CROOZ (2138) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 of the fiscal year ending March 2026, the Company experienced both a decline in revenue, primarily due to the transfer of SHOPLIST, formerly the core business of its EC Business, and a reduction in losses driven by cuts in common expenses. Revenue was ¥8.47B, down 22.7% YoY, while the operating loss was ¥0.15B (versus a loss of ¥1.01B in the same period last year), representing an improvement of ¥0.86B. The ordinary loss was ¥0.33B (versus a loss of ¥0.87B in the same period last year), and net income was ¥-0.33B (versus ¥-0.49B in the same period last year), with the loss narrowing in both cases. Excluding the business portfolio change associated with the transfer, the increase in revenue and return to profitability in the IT Outsourcing Business, together with the reduction in company-wide common expenses, drove the improvement in earnings.

Factors Affecting Performance

【Revenue】Revenue was ¥8.47B, down 22.7% YoY. The primary factor was a change in the comparison base, as the SHOPLIST Business, which was transferred in February 2025, had been included in EC Business revenue for the same period last year. By segment, the IT Outsourcing Business expanded to ¥5.31B (+63.3% YoY), with the SES Business accounting for ¥3.01B and leading growth. The EC Business generated ¥2.85B (-51.4% YoY); however, when comparing only the Ada. Business, which is the core business after the transfer, revenue increased by +31.4% YoY.

【Profit and Loss】The operating loss was ¥0.15B, improving by ¥0.86B from the ¥1.01B loss in the same period last year. The gross profit margin improved to 51.6% from 42.3% in the same period last year, but the SG&A expense ratio also increased to 53.4% (51.5% in the same period last year), leaving fixed-cost absorption amid the reduced scale of operations as an issue. The ordinary loss of ¥0.33B resulted from ¥0.22B in interest expense reducing operating earnings, and the improvement in operating results has not sufficiently flowed through to ordinary income. Extraordinary income and expenses included temporary factors such as a ¥0.04B gain on the sale of investment securities. Net income of ¥-0.33B improved from ¥-0.49B in the same period last year, but the Company remains in a loss position. Despite lower revenue, losses narrowed substantially, resulting in a pattern of lower revenue and improved earnings (narrowing losses).

Segment Analysis

The IT Outsourcing Business generated revenue of ¥5.31B and operating income of ¥0.01B, returning to profitability from a loss of ¥0.02B in the same period last year. The core SES Business led earnings with revenue of ¥3.01B and profit of ¥0.17B, while the Nursing Care and Welfare Human Resources Services Business recorded a loss of ¥0.12B on revenue of ¥0.72B, making profitability improvement a challenge. The EC Business generated revenue of ¥2.85B and operating income of ¥0.09B (profit margin of 3.2%), demonstrating higher profitability than the IT Outsourcing Business (profit margin of 0.2%). Losses in the “Other” category, which includes company-wide common expenses and other items, narrowed significantly from ¥1.04B in the same period last year to ¥0.25B, becoming the primary factor behind the improvement in company-wide earnings.

Key Financial Metrics

【Profitability】The operating margin was -1.8%, improving from -9.2% in the same period last year, but it remains below the break-even point. The net profit margin was -3.9%, representing only a modest improvement from -4.5% in the same period last year, indicating that the improvement in operating results has not sufficiently flowed through to bottom-line earnings. 【Cash Flow Quality】Cash and deposits were ¥6.73B, while interest expense of ¥0.22B was recorded as a non-operating expense, indicating that the operating loss continues to be insufficient to cover interest payments. 【Investment Efficiency】ROE (annualized) was -4.9%, primarily due to the net profit margin remaining negative. 【Financial Soundness】The equity ratio was 29.0%. Long-term borrowings increased by +38.8% YoY to ¥13.19B, while cash and deposits decreased by -33.4% YoY. Current assets of ¥9.35B exceeded current liabilities of ¥4.76B, but increased leverage has emerged as a challenge for the Company’s financial condition.

Cash Flow Analysis

As detailed data from the statement of cash flows is not included in the disclosed information, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥6.73B, a decrease of ¥3.37B, or 33.4%, from ¥10.10B in the same period last year. During the same period, long-term borrowings increased by ¥3.69B YoY to ¥13.19B, suggesting that funding obtained through bonds and borrowings has supported cash management. Current liabilities include ¥2.00B in bonds due for redemption within one year and ¥0.95B in long-term borrowings due for repayment within one year. While these obligations appear manageable at the current cash level, liquidity headroom after repayment is trending downward. Property, plant and equipment amounted to ¥0.29B, representing only 0.9% of total assets, indicating that cash outflows from large-scale capital investment are limited.

Earnings Quality

Against an operating loss of ¥0.15B, interest expense of ¥0.22B was incurred as a non-operating expense, with the expansion to an ordinary loss of ¥0.33B largely attributable to financial expenses. Extraordinary income included a ¥0.04B gain on the sale of investment securities, while extraordinary losses included ¥0.02B in losses on the retirement of fixed assets and other items; both affected net income as temporary factors. Comprehensive income was ¥-0.32B, close to net income attributable to owners of the parent of ¥-0.33B, indicating limited divergence from net income due to valuation-related items such as the valuation difference on other securities and foreign currency translation adjustments. The improvement in the gross profit margin (51.6%) includes the impact of the business portfolio change—the transfer of the low-margin SHOPLIST Business—and therefore needs to be evaluated separately from an actual improvement in the earnings power of existing businesses.

Earnings Forecast and Guidance

Progress toward the full-year revenue forecast of ¥11.82B was 71.7%, 3.3pt below the standard Q3 progress rate of 75%. Against the full-year operating income forecast of ¥0.03B, the cumulative result was an operating loss of ¥0.15B, requiring the Company to record at least approximately ¥0.18B in operating income in Q4 to achieve the forecast. The full-year ordinary income forecast is ¥-0.17B, implying an improvement of approximately ¥0.16B in Q4 from the cumulative ordinary loss of ¥0.33B. The full-year EPS forecast is -¥17.80, compared with cumulative EPS of -¥34.78.

Shareholder Returns

The Q2 dividend was ¥0, and the full-year dividend forecast is also ¥0, with the no-dividend policy continuing. As the Company recorded a cumulative quarterly net loss attributable to owners of the parent of ¥0.33B, no earnings are available for calculating the payout ratio, and it is therefore not evaluated. The no-dividend policy is consistent with a capital allocation policy that prioritizes recovery from the operating loss and addressing financial burdens.

Risk Factors

1. Financial leverage and interest burden: Long-term borrowings were ¥13.19B, up +38.8% YoY, while interest expense of ¥0.22B exceeded the operating loss of ¥0.15B. Whether the recovery in operating income reaches a level sufficient to cover interest payments will be a key focus going forward.

2. Variations in profitability by business: Within the IT Outsourcing Business, the Nursing Care and Welfare Human Resources Services Business recorded a loss of ¥0.12B on revenue of ¥0.72B, resulting in a significant profitability gap relative to the SES Business (profit of ¥0.17B). The pace at which losses in this business narrow will be an important variable in improving consolidated earnings.

3. Prerequisites for achieving the full-year forecast: Against the full-year operating income forecast of ¥0.03B, the cumulative result was an operating loss of ¥0.15B, and progress is below the standard level. A substantial improvement in operating income in Q4 is a prerequisite for achieving the forecast.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The Company’s profitability is substantially below the industry median, and it remains below the break-even point.

Growth and Capital Efficiency

The revenue growth rate is substantially below the industry median, but most of this difference is attributable to the change in the comparison base resulting from the business transfer.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The operating loss improved by ¥0.86B YoY, with the return to profitability of the IT Outsourcing Business and reductions in company-wide common expenses serving as the primary factors behind the narrowing loss. While the gross profit margin improved (51.6%), the SG&A expense ratio increased to 53.4%, leaving room for improvement in fixed-cost absorption.

2. Achieving the full-year operating income forecast of ¥0.03B requires a substantial return to operating profitability in Q4, and progress is below the standard quarterly level.

3. Long-term borrowings increased (+38.8% YoY) while cash and deposits decreased (-33.4% YoY), and as long as interest expense continues to exceed the operating loss, the trend in financial burdens will determine the actual impact of earnings improvement.

Theoretical Share Price (Reference Value)

Sensitivity: 621 yen–656 yen at ±1% for the cost of equity, and 630 yen–644 yen at ±0.1 for ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value will be below book value per share.
• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it does not constitute 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 summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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