| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥51.6B | ¥45.9B | +12.7% |
| Operating Income | ¥9.1B | ¥5.9B | +53.2% |
| Ordinary Income | ¥9.5B | ¥5.3B | +79.7% |
| Net Income | ¥6.8B | ¥4.0B | +71.7% |
| ROE | 5.1% | 3.0% | - |
FY2026 Q1 results: Revenue ¥51.6B (vs prior year +¥5.8B +12.7%), Operating Income ¥9.1B (vs prior year +¥3.2B +53.2%), Ordinary Income ¥9.5B (vs prior year +¥4.2B +79.7%), quarterly Net Income attributable to owners of the parent ¥6.8B (vs prior year +¥2.9B +71.7%). The core IT Security Business recorded Revenue ¥48.6B (+12.7%) and Operating Income ¥11.7B (+45.2%), maintaining high profitability with Gross Margin 48.8% (improved +2.9pt from 45.9% a year earlier) and Operating Margin 17.6% (expanded +4.7pt from 12.9%), delivering substantial margin improvement. Contract liabilities ¥90.7B reached approximately 1.8x quarterly Revenue, providing strong revenue visibility from advance receipts for maintenance and cloud services. Progress against full-year guidance is Revenue 24.4%, Operating Income 28.8%, Net Income 29.1%, indicating profit-side lead driven by an improved mix toward higher value-added products and services.
[Revenue] Revenue ¥51.6B (+12.7%) was driven by the core IT Security Business at ¥48.6B (+12.7%), accounting for 94.1% of the total. Revenue composition: Products ¥19.0B (36.8% of total), Maintenance ¥13.9B (26.9%), Cloud Services ¥7.4B (14.3%), Services & Others ¥11.3B (21.9%); stock-type Maintenance and Cloud account for 41.2% of total. In the IT Security Business, Products ¥17.6B, Maintenance ¥13.8B, Cloud ¥7.1B, Services ¥10.1B indicate a functioning three-pillared model of product sales, maintenance, and cloud. The Video Communication Business grew to ¥2.7B (+18.9%) but incurred an operating loss of ¥0.6B (worsened from a ¥0.4B loss a year earlier) due to upfront investments for commercialization of remote driving technology. Eco New Business Development contracted to ¥0.5B (-14.5%) with an operating loss of ¥0.6B (improved from a ¥1.1B loss a year earlier). Contract liabilities ¥90.7B (vs prior year ¥89.3B +¥1.4B) remain about 1.8x quarterly Revenue, and continued orders for maintenance and cloud support revenue stability.
[Profit & Loss] Cost of sales ¥26.5B (cost of sales ratio 51.3%) produced Gross Profit ¥25.2B; Gross Margin 48.8% improved +2.9pt from 45.9% a year earlier. SG&A ¥16.1B (SG&A ratio 31.2%, up +¥1.0B from ¥15.1B) increased in absolute terms, but Gross Profit growth (+¥4.1B) outpaced it, resulting in Operating Income ¥9.1B (Operating Margin 17.6%), up +¥3.2B (+53.2%) from ¥5.9B a year earlier. Non-operating income totaled ¥0.5B including interest income ¥0.3B and foreign exchange gains ¥0.2B, while non-operating expenses were ¥0.0B (net, including foreign exchange losses ¥0.6B), resulting in net non-operating income of +¥0.4B. Ordinary Income ¥9.5B rose +¥4.2B (+79.7%) from ¥5.3B, exceeding operating income growth. Extraordinary items net -¥0.2B (extraordinary gains ¥0.6B, extraordinary losses ¥0.9B), including gain on sale of subsidiary shares ¥0.6B and impairment on investment securities ¥0.1B, with limited one-off impact. Profit before income taxes ¥10.1B less income taxes ¥3.3B (effective tax rate 32.5%) resulted in quarterly Net Income attributable to owners of the parent ¥6.8B (Net Margin 13.3%, improved +4.6pt from 8.7%), achieving both revenue and profit growth.
The IT Security Business posted Revenue ¥48.6B (+12.7%), Operating Income ¥11.7B (+45.2%), and margin 24.1%, maintaining high profitability as the core. A balanced mix of Products, Maintenance, and Cloud Services plus Services revenue ¥10.1B contributed. The Video Communication Business grew Revenue to ¥2.7B (+18.9%) but faces heavy upfront costs for commercialization of remote driving technology, producing an Operating Loss ¥0.6B (worsened ¥0.2B from prior year loss of ¥0.4B). Margin -22.1% reflects continued investment phase. Eco New Business Development shrank to Revenue ¥0.5B (-14.5%) with Operating Loss ¥0.6B (improved from prior year loss of ¥1.1B) but margin remains -117.0%, still on the path to monetization. After deducting corporate expenses ¥1.4B (same as prior year), consolidated Operating Income was ¥9.1B.
[Profitability] Operating Margin 17.6% improved +4.7pt from 12.9% a year earlier, driven by expansion of Gross Margin 48.8% (+2.9pt) and Net Margin 13.3% (+4.6pt). ROE 5.1% is mainly driven by Net Margin improvement; Equity Turnover 0.39x (Revenue ¥51.6B ÷ Net Assets ¥132.0B) and Total Asset Turnover 0.21x remain low, reflecting an asset structure reliant on the depth of contract liabilities. [Cash Quality] Non-operating income is small at 0.9% of Revenue, and Net Income ¥6.8B is 71.6% of Ordinary Income ¥9.5B, indicating stable quality of earnings. Contract liabilities ¥90.7B equal 1.8x quarterly Revenue and advance receipts for maintenance and cloud services enhance future cash flow stability. [Investment Efficiency] With Total Assets ¥252.0B and Revenue ¥51.6B, Total Asset Turnover is 0.21x and ROA 2.7% (Net Income ¥6.8B ÷ Total Assets ¥252.0B × 4x annualization), indicating limited asset efficiency, but Liquidity is secured with Current Assets ¥231.8B including Cash & Deposits ¥87.2B and Short-term Investment Securities ¥80.0B totaling ¥167.2B. [Financial Soundness] Equity Ratio 53.2% and Debt-to-Equity 0.88x reflect a conservative capital structure. Current Ratio 197.8% and Quick Ratio 189.3% show very healthy short-term payment capacity, and interest-bearing debt is effectively zero (only lease liabilities: current ¥3.2B, non-current ¥5.7B).
Although the cash flow statement is not disclosed, balance sheet movements indicate Cash & Deposits declined to ¥87.2B (from ¥108.6B a year earlier, -¥21.4B) while Short-term Investment Securities increased to ¥80.0B (from ¥60.0B, +¥20.0B), suggesting surplus funds were shifted toward yield-seeking investments. Total cash equivalents (Cash & Deposits + Short-term Investment Securities) ¥167.2B (from ¥168.6B, -¥1.4B) remain essentially flat, maintaining overall liquidity. Accounts receivable ¥24.6B (from ¥27.0B, -¥2.4B) decreased and Inventories ¥10.0B (from ¥10.5B, -¥0.5B) slightly decreased, indicating progress in working capital efficiency. Current liabilities fell significantly to ¥117.2B (from ¥129.0B, -¥11.8B), mainly due to seasonal factors including income taxes payable ¥1.3B (from ¥6.6B, -¥5.3B) and bonus provisions ¥2.5B (from ¥7.5B, -¥5.0B). Contract liabilities ¥90.7B (from ¥89.3B, +¥1.4B) remain high, and the advance-receipt structure supports cash flow stability. Net assets increased to ¥134.2B (from ¥132.6B, +¥1.6B), reflecting accumulation of retained earnings.
Ordinary Income ¥9.5B to Net Income ¥6.8B (conversion rate 71.6%)—main divergence factors are effective tax rate 32.5% and net extraordinary items -¥0.2B—indicating stable earnings quality. Non-operating income ¥0.5B is small at 0.9% of Revenue, primarily interest income ¥0.3B and foreign exchange gains ¥0.2B. Non-operating expenses are effectively net -¥0.0B including foreign exchange losses ¥0.6B, so foreign exchange impacts are offset at the non-operating line. Extraordinary items net -¥0.2B (gain on sale of subsidiary shares ¥0.6B offset by impairment on investment securities ¥0.1B, etc.) are limited and one-off; core earning power should be evaluated at the operating and ordinary income levels. Contract liabilities ¥90.7B and the stock revenue structure from maintenance and cloud smooth revenue recognition timing via accumulated advance receipts, supporting sustainability of profits.
Full-year guidance remains Revenue ¥212.0B (+7.3%), Operating Income ¥31.5B (+10.7%), Ordinary Income ¥32.0B (+7.5%), Net Income ¥23.5B, EPS ¥126.74, Dividend ¥30.0. Q1 progress rates: Revenue 24.4% (roughly in line with standard 25%), Operating Income 28.8% (+3.8pt vs standard), Ordinary Income 29.7% (+4.7pt), Net Income 29.1% (+4.1pt), showing profit-side outperformance driven by Gross Margin improvement, high margins in the core business, and contributions from higher interest income and foreign exchange gains in non-operating items. Contract liabilities remain about 1.8x quarterly Revenue, and the depth of stock revenue including renewals of maintenance and cloud increases revenue visibility for the second half onwards. Management has not revised guidance or dividend forecast and expects to achieve full-year targets.
Full-year forecast dividend ¥30.0 (vs prior year ¥26.0 +¥4.0), representing a Payout Ratio of 23.7% against forecast EPS ¥126.74, a conservative level. Q1 EPS ¥37.00 (vs prior year ¥21.63 +71.1%) expanded significantly, indicating substantial room for dividend increases on a full-year basis. Combined liquidity buffer Cash & Deposits ¥87.2B and Short-term Investment Securities ¥80.0B totaling ¥167.2B plus contract liabilities ¥90.7B provide stability for dividend funding. No share buyback disclosed; share returns appear dividend-focused. There is ample scope to balance growth investment (upfront spending for new businesses, R&D) and shareholder returns, leaving room to consider raising the Payout Ratio or initiating buybacks.
Business concentration risk: The IT Security Business accounts for 94.1% of Revenue and more than 100% of Operating Income, creating high concentration risk. Adverse changes in specific market conditions (stagnation in cybersecurity demand, intensified price competition, loss of large projects) would directly impact performance. Sustaining the prior-year +12.7% growth depends on the project pipeline and competitive landscape; renewal rates of contract liabilities ¥90.7B will be an important indicator.
Delay in monetization of new businesses: The Video Communication Business (Operating Loss ¥0.6B, Margin -22.1%) and Eco New Business Development (Operating Loss ¥0.6B, Margin -117.0%) remain in an investment phase. Delays to profitability or need for additional investment could dilute company-wide margins. The Video Communication Business is in the transition to commercialization of remote driving technology; market ramp-up and speed of customer acquisition are key.
Working capital management risk: With Accounts Receivable ¥24.6B and Inventories ¥10.0B, prolonged receivable collection or inventory stagnation could deteriorate cash flow and require additional working capital. While contract liabilities’ depth supports liquidity, increases in cancellation rates or declines in renewal rates could reduce advance receipts and affect liquidity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 17.6% | 6.2% (4.2%–17.2%) | +11.4pt |
| Net Margin | 13.3% | 2.8% (0.6%–11.9%) | +10.4pt |
Profitability metrics significantly exceed industry medians, supported by the IT Security Business’s high value-added model and stock revenue from maintenance and cloud.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.7% | 20.9% (12.5%–25.8%) | -8.2pt |
Revenue growth lags the industry median but is offset by higher margins, yielding a favorable balance between growth and profitability.
※ Source: Company compilation
The core IT Security Business maintains high profitability with 94.1% of Revenue and margin 24.1%; Gross Margin 48.8% (+2.9pt) and Operating Margin 17.6% (+4.7pt) show an improving trend. Contract liabilities ¥90.7B equal about 1.8x quarterly Revenue, providing revenue visibility and funding stability from maintenance and cloud advance receipts, supporting steady growth into the second half. With Operating Income progress at 28.8% vs full-year target, an upward revision is possible if the high-value product/service mix improvement continues.
New businesses (Video Communication, Eco) together produce Operating Loss ¥1.2B, compressing total company profits by about 13%. Timely profitability will be the next driver of margin improvement. Video Communication is in the commercialization transition for remote driving technology, with Revenue growth +18.9% but margin -22.1% and continued losses; progress in monetization should be monitored.
This report was auto-generated by AI analyzing XBRL earnings data and is a financial analysis document. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.