| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥343.9B | ¥309.5B | +11.1% |
| Operating Income / Operating Profit | ¥62.1B | ¥55.0B | +12.9% |
| Ordinary Income | ¥65.4B | ¥57.6B | +13.5% |
| Net Income | ¥21.4B | ¥19.2B | +11.2% |
| ROE | 7.3% | 7.8% | - |
For the fiscal year ended March 2026, SoftCreate Holdings reported Revenue of ¥343.9B (YoY +¥34.4B +11.1%), Operating Income of ¥62.1B (YoY +¥7.1B +12.9%), Ordinary Income of ¥65.4B (YoY +¥7.8B +13.5%), and Net Income attributable to owners of the parent of ¥21.4B (YoY +¥2.2B +11.2%), delivering double-digit growth across the four main indicators. Both the EC Solution (＋8.9%) and IT Solution (＋14.2%) segments expanded steadily, with recurring revenues centered on maintenance and cloud services driving stable growth. Gross profit margin declined slightly to 40.8% (from 41.6% last year, -0.8pt), but SG&A ratio improved to 22.7% (from 23.8% last year, -1.1pt), expanding the operating margin to 18.1% (from 17.8% last year, +0.3pt). Non-operating results included equity-method investment gains of ¥0.9B and dividend income of ¥1.1B as stable contributors. Extraordinary gains included ¥1.1B from sale of investment securities and ¥0.9B from negative goodwill (step acquisition gain) recognized on staged acquisition, supporting the period profit.
[Revenue] Revenue was ¥343.9B, up +11.1% YoY. By segment, EC Solution was ¥181.0B (52.6% of sales, +8.9% YoY) and IT Solution was ¥165.3B (47.4%, +14.2% YoY), showing balanced expansion across both businesses. EC Solution growth was driven by sales and customization of the ecbeing EC site package, hosting services, and value-added services such as SEO and promotion. IT Solution performed well on sales of in-house software products (X-point Cloud, AgileWorks, L2Blocker) and network construction. By revenue recognition type, goods transferred at a point in time were ¥56.7B (＋16.8% YoY), and goods transferred over a period (centered on maintenance and subscriptions) were ¥282.8B (＋10.0% YoY), with the recurring revenue base underpinning growth.
[Profit & Loss] Cost of sales was ¥203.8B (＋13.1% YoY), rising with revenue, while gross profit reached ¥140.2B (＋9.0% YoY), causing gross margin to fall to 40.8% (from 41.6% last year, -0.8pt). SG&A was ¥78.1B (＋6.0% YoY), growing at a lower rate than revenue, improving the SG&A ratio to 22.7% (from 23.8% last year, -1.1pt). As a result, Operating Income rose to ¥62.1B (＋12.9%), and operating margin improved to 18.1% (+0.3pt). Non-operating income included ¥0.9B equity-method investment gains and ¥1.1B dividend income, while non-operating expenses were only ¥0.1B, expanding Ordinary Income to ¥65.4B (＋13.5%). Extraordinary income included ¥1.1B gain on sale of investment securities and ¥0.9B negative goodwill from staged acquisition. Extraordinary loss was minimal at ¥0.1B, leading to Profit Before Tax of ¥66.6B (＋15.8%). Income taxes amounted to ¥20.0B, with an effective tax rate of 30.1% (30.0% prior year). After deducting Net Income attributable to non-controlling interests of ¥4.8B, Net Income attributable to owners of the parent was ¥21.4B (＋11.2%). Excluding temporary extraordinary gains, improvements in core profitability are evident and the revenue/earnings uptrend is clear.
The EC Solution segment reported segment profit (on an ordinary income basis) of ¥44.9B (¥40.7B prior year, +10.3%), with a margin of 24.8% (from 24.5% prior year, +0.3pt), maintaining a high level. The IT Solution segment reported segment profit of ¥32.3B (¥30.0B prior year, +7.8%), with a margin of 19.5% (from 20.7% prior year, -1.2pt), slightly down but with absolute profits expanding steadily. Combined segment profits totaled ¥77.2B; after deducting corporate expenses of ¥11.8B (prior year ¥13.1B), consolidated Ordinary Income aggregated to ¥65.4B. The reduction in corporate expenses contributed to the improvement in consolidated margins, reflecting scale benefits and improved management efficiency.
[Profitability] Operating margin was 18.1% (from 17.8% prior year, +0.3pt), ROE was 7.3% (7.3% prior year, flat), and ROA was 16.9% (from 17.2% prior year, -0.3pt), remaining at healthy levels. Equity Ratio was 69.4% (from 69.1% prior year, +0.3pt), and Payout Ratio was 38.7% (same as prior year), indicating room for stable dividends. [Cash Quality] Operating Cash Flow (OCF) was ¥55.4B (＋11.0% YoY), representing 2.59x Net Income of ¥21.4B, demonstrating strong cash generation. The accrual ratio was -15.9%, indicating low reliance on non-cash accounting items and healthy earnings quality. [Investment Efficiency] Total Asset Turnover was 0.82x (from 0.87x prior year), slightly down reflecting asset increases from M&A, etc. Investment in tangible fixed assets was restrained at ¥0.9B, while investment in intangible fixed assets (software, etc.) was active at ¥17.7B, showing an investment allocation focused on product development. [Financial Soundness] Equity Ratio 69.4%, Current Ratio 267.7%, Quick Ratio 261.8% are very high. Interest-bearing debt totaled ¥2.1B (current + non-current) (Debt/Equity 0.7%), approaching net cash. Cash and deposits were ¥132.2B, short-term securities ¥19.9B, and investment securities ¥85.3B, providing ample capital buffer.
OCF was ¥55.4B (¥50.0B prior year, +11.0%), starting from Profit Before Tax of ¥66.6B before tax adjustments, with depreciation expense of ¥14.4B, goodwill amortization of ¥0.3B and other non-cash expenses added back. Increases in trade receivables of ¥11.3B and inventory of ¥2.3B pressured working capital. Increases in accounts payable of ¥8.1B and contract liabilities of ¥2.7B partially offset this, and after corporate tax payments of ¥20.6B, OCF settled at the reported level. Investing Cash Flow was -¥54.0B (prior year -¥20.8B), driven mainly by acquisition of subsidiary shares ¥15.3B, acquisition of intangible fixed assets ¥17.7B, and purchase of short-term securities ¥44.9B (sales/redemptions ¥25.0B). Capital expenditure was limited to ¥0.9B, with funds directed to M&A and software investment. Free Cash Flow fell sharply to ¥1.4B (¥29.1B prior year). Financing Cash Flow was -¥8.7B (prior year -¥14.7B), mainly dividend payments of ¥14.6B (¥14.3B to owners of the parent, ¥1.3B to non-controlling interests); share buybacks were almost zero. Net cash decreased by ¥7.2B to end the period with a balance of ¥142.3B. While OCF remains solid, note the reduction in on-hand cash due to large-scale investments.
Operating Income of ¥62.1B and non-operating income of ¥3.5B (dividend income ¥1.1B, equity-method investment gains ¥0.9B, etc.) were the main components of Ordinary Income of ¥65.4B, indicating stable earnings from core operations and related investments. Extraordinary income of ¥1.2B (¥1.1B gain on sale of investment securities, ¥0.9B step acquisition gain) is temporary and limited to 0.3% of Revenue, having minimal impact on the earnings structure. OCF is 2.59x Net Income and the accrual ratio is -15.9%, indicating strong cash backing of profits. However, the increase in trade receivables and DSO of approximately 85 days (Accounts receivable ¥79.6B ÷ Revenue ¥343.9B × 365 days) is a driver of working capital expansion; shortening collection periods will be key to improving future cash generation. Inventory increase was modest at ¥2.3B, but project progress management and timely revenue recognition are important. The divergence between Ordinary Income and Net Income is mainly due to an effective tax rate of 30.1% and Net Income attributable to non-controlling interests of ¥4.8B; no structural distortion is observed and the overall quality of earnings is high.
For the fiscal year ending March 2027, the company plans Revenue of ¥370.0B (YoY +7.6%), Operating Income of ¥63.0B (＋1.5%), Ordinary Income of ¥65.5B (＋0.1%), and EPS of ¥165.75 (from ¥167.14 prior year, -0.8%), projecting modest revenue growth with slight profit increases. Operating margin is expected to fall to 17.0% from this year’s 18.1% (-1.1pt), reflecting a conservative plan that incorporates higher goodwill amortization post-M&A, intangible asset amortization burdens, and personnel investment. Contract liabilities at period-end of ¥21.8B (¥19.1B prior year, +14.2%) indicate a solid backlog and continued visibility of recurring revenues. Progress by the end of H1 should be closely monitored; maintaining segment margins (EC Solution in the mid-24% range, IT Solution in the 20% range) and controlling corporate expenses will be key to achieving targets.
Annual dividend is ¥62 (interim ¥31, year-end ¥31), up ¥7 from ¥55 prior year (+12.7%). Payout Ratio is 38.7% (38.7% prior year), with EPS of ¥167.14 and total dividends amounting to ¥15.5B (¥14.3B paid to owners of the parent, including interim dividend ¥31 × shares outstanding). Share buybacks were ¥0.0B, so shareholder returns are concentrated on dividends. Dividends paid of ¥14.6B far exceed Free Cash Flow of ¥1.4B, but with cash and deposits ¥132.2B, short-term securities ¥19.9B, and investment securities ¥85.3B totaling ¥237.4B in liquid assets, short-to-medium term dividend sustainability is adequate. If working capital efficiency improves and M&A investment pace normalizes, FCF generation should stabilize, potentially enabling higher payout ratios or further dividend increases. Note that payout ratio here is evaluated as dividends only / Net Income attributable to owners of the parent, excluding share buybacks.
Working capital expansion and cash collection risk: Trade receivables increased to ¥79.6B (¥66.8B prior year, +19.2%), extending DSO to approximately 85 days. Delays in project acceptance or customer payment terms could cause variability in OCF and pressure Free Cash Flow. While contract liabilities of ¥21.8B have increased indicating upfront collections, if project progress lags, revenue recognition timing may be deferred.
M&A-related risk: Large M&A activity carried out with subsidiary share acquisitions of ¥15.3B, increase in intangible fixed assets of ¥21.8B, and goodwill balance of ¥18.9B (from ¥1.1B prior year, +1551.6%). Goodwill/Total Assets ratio is 4.5%, and Goodwill/Equity ratio is 6.5%, which are healthy at present, but delayed synergy realization or failure to meet plans could create future impairment risk. The ¥0.9B step acquisition gain is a one-off and will not recur in subsequent periods.
Rising personnel costs and pressure on gross margin: Gross profit margin declined to 40.8% (from 41.6% prior year, -0.8pt). Labor cost inflation, increased subcontracting costs, and intensified price competition are suspected drivers. Continued difficulty in hiring or rising unit costs could further compress gross margin and jeopardize maintenance of operating margins. While SG&A ratio improved, expansion of headcount or R&D investment could increase fixed costs and reduce operating leverage.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 18.1% | 8.1% (3.6%–16.0%) | +10.0pt |
| Net Margin | 6.2% | 5.8% (1.2%–11.6%) | +0.4pt |
Operating margin exceeds the industry median by 10.0pt, placing the company in the upper tier of profitability within the IT & Telecommunications sector. Net margin also modestly exceeds the median, highlighting core business strength.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.1% | 10.1% (1.7%–20.2%) | +1.0pt |
Revenue growth outperforms the industry median by 1.0pt, reflecting stable growth driven by a recurring revenue base.
※ Source: Company aggregation
Recurring revenue base and high profitability: Revenue from goods transferred over a period (maintenance/subscription) accounts for 82.2% of sales, and contract liabilities of ¥21.8B provide support for future revenue. Operating margin of 18.1% exceeds the industry median by 10.0pt, maintaining top-level profitability within the IT & Telecommunications sector. EC Solution margin of 24.8% and IT Solution margin of 19.5% show high segment-level profitability and a stable earnings structure.
Active M&A and strengthening of intangible assets: Subsidiary share acquisition of ¥15.3B, increase in intangible fixed assets of ¥21.8B, and recognition of goodwill ¥18.9B indicate execution of large-scale M&A. Investment in intangible assets such as software should contribute to product competitiveness. Goodwill/Total Assets 4.5% and Goodwill/Equity 6.5% are at healthy levels currently. Integration progress and future impairment test outcomes will be monitoring points.
Room to improve working capital efficiency: Increases in trade receivables ¥11.3B and inventory ¥2.3B expanded working capital and reduced Free Cash Flow to ¥1.4B. DSO of approximately 85 days is on the long side; shortening collections would further enhance OCF quality. Payout Ratio of 38.7% is sustainable, but FCF coverage is below 0.1x and dividends are being funded from liquidity and investment securities. Improvement in working capital management and smoothing the pace of M&A investment are key to stabilizing FCF generation and improving internal funding coverage for stable dividends.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings disclosure data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by the company based on public financial statements. Investment decisions should be made at your own responsibility, and you should consult a professional advisor as appropriate.