CAREER DESIGN CENTER CO.,LTD. FY2026 Q3 Earnings Report

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Executive Summary

Despite only a slight increase in revenue, the Company secured higher profit through improved SG&A efficiency, resulting in higher revenue and profit for the quarter. Revenue was ¥14.24B (+1.7% YoY), Operating Income was ¥1.32B (+9.2%), Ordinary Income was ¥1.34B (+9.1%), and Net Income was ¥0.92B (+9.0%), all exceeding the previous year. The Operating Margin improved by +0.6pt to 9.3% from 8.6% in the same period of the previous year, with the decline in gross margin offset by a reduction in the SG&A ratio. Progress toward the full-year plan (Revenue of ¥20.00B and Operating Income of ¥1.89B) was 71.2% and 70.0%, respectively, remaining at a level that requires momentum to accelerate over the remaining quarters.

Factors Affecting Financial Performance

【Revenue】Revenue was ¥14.24B, representing an increase of +1.7% YoY. The growth rate was substantially below the industry median of 10.4%, indicating moderate top-line growth momentum. No segment-level disclosure was provided, and the increase in revenue appears to have resulted from moderate growth in existing businesses.

【Profit and Loss】Operating Income increased by +9.2% YoY to ¥1.32B, while the Operating Margin improved by +0.6pt to 9.3% from 8.6% in the same period of the previous year. The gross margin declined by -1.5pt to 50.9% from 52.4% in the previous year; however, the SG&A ratio improved by -2.2pt to 41.6% from 43.8%, more than offsetting the gross-margin decline and driving higher Operating Income. Non-operating and extraordinary gains and losses were both immaterial. Ordinary Income of ¥1.34B and Net Income of ¥0.92B remained at approximately the same growth rates as Operating Income, indicating that earnings were derived from the core business. In conclusion, the Company reported higher revenue and profit for the current fiscal year.

Key Financial Metrics

【Profitability】The Operating Margin improved by +0.6pt to 9.3% from 8.6% in the same period of the previous year, while the Net Margin also rose by +0.4pt to 6.4% from 6.0% in the previous year. ROE was 18.0%, indicating a high level of capital efficiency based on equity at period-end.【Cash Quality】Cash and deposits increased to ¥4.04B from ¥3.94B in the previous year. Accounts receivable of ¥1.57B remained almost flat YoY, indicating that the expansion of receivables relative to revenue growth was contained. Contract liabilities were ¥0.46B, up +13.0% from ¥0.40B in the previous year, confirming an accumulation of deferred revenue.【Investment Efficiency】Intangible assets were ¥1.07B, accounting for 13.7% of total assets. Software accounted for the majority, and impairment risk relating to goodwill and other assets is relatively limited.【Financial Soundness】The Equity Ratio rose by +5.3pt to 65.1% from 59.8% in the previous year, while current assets of ¥5.87B were approximately 2.4 times current liabilities of ¥2.42B. No interest-bearing debt was identified, indicating a conservative financial base.

Cash Flow Analysis

As the cash flow statement was not disclosed separately, funding trends are assessed based on changes in the balance sheet. Cash and deposits increased by +2.7% to ¥4.04B from ¥3.94B in the same period of the previous year, indicating continued cash generation from the core business. Accounts receivable were ¥1.57B, showing almost no growth from ¥1.53B in the previous year, and no deterioration in the collection period relative to revenue growth was observed. Contract liabilities increased by +13.0% to ¥0.46B from ¥0.40B in the previous year, with the accumulation of deferred revenue supporting cash holdings. Income taxes payable declined by -71.9% to ¥0.10B from ¥0.34B in the previous year, indicating that payment of final taxes for the prior period progressed and contributed to a reduction in current liabilities. Investment in property, plant and equipment and intangible assets was limited. The increase in net assets was primarily attributable to the accumulation of retained earnings, suggesting stable financial management funded by internal reserves.

Earnings Quality

The impact of non-operating and extraordinary gains and losses on current-period earnings was extremely limited, with the increase from Operating Income of ¥1.32B to Ordinary Income of ¥1.34B amounting to only ¥0.01B. Non-operating income, including interest income, was ¥0.01B, while non-operating expenses were also small at ¥0.00B, with no temporary factors outside the core business providing a material boost. The only extraordinary loss was a ¥0.003B loss on disposal of fixed assets, which was immaterial. The effective tax rate was 31.4%, virtually unchanged from 31.4% in the previous year, with no distortion observed in the tax burden. The increase in contract liabilities and stable accounts receivable indicate that revenue recognition was generally aligned with actual cash collections. Accrual distortions were limited, and earnings quality is assessed as generally high.

Earnings Forecast and Guidance

Progress toward the full-year plan was 71.2% for Revenue, 70.0% for Operating Income, 70.3% for Ordinary Income, and 71.9% for Net Income. The full-year plan calls for Revenue of ¥20.00B (+7.3% YoY) and Operating Income of ¥1.89B (+19.4%), exceeding the current-period growth rates of +1.7% for Revenue and +9.2% for Operating Income. Accordingly, the plan assumes an acceleration in the pace of revenue and profit growth over the remaining quarters. The Company has not revised its earnings forecast as of the current quarter, and achieving the plan will require an additional approximately ¥0.57B in Operating Income over the remaining quarters.

Shareholder Returns

For the fiscal year ending September 2026, the Company plans an annual dividend of ¥160, comprising an ordinary dividend of ¥140 and a special dividend of ¥20. The Payout Ratio relative to forecast EPS of ¥242.32 is 66.0%, calculated as ¥160 ÷ ¥242.32, representing an increase from the previous fiscal year-end ordinary dividend of ¥100. The special dividend of ¥20 is a one-time element, and the ordinary dividend level may serve as the base from the next fiscal year onward. Given the financial base of cash and deposits of ¥4.04B and an Equity Ratio of 65.1%, sufficient capacity to make payments is secured even at a 66% Payout Ratio.

Risk Factors

1. Slowing revenue growth: Revenue YoY growth was limited to +1.7%, substantially below the industry median of 10.4% (Delta -8.8pt). The high reliance on SG&A efficiency in the profit-growth structure requires monitoring of sustainability if top-line growth remains low.

2. Declining gross margin trend: The gross margin was 50.9%, down -1.5pt from 52.4% in the previous year. If the decline continues, there may be limitations to sustaining profit growth solely through SG&A reductions.

3. High Payout Ratio including the special dividend: The Payout Ratio was 66.0% based on forecast EPS, a somewhat high level. The special dividend of ¥20 is a one-time element, and the sustainability of dividends during periods of earnings volatility should be closely monitored based on future results.

Industry Benchmark (For Reference; Compiled by the Company)

※Source: Compiled by the Company

Key Points from the Earnings Results

1. Structural improvement in the SG&A ratio: The SG&A ratio improved by -2.2pt to 41.6% from 43.8% in the previous year, absorbing the decline in gross margin (-1.5pt) and driving an improvement in the Operating Margin. Efficiency gains in the cost structure were the primary driver of profit growth.

2. Increase in the Equity Ratio and accumulation of internal reserves: The Equity Ratio rose by +5.3pt to 65.1% from 59.8% in the previous year, while retained earnings accumulated to ¥4.52B. Financial soundness has been improving on a structural basis.

3. Dividend increase plan and special dividend: For the fiscal year ending September 2026, the Company plans an annual dividend of ¥160, comprising an ordinary dividend of ¥140 and a special dividend of ¥20, an increase from the previous fiscal year-end dividend of ¥100. The treatment of the special dividend will be an important point to monitor when assessing future shareholder-return policies.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,355–¥1,429 at ±1% for the cost of equity, and ¥1,382–¥1,405 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end have been used (there is a timing difference relative to the full-year forecast).

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This figure does not predict or guarantee 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 disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

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