AZOOM (3496) FY2026 Q1 Earnings Report

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Executive Summary

In addition to higher revenue and earnings, the Company achieved net income growth exceeding operating income growth, maintaining a high level of profitability. Revenue was ¥37.3B (+24.7% YoY), operating income was ¥6.3B (+25.4%), ordinary income was ¥6.2B (+24.8%), and quarterly net income attributable to owners of the parent was ¥4.5B (+31.8%). Although the gross margin declined to 39.4% as the increase in cost of sales exceeded revenue growth, the operating margin improved slightly to 16.9% because SG&A expenses grew at a slower rate than revenue. Q1 progress against the full-year plan was 22.0% for revenue and 20.0% for operating income, both slightly below the standard 25%, making progress from Q2 onward a key focus.

Factors Affecting Performance

【Revenue】Revenue was ¥37.3B, up +24.7% YoY, maintaining high growth close to the full-year plan of +26.1% YoY. The disclosed Visualization segment remained small, with revenue of ¥0.7B and operating income of ¥0.1B (margin of 18.1%), limiting its impact on overall Company performance. Contract liabilities increased to ¥2.0B, up +31.8% YoY, and the accumulation of deferred revenue is providing a foundation for future revenue recognition.

【Profit and Loss】Gross profit was ¥14.7B (+20.4% YoY), below the growth rate of revenue, and the gross margin declined to 39.4% from 40.8% in the same period of the previous year. Meanwhile, SG&A expenses increased to ¥8.4B (+16.9%), below the revenue growth rate, resulting in a slight improvement in the operating margin to 16.9%. Ordinary income was ¥6.2B (+24.8%), showing growth at nearly the same level as operating income, indicating a limited impact from non-operating gains and losses. Net income increased +31.8% to ¥4.5B, exceeding operating income growth due to a relative reduction in the tax burden. The Company reported higher revenue and earnings, with the effect of operating leverage from controlling SG&A expenses serving as the primary driver of earnings growth.

Segment Analysis

The disclosed Visualization segment generated revenue of ¥0.7B, operating income of ¥0.1B, and an operating margin of 18.1%, representing only approximately 1.8% of total Company revenue of ¥37.3B. The segment remains small, and its impact on overall Company performance is limited.

Key Financial Indicators

【Profitability】The operating margin was 16.9%, a slight improvement from 16.8% in the same period of the previous year, while the net profit margin improved to 12.1% from 11.5%. The gross margin declined to 39.4% from 40.8%, confirming the impact of rising costs.【Cash Flow Quality】Cash and deposits were ¥45.8B, accounting for 58.8% of total assets, while accounts receivable were ¥1.3B, equivalent to only 3.5% of revenue, with no expansion of trade receivables observed. The ¥2.0B increase in contract liabilities indicates the securing of funds through deferred revenue.【Investment Efficiency】Annualized ROE was high at 30.3%, driven primarily by the net profit margin and asset turnover, with low dependence on financial leverage.【Financial Soundness】The equity ratio was 76.9% and the current ratio was equivalent to 451.6%, while long-term borrowings remained at ¥0.6B, indicating that the financial foundation is generally strong.

Cash Flow Analysis

As figures from the statement of cash flows have not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥45.8B, down 20.2% from ¥57.4B in the same period of the previous year, but still accounted for 58.8% of total assets and remained equivalent to 3.4 times current liabilities of ¥13.6B. Accounts receivable declined 40.6% YoY to ¥1.3B, and despite the increase in revenue, no tying up of funds through an expansion of trade receivables was observed. Contract liabilities increased 31.8% YoY to ¥2.0B, indicating progress in securing working capital through deferred revenue. Long-term borrowings increased slightly, but remained small at ¥0.6B, limiting their impact on the funding structure. The decline in cash and deposits may have resulted from capital allocation such as investments or shareholder returns, and the future trend in cash-generation capacity warrants monitoring.

Earnings Quality

The difference between operating income of ¥6.3B and ordinary income of ¥6.2B was limited to non-operating gains and losses of ¥0.06B. This indicates that the boost to earnings from temporary factors was limited and that most earnings were generated through recurring operating activities. Non-operating expenses were small, including interest paid of ¥0.03M and foreign exchange losses, and the Company does not have a structure in which financial expenses materially erode earnings. Net income grew +31.8%, exceeding operating income growth of +25.4%, due to a relative reduction in the tax burden rather than non-recurring extraordinary gains or losses. Comprehensive income was ¥4.6B, nearly in line with net income of ¥4.5B, and the difference, primarily attributable to foreign currency translation adjustments, was small. The divergence between net income and comprehensive income was therefore limited. Overall earnings quality is good; however, if the decline in gross margin continues, it should be noted that there is a limit to the extent to which margins can be maintained solely through SG&A expense control.

Earnings Forecasts and Guidance

The full-year Company forecast is revenue of ¥170.0B (+26.1% YoY), operating income of ¥31.5B (+20.5%), and ordinary income of ¥31.4B (+20.4%). Q1 progress was 22.0% for revenue, 20.0% for operating income, and 19.9% for ordinary income, all below the standard Q1 progress rate of 25%. The operating margin assumed in the full-year plan is 18.5%, above the Q1 result of 16.9%; therefore, achieving the plan will require an improvement in gross margin or a further reduction in the SG&A ratio from Q2 onward. Forecast EPS is ¥179.27, and Q1 EPS of ¥36.91 represents 20.6% of the full-year forecast.

Shareholder Returns

The full-year forecast dividend per share is ¥126.00. Based on forecast full-year EPS of ¥179.27, the payout ratio is approximately 70.3%, above the generally accepted benchmark of 60%. Quarterly net income attributable to owners of the parent in Q1 was only 20.6% of the full-year forecast, and achieving the dividend forecast depends on progress toward the full-year earnings plan. The financial foundation of cash and deposits of ¥45.8B, interest-bearing debt of ¥0.6B, and an equity ratio of 76.9% supports the Company’s capacity to pay dividends. No share repurchase results have been disclosed, and the payout ratio is evaluated based solely on dividends.

Risk Factors

1. Declining gross margin: The gross profit margin was 39.4%, down from 40.8% in the same period of the previous year. If the increase in the cost-of-sales ratio continues, the scope for maintaining the operating margin solely through SG&A expense control will be limited.

2. Delayed progress against the full-year plan: The full-year progress rate for operating income was 20.0%, below the standard 25%. The operating margin assumed in the full-year plan is 18.5%, above the Q1 result of 16.9%, making improvement in the profit margin from Q2 onward a prerequisite for achieving the plan.

3. High forecast payout ratio: The payout ratio based on full-year forecast EPS is approximately 70.3%, above the benchmark of 60%. The ability to maintain dividends is structurally dependent on achieving the full-year earnings plan.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (real_estate)

Profitability and Returns

Although median data for the industry has not been obtained, an operating margin of 16.9% is high for a real estate-related business.

Growth and Capital Efficiency

A revenue growth rate of 24.7% represents a high level of growth within the industry.

Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. SG&A expense growth was contained at +16.9% against revenue growth of +24.7%, resulting in a slight improvement in the operating margin. The results confirm a structure that efficiently converts revenue growth into earnings.

2. The gross margin declined by approximately 1.4 percentage points YoY. In evaluating profitability, it is necessary to continue monitoring not only the operating margin but also trends in the cost-of-sales ratio.

3. Q1 progress against the full-year plan was in the low 20% range for both revenue and operating income, slightly below the standard 25%. Together with the forecast payout ratio of 70.3%, progress in earnings from Q2 onward will be a key focus.

Theoretical Share Price (Reference Value)

Sensitivity: ¥889–¥939 for ±1% in the cost of equity, and ¥903–¥929 for ±0.1 in ω.

Notes:

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

(Valuation 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 the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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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