Kakaku.com (2371) FY2026 Q3 Earnings Report

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Executive Summary

While Revenue maintained high growth of 21.5%, Operating Income declined 4.2%, resulting in higher revenue but lower earnings. Revenue was ¥688.9B (+21.5% YoY), Operating Income was ¥211.3B (-4.2%), and Net Income attributable to owners of the parent was ¥143.7B (-4.8%). The primary drivers of revenue growth were increased revenue from Tabelog and the Incubation Business, as well as substantial revenue expansion at Kyujin Box. The main factors behind the decline in earnings were increased brand investment in Kyujin Box and higher company-wide expenses.

Factors Affecting Performance

【Revenue】Revenue was ¥688.9B, representing high growth of +21.5% YoY. Tabelog grew +20.5%, Kyujin Box +58.2%, and the Incubation Business +26.6%, while Kakaku.com remained at +1.9% due to declining revenue in the financial services area. The rapid expansion of Kyujin Box was the largest driver of top-line growth.

【Profit and Loss】Operating Income was ¥211.3B, down -4.2% YoY; Net Income was ¥144.1B (consolidated), down -4.3% YoY; and Net Income attributable to owners of the parent was ¥143.7B, down -4.8%. Operating expenses increased to ¥478.5B, up +40.6% YoY and faster than the rate of revenue growth. The primary factors were increased advertising and promotional expenses for Kyujin Box and a 30.9% increase in company-wide expenses. The impairment loss of ¥5.9B related to the Kakaku.com Business recognized in the same period of the previous year did not occur in the current period and was a temporary factor; taking this into account, the underlying decline in earnings was larger than the reported figure suggests. Profit Before Tax was ¥209.3B (-5.7% YoY). The difference from Net Income was attributable to income taxes of ¥65.2B (effective tax rate: 31.1%), and there was no significant factor causing a divergence between recurring and temporary items. In conclusion, the results reflect higher revenue but lower earnings.

Segment Analysis

The core business is Tabelog, which accounts for 43.1% of revenue and generated Operating Income of ¥170.3B (margin: 57.4%), making it the central contributor to company-wide profit. The business recorded a 24.5% increase in earnings YoY and led the growth in both revenue and earnings. Kakaku.com generated revenue of ¥175.6B and Operating Income of ¥93.1B (margin: 53.0%), securing a 12.9% increase in earnings despite being a mature business. Meanwhile, Kyujin Box expanded rapidly, with revenue of ¥144.1B (+58.2% YoY), but its operating result turned to a loss of -¥8.7B, a substantial deterioration from Operating Income of ¥6.8B in the previous year. This was attributable to increased brand investment and was the largest factor behind the decline in consolidated Operating Income. The Incubation Business continued to grow steadily, generating revenue of ¥72.5B and Operating Income of ¥19.4B (margin: 26.8%, +55.0% YoY). There is a significant difference in margins among the segments: while Tabelog and Kakaku.com exceed 50%, Kyujin Box is loss-making, clearly reflecting differences in the maturity of the business portfolio.

Key Financial Indicators

Profitability: ROE was 23.8%, and the Operating Margin was 30.7% (down from 38.9% in the previous year).
Cash quality: Operating Cash Flow (OCF)/Net Income was approximately 1.0x, and Free Cash Flow was ¥37.0B.
Investment efficiency: Capital expenditures were ¥5.4B versus depreciation and amortization of approximately ¥32.2B. Capital expenditures/depreciation and amortization was below 1.0x, indicating that growth investment is centered on intangible assets and M&A.
Financial soundness: The Equity Ratio was 71.7% (improved from 66.1% in the previous year).

Cash Flow Analysis

Operating Cash Flow was ¥144.8B, approximately 1.0x Net Income, indicating that earnings were generally supported by cash generation. However, it decreased 22.2% from ¥185.9B in the same period of the previous year, due to increased income tax payments (¥97.7B) and deterioration in working capital. Investing Cash Flow was -¥107.7B, primarily due to ¥50B in time-deposit placements and ¥37.2B for the acquisition of a subsidiary, while capital expenditures were limited to ¥5.4B. Financing Cash Flow was -¥178.0B, mainly reflecting dividend payments of ¥158.2B. Free Cash Flow was ¥37.0B, below dividend payments, indicating that dividends for the period were funded in part by cash on hand in addition to cash generated from operations. The assessment of cash generation is standard to somewhat weak, warranting monitoring.

Earnings Quality

The concept of Ordinary Income is not used because the Company applies IFRS; Profit Before Tax of ¥209.3B is used instead. The difference between Profit Before Tax and consolidated Net Income of ¥144.1B was attributable to income taxes of ¥65.2B (effective tax rate: 31.1%), and no special temporary factors were identified. Finance costs increased from ¥0.4B in the previous year to ¥3.7B, but remained limited at less than 1% of Revenue. Operating Cash Flow of ¥144.8B was broadly in line with Net Income attributable to owners of the parent of ¥143.7B, indicating low accruals and generally good earnings quality.

Earnings Forecast and Guidance

The cumulative Q3 progress rates against the full-year forecast (Revenue of ¥920.0B and Operating Income of ¥280.0B) were 74.9% for Revenue and 75.5% for Operating Income, in line with the standard 75% level. There were no revisions to the earnings or dividend forecasts, and the Company maintained its full-year plan calling for higher revenue but lower earnings. Q4 is the period of peak demand in the recruitment market for Kyujin Box, and the expected temporary expansion of losses due to concentrated brand investment was cited as background to the full-year progress.

Shareholder Returns

The Q2 dividend was ¥25.00 per share, and the full-year dividend forecast is ¥50.00 per share. The forecast Payout Ratio (numerator: forecast full-year Net Income; denominator: forecast total dividends) is approximately 52.0%, within the range below 60%. No share repurchases were confirmed, and shareholder returns consist solely of dividends; therefore, the term “Payout Ratio” is used. Free Cash Flow of ¥37.0B was below dividend payments of ¥158.2B, indicating that dividends were funded using cash on hand in addition to cash generated from operations.

Catalysts

【Short Term】Q4 is the period of peak demand in the recruitment market for Kyujin Box, and earnings trends resulting from concentrated brand investment will be closely watched. Progress in strengthening promotions for Tabelog in regional cities is also a short-term focus.

【Long Term】Key long-term themes include progress in the expansion of Kyujin Box and the conversion of en Inc.’s Engage Business into a subsidiary, the creation of synergies following M&A involving LiPLUS Holdings and others, and the valuation of goodwill and intangible assets (+61.5% YoY).

Industry Benchmark (For Reference; Prepared by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The Company's profitability significantly exceeds the industry median, placing it among the high-profitability group within the IT and telecommunications industry.

Growth and Capital Efficiency

The growth rate also ranks in the upper tier of the industry, demonstrating the ability to achieve both high profitability and high growth.

※Source: Compiled by the Company

Risk Factors

1. Investment recovery risk for Kyujin Box: While Revenue expanded rapidly by +58.2% YoY, its operating result was a loss of -¥8.7B. Losses are expected to expand in Q4 due to concentrated brand investment, and the timing of reaching the breakeven point remains uncertain.

2. Increase in goodwill and intangible assets and valuation risk: Goodwill and intangible assets increased by ¥44.3B (+61.5%) from the beginning of the period, primarily due to the conversion of LiPLUS Holdings and others into subsidiaries. Depending on future integration progress and monetization, there is a risk of impairment in the future.

3. Balance between cash flow and shareholder returns: Free Cash Flow was limited to ¥37.0B, below dividend payments of ¥158.2B. Operating Cash Flow also declined -22.2% YoY, making recovery of operating cash generation a key challenge for sustaining dividends at the current high level.

Key Points of Note in the Earnings Results

1. Tabelog and Kakaku.com maintained Operating Margins above 50% and continued to function steadily as the core of consolidated profitability. However, the conversion of Kyujin Box to a loss-making business caused the consolidated Operating Margin to decline by 825bp YoY. Differences in the earnings structures among businesses represent a structural inflection point that will determine future margin trends.

2. The Company maintains high financial soundness, with an Equity Ratio of 71.7% (66.1% in the previous year) and a current ratio equivalent to 291.7%, securing the financial capacity to pursue M&A and upfront investment.

3. Full-year progress rates were around 75% for both Revenue and Operating Income, representing standard progress and broadly aligning with the Company’s plan for higher revenue but lower earnings. Investment trends in Kyujin Box during Q4 will be a key focus in assessing the full-year margin trend.

Theoretical Share Price (Reference Value)

Sensitivity: ¥521–¥551 at ±1% for the cost of equity, and ¥530–¥545 at ±0.1 for ω.

Note:

• Net assets as of the quarter-end are used (there is a time lag 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 values based solely on publicly disclosed data; these are not forecasts of market share prices or recommendations for specific investment actions, and do not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI through an integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. 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 responsibility, after consulting professionals as necessary.

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AI Financial Analysis

Executive Summary

Kakaku.com delivered strong top-line growth in FY2026 Q3, but profitability weakened materially as investment and cost pressure outweighed revenue expansion. Revenue increased 21.5% year on year to ¥68.89bn. Operating income declined 4.2% to ¥21.13bn despite the revenue increase. Net income attributable to owners fell 4.8% to ¥14.37bn, and basic EPS declined to ¥72.64 from ¥76.38. The operating margin contracted to 30.7% from 38.9% a year earlier, a decline of 820bp. The comparison includes a ¥0.59bn impairment charge in the prior-year Price.com segment; excluding that charge, the prior-year operating margin was approximately 40.0%, implying an underlying margin contraction of about 930bp. Tabelog was the principal earnings engine, with segment profit rising 24.5% to ¥17.03bn on revenue growth of 20.5%. Price.com also improved, with segment profit up 12.9% to ¥9.31bn. In contrast, Jobbox revenue grew 58.2% to ¥14.41bn but segment profit swung to a ¥0.87bn loss from a ¥3.68bn profit. Unallocated corporate costs increased 31.0% to ¥6.28bn, faster than group revenue growth and accounting for a substantial part of the group-level margin compression. The group maintained excellent reported profitability, including an annualized ROE of 31.6%, a 20.9% net margin, and a 30.7% EBIT margin. Operating cash flow of ¥14.48bn essentially matched net income of ¥14.41bn, supporting the cash realization of reported earnings. However, operating cash flow fell 22.2% year on year, reflecting higher tax payments and unfavorable receivable and payable movements. Free cash flow was positive at ¥3.70bn, but it did not cover ¥15.82bn of dividends paid during the nine-month period. Cash and cash equivalents declined by ¥14.07bn to ¥36.79bn after dividends, a ¥3.72bn subsidiary acquisition, and ¥5.00bn placed into time deposits. Full-year guidance was maintained, and nine-month progress is broadly in line with the annual plan. The key forward implication is that sustained Tabelog and Price.com momentum must be sufficient to absorb Jobbox monetization investment and rising corporate costs without further erosion of the group operating margin.

Profitability Analysis

The reported annualized DuPont ROE is 31.6%, decomposed into a 20.9% net profit margin, 1.090x annualized asset turnover, and 1.39x financial leverage. This is a high-quality ROE profile because returns are driven primarily by a strong margin and productive asset use rather than aggressive leverage. Financial leverage remains moderate, consistent with the 71.7% equity ratio and 0.39x debt-to-equity ratio. The largest adverse change is margin compression: revenue rose 21.5%, while operating income fell 4.2%, reducing the operating margin by 820bp to 30.7%. The extended DuPont tax burden was 0.687, slightly below the 0.70 normal benchmark, reflecting a 31.1% effective tax rate. The interest burden remained very strong at 0.990, indicating that net finance costs had only a limited effect on pre-tax earnings despite finance costs rising to ¥0.37bn from ¥0.04bn. Segment economics were highly differentiated. Tabelog is the core business based on its ¥17.03bn segment-profit contribution, with an implied segment margin of 57.4%, up from 55.5% in the prior year. Price.com generated ¥9.31bn of segment profit and an implied 53.0% margin, up from 47.9%; the prior-year result included a ¥0.59bn impairment. Incubation segment profit increased 54.9% to ¥1.94bn, with its implied margin improving to 26.6% from 21.7%. Jobbox's implied segment margin deteriorated sharply to negative 6.0% from positive 40.4%, making its rapid revenue growth dilutive to consolidated profitability. In addition, unallocated corporate costs rose to ¥6.28bn from ¥4.79bn, exceeding the revenue growth rate and creating negative operating leverage at the consolidated level. Accordingly, the high annualized ROE remains attractive, but its durability depends on restoring Jobbox profitability and moderating central-cost growth.

Growth Assessment

Revenue growth was broad-based across all four reported segments. Tabelog revenue increased 20.5% to ¥29.68bn, retaining its position as the largest revenue and profit contributor. Price.com revenue rose 1.9% to ¥17.56bn, indicating comparatively mature but resilient growth. Jobbox was the fastest-growing major business, with revenue up 58.2% to ¥14.41bn, but the associated loss indicates that current expansion is being purchased at a substantial profitability cost. Incubation revenue grew 26.6% to ¥7.25bn and segment profit increased faster than revenue. The group has incorporated one subsidiary during the period, and acquisition spending totaled ¥3.72bn, or 5.4% of nine-month revenue, representing active but not aggressive M&A intensity. Goodwill and intangible assets increased ¥4.43bn, or 61.5%, from fiscal year-end to ¥11.64bn, consistent with acquisition-related expansion. Full-year revenue guidance is ¥92.0bn, and nine-month revenue has reached 74.9% of this target, essentially aligned with the standard 75% seasonal progress rate. Operating income progress is 75.5% against the ¥28.0bn full-year target, while profit attributable to owners progress is 75.6% against the ¥19.0bn forecast; both are also broadly on plan. Management has not revised either earnings or dividend guidance. The outlook therefore rests on continued monetization in Tabelog, disciplined scaling in Jobbox, and containment of corporate expenses.

Financial Health

Financial health is strong. Current assets of ¥58.37bn exceeded current liabilities of ¥20.01bn, resulting in a current ratio of approximately 2.92x, well above the 1.5x healthy benchmark. Cash and cash equivalents of ¥36.79bn alone were approximately 1.84x current liabilities. The equity ratio improved to 71.7% from 66.1% in the prior-year comparison, despite total equity declining to ¥60.61bn from ¥62.13bn because dividends exceeded nine-month earnings. Total liabilities declined 24.6% to ¥23.65bn. Debt-to-equity of 0.39x remains conservative and far below the 2.0x level associated with aggressive leverage. Interest-bearing borrowings were limited at ¥0.17bn, while lease liabilities totaled ¥3.54bn. There is no material maturity mismatch: current assets substantially exceed current liabilities, including current lease liabilities of ¥1.16bn and current borrowings of ¥0.06bn. Other financial liabilities increased to ¥7.47bn from ¥2.78bn, and should be monitored given their material size within current liabilities. Right-of-use assets declined to ¥3.89bn from ¥4.64bn, broadly consistent with lease-liability reduction. The balance sheet can accommodate the current dividend policy and selective acquisition activity, although liquidity declined during the period due to capital allocation outflows.

Notable B/S Changes

Goodwill and intangible assets: +¥4.43bn (+61.5%) to ¥11.64bn - consistent with acquisition activity; future value creation and impairment indicators warrant monitoring. Cash and cash equivalents: -¥14.07bn (-27.7%) to ¥36.79bn - driven by dividends, acquisition spending, and ¥5.00bn of time-deposit placement, while liquidity remains strong. Other financial assets (current): +¥5.05bn to ¥5.33bn - reflects the period's time-deposit placement and changes in liquid financial-asset allocation. Other financial liabilities (current): +¥4.68bn (+168.4%) to ¥7.47bn - a material current-liability movement that should be monitored alongside cash conversion. Other current liabilities: -¥7.67bn (-72.5%) to ¥2.91bn - the reversal contributed to operating-cash-flow pressure during the period. Total liabilities: -¥7.72bn (-24.6%) to ¥23.65bn - supports the increase in the equity ratio to 71.7% and reinforces conservative solvency.

Cash Flow Quality

Cash-flow quality is sound at the earnings-conversion level. Operating cash flow was ¥14.48bn versus net income of ¥14.41bn, producing an OCF-to-net-income ratio of 1.01x and clearing the 0.8x quality threshold. The accruals ratio was negative 0.1%, also consistent with low accrual risk. Cash generation before tax and financing outflows remained robust, with operating cash-flow subtotal of ¥24.21bn. Cash conversion was nevertheless lower year on year, as operating cash flow declined from ¥18.60bn. Working-capital movements were unfavorable: receivables increased by ¥0.92bn and payables decreased by ¥1.34bn, together reducing operating cash flow by ¥2.26bn. Income taxes paid increased 18.2% to ¥9.77bn and represented the largest cash-flow deduction. Free cash flow was positive at ¥3.70bn after reported capital expenditures of ¥0.54bn, confirming that the underlying platform operations remain cash generative. Intangible-asset purchases of ¥1.45bn and acquisition spending of ¥3.72bn increased total investing outflows to ¥10.77bn. Financing outflows of ¥17.80bn were driven primarily by ¥15.82bn of dividends and ¥1.11bn of lease payments. Consequently, cash and cash equivalents decreased by ¥14.07bn during the period. The cash decline does not indicate weak operating earnings quality; it principally reflects distributions to shareholders, time-deposit placement, and investment activity.

Dividend Sustainability

The indicated full-year dividend is ¥50.00 per share, including the ¥25.00 interim dividend. Against forecast EPS of ¥96.09, the prospective dividend payout ratio is approximately 52.0%, within the benchmark range generally viewed as sustainable for dividends. The reported nine-month payout ratio based on the paid ¥25.00 interim dividend is 34.5%. However, dividends paid during the period totaled ¥15.82bn, materially exceeding reported free cash flow of ¥3.70bn, for FCF coverage of 0.75x. This gap reflects the timing and scale of shareholder distributions as well as acquisition and investment cash outflows, rather than a shortfall in operating cash generation. Operating cash flow of ¥14.48bn also remained below dividends paid, although the company retained a substantial ¥36.79bn cash balance and carries limited borrowings. The prior fiscal year-end dividend included a ¥30.00 special dividend in addition to a ¥25.00 ordinary dividend, which contributed to the elevated cash distribution profile. Dividend sustainability is therefore supported by high margins, strong cash reserves, and conservative leverage, but future coverage should be assessed against recurring free cash flow after intangible investment and acquisitions rather than net income alone.

Risk Assessment

Business risks include Jobbox execution risk: revenue increased 58.2% to ¥14.41bn, but segment profit moved to a ¥0.87bn loss from a ¥3.68bn profit. The immediate risk is that customer-acquisition, product, or traffic-monetization spending remains elevated for longer than revenue growth can support., Restaurant-platform risk: Tabelog contributes the largest segment profit at ¥17.03bn. Its concentration as the core earnings source leaves consolidated earnings sensitive to restaurant advertising demand, reservation activity, merchant budgets, and competitive behavior in dining discovery and booking., Online platform competition risk: Price.com, Tabelog, Jobbox, and the Incubation services compete for consumer traffic and advertiser budgets. Search-algorithm changes, changes in digital advertising pricing, and platform substitution could affect traffic acquisition costs and monetization., M&A integration risk: subsidiary acquisition spending of ¥3.72bn and a 61.5% increase in goodwill and intangible assets indicate greater reliance on inorganic expansion. Integration and performance-delivery risks should be monitored..

Financial risks include Margin risk: consolidated operating margin fell 820bp to 30.7% as operating expenses increased 40.6%, materially faster than revenue growth of 21.5%., Cash-distribution risk: ¥15.82bn of dividends paid exceeded ¥3.70bn of reported free cash flow, reducing cash and cash equivalents by ¥14.07bn during the period., Finance-cost risk: finance costs increased to ¥0.37bn from ¥0.04bn. The current interest burden remains strong at 0.990, but the source of this increase warrants ongoing monitoring., Intangible-value risk: goodwill and intangible assets reached ¥11.64bn, equal to 13.8% of total assets. This is not a balance-sheet concentration under the 20% benchmark, but the ¥4.43bn increase raises the importance of post-acquisition return validation..

Key concerns include High likelihood/high impact: Jobbox must demonstrate a path from rapid revenue growth to sustainable segment profitability., High likelihood/high impact: corporate-cost growth of 31.0% is outpacing revenue growth and needs to normalize to stabilize group margins., Medium likelihood/high impact: the sustainability of shareholder distributions depends on recurring free cash flow recovering toward dividend outflows., Medium likelihood/medium impact: Tabelog's role as the largest contributor makes its growth and margin trajectory central to the group earnings outlook..

Investment Implications

Key takeaways include The company combines strong platform revenue growth with still-excellent profitability, as shown by a 30.7% operating margin and 31.6% annualized ROE., Tabelog and Price.com generated higher segment profit, but their gains were offset by a Jobbox loss and higher unallocated corporate costs., Nine-month progress against full-year revenue, operating-income, and net-income guidance is approximately 75%, indicating that maintained forecasts are broadly supported by reported results., Cash earnings conversion is strong, but capital allocation reduced the cash balance and dividends exceeded reported free cash flow..

Metrics to watch include Jobbox segment profit and the pace of margin recovery, Unallocated corporate costs relative to consolidated revenue growth, Tabelog revenue growth and segment margin, Operating cash flow after tax payments and working-capital movements, Dividend cash outflows relative to recurring free cash flow, Returns and impairment indicators associated with the increase in goodwill and intangible assets.

Regarding relative positioning, Kakaku.com is financially positioned as a high-margin, asset-light Japanese internet-platform operator with strong liquidity and low balance-sheet leverage. Its principal relative strength is the earnings contribution and margin of Tabelog and Price.com, while its principal relative weakness is the current profitability dilution from scaling Jobbox and higher central costs.