| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥237.9B | ¥222.1B | +7.1% |
| Operating Income | ¥32.4B | ¥27.4B | +18.4% |
| Equity-Method Investment Gains (Losses) | ¥0.4B | ¥0.4B | +0.0% |
| Ordinary Income | ¥32.9B | ¥27.8B | +18.3% |
| Net Income | ¥20.8B | ¥0.9B | -96.6% |
| ROE | 24.5% | 1.1% | - |
For the fiscal year ended March 2026, Revenue was ¥237.9B (YoY +¥15.8B +7.1%), Operating Income was ¥32.4B (YoY +¥5.0B +18.4%), Ordinary Income was ¥32.9B (YoY +¥5.1B +18.3%), and Net Income attributable to owners of the parent was ¥20.8B (YoY +¥19.9B). Although Net Income rose sharply from ¥0.9B in the prior year, that prior low base reflected a one-off reversal; on a pre-tax basis Profit Before Tax was ¥33.6B (YoY +¥5.7B +20.4%), indicating a stable trend of profit growth. Gross margin improved to 45.5% (prior year 44.9%, +0.6pt) and Operating Margin improved to 13.6% (prior year 12.3%, +1.3pt), reflecting notable profitability enhancement. By segment, the IT Infrastructure-related business delivered steady growth with Revenue ¥190.1B (+6.5%) and Operating Income ¥21.8B (+10.9%), while the DX Solutions-related business achieved high growth and high profitability with Revenue ¥49.0B (+9.8%) and Operating Income ¥9.5B (+44.5%), driving group-level profit expansion. Operating Cash Flow was ¥30.6B (YoY +77.9%), well above Net Income, and Free Cash Flow generated was ¥28.5B.
[Revenue] Revenue of ¥237.9B (YoY +7.1%) was achieved through dual growth in the IT Infrastructure-related and DX Solutions-related businesses. IT Infrastructure-related revenue was ¥190.1B (revenue mix 79.9%) up +6.5% YoY, supported by stable foundations in network integration, system integration, and office equipment sales. DX Solutions-related revenue was ¥49.0B (mix 20.6%) up +9.8% YoY, approaching double-digit growth, driven by expanded sales of the integrated digital marketing SaaS "Cloud CIRCUS" and efficiency solutions such as RPA/iPaaS. While IT Infrastructure accounts for roughly 80% of revenue mix, DX Solutions is growing faster, gradually improving the mix. Goods transferred at a point in time amounted to ¥125.2B and goods transferred over time amounted to ¥112.5B, reflecting expansion of the subscription base and supporting stock revenue.
[Profitability] Operating Income of ¥32.4B (YoY +18.4%) significantly outpaced Revenue growth, demonstrating operating leverage. Cost of sales was ¥129.6B (54.5% of revenue), contained to a YoY increase of +5.9%, resulting in a gross margin of 45.5% (prior year 44.9%, +0.6pt). SG&A was ¥75.9B (31.9% of revenue), up +4.9% YoY, below the revenue growth rate, benefiting from scale-driven decreases. Goodwill amortization of ¥0.8B was included but had a limited impact. Non-operating items comprised non-operating income ¥0.9B (interest income ¥0.1B, equity-method investment gains ¥0.4B, investment partnership gains ¥0.3B, etc.) and non-operating expenses ¥0.4B (interest expense ¥0.2B, etc.), netting +¥0.5B and contributing minimally to Ordinary Income. Ordinary Income of ¥32.9B (YoY +18.3%) showed similar expansion as Operating Income, indicating earnings growth rooted in core operations. Extraordinary items netted +¥0.1B (extraordinary gains ¥0.6B—gains on sales of investment securities, etc.; extraordinary losses ¥0.5B—loss on sale of subsidiary shares ¥0.5B, valuation losses on investment securities ¥0.2B, etc.), with limited impact on Net Income. Profit before tax of ¥33.6B less income taxes ¥10.0B (effective tax rate 29.8%) and non-controlling interests ¥0.4B resulted in Net Income attributable to owners of the parent of ¥20.8B. The prior year Net Income of ¥0.9B was temporarily depressed due to reversal of deferred tax assets; this period shows normalization and confirms a pre-tax growth trend of +20.4%. In conclusion, the company achieved revenue and profit growth with improved profitability.
The IT Infrastructure-related business reported Revenue ¥190.1B (YoY +6.5%), Operating Income ¥21.8B (YoY +10.9%), and a margin of 11.5%. Comprehensive IT services including network integration, cloud system integration, and office equipment sales expanded stably, and scale effects improved margins year-on-year. The DX Solutions-related business reported Revenue ¥49.0B (YoY +9.8%), Operating Income ¥9.5B (YoY +44.5%), and a margin of 19.3%, achieving high profitability. Expansion of the SaaS digital marketing platform "Cloud CIRCUS" and efficiency solutions such as RPA/iPaaS increased subscription revenue, contributing to margin uplift. The CVC-related business, an IT venture investment business, had an Operating Loss of ¥0.02B (improved from △¥0.03B prior year) and is immaterial. Group-level profit growth was driven by stable growth in IT Infrastructure and high profitability in DX Solutions; the DX Solutions profit growth rate of +44.5% contributed most to the increase in consolidated operating margin.
[Profitability] Operating Margin of 13.6% improved from 12.3% prior year (+1.3pt), supported by gross margin 45.5% (prior year 44.9% +0.6pt) and SG&A ratio 31.9% (prior year 32.5% -0.6pt). ROE of 24.5% decreased from 27.3% prior year, primarily because the pace of equity growth outstripped Net Income growth, but it remains at a high level. DuPont decomposition shows Net Profit Margin 8.7% (prior year 8.8% -0.1pt), Total Asset Turnover 1.53x (prior year 1.56x slight decline), and Financial Leverage 1.83x (prior year 1.86x slight decline), indicating stable high capital efficiency. [Cash Quality] Operating Cash Flow to Net Income ratio is 1.48x (Operating Cash Flow ¥30.6B ÷ Net Income ¥20.8B), substantially exceeding Net Income and indicating strong cash conversion. Operating CF subtotal of ¥36.0B (Profit before tax ¥33.6B plus depreciation ¥4.3B, goodwill amortization ¥0.8B, adjusted for equity-method losses -¥0.4B, etc.) less income taxes paid ¥5.7B resulted in Operating CF ¥30.6B, a YoY increase of +77.9%. EBITDA, adding depreciation ¥4.3B and goodwill amortization ¥0.8B, was ¥37.5B, yielding an Operating CF/EBITDA ratio of 0.82x, somewhat constrained partly due to working capital movements (accounts receivable increase -¥2.8B, inventory increase -¥0.4B, etc.). [Investment Efficiency] Total Asset Turnover 1.53x, EBIT margin 13.6%, and CapEx to Depreciation ratio 0.72x (of investment CF -¥2.1B, CapEx -¥3.1B ÷ depreciation ¥4.3B) indicate maintenance of growth investments within depreciation coverage. [Financial Soundness] Equity Ratio 54.6% (prior year 53.5% +1.1pt) and Current Ratio 220.6% (current assets ¥130.6B ÷ current liabilities ¥59.2B) show very strong liquidity. Net Cash of ¥61.4B (cash ¥76.7B - interest-bearing debt ¥15.3B) indicates effectively debt-free operations, and Interest Coverage is 140x (Operating Income ¥32.4B ÷ interest expense ¥0.2B), implying minimal interest burden. Debt/EBITDA ratio is 0.41x (interest-bearing debt ¥15.3B ÷ EBITDA ¥37.5B), extremely low.
Operating Cash Flow was ¥30.6B (prior year ¥17.2B, +77.9%), a large increase and well above Net Income ¥20.8B. Operating CF subtotal was ¥36.0B (Profit before tax ¥33.6B plus depreciation ¥4.3B, goodwill amortization ¥0.8B and other non-cash expenses, adjusted for equity-method results -¥0.4B), and after working capital changes—accounts receivable increase -¥2.8B, inventory increase -¥0.4B, accounts payable increase +¥0.4B, etc.—and income taxes paid -¥5.7B, Operating CF amounted to ¥30.6B. Working capital impacts were minor and profit growth translated directly into CF generation. Investing CF was -¥2.1B (prior year -¥4.3B), composed of fixed asset acquisitions -¥3.1B, acquisition of investment securities -¥0.02B, proceeds from sale of investment securities +¥0.1B, and proceeds from sale of subsidiary shares +¥0.5B, etc., reflecting continued growth investment alongside asset disposals. FCF was ¥28.5B (Operating CF ¥30.6B + Investing CF -¥2.1B). Financing CF was -¥17.6B, comprised of long-term debt repayments -¥14.1B, short-term debt repayments -¥4.0B, long-term borrowings +¥12.0B, short-term borrowings +¥4.0B, dividends paid -¥12.0B, and share buybacks -¥3.6B. While executing borrowings and repayments, the company returned ¥15.6B to shareholders (dividends + share buybacks), and cash and cash equivalents increased by ¥11.1B to ¥76.7B. FCF sufficiently covered shareholder returns and financial flexibility remains high.
Operating Income of ¥32.4B constitutes the majority of earnings, with non-operating items netting +¥0.5B (non-operating income ¥0.9B - non-operating expenses ¥0.4B) and being immaterial. Breakdown of non-operating income includes interest/dividends received and similar ¥0.2B, foreign exchange gains ¥0.2B, and investment partnership gains ¥0.3B, indicating limited contribution from non-core activities. Extraordinary items netted +¥0.1B (extraordinary gains ¥0.6B - extraordinary losses ¥0.5B), including loss on sale of subsidiary shares ¥0.5B (net), gain on sale of investment securities ¥0.1B, and valuation loss on investment securities ¥0.2B, with limited impact on Net Income. The fact that Operating CF substantially exceeds Net Income (Operating CF ¥30.6B ÷ Net Income ¥20.8B = 1.48x) indicates solid cash-backed quality of earnings. Conversely, Operating CF/EBITDA ratio of 0.82x is somewhat constrained, partly due to increases in working capital (accounts receivable +¥2.8B, inventory +¥0.4B). The increase in accounts receivable is within normal ranges accompanying revenue growth, and no abnormal accrual buildup is observed. Comprehensive Income of ¥23.6B exceeds Net Income by ¥2.8B, contributed by Other Comprehensive Income ¥2.1B (increase in valuation difference on available-for-sale securities, etc.), but the divergence from Net Income is limited and does not materially affect earnings quality. Overall, recurring operating revenue is the primary earnings source, one-off factors are minor, and cash backing is strong.
For the fiscal year ending March 2027, the company guides Revenue ¥260.0B (YoY +9.3%), Operating Income ¥35.5B (YoY +9.5%), Ordinary Income ¥35.5B (YoY +7.8%), and Net Income attributable to owners of the parent ¥23.4B (EPS 250.60円), planning for revenue and profit growth. Both Revenue and Operating Income are projected to grow in the high single digits, representing a conservative guidance assuming continuation of current growth momentum. Operating Margin is projected at 13.7% (¥35.5B ÷ ¥260.0B), roughly in line with the current period 13.6%, assuming continued high growth and high profitability of DX Solutions and stable growth of IT Infrastructure. At the current period end, progress ratios are Revenue 91.5% (¥237.9B ÷ ¥260.0B) and Operating Income 91.3% (¥32.4B ÷ ¥35.5B), indicating healthy progress and high likelihood of achieving full-year targets. Dividend guidance is stated as annual ¥0, but notes indicate a planned year-end dividend of ¥91 (including ¥8 commemorative dividend), effectively confirming a continued dividend policy.
Annual dividend is ¥145 (interim ¥54 + year-end ¥91, including ¥8 commemorative dividend at year-end), representing a payout ratio of 58.6% relative to EPS 247.58円. The prior year annual dividend was ¥0, but dividends were resumed and increased this period. Total dividends amount to approximately ¥12.0B (corresponding to issued shares 10,240 thousand shares - treasury shares 891 thousand shares), allocating 57.7% of Net Income ¥20.8B to shareholder returns. Share buybacks amounted to ¥3.6B, and combined with dividends total shareholder returns were approximately ¥15.6B, implying a Total Return Ratio of about 75%. Coverage of total returns by FCF (¥28.5B) is 1.83x, indicating ample capacity. Backed by Net Cash ¥61.4B and a strong equity ratio of 54.6%, the company balances dividend increases tied to profit growth with agile share buybacks. Excluding the ¥8 commemorative dividend, the effective dividend level is ¥137, and given profit growth and strong cash position, sustainability is high.
Segment concentration risk: The IT Infrastructure-related business accounts for 79.9% of Revenue and 69.7% of Operating Income, so demand fluctuations or vendor condition changes in this segment directly affect consolidated results. IT spending cuts by client firms or intensified price competition in the telecommunications infrastructure market could pressure both gross margin and revenue growth. Although DX Solutions-driven mix improvement is progressing, concentration remains high and IT Infrastructure trends will drive earnings volatility.
Sustainability risk of DX Solutions high growth: The DX Solutions-related business delivered Operating Income growth +44.5% and margin 19.3%, driving consolidated profit growth, but rising SaaS churn rates or elevated customer acquisition costs would affect profitability. SMB-targeted SaaS is sensitive to economic conditions, and reduced customer willingness to invest in digitalization could slow growth. If upfront sales and development spending outpace revenue expansion, SG&A ratio could rise and compress margin improvement potential.
Working capital and cash flow volatility risk: Operating CF/EBITDA ratio of 0.82x is slightly below the benchmark 0.9x, partly due to increases in accounts receivable (-¥2.8B) and inventory (-¥0.4B). Continued extension of receivable collection terms or inventory buildup accompanying revenue growth could degrade cash flow quality. Seasonal factors or timing of large project acceptance could cause significant swings in working capital, so attention is required on the stability of FCF generation.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 13.6% | 3.4% (1.4%–5.0%) | +10.3pt |
| Net Profit Margin | 8.7% | 2.3% (1.0%–4.6%) | +6.4pt |
Both Operating Margin and Net Profit Margin substantially exceed industry medians, supported by high profitability of DX Solutions and SG&A dilution from scale effects.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.1% | 5.9% (0.4%–10.7%) | +1.2pt |
Revenue growth modestly exceeds industry median, driven by stable IT Infrastructure growth and high growth in DX Solutions.
※ Source: Company compilation
High profitability and sustainability of DX Solutions growth: DX Solutions-related Operating Margin of 19.3% (prior year 14.7%, +4.6pt) and Operating Income growth +44.5% drove group-level profitability improvement. Accumulation of SaaS subscriptions has contributed to margin uplift; trends in customer acquisition and churn rates and the pace of SG&A investment will determine future profitability trends. Although DX Solutions accounts for 20.6% of revenue and is still small in scale, the gap in growth and margin is improving the mix and suggests structural upside to consolidated margins.
Cash generation and sustainability of shareholder returns: Operating CF ¥30.6B generated FCF ¥28.5B and comfortably covered dividends + share buybacks of ¥15.6B (FCF coverage 1.83x). Net Cash ¥61.4B and Equity Ratio 54.6% provide a financial base to balance growth investment and shareholder returns. However, Operating CF/EBITDA ratio 0.82x is somewhat constrained, and working capital efficiency (shortening collection periods, compressing inventory) is an area for CF improvement. Payout Ratio 58.6% and Total Return Ratio about 75% are sustainable within profits and FCF.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on publicly disclosed financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.