| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥67.0B | ¥42.4B | +58.2% |
| Operating Income | ¥16.1B | ¥10.8B | +48.2% |
| Ordinary Income | ¥16.2B | ¥10.9B | +49.6% |
| Net Income | ¥11.1B | ¥7.2B | +52.9% |
| ROE | 16.8% | 12.3% | - |
For the six months ended Q2 FY2026, revenue was ¥67.0B (YoY +¥24.6B, +58.2%), Operating Income was ¥16.1B (YoY +¥5.2B, +48.2%), Ordinary Income was ¥16.2B (YoY +¥5.4B, +49.6%), and Net Income was ¥11.1B (YoY +¥3.8B, +52.9%), recording significant top- and bottom-line growth. Revenue growth of +58.2% was driven by an expanded membership base and contributions from new store openings. Operating margin remained high at 24.0% (down -1.6pt from 25.6% a year ago), while a rise in SG&A ratio (10.6% → 11.7%) slightly pressured margins. Net income growth of +52.9% absorbed increased corporate taxes and secured a year-over-year higher increase. EPS was ¥66.63 (from ¥45.59, +46.2%) and diluted EPS was ¥65.06, reflecting growth; progress vs. full-year forecast EPS of ¥148.58 was 44.8%, slightly below the half-year benchmark (50%) but within an acceptable range.
[Revenue] Revenue of ¥67.0B (prior year ¥42.4B, +58.2%) is presumed to be mainly due to expansion of the membership base and contributions from new store openings. Contract liabilities increased to ¥4.48B (prior year ¥3.41B, +¥1.07B, +31.4%), and the buildup of deferred revenue equivalent to 6.7% of revenue indicates progress in the subscription-based membership model. The change in contract liabilities (+¥0.11B) contributed positively to Operating Cash Flow, and the accumulation of recurring revenue has improved short-term revenue visibility. Cost of sales was ¥43.1B (prior year ¥27.1B, +59.3%), outpacing revenue growth, with a cost of sales ratio of 64.3% (prior year 63.8%, +0.5pt). As a result, gross profit was ¥23.9B (YoY +¥8.6B, +55.9%), and gross margin was 35.7% (prior year 36.2%, -0.5pt), a slight decline but at a stable level.
[Profitability] Against gross profit of ¥23.9B, SG&A was ¥7.9B (prior year ¥4.5B, +75.0%), growing faster than revenue and pushing the SG&A ratio up to 11.7% (prior year 10.6%, +1.1pt). The increase is mainly due to upfront investment for new store openings, personnel costs, and advertising. Operating Income was ¥16.1B (YoY +¥5.2B, +48.2%), with an Operating Margin of 24.0% (prior year 25.6%, -1.6pt), maintaining high profitability though margin declined slightly. Non-operating income was ¥0.2B (including interest income ¥0.1B) and non-operating expenses were ¥0.04B (interest expense ¥0.03B), both immaterial, so Ordinary Income of ¥16.2B (YoY +¥5.4B, +49.6%) grew roughly in line with Operating Income. No extraordinary gains/losses were disclosed. Pre-tax income was ¥16.3B and corporate taxes were ¥5.2B (effective tax rate 32.0%), resulting in Net Income of ¥11.1B (YoY +¥3.8B, +52.9%). In conclusion, the company achieved revenue and profit growth, but a higher SG&A ratio led to an Operating Margin below the prior year.
[Profitability] Operating Margin 24.0% (down -1.6pt from 25.6%) decreased due to higher SG&A ratio but remains at a high level. Net Profit Margin 16.5% (down -0.6pt from 17.1%) similarly shows a slight decline but remains strong. ROE of 16.8% is decomposed as Net Profit Margin 16.5% × Total Asset Turnover 0.623 × Financial Leverage 1.64; the main driver of ROE improvement versus the prior year was a significant increase in Total Asset Turnover from 0.421 to 0.623. [Cash Quality] Operating Cash Flow / Net Income is 1.01x, securing minimum consistency, but Operating Cash Flow / EBITDA (EBITDA = Operating Income + Depreciation = ¥17.5B) is 0.64x, indicating weak cash conversion efficiency. Days Sales Outstanding (DSO) is 107 days (Accounts Receivable ¥19.7B ÷ Revenue ¥67.0B × 365 days), showing elongation and significant room to improve working capital management. [Investment Efficiency] CapEx was ¥4.1B versus Depreciation ¥1.4B, so CapEx/Depreciation is 2.94x, indicating an aggressive growth investment phase. Improvement in Total Asset Turnover to 0.623x (from 0.421x) suggests revenue expansion contributed to asset efficiency gains. [Financial Soundness] Equity Ratio is 61.1% (up +2.7pt from 58.4%), Current Ratio 229.5%, Quick Ratio 220.3%, indicating strong liquidity. Interest-bearing debt is minimal at a total of ¥3.27B (short-term borrowings ¥0.68B, long-term borrowings ¥0.51B, bonds including those due within one year ¥2.08B), with Debt/EBITDA of 0.19x and Interest Coverage (Operating Income ÷ Interest Expense) of 632x, reflecting extremely high financial safety. Deposits received of ¥11.89B are recorded as non-current liabilities, confirming an increase in customer deposits associated with store expansion.
Operating Cash Flow was ¥11.1B (prior year ¥6.0B, +84.7%), which at 1.01x relative to Net Income of ¥11.1B is acceptable. From a subtotal of ¥17.3B (prior year ¥9.0B), the main working capital changes deducted were increase in trade receivables -¥0.8B, decrease in trade payables -¥0.2B, and increase in inventories -¥0.2B, totaling -¥1.2B of working capital deterioration, which pressured Operating Cash Flow. Conversely, increase in contract liabilities +¥1.1B (prior year -¥0.8B) contributed positively to cash flow via buildup of deferred revenue. Corporate tax payments -¥6.3B (prior year -¥3.0B) increased with higher profits. Investing Cash Flow was -¥8.2B (prior year -¥5.4B), mainly due to CapEx -¥4.1B (prior year -¥1.5B) and intangible asset acquisitions -¥0.7B (prior year -¥0.6B), indicating continued aggressive growth investment. Financing Cash Flow was -¥5.1B (prior year -¥4.6B), primarily dividend payments -¥4.1B, bond redemption -¥0.6B, long-term borrowings repayment -¥0.4B, and lease liability repayments -¥0.1B. Free Cash Flow was ¥3.0B (Operating Cash Flow ¥11.1B + Investing Cash Flow -¥8.2B), which was below dividend payments of ¥4.1B, leaving an FCF coverage of 0.73x and temporarily short; however, cash and deposits of ¥30.5B (prior year ¥32.7B) provide a sufficient buffer.
Ordinary Income of ¥16.2B is almost the same level as Operating Income of ¥16.1B, indicating negligible impact from non-operating items. Non-operating income of ¥0.2B (0.3% of revenue) mainly consists of interest income ¥0.1B, and non-operating expenses of ¥0.04B (0.1% of revenue) are mainly interest expense ¥0.03B. There were no one-off items or extraordinary gains/losses, indicating a recurring earnings structure. The accrual ratio (Net Income - Operating Cash Flow) ÷ Total Assets is -0.04%, very low, indicating high earnings quality. However, with Operating Cash Flow ¥11.1B vs. EBITDA ¥17.5B (Operating Income ¥16.1B + Depreciation ¥1.4B), OCF/EBITDA is 0.64x and working capital increases are suppressing cash conversion. Extended receivable collection (DSO 107 days) is the primary cause and improvements via stronger collection management could materially improve this metric. The gap between Ordinary Income and Net Income is mainly due to corporate taxes of ¥5.2B (effective tax rate 32.0%), with no structural issues identified.
Full-year forecast is Revenue ¥143.2B (YoY +47.2%), Operating Income ¥35.1B (YoY +51.7%), Ordinary Income ¥35.6B (YoY +53.5%), and Net Income ¥24.7B (YoY +61.8%). Progress of the half-year cumulative results vs. full-year forecast is: Revenue 46.8%, Operating Income 45.8%, Ordinary Income 45.7%, Net Income 44.7%—a lag of -3.2pt to -5.3pt vs. the half-year benchmark of 50%, but within an acceptable ±10% deviation. The buildup of contract liabilities of ¥4.48B (6.7% of revenue) enhances revenue visibility for the second half to some degree. If SG&A ratio is contained and working capital normalizes, margin improvement and cash generation in H2 are expected to support achieving forecasts.
Interim dividend at the end of Q2 was announced at ¥26 (ordinary dividend ¥20 + commemorative dividend ¥6 for the listing change to the TSE Prime & NSE Premier markets) and was paid. Full-year dividend forecast is ¥25; given the Q2 interim of ¥26, the year-end dividend would effectively be a reduction, but considering the one-off ¥6 commemorative dividend, the regular dividend level is maintained. Against the full-year Net Income forecast of ¥24.7B, annual dividends of ¥25 × shares outstanding 16,694 thousand = ¥4.17B imply a Payout Ratio of 16.9%, which is conservative. Free Cash Flow ¥3.0B vs. interim dividend payment ¥4.1B (equivalent to a payout ratio of 39.3%) yields an FCF coverage of 0.73x and is temporarily insufficient, but cash and deposits ¥30.5B provide a sufficient buffer and there is no concern about dividend sustainability. Future improvement in Operating Cash Flow and smoothing of the investment pace are expected to restore FCF-based dividend coverage.
Working Capital Management Risk: DSO of 107 days has lengthened, and an increase in trade receivables to ¥19.7B (prior year ¥19.0B, +3.7%) is pressuring Operating Cash Flow. Although an increase in contract liabilities of +¥1.1B supports cash flow, persistent delays in receivable collections could entrench a low OCF/EBITDA of 0.64x and reduce cash generation capacity.
Profitability Pressure from Upfront Costs: SG&A of ¥7.9B (prior year ¥4.5B, +75.0%) grew faster than revenue growth of +58.2%, raising the SG&A ratio to 11.7% (prior year 10.6%, +1.1pt). Upfront investment for new store openings and personnel costs are primary drivers; if fixed costs become structural, the trend of declining Operating Margin (24.0% vs. 25.6% prior year, -1.6pt) could continue and erode profitability.
Cash Flow Pressure from Continued Growth Investment: CapEx of ¥4.1B is 2.94x Depreciation ¥1.4B, indicating an aggressive growth investment phase, and Investing Cash Flow of -¥8.2B has pressured Free Cash Flow of ¥3.0B. With dividend payments of ¥4.1B, FCF coverage of 0.73x is insufficient, and continued growth investment could temporarily leave cash generation unable to fully cover dividends and working capital needs.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 24.0% | 14.0% (3.8%–18.5%) | +10.0pt |
| Net Profit Margin | 16.5% | 9.2% (1.1%–14.0%) | +7.2pt |
Operating Margin 24.0% and Net Profit Margin 16.5% both substantially exceed industry medians, placing the company among the top performers in the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 58.2% | 21.0% (15.5%–26.8%) | +37.2pt |
Revenue growth of 58.2% far exceeds the industry median of 21.0%, placing the company among the sector leaders in growth.
※ Source: Company aggregation
Coexistence of High Growth and High Profitability: Revenue growth +58.2%, Operating Margin 24.0%, and ROE 16.8% indicate a structure where membership expansion and new store rollouts drive earnings. The increase in contract liabilities (+31.4%) reflects accumulation of subscription revenue and improves short-term revenue visibility. However, the rise in SG&A ratio (+1.1pt) and decline in Operating Margin (-1.6pt) are attributable to upfront growth costs; mid-term absorption through revenue scale is expected, but cost control remains a monitoring point.
Room to Improve Cash Conversion Efficiency: Operating Cash Flow / EBITDA 0.64x and DSO 107 days indicate cash conversion challenges. Strengthening collection management of accounts receivable ¥19.7B to normalize working capital could improve OCF/EBITDA and expand Free Cash Flow. Although Free Cash Flow ¥3.0B is below dividend payments ¥4.1B, cash and deposits ¥30.5B provide a sufficient buffer, so there is no immediate concern about dividend sustainability. Attention will be on Operating Cash Flow improvement and smoothing investment pace to recover FCF-based dividend coverage.
Financial Soundness and Continued Growth Investment: Equity Ratio 61.1%, Debt/EBITDA 0.19x, and Interest Coverage 632x demonstrate very high financial safety, supporting continued aggressive growth investment (CapEx/Depreciation 2.94x). Progress vs. full-year forecast is 44.7%–46.8%, slightly below the half-year benchmark but within an acceptable range. Containing SG&A in H2 and normalizing working capital are key to achieving full-year forecasts.
This report is an AI-generated earnings analysis automatically produced from XBRL disclosure data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on public filings. Investment decisions are your responsibility; please consult a professional advisor as necessary.