Startia Holdings,Inc. FY2027 Q1 Earnings Report

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Executive Summary

The quarter delivered higher revenue and earnings, resulting in a high-quality financial performance in which Operating Income outpaced revenue growth due to improved cost efficiency. Revenue was ¥6.04B (+7.2% YoY), Operating Income was ¥0.70B (+18.9%), Ordinary Income was ¥0.71B (+19.8%), and Net Income was ¥0.51B (+23.4%). The primary drivers of earnings growth were a decline in the SG&A ratio and an improved segment mix resulting from the expansion of the high-margin DX Solutions Business.

Factors Affecting Performance

【Revenue】Revenue was ¥6.04B, up +7.2% YoY. By segment, the core IT Infrastructure-Related Business generated ¥4.76B (78.7% of total, +8.1% YoY), while the DX Solutions-Related Business generated ¥1.29B (21.3% of total, +4.0% YoY), with both businesses posting revenue growth. IT Infrastructure was the primary driver of revenue growth, although its high revenue concentration warrants attention.

【Profit and Loss】Operating Income was ¥0.70B (+18.9% YoY), and the Operating Margin improved to 11.7% from the previous year. The gross margin was broadly flat at 44.5%, while the SG&A ratio declined to 32.8% (approximately 33.9% in the previous year), resulting in operating leverage. The DX Solutions segment had a high segment margin of 19.6%, significantly exceeding the 8.4% margin of IT Infrastructure, and the improved mix is lifting the Company-wide margin. Ordinary Income was ¥0.71B (+19.8% YoY), with non-operating income and expenses remaining minimal. Net Income was ¥0.51B (+23.4% YoY), and earnings growth was secured despite reduced dependence on the gain on the sale of investment securities (extraordinary income) recorded in the previous year. Both revenue and earnings increased.

Segment Analysis

The IT Infrastructure-Related Business generated revenue of ¥4.76B (+8.1% YoY) and Operating Income of ¥0.40B (+16.0% YoY), with a margin of 8.4%, making it the core business and accounting for 78.7% of Company-wide revenue. The DX Solutions-Related Business generated revenue of ¥1.29B (+4.0% YoY) and Operating Income of ¥0.25B (+21.3% YoY), with a margin of 19.6%. Although revenue growth was moderate, its high earnings growth rate means that it is driving the Company-wide margin as a highly profitable business. The margin gap between the two businesses reached approximately 11.2pt, indicating further potential for improvement in the Company-wide margin if DX’s revenue mix continues to expand. The CVC-Related Business continues to post a small loss. In addition, beginning this quarter, the WEB Solutions Business was reclassified from the IT Infrastructure-Related Business to the DX Solutions-Related Business; previous-year period figures have also been reclassified for comparison.

Key Financial Indicators

【Profitability】The Operating Margin improved to 11.7% from the previous year, while the Net Margin rose to 8.3% (7.1% in the previous year). The gross margin of 44.5% was broadly in line with the previous year, and the decline in the SG&A ratio to 32.8% contributed to earnings growth. 【Cash Quality】Cash and deposits totaled ¥6.72B, accounting for 48.6% of total assets. Non-operating income and expenses were minimal, indicating limited dependence on one-off gains and losses. 【Capital Efficiency】ROE was 6.3%, while the effective tax rate, calculated from Pretax Income of ¥0.71B and income taxes of ¥0.20B, was 27.9%, a standard level. 【Financial Soundness】The Equity Ratio rose to 58.9% (54.0% in the previous year), and liquidity was ample, with current assets of ¥11.53B compared with current liabilities of ¥4.73B. Long-term borrowings were ¥0.95B, and the Company was in a net cash position, with cash substantially exceeding interest-bearing debt, indicating a conservative financial foundation.

Cash Flow Analysis

Although detailed disclosure of the statement of cash flows is unavailable, an examination of funding trends based on changes in the balance sheet shows that cash and deposits totaled ¥6.72B, slightly down from ¥6.77B in the previous year. Total assets contracted to ¥13.82B from ¥15.55B in the previous year, while income taxes payable declined substantially YoY, suggesting that payment of the tax burden recorded in the previous period was one factor behind the cash outflow. Accounts receivable and notes receivable remained high at ¥3.48B, and trends in the collection cycle relative to revenue growth will be a factor affecting future cash generation. Long-term borrowings declined from the previous year, and the balance sheet as a whole is becoming leaner alongside the reduction in liabilities.

Quality of Earnings

The quarter’s earnings were primarily derived from operating activities, and earnings quality appears sound. Non-operating income was ¥0.01B, comprising small items such as dividend income and foreign exchange gains, while non-operating expenses were also ¥0.01B, primarily interest expenses. Both remained limited at approximately 0.2% of revenue. The difference between Ordinary Income and Operating Income was nearly zero, indicating that the impact of financial income and expenses on performance was limited. Although the previous-year period included extraordinary income from the sale of investment securities, no such one-off factors were present in the current period. The fact that Net Income growth (+23.4% YoY) was driven by improved underlying earning power is therefore favorable. Comprehensive Income was ¥0.50B, broadly in line with Net Income attributable to owners of the parent of ¥0.50B. Other valuation differences on available-for-sale securities changed only slightly (-¥0.01B), resulting in a small divergence between Net Income and Comprehensive Income.

Earnings Forecast and Guidance

The full-year forecast calls for Revenue of ¥26.00B (+9.3% YoY), Operating Income of ¥3.55B (+9.5% YoY), and Ordinary Income of ¥3.55B (+7.8% YoY). There were no revisions to the earnings forecast or dividend forecast for the quarter. Progress rates for the quarter were 23.3% for Revenue, 19.9% for Operating Income, and 20.0% for Ordinary Income, indicating that Operating Income and Ordinary Income were slightly behind the simple one-quarter benchmark of 25%. This appears to reflect the business characteristics of high-margin DX projects and maintenance-renewal revenue being weighted toward the second half. The Company’s decision to maintain its forecasts suggests a certain degree of visibility regarding project execution in the second half. The pace of progress from the next quarter onward will be a key focus in assessing the likelihood of achieving the full-year plan.

Shareholder Returns

There was no dividend payment in Q1, and the full-year dividend forecast remains unchanged at ¥145 per share. The Payout Ratio, calculated based on the full-year Net Income forecast of ¥2.34B and the assumed total dividend amount based on the average number of shares outstanding during the period, is approximately 58%. Although the Payout Ratio is somewhat high, the Company’s net cash financial position—with limited interest-bearing debt relative to cash and deposits of ¥6.72B—provides sufficient capacity to support dividend sustainability.

Risk Factors

1. Revenue concentration risk: The core IT Infrastructure-Related Business accounts for 78.7% of Company-wide revenue, meaning that demand trends in this business, including the IT investment cycle of small and medium-sized enterprises, have a significant impact on overall performance.

2. Working capital efficiency: Accounts receivable and notes receivable totaled ¥3.48B, a large amount relative to the asset base. A lengthening collection cycle could create volatility in the timing of Operating Cash Flow.

3. Delayed full-year progress: Progress rates for Operating Income and Ordinary Income were below the one-quarter benchmark of 25%. Because the earnings structure is premised on a second-half weighting, the pace of project execution in the second half will be critical to achieving the plan.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (trading)

Profitability and Returns

The Company’s Operating Margin and Net Margin both substantially exceed the industry median, indicating a superior level of profitability within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate also exceeds the industry median, although it remains below the upper limit of the industry IQR (11.7%), placing the Company’s growth among the higher levels within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The Operating Margin improved from the previous year, and the Company achieved earnings growth (+18.9%) exceeding its revenue growth rate (+7.2%). The expansion of the high-margin DX Solutions Business, with a margin of 19.6%, is confirmed to be driving Company-wide profitability.

2. Earnings increased despite the absence of the extraordinary income from the gain on the sale of investment securities recorded in the previous-year period. The fact that Net Income growth was supported by improved underlying earning power is noteworthy from the perspective of earnings quality.

3. The Equity Ratio rose to 58.9%, and the Company maintained a net cash financial foundation in which cash and deposits exceeded interest-bearing debt. However, progress rates against the full-year forecast for both Operating Income and Ordinary Income were below the one-quarter benchmark, making the pace of earnings recognition in the second half a key point for confirming achievement of the full-year plan.

Theoretical Share Price (Reference Value)

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

Sensitivity: ¥1,322–¥1,396 at ±1% for the Cost of Equity, and ¥1,347–¥1,375 at ±0.1 for ω.

Notes:

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

(Calculation model: Residual Income Model / Interest-rate reference month: 2026-07 / This value 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 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 with professionals as necessary.

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