| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥173.1B | ¥161.9B | +6.9% |
| Operating Income / Operating Profit | ¥20.1B | ¥18.4B | +9.7% |
| Ordinary Income | ¥20.4B | ¥19.0B | +7.6% |
| Net Income / Net Profit | ¥14.0B | ¥12.5B | +11.6% |
| ROE | 21.0% | 21.4% | - |
For the fiscal year ended March 2026, Crosscat reported Revenue of ¥173.1B (YoY +¥11.2B +6.9%), Operating Income of ¥20.1B (YoY +¥1.8B +9.7%), Ordinary Income of ¥20.4B (YoY +¥1.5B +7.6%), and Net Income of ¥14.0B (YoY +¥1.5B +11.6%), achieving revenue and profit growth. Operating margin improved to 11.6% (from 11.3% prior year, +0.3pt) and Net margin improved to 8.1% (from 7.7% prior year, +0.4pt), indicating notable profitability enhancement. Operating Cash Flow (OCF) expanded significantly to ¥23.4B (YoY +238.7%), with decreases in accounts receivable and increases in accounts payable contributing to working capital improvement. ROE was 21.0% and Equity Ratio was 61.4%, demonstrating both profitability and financial soundness, and a Payout Ratio of 35.4% indicates continued shareholder returns.
[Revenue] Revenue was ¥173.1B (YoY +6.9%), showing steady growth. By major customer, sales to Fujitsu amounted to ¥34.1B (19.7% of total) and to NTT DATA amounted to ¥24.8B (14.4% of total), with the two top customers accounting for approximately 34% of sales. Sales to Fujitsu increased by ¥3.5B from ¥30.6B in the prior year, and sales to NTT DATA increased by ¥4.2B from ¥20.7B in the prior year. Sales to the National Tax Agency were recorded at ¥19.4B in the prior year but are not on the major-customer list this period, suggesting a cycle-out of projects. Sales were domestic only; there was no overseas deployment. The company operates a single segment, the Information Services Business, and sales growth was driven by deepening relationships with existing major customers and steady execution of contracted projects.
[Profit & Loss] Cost of sales was ¥132.4B (from ¥123.5B prior year, +7.2%), resulting in a gross margin of 23.6%, a slight decline of -0.2pt from 23.8% in the prior year. Rising personnel costs and increased subcontracting expenses may have pushed up the cost ratio. Selling, General & Administrative expenses (SG&A) were ¥20.6B (from ¥20.1B prior year, +2.7%), with an SG&A ratio of 11.9%, down -0.5pt from 12.4% prior year, and cost control over SG&A relative to revenue generated operating leverage. Non-operating income was ¥0.7B (dividend income ¥0.3B, subsidy income ¥0.3B, etc.) and non-operating expenses were ¥0.4B (interest expense ¥0.1B, etc.), contributing +¥0.3B from non-operating activities. Extraordinary income included ¥0.8B gain on sale of investment securities as a one-off item. Profit before tax was ¥21.2B, with income taxes of ¥6.1B (effective tax rate 28.8%). The gap between Ordinary Income and Net Income reflects the impact of extraordinary items and income taxes; no structural issues were identified. In conclusion, the company achieved revenue and profit growth, and improved SG&A ratio drove enhanced operating efficiency and margin expansion.
[Profitability] Operating margin was 11.6% (improved +0.3pt from 11.3% prior year), and Net margin was 8.1% (improved +0.4pt from 7.7% prior year), indicating an improving profitability trend. ROE remained high at 21.0%, supported by the combination of improved Net margin, Total Asset Turnover of 1.60x, and Financial Leverage of 1.63x. Revenue growth of +6.9% reflects expansion of projects with major customers and stable order intake. [Cash Quality] OCF of ¥23.4B is 1.67x Net Income of ¥14.0B, indicating strong alignment between profit and cash. From OCF subtotal of ¥29.1B, after income tax payments of ¥5.9B, decreases in accounts receivable of ¥4.8B and increases in accounts payable of ¥1.8B contributed to working capital improvement, yielding favorable cash conversion. Free Cash Flow was ¥20.2B, sufficiently covering dividends of ¥4.6B and share buybacks of ¥1.4B. [Investment Efficiency] Capital expenditures were ¥0.6B, only 48% of depreciation of ¥1.3B, falling below replacement investment levels. As a labor-intensive IT services company, capital intensity is low, but continued investment restraint could affect future tool and infrastructure updates. Intangible fixed assets were ¥1.5B (software ¥0.6B, goodwill ¥0.7B), and goodwill/EBITDA ratio was 0.03x, indicating extremely low impairment risk. [Financial Soundness] Equity Ratio was 61.4% (improved +5.8pt from 55.6% prior year), Current Ratio 244%, Debt/EBITDA 0.32x, and Interest Coverage 327x, reflecting very high financial safety. Short-term borrowings were reduced substantially to ¥7.0B (from ¥15.0B prior year, -53%), and Cash and Deposits of ¥33.0B cover short-term liabilities 4.72x, indicating no liquidity concerns. Retained earnings were ¥68.6B (from ¥58.1B prior year, +18.0%), showing accumulated internal reserves.
Operating Cash Flow was ¥23.4B, up +238.7% from ¥6.9B prior year, demonstrating significantly enhanced cash generation. From OCF subtotal of ¥29.1B, after income tax payments of ¥5.9B, decreases in accounts receivable of ¥4.8B and increases in accounts payable of ¥1.8B contributed to working capital improvement, while changes in inventories were almost nil. OCF is 1.67x Net Income of ¥14.0B, indicating high quality of earnings, and OCF/EBITDA ratio was 1.09x, reflecting good cash conversion efficiency. Investing cash flow was -¥3.2B, consisting of CapEx ¥0.6B, intangible asset investment ¥0.1B, purchases of investment securities ¥3.5B, and sales of investment securities ¥1.0B. Financing cash flow was -¥14.0B, comprising repayment of short-term borrowings ¥8.0B, dividend payments ¥4.6B, and share buybacks ¥1.4B. Free Cash Flow of ¥20.2B comfortably exceeded total shareholder returns of ¥6.0B, supporting sustainability of returns. Cash and deposits at year-end were ¥33.0B (up +¥6.2B from ¥26.8B prior year), maintaining a strong cash position.
With Net Income of ¥14.0B and OCF of ¥23.4B, the OCF/Net Income ratio is 1.67x, indicating high earnings quality. Operating Income of ¥20.1B, a recurring source of earnings, is the primary contributor to profit, while non-operating income of ¥0.7B (dividend income ¥0.3B, subsidy income ¥0.3B, etc.) is minor at 0.4% of Revenue. Extraordinary income includes a one-off ¥0.8B gain on sale of investment securities but accounts for only 3.8% of Profit before tax of ¥21.2B, so core business earnings drive profit. Comprehensive income was ¥13.8B, ¥0.2B lower than Net Income of ¥14.0B, due to a decrease in valuation differences on available-for-sale securities of -¥1.7B (prior year +¥0.6B) and actuarial adjustments related to retirement benefits of +¥0.4B (prior year -¥0.1B), with no material divergence. In working capital movements, the decrease in accounts receivable of ¥4.8B boosted OCF and suggests improvement in the collection cycle, supporting earnings quality from an accrual standpoint. The difference from OCF subtotal ¥29.1B to OCF after working capital ¥23.4B is reasonable as working capital movement, and there are no signs of earnings manipulation.
For the fiscal year ending March 2027, guidance calls for Revenue of ¥179.0B (YoY +3.4%), Operating Income of ¥21.5B (YoY +6.8%), and Ordinary Income of ¥21.9B (YoY +7.2%). Versus current-period results, this implies Revenue up ¥5.9B and Operating Income up ¥1.4B, with an expected Operating margin of 12.0% (up +0.4pt from 11.6% this period). Progress against the full-year forecast is high: Revenue progress 96.7%, Operating Income 93.6%, Ordinary Income 93.2%, and if project execution remains steady toward year-end, forecast achievement is within sight. Forecast dividend is undecided (¥0), but given the realized Payout Ratio of 35.4% and accumulation of internal reserves, there is ample room for dividend increases. The forecast assumes continued orders from major customers and maintained cost control, and the projected Revenue growth of +3.4% can be considered conservative.
Year-end dividend was ¥37 per share, totaling ¥4.65B, with a Payout Ratio of 35.4%, providing stable shareholder returns. The prior-year Payout Ratio was also 35.4%, reflecting a consistent dividend policy tied to profit growth. Share buybacks of ¥1.4B were executed, bringing total returns (dividends + buybacks) to ¥6.0B and a Total Return Ratio of 43.2%. Coverage of total returns by Free Cash Flow of ¥20.2B is 3.4x, indicating ample capacity and high sustainability of returns. With Cash and Deposits of ¥33.0B and Retained Earnings of ¥68.6B, there is significant internal reserve to support future dividend increases. Treasury stock at year-end was 3,010 thousand shares (17.7% of shares outstanding), with limited impact on liquidity. The dividend policy appears to target a Payout Ratio around 35%, and stepwise increases in dividends in line with profit growth are anticipated.
Customer concentration risk: Sales to Fujitsu were ¥34.1B (19.7% of total) and to NTT DATA were ¥24.8B (14.4% of total), with the top two customers accounting for about 34%, indicating high dependence on specific customers. Changes in procurement policies or pricing negotiations by major customers could lead to reduced orders or margin compression. Sales to the National Tax Agency were ¥19.4B in the prior year but were absent from the major-customer list this period, suggesting project variability. The company does not disclose backlog or contract liabilities, posing transparency issues regarding future order visibility.
Risk of prolonged accounts receivable collection: Accounts receivable balance is ¥45.0B, and with Revenue of ¥173.1B, Days Sales Outstanding (DSO) is approximately 95 days, indicating a long collection cycle. Although accounts receivable decreased ¥4.8B from ¥49.8B prior year, the nature of large-customer projects means receipts may be delayed due to acceptance and payment terms. In an economic downturn, credit risk could rise and strain working capital, necessitating ongoing credit management and collection monitoring.
Risk of weakened competitiveness due to underinvestment: CapEx of ¥0.6B is only 48% of depreciation of ¥1.3B, below replacement levels. Intangible fixed assets also fell to ¥1.5B (from ¥2.4B prior year, -¥0.9B), raising concerns about aging in-house tools and infrastructure, and potential delays in security and automation investments. While the IT services industry is labor-intensive with low capital intensity, persistent investment restraint could hinder medium- to long-term productivity improvements and differentiation, limiting room for gross margin improvement.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.6% | 8.1% (3.6%–16.0%) | +3.5pt |
| Net Margin | 8.1% | 5.8% (1.2%–11.6%) | +2.2pt |
On profitability, both Operating Margin 11.6% and Net Margin 8.1% exceed industry medians, placing the company among the higher-profitability peers in the IT & Communications sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.9% | 10.1% (1.7%–20.2%) | -3.2pt |
Revenue growth of +6.9% is solid but trails the industry median of 10.1% by -3.2pt, suggesting growth speed is somewhat below peers. Stable growth from deepening major-customer relationships is evident, and there is room for new market expansion.
※ Source: Company compilation of public financial statements
Operating leverage drove Operating Margin to 11.6% (up +0.3pt from 11.3% prior year) and Net Margin to 8.1% (up +0.4pt), with SG&A ratio decline (12.4% → 11.9%) being the main driver of margin improvement. ROE 21.0%, Debt/EBITDA 0.32x, and Current Ratio 244% demonstrate a balance of profitability and financial safety. OCF of ¥23.4B is 1.67x Net Income, indicating high earnings quality. The FY2027 forecast (Revenue +3.4%, Operating Income +6.8%) is a conservative earnings plan; if orders from major customers continue and cost control is maintained, probability of achievement is high, and there is significant room for dividend increases as internal reserves accumulate.
Monitoring points include DSO of approximately 95 days and the CapEx/Depreciation ratio of 0.48x reflecting investment restraint. Accounts receivable decreased ¥4.8B year-on-year, contributing to OCF, but project characteristics for large customers mean acceptance and payment terms can lengthen the collection cycle. CapEx remains below depreciation, raising risks of aging in-house tools and infrastructure and delayed security/automation investments, which could constrain medium- to long-term productivity and margin expansion. Key indicators to watch are DSO and credit status, CapEx/Depreciation ratio, gross margin and personnel cost trends, and order activity from major customers.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions should be made at your own responsibility, and, if necessary, after consulting a professional advisor.