations. The earning power of the continuing businesses is reflected in the improvement in basic EPS (¥11.70→¥16.65).

2. The segment profit margin of the core HOME'S-related businesses has declined, making the balance between revenue growth and increases in selling, general and administrative expenses a key structural factor affecting future profitability.

3. OCF remains above Net Income, providing solid cash support for earnings, but free cash flow is slightly negative due to investment-led spending. The conservative financial foundation, represented by an Equity Ratio of 65.8%, supports near-term investment and shareholder returns.

Theoretical Share Price (For Reference)

Sensitivity: ¥212–¥225 at ±1% for the Cost of Equity, and ¥218–¥218 at ±0.1 for ω.

Notes:

• Because cumulative Net Income progress against the full-year forecast is 85%, exceeding the standard level of 75%, forecast EPS has been adjusted upward within a maximum range of +10% (because companies progressing ahead of schedule tend to exceed their forecasts; adjustments may be excessive for businesses with strong seasonality).
• Net assets as of the quarter-end have been used (there is a timing difference relative to the full-year forecast).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with professionals as necessary.

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