Kakaku.com,Inc. FY2027 Q1 Earnings Report

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Executive Summary

Kakaku.com’s Q1 of the fiscal year ending March 2027 recorded higher revenue but lower profit due to an increase in company-wide expenses and deteriorating profitability in the HR Business. Revenue increased to ¥257.0B (¥219.6B in the previous year, YoY +17.0%), while Operating Income declined to ¥68.8B (¥72.9B in the previous year, YoY -5.6%), Profit Before Tax declined to ¥69.2B (¥72.6B in the previous year, YoY -4.7%), and Net Income attributable to owners of the parent declined to ¥46.9B (¥50.1B in the previous year, YoY -6.3%). The primary drivers of revenue growth were the expansion of Tabelog (+17.9%) and HR (+44.5%), while the main factors behind the decline in profit were the increase in company-wide expenses not allocated to segments from ¥18.2B to ¥30.3B and the decline in margins in the HR Business.

Factors Affecting Performance

【Revenue】Revenue was ¥257.0B, up +17.0% year on year. Tabelog grew into the largest segment at ¥109.2B (+17.9%), while HR expanded sharply to ¥67.4B (+44.5%). In contrast, Kakaku.com declined to ¥55.2B (-5.4%), while Incubation increased to ¥25.2B (+14.7%). The primary drivers of revenue growth were deeper penetration of Tabelog’s customer-referral and reservation functions and the expansion of the HR Business, including the effects of newly consolidated entities.

【Profit and Loss】Combined Operating Income from the four segments increased to ¥99.2B from ¥91.1B in the previous year. However, as company-wide expenses not allocated to individual segments increased from ¥18.2B to ¥30.3B, consolidated Operating Income declined to ¥68.8B (¥72.9B in the previous year, -5.6%). Profit Before Tax was ¥69.2B (-4.7%), while Net Income attributable to owners of the parent was ¥46.9B (-6.3%). The larger decline from Profit Before Tax was due to a slight increase in the burden of income taxes of ¥22.3B (effective tax rate of 32.3%, compared with 31.0% in the previous year). As Profit Before Tax was at approximately the same level as Operating Income, no significant one-off gains or losses were identified. In conclusion, the company recorded higher revenue but lower profit.

Segment Analysis

Tabelog was the core contributor to consolidated profit, with Operating Income of ¥62.8B (margin of 57.5%, up +20.1% year on year), and its margin also increased from the previous year. Kakaku.com maintained high profitability, with Operating Income of ¥28.5B and a margin of 51.6%, despite a decline in revenue (-5.4%). HR expanded in scale, with revenue of ¥67.4B (+44.5%), but Operating Income declined to ¥2.3B (-36.0%) and its margin fell to 3.4%, indicating a phase in which growth investments are preceding earnings contributions. Incubation recorded higher revenue and profit, with revenue of ¥25.2B (+14.7%) and Operating Income of ¥5.7B (+44.5%), while its margin improved to 22.4%. Although combined segment profit increased +8.9% year on year, the +66.6% increase in company-wide expenses weighed on consolidated Operating Income. A key feature of the current period is that the earnings contributions from the growing segments were insufficient to offset the increase in company-wide expenses.

Key Financial Indicators

【Profitability】The Operating Margin was 26.8%, down 6.4pt from 33.2% in the previous year, while the Net Profit Margin also declined to 18.2% from 22.8%, a decrease of 4.6pt. The primary causes were the increase in company-wide expenses and the low margin of HR, which reduced the high individual segment margins of Tabelog and Kakaku.com (57.5% and 51.6%, respectively) at the consolidated level.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥35.6B, representing only 0.76x quarterly Net Income of ¥46.9B. An increase in operating receivables (-¥16.2B) and income tax payments (-¥42.3B) weighed on cash generation.【Investment Efficiency】ROE was 7.2% (on a quarterly basis), deteriorating from the previous year mainly due to the decline in the Net Profit Margin. However, the Total Asset Turnover Ratio improved to 0.26x, with the effects of revenue growth supporting asset efficiency.【Financial Soundness】The Equity Ratio was 64.7%, down from 70.3% in the previous year. Nevertheless, current assets of ¥657.4B substantially exceeded current liabilities of ¥317.8B, and financial expenses on short-term borrowings of ¥45.0B were ¥0.3B, indicating a negligible interest burden.

Cash Flow Analysis

Operating Cash Flow was ¥35.6B, down 27.7% from ¥49.3B in the previous year. Against a subtotal before changes in working capital of ¥77.7B, an increase in operating receivables (-¥16.2B), a decrease in trade payables (-¥11.4B), and income tax payments (-¥42.3B) weighed on cash generation. Although investing cash flow included an outflow of ¥49.4B for the acquisition of a subsidiary, the net outflow was limited to -¥11.8B due to the ¥50.0B withdrawal of time deposits. Financing cash flow was -¥8.5B, reflecting proceeds of ¥45.0B from short-term borrowings, offset by items including dividend payments of ¥49.3B. Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was ¥23.8B, below the dividend payment of ¥49.3B during the quarter. Since the dividend for the quarter corresponded to the previous fiscal year-end dividend, simple comparisons require caution; however, cash and cash equivalents increased by ¥1.5B during the period and remained at ¥480.1B.

Earnings Quality

Quarterly comprehensive income was ¥46.7B, approximately in line with quarterly Net Income of ¥46.9B, with a small gap of approximately ¥0.2B between the two. Other comprehensive income consisted of a valuation difference on other securities of △¥0.2B and foreign currency translation adjustments of +¥0.05B. Both were immaterial and did not significantly distort earnings quality. From an accrual perspective, however, there was a gap between the subtotal of ¥77.7B before changes in working capital and actual Operating Cash Flow of ¥35.6B. Working capital factors, including the increase in trade receivables and tax payments, created a timing difference between profit and cash flow. No special or extraordinary one-off items were identified, and changes in Operating Income, Profit Before Tax, and Net Income were attributable to the underlying earnings structure, namely changes in segment margins and the increase in company-wide expenses.

Earnings Forecast and Guidance

Progress against the full-year company forecast was 22.4% for revenue (¥257.0B/¥1145.0B), 22.4% for Operating Income (¥68.8B/¥308.0B), and 22.7% for Net Income attributable to owners of the parent (¥46.9B/¥207.0B). All were slightly below the approximately 25% level generally expected for Q1. The full-year Operating Income forecast calls for an increase of +13.1% from the previous year; however, the current quarter recorded a year-on-year decline of -5.6%. Achieving the full-year plan will require a recovery from Q2 onward through a slowdown in the growth of company-wide expenses and improved profitability in the HR Business. The company has not revised its earnings forecast as of the current quarter.

Shareholder Returns

Dividend payments during Q1 were ¥49.3B (¥109.4B in the previous year), corresponding to the year-end dividend for the previous fiscal year (FY ending March 2026). The forecast dividend per share for the current fiscal year (FY ending March 2027) was disclosed as ¥0, and no revision to the dividend forecast had been made as of the current quarter. The actual dividend per share in the same quarter of the previous year was ¥25; however, as no confirmed dividend amount for the current fiscal year had been disclosed as of the date of this report, developments in disclosures toward the fiscal year-end require monitoring. No new share repurchase program was identified.

Risk Factors

1. HR Business profitability: While revenue in the HR segment surged +44.5% year on year, Operating Income declined by -36.0%, and the margin remained at 3.4% (down from approximately 8.5% in the previous year). Scale expansion has not yet translated sufficiently into profitability, and the pace of future margin improvement could have a significant impact on the consolidated profit margin.

2. Temporary decline in cash generation: Operating Cash Flow was ¥35.6B, representing only 0.76x quarterly Net Income of ¥46.9B. The main factors were an increase in operating receivables (-¥16.2B) and income tax payments (-¥42.3B). The extent to which working capital reverses will determine cash generation capacity from the next quarter onward.

3. Increase in goodwill and intangible assets: Reflecting the acquisition of a subsidiary (investing cash flow of -¥49.4B), goodwill and intangible assets reached ¥189.0B (18.9% of total assets), an increase of +65.7% from the end of the previous fiscal year. The company is at a level where sensitivity to impairment risk would increase if future business plans are not achieved.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Margin and Net Profit Margin are substantially above the industry median, placing profitability at a high level within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate exceeds both the industry median and the upper bound of the IQR, indicating that the company continues to maintain a high growth rate within the industry.

※Source: Compiled by the Company

Key Points in the Earnings Report

1. Among Tabelog and HR, which drove revenue growth, Tabelog continued to achieve growth accompanied by profitability, with a margin of 57.5% (approximately +1.1pt year on year), while HR prioritized scale expansion and its margin declined to 3.4%. The asymmetry in earnings contributions by business was the primary cause of the 6.4pt decline in the consolidated Operating Margin, making segment-level margin trends a key area of focus going forward.

2. Company-wide expenses (inter-segment adjustment amount) increased from ¥18.2B to ¥30.3B, partially offsetting the effects of revenue growth. The extent of recovery in full-year operating leverage will depend on whether this increase in expenses is temporary or structural.

3. Operating Cash Flow remained at 0.76x quarterly Net Income, due to the increase in trade receivables and income tax payments. Full-year progress rates for both revenue and profit were also in the 22% range, slightly below the standard Q1 level. Normalization of working capital and improvement in HR profitability toward the second half of the fiscal year will be indicators for assessing the quality of future performance trends.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥620–¥662 at Cost of Equity ±1%, and ¥630–¥657 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value is not a forecast or guarantee of the future share price.)

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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 available earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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