Startia Holdings (3393) FY2026 Q3 Earnings Report

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Executive Summary

The cumulative results for Q3 of the fiscal year ending March 2026 were favorable, with profit growth exceeding revenue growth and margins improving. Revenue was ¥173.1B (+7.0% YoY), Operating Income was ¥21.2B (+11.4%), Ordinary Income was ¥21.6B (+10.4%), and Net Income was ¥15.7B (+10.3%). The Operating Income margin improved to 12.2% from approximately 11.7% in the same period of the previous year. In addition to the effect of higher revenue, growth in the high-margin DX Solutions-related Business drove profit growth.

Factors Affecting Results

【Revenue】Revenue was ¥173.1B (+7.0% YoY). By segment, the IT Infrastructure-related Business generated ¥138.1B (79.8% of the total, +6.0% YoY), while the DX Solutions-related Business generated ¥36.0B (20.8% of the total, +10.8% YoY), with the DX Solutions-related Business showing relatively stronger growth. By revenue recognition category, revenue from transfers at a point in time was ¥89.7B (+7.1%), while revenue from transfers over time was ¥83.3B (+6.7%). Recurring service revenue accounted for approximately 48% of total revenue.

【Profit and Loss】Operating Income was ¥21.2B (+11.4%), exceeding the revenue growth rate and indicating positive operating leverage. The DX Solutions-related Business had a segment profit margin of 17.8%, substantially exceeding the 10.0% margin of the IT Infrastructure-related Business and improving from approximately 13% in the same period of the previous year. Meanwhile, the profit margin of the IT Infrastructure-related Business remained broadly flat, indicating that the improvement in the consolidated profit margin is highly dependent on the DX Business. Ordinary Income was ¥21.6B (+10.4%), and Net Income was ¥15.7B (+10.3%). The scale of non-operating and extraordinary gains and losses was small, with the primary factor behind profit growth being improved profitability at the operating level. Extraordinary income of ¥0.1B (gain on sale of investment securities) can be distinguished as a temporary factor, although its impact on pre-tax income was immaterial. In conclusion, the Company achieved both revenue and profit growth.

Segment Analysis

The IT Infrastructure-related Business generated Revenue of ¥138.1B (79.8% of the total), Operating Income of ¥13.7B, and a profit margin of 10.0%, serving as the foundation of consolidated profitability. However, its profit margin was broadly flat or slightly lower year on year. The DX Solutions-related Business generated Revenue of ¥36.0B (20.8% of the total), Operating Income of ¥6.4B, and a high profit margin of 17.8%, exceeding the core business in both revenue and profit growth rates. The CVC Application-related Business recorded a negligible Operating Loss of ¥0.0B, with a limited impact on consolidated results. The increase in Company-wide Operating Income was primarily attributable to improved profitability in the DX Solutions-related Business, while the profit margin trend of the core IT Infrastructure-related Business will remain a key focus.

Key Financial Indicators

【Profitability】The Operating Income margin of 12.2% and Net Income margin of 9.1% were both above the levels recorded in the same period of the previous year. Against a Gross Profit margin of 44.8%, the Company absorbed an SG&A expense ratio of 32.6% while securing profit growth.【Cash Flow Quality】Non-operating income was ¥0.7B, equivalent to 0.4% of Revenue, while extraordinary income of ¥0.1B was also immaterial at 0.6% of pre-tax income. Accordingly, the majority of profit was derived from the Company’s core operating activities.【Investment Efficiency】ROE was 20.4% and remained at a high level, supported by the combination of the Net Income margin, asset efficiency, and financial leverage.【Financial Soundness】The Equity Ratio was 58.5%, while Cash and Deposits of ¥62.9B exceeded Current Liabilities of ¥48.8B, indicating a conservative and stable financial base.

Cash Flow Analysis

Although individual disclosures from the statement of cash flows were not provided, funding trends can be inferred from changes in the balance sheet. Cash and Deposits were ¥62.9B, slightly down from ¥65.7B in the previous year. However, Current Assets of ¥106.2B substantially exceeded Current Liabilities of ¥48.8B, resulting in ample working capital of ¥57.4B. Long-term borrowings declined from ¥5.7B to the previous year’s level of ¥13.0B, indicating progress in reducing interest-bearing debt. Treasury stock increased to ¥13.6B, suggesting that funds were allocated toward shareholder returns and capital policy initiatives. Overall, the Company continues to pursue prudent financial management that restrains financial leverage while maintaining earnings growth.

Quality of Earnings

The increase in profit for the current period was primarily driven by improvement at the Operating Income level, indicating high earnings quality. Non-operating income of ¥0.7B consisted of small items such as dividend income, foreign exchange gains, and gains from the operation of investment partnerships, with a limited contribution to Ordinary Income at 0.4% of Revenue. Extraordinary income of ¥0.1B represented a gain on the sale of investment securities and should be distinguished as a temporary factor, although its impact on pre-tax income of ¥21.7B was immaterial. The difference between Ordinary Income and Net Income was attributable to income taxes of ¥6.1B and profit or loss attributable to non-controlling interests of ¥0.3B, with no particularly unusual accruals observed. The Company achieved both revenue and profit growth while maintaining a Gross Profit margin of 44.8%, which can be evaluated as sustainable earnings derived from operating activities.

Earnings Forecast and Guidance

The full-year earnings forecast calls for Revenue of ¥236.0B (+6.3% YoY), Operating Income of ¥31.5B (+15.1%), and Ordinary Income of ¥31.9B (+14.6%). During the quarter, revisions were made to the earnings and dividend forecasts. Cumulative Q3 progress rates were 73.4% for Revenue, 67.3% for Operating Income, and 67.7% for Ordinary Income, slightly below the standard 75% progress level. To achieve the full-year plan, Q4 will need to generate Revenue of ¥62.9B and Operating Income of ¥10.3B, implying a profit margin of approximately 16.4%, above the cumulative margin of 12.2%. Maintaining growth in the high-margin DX Solutions-related Business will be critical to achieving the plan.

Shareholder Returns

The dividend forecast for the fiscal year ending March 2026 is ¥135 per share for the full year. This consists of an interim dividend of ¥54 and a planned year-end dividend of ¥81, comprising an ordinary dividend of ¥73 and a commemorative dividend of ¥8. Excluding the commemorative dividend, the full-year ordinary dividend will be ¥127. The Payout Ratio against the full-year forecast EPS of ¥230.61 is approximately 58.5% based on the annual dividend of ¥135 and approximately 55.1% based on the ordinary dividend of ¥127. It is appropriate to distinguish the commemorative dividend as a one-time return. Given the financial base of Cash and Deposits of ¥62.9B and Retained Earnings of ¥69.1B, the Company has ample funding capacity to support dividend payments.

Risk Factors

1. Profitability trends in the core business: The IT Infrastructure-related Business accounts for approximately 80% of consolidated Revenue, but its segment profit margin has remained broadly flat or slightly decreased from the same period of the previous year. If profitability improvement in this business stagnates, it could constrain further improvement in the consolidated profit margin.

2. Dependence on the high-margin segment: The DX Solutions-related Business has a profit margin of 17.8% and is driving Company-wide profit. However, the increase in consolidated Operating Income depends on improved profitability in this single business, making the sustainability of its growth and profitability an important factor affecting Company-wide results.

3. Progress toward achieving the full-year plan: The progress rate for Operating Income against the full-year forecast remains at 67.3%, requiring the Company to achieve a profit margin in Q4 of approximately 16.4%, above the cumulative level. The timing and profitability of project recognition at the fiscal year-end could affect results.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (trading)

Profitability and Returns

The Company’s Operating Income margin and Net Income margin substantially exceed the industry median, placing it among the high-profitability group within the industry.

Growth and Capital Efficiency

The Revenue growth rate also exceeds the industry median but remains within the industry’s upper range, below the IQR upper limit of 8.6%.

※Source: Company analysis

Key Points from the Earnings Results

1. Operating Income growth of +11.4% exceeded Revenue growth of +7.0%, and the Operating Income margin improved from the same period of the previous year. This improvement was primarily attributable to an approximately 4.8pt improvement in the profit margin of the DX Solutions-related Business year on year, representing an observable qualitative change in the earnings structure.

2. The core IT Infrastructure-related Business accounts for approximately 80% of consolidated Revenue, but its profit margin has remained broadly flat. Whether the Company-wide profit margin can continue to improve structurally depends on profitability trends in this business.

3. The dividend forecast is ¥135 per share for the full year, consisting of an ordinary dividend of ¥127 plus a commemorative dividend of ¥8. The Payout Ratio based on the ordinary dividend is approximately 55.1%, and the underlying dividend level excluding the commemorative dividend is relatively well aligned with earnings growth.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,230–¥1,299 at Cost of Equity ±1%; ¥1,254–¥1,279 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference relative to the full-year forecast).
• Because non-controlling interests are included in net assets, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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 responsibility, after consulting a professional as necessary.

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AI Financial Analysis

Executive Summary

FY2026 Q3 cumulative performance was solid, with revenue and operating profit both expanding and the higher-margin DX Solutions business driving profit growth. Revenue increased 7.0% YoY to ¥17.31bn. Operating income rose 11.4% to ¥2.12bn, outpacing revenue growth. Ordinary income increased 10.4% to ¥2.16bn. Profit attributable to owners of parent grew 9.7% to ¥1.54bn. Gross profit increased 7.9% to ¥7.76bn. The gross margin improved by approximately 35bp YoY to 44.8%. The operating margin expanded by approximately 47bp YoY to 12.2%, remaining within the good 8–15% profitability range. SG&A expenses rose 6.6%, below revenue growth, demonstrating favorable operating leverage. Net profit margin was 8.9%, a good level, although it remained below the operating margin after tax expense. The effective tax rate was 27.9%, producing a tax burden of 0.709 and indicating a broadly normal tax outcome. Profit before tax included a ¥0.12bn gain on the sale of investment securities, which was immaterial at only around 0.1% of revenue. The IT Infrastructure segment remained the revenue core, while DX Solutions became the principal incremental profit driver through substantial margin expansion. The balance sheet is highly liquid, with cash of ¥6.29bn, a 217.5% current ratio and cash equivalent to 15.72x short-term debt. Long-term borrowings fell materially, reducing financial risk, although 41.1% of interest-bearing debt is short term and therefore requires ongoing refinancing management. Full-year forecast progress is modestly behind a standard 75% Q3 pace at the operating-profit level, implying that the Q4 delivery profile is important to meeting revised guidance. The proposed full-year DPS of ¥135, including an ¥8 commemorative dividend, implies a forecast dividend payout ratio of about 58.5%, near but still within the 60% sustainability benchmark.

Profitability Analysis

The reported annualized ROE of 26.7% is strong and materially exceeds the 15% benchmark. The DuPont decomposition is net profit margin of 8.9%, annualized asset turnover of 1.755x, and financial leverage of 1.71x. This shows that high ROE is supported by a combination of good earnings margins, efficient annualized asset utilization, and moderate leverage rather than by excessive balance-sheet gearing. The operating-margin improvement to 12.2% from approximately 11.8% YoY was the key earnings enhancement, supported by gross-margin expansion and SG&A growth of 6.6% versus revenue growth of 7.0%. Gross margin rose to 44.8% from approximately 44.5%, indicating modestly improved revenue mix and/or delivery economics. The largest segment-level profitability change was in DX Solutions: segment profit increased 51.4% YoY to ¥6.40bn while revenue grew 10.8% to ¥35.80bn. Its segment margin consequently improved to 17.9% from 13.1%, a gain of roughly 480bp. IT Infrastructure generated revenue of ¥137.20bn, or approximately 79% of consolidated revenue, and is the core business by operating-income contribution at ¥13.75bn. However, IT Infrastructure segment profit was broadly flat at +0.3% YoY despite 6.0% revenue growth, and its segment margin declined to 10.0% from 10.6%. Accordingly, continued group-level margin expansion depends increasingly on sustained DX Solutions scaling and on stabilization of profitability in IT Infrastructure. The five-factor DuPont tax burden of 0.709 is normal, while the interest burden of 1.026 reflects non-operating income exceeding net interest cost and a low financing burden. Interest coverage of 115.76x confirms that interest expense is not a constraint on profitability.

Growth Assessment

Growth was balanced at the consolidated revenue level, but profit growth was more concentrated in DX Solutions. IT Infrastructure revenue rose 6.0% YoY to ¥137.20bn, underpinning the group's recurring customer base and scale. DX Solutions revenue increased 10.8% to ¥35.80bn and delivered 31.8% of reported-segment profit, compared with approximately 23.5% in the prior-year period. Revenue recognized over time increased 6.7% YoY to ¥83.33bn, while point-in-time revenue rose 7.3% to ¥89.66bn, indicating growth across both delivery types. The segment reporting change has been retrospectively reflected in the comparison period, preserving comparability of the IT Infrastructure and DX Solutions trends. Against full-year guidance, Q3 cumulative revenue represents 73.4% of the ¥23.60bn forecast, 1.6 percentage points below the standard 75% progress rate. Operating-income progress is 67.3% of the ¥3.15bn forecast, 7.7 percentage points below the standard pace. Ordinary-income progress is 67.7% of the ¥3.19bn forecast, also below the seasonal reference point. Profit attributable to owners progress is 71.3% of the ¥2.16bn forecast. The required Q4 operating income is ¥1.03bn, equivalent to roughly 32.7% of the full-year forecast, versus an even quarterly run-rate of 25%. The forecast therefore requires a stronger final quarter, particularly in operating profit, but the high-margin DX Solutions trajectory provides a clear potential source of upside execution.

Financial Health

Liquidity is strong. Current assets of ¥10.62bn exceed current liabilities of ¥4.88bn by ¥5.74bn, resulting in working capital of ¥5.74bn and a current ratio of 217.5%. The quick ratio is also robust at 206.3%, demonstrating that liquidity is not dependent on inventory realization. Cash and deposits of ¥6.29bn account for 47.8% of total assets and exceed total interest-bearing debt of ¥0.97bn by approximately ¥5.31bn. Debt/capital is a conservative 11.2%, and the reported debt-to-equity ratio of 0.71x remains below the 1.0x conservative benchmark. Interest coverage of 115.76x reinforces the limited servicing burden. Long-term loans declined ¥0.72bn, or 55.7% YoY, to ¥0.57bn, materially lowering longer-dated financial obligations. The current portion of long-term loans declined ¥0.37bn, or 25.9% YoY, to ¥1.05bn, further reducing near-term scheduled loan repayments. The refinancing-risk alert warrants attention because 41.1% of debt is classified as short term, above the 40% alert threshold. The root cause is the concentration of a meaningful share of borrowing maturities within one year rather than an excessive absolute debt load. In context, this maturity mix is mitigated by cash equal to 15.72x short-term debt, a current ratio above 2.0x, and exceptionally high interest coverage. The impact on the investment case is therefore limited under current conditions, but debt maturity management should be monitored if cash is deployed toward acquisitions, dividends, or repurchases. Goodwill is ¥0.34bn, equal to 4.4% of equity and 2.6% of assets, indicating low balance-sheet dependency on acquired value retention. Intangible assets represent 9.2% of total assets, below the 20% concentration benchmark. Treasury stock increased by ¥0.32bn to ¥1.36bn, reducing reported equity available to common shareholders and increasing sensitivity of per-share metrics to capital-allocation decisions.

Notable B/S Changes

Long-term loans: -¥0.72bn (-55.7%) to ¥0.57bn — substantial deleveraging reduced long-term financing obligations and supports a stronger net-cash balance-sheet profile. Current portion of long-term loans: -¥0.37bn (-25.9%) to ¥1.05bn — near-term scheduled repayments decreased, though the 41.1% short-term debt share remains a refinancing-monitoring item. Treasury stock: -¥0.32bn (-30.5%) to -¥1.36bn — the larger treasury-stock balance indicates active capital allocation and reduces common equity, increasing the importance of assessing shareholder returns on a total-return basis. Inventories: +¥0.09bn (+20.2%) to ¥0.55bn — the increase is modest relative to total assets but exceeds revenue growth in the IT Infrastructure-led product activity and warrants monitoring for working-capital efficiency.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, free cash flow, capital expenditure and depreciation figures are not available in the provided financial data. Earnings quality can nevertheless be assessed partially from the income statement and balance sheet. Operating income of ¥2.12bn was closely supported by ordinary income of ¥2.16bn, with net non-operating income limited to ¥0.42bn. Non-operating income of ¥0.68bn represented only 0.4% of revenue, well below the 5% level at which non-operating items would materially affect earnings interpretation. FX gains were ¥0.11bn and dividend income was ¥0.06bn, neither large enough to dominate earnings. The ¥0.12bn gain on sale of investment securities lifted profit before tax but was immaterial relative to ¥2.17bn of profit before tax. The gap between ordinary income and profit before tax was also small, reflecting the limited size of extraordinary income. Receivables declined ¥0.22bn YoY to ¥3.28bn despite revenue growth, which is directionally supportive of collection discipline. Inventories increased ¥0.09bn, or 20.2% YoY, to ¥0.55bn; this is modest in absolute size at 4.2% of assets but should be monitored against IT Infrastructure sales growth. Trade payables declined ¥0.07bn YoY to ¥1.41bn, so changes in working capital do not indicate an obvious stretching of supplier payments. The available evidence points to predominantly operating-led earnings, while cash realization should be assessed when full cash-flow disclosures are available.

Dividend Sustainability

The company paid an interim DPS of ¥54.0 at Q2. The stated year-end DPS is ¥81.0, comprising a ¥73.0 ordinary dividend and a ¥8.0 commemorative dividend, bringing forecast FY2026 DPS to ¥135.0. Based on forecast EPS of ¥230.61, the forecast dividend payout ratio is approximately 58.5%. This is below the 60% sustainability benchmark but leaves a relatively narrow buffer if earnings fall short of the full-year plan. The recurring portion of the projected DPS is ¥127.0, implying a recurring-dividend payout ratio of approximately 55.1% against forecast EPS. The commemorative component should be treated as non-recurring when assessing the underlying dividend run rate. Cumulative Q3 profit attributable to owners of ¥1.54bn already covers the approximately ¥0.51bn cash cost of the interim dividend on 9.37m average shares. Retained earnings of ¥69.15bn provide substantial accounting capacity for distributions. Cash of ¥62.88bn also provides a strong liquidity buffer relative to expected dividends and debt. The ¥3.18bn increase in treasury stock indicates active capital allocation through share repurchases or related treasury-share transactions; when dividends and buybacks are considered together, the appropriate measure is the total return ratio rather than the dividend payout ratio. The sustainability of the full shareholder-return profile depends on maintaining the forecast Q4 earnings delivery and preserving the current net-cash position.

Risk Assessment

Business risks include DX Solutions is the main profit-growth engine, but its 17.9% segment margin and 51.4% profit growth create sensitivity to customer demand, competitive pricing, SaaS/service adoption, and execution in digital-transformation projects., IT Infrastructure represents approximately 79% of consolidated revenue, yet its segment margin declined by roughly 60bp to 10.0%; further margin erosion in this core business could offset DX Solutions' contribution., Inventory increased 20.2% YoY while IT Infrastructure sales grew 6.0%; although inventory remains only 4.2% of assets, slower inventory turnover or technology-product obsolescence would pressure working capital and margins., The Q4 operating-profit requirement is relatively high because Q3 cumulative operating-income progress is 67.3% versus a standard 75% pace, creating year-end execution risk..

Financial risks include Short-term debt represents 41.1% of interest-bearing debt, slightly above the 40% refinancing-risk alert threshold. The probability-adjusted impact is mitigated by cash/short-term debt of 15.72x, but refinancing terms and maturity concentration remain relevant., Treasury stock increased ¥0.32bn, or 30.5% YoY, to ¥1.36bn. Continued buybacks may reduce financial flexibility if undertaken concurrently with elevated dividends or strategic investment., The forecast DPS includes an ¥8 commemorative component and implies a 58.5% payout ratio, leaving less earnings headroom than a lower-payout policy..

Key concerns include Highest priority: achievement of the forecast Q4 operating income needed to close the 7.7-percentage-point gap versus standard Q3 progress., High priority: whether DX Solutions can sustain its sharp margin expansion while IT Infrastructure restores or protects its segment margin., Moderate priority: management of short-term debt maturities despite substantial cash liquidity., Moderate priority: inventory growth relative to the pace of IT Infrastructure revenue growth., Low priority: goodwill impairment risk is limited at 4.4% of equity, but acquired intangible assets and goodwill should continue to generate returns consistent with their carrying values..

Investment Implications

Key takeaways include Revenue grew 7.0% and operating income grew 11.4%, producing operating-margin expansion to 12.2%., Annualized ROE of 26.7% is strong, supported by 8.9% net margin, 1.755x annualized asset turnover, and moderate 1.71x financial leverage., DX Solutions is the principal growth driver, with a 51.4% increase in segment profit and a segment-margin increase to 17.9%., IT Infrastructure remains the core revenue and profit contributor but showed a segment-margin decline to 10.0%., Liquidity and solvency are strong, with ¥6.29bn cash, a 217.5% current ratio, 11.2% debt/capital, and 115.76x interest coverage., Guidance achievement relies on a comparatively strong Q4, especially at the operating-profit line..

Metrics to watch include DX Solutions revenue growth and segment margin, IT Infrastructure segment margin and inventory trend, Q4 operating income versus the ¥1.03bn implied requirement, Short-term debt share and debt maturity profile, Forecast DPS of ¥135 and the dividend payout ratio excluding the commemorative dividend, Treasury-stock movements and total return ratio.

Regarding relative positioning, The company exhibits above-benchmark profitability, with a 12.2% operating margin, 26.7% annualized ROE, strong liquidity, and limited goodwill exposure. Its relative earnings profile is increasingly characterized by a higher-margin DX Solutions business alongside a much larger but currently lower-margin IT Infrastructure core, making segment-mix progression and core-business margin defense central to comparative performance.