AZOOM CO.,LTD FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 of FY2026 ending September, Azoom continued to achieve higher revenue and profits against the backdrop of expansion in its core Idle Asset Utilization Business. Profit growth exceeded revenue growth, and profitability was maintained. Revenue was ¥122.7B (¥97.1B in the previous year, YoY +26.4%), Operating Income was ¥21.5B (up +26.6%), and Ordinary Income was ¥21.4B (up +26.7%). Net Income attributable to owners of the parent was ¥15.3B (¥12.0B in the previous year, YoY +26.8%), while EPS was ¥124.37 (¥101.92 in the previous year, YoY +22.0%), indicating growth slightly below the net income growth rate. The primary driver of profit growth was the realization of economies of scale through an improvement in the SG&A expense ratio (23.6%, compared with 23.9% in the previous year). The impact of non-operating and extraordinary gains and losses was limited, indicating profit growth originating from the core business.

Factors Affecting Results

【Revenue】Revenue was ¥122.7B, representing an increase of YoY +26.4%. The core Idle Asset Utilization Business led company-wide growth with revenue of ¥120.6B (up +26.4%), accounting for 98.3% of the revenue mix. The Visualization Business generated ¥2.1B (up +26.1%), demonstrating growth at a similar level despite its small scale.

【Profit and Loss】Operating Income was ¥21.5B (YoY +26.6%), while Ordinary Income was ¥21.4B (up +26.7%), remaining at nearly the same growth rate. The impact of non-operating gains and losses, including interest income of ¥0.1B and foreign exchange losses of ¥0.1B, was limited. The extraordinary loss of ¥0.2B, consisting of losses on disposal of fixed assets, was a temporary factor and did not materially affect the Ordinary Income level. Net Income attributable to owners of the parent was ¥15.3B (up +26.8%), remaining at a normal level after applying an effective tax rate of approximately 28% to Profit Before Tax of ¥21.3B. While the gross profit margin declined slightly to 41.1%, the SG&A expense ratio improved to 23.6%, enabling the Operating Income margin to remain at 17.5%. In conclusion, the company achieved higher revenue and profits, representing high-quality profit growth accompanied by improved cost efficiency.

Segment Analysis

The segments comprise the Idle Asset Utilization Business and the Visualization Business. The Idle Asset Utilization Business generated revenue of ¥120.6B (YoY +26.4%) and Operating Income of ¥21.3B (up +24.4%), with a profit margin of 17.7%. It serves as the core of the company and accounts for 98.3% of the revenue mix. The Visualization Business generated revenue of ¥2.1B (up +26.1%) and Operating Income of ¥0.2B (up +325.9%), with a profit margin of 11.9%, indicating progress toward profitability despite its small scale. Both segments are on a trend of higher revenue and profits; however, the profit margin of the Idle Asset Utilization Business exceeds that of the Visualization Business by approximately 5.8pt, and the difference in business scale is also reflected in the profitability gap. The fact that company-wide performance is significantly influenced by the performance of a single business is a point requiring attention.

Key Financial Metrics

【Profitability】The Operating Income margin was 17.5% (17.5% in the previous year, nearly flat), the gross profit margin was 41.1% (down from 41.4% in the previous year), and the net profit margin was 12.5% (up from 12.4% in the previous year). The improvement in the SG&A expense ratio (23.6%, compared with 23.9% in the previous year) offset the decline in the gross profit margin. 【Cash Quality】Accounts receivable and notes receivable were ¥2.1B, a low level relative to the scale of revenue. Contract liabilities of ¥2.9B and deferred revenue of ¥5.1B increased from the previous year, confirming an accumulation of advance revenue. 【Investment Efficiency】ROE was 24.2%, indicating a high level of capital efficiency relative to net assets of ¥63.2B. Total assets were ¥85.4B (down from ¥88.9B in the previous year), indicating progress in reducing the asset base. 【Financial Soundness】The Equity Ratio was 74.0% (down from 76.7% in the previous year but remaining at a high level). Interest-bearing liabilities were limited, consisting of long-term borrowings of ¥0.4B and liabilities related to retirement benefits of ¥0.2B. The company has a strong financial base, with current assets of ¥64.9B substantially exceeding current liabilities of ¥17.1B.

Cash Flow Analysis

As cash flow statement data has not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥46.7B, down from ¥57.4B in the previous year. During this period, property, plant and equipment increased to ¥2.4B (up +104.5% year on year), while intangible assets increased to ¥7.2B (up +33.1%). Accordingly, capital investment and software development investment appear to have been factors contributing to cash outflows. Retained earnings were ¥41.8B, down from the previous year, potentially reflecting shareholder returns through dividend payments. Meanwhile, accounts receivable remained at a low level of ¥2.1B, and increases in contract liabilities and deferred revenue were confirmed. Accordingly, the efficiency of cash collection generated from business activities is considered to have remained sound.

Quality of Earnings

The majority of current-period profit originated from the core business, and the impact of non-recurring factors was limited. Non-operating income of ¥0.1B and non-operating expenses of ¥0.1B, including foreign exchange losses of ¥0.1B, were small in scale, and the difference between Operating Income of ¥21.5B and Ordinary Income of ¥21.4B was minimal. The extraordinary loss consisted solely of a ¥0.2B loss on disposal of fixed assets and can be clearly classified as a temporary factor. The difference between Ordinary Income and Net Income was attributable to income taxes of ¥5.9B, corresponding to an effective tax rate of approximately 28%, which is a normal level. Comprehensive income was ¥15.4B, nearly equal to Net Income attributable to owners of the parent of ¥15.3B. Excluding foreign currency translation adjustments of ¥0.1B, the difference between the two was small, indicating high earnings quality.

Earnings Forecasts and Guidance

Progress toward the full-year plan was 72.2% for revenue (¥122.7B/¥170.0B), 68.3% for Operating Income (¥21.5B/¥31.5B), and 68.3% for Ordinary Income (¥21.4B/¥31.4B). Compared with the 75% benchmark for cumulative Q3 progress, revenue was slightly below by ▲2.8pt and Operating Income by ▲6.7pt. Accordingly, accumulation in Q4 will be key to achieving the plan. Specifically, approximately ¥47.4B in revenue and approximately ¥10.0B in Operating Income must be generated in Q4 alone, exceeding the quarterly average Operating Income of approximately ¥7.2B for the nine-month cumulative period. No revisions were made to the earnings forecast or dividend forecast during the quarter, and management expects to achieve its initial plan. The increase in contract liabilities and deferred revenue provides an indication of a certain degree of future revenue visibility.

Shareholder Returns

The company paid an interim dividend of ¥63.00, and its full-year dividend forecast also remains ¥63.00, with no revision as of the current quarter. The amounts are stated after taking into account the stock split conducted on October 1, 2025, at a ratio of 1 share to 2 shares; caution is therefore required when assessing the effective increase or decrease in dividends. Based on the full-year dividend forecast of ¥63.00 and 12,336 thousand issued shares, the annual total dividend amount is calculated at approximately ¥0.8B, resulting in a Payout Ratio of approximately 35.3% against the full-year Net Income forecast of ¥22.0B. Given the financial base of an Equity Ratio of 74.0% and cash and deposits of ¥46.7B, there appears to be substantial capacity to secure funds for dividends. No share repurchases have been confirmed.

Risk Factors

1. Business concentration risk: The Idle Asset Utilization Business accounts for 98.3% of revenue, indicating a high degree of dependence on a single business. Changes in demand trends and conversion rates for this business directly affect company-wide performance.

2. Delayed progress against the full-year plan: As of cumulative Q3, progress was 68.3% for Operating Income and 68.3% for Ordinary Income, below the standard progress pace of 75%. The shortfall against the plan must be made up in Q4.

3. Timing shifts in revenue recognition associated with an increase in work in progress: The balance of work in progress has increased, creating a risk that revenue recognition and cash conversion may be delayed depending on the timing of project acceptance and delivery.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (real_estate)

Profitability and Returns

Both the Operating Income margin and net profit margin substantially exceed the industry median, placing the company’s profitability among the top tier of the industry.

Growth and Capital Efficiency

The revenue growth rate exceeds the industry median but is not exceptionally high compared with the upper bound of the IQR (54.7%).

※Source: Compiled by the Company

Key Points from the Earnings Results

1. High profitability and capital efficiency have been sustained. The company achieved higher revenue and profits while maintaining ROE of 24.2% and an Operating Income margin of 17.5%. The improvement in the SG&A expense ratio (23.6%, compared with 23.9% in the previous year) indicates the realization of economies of scale.

2. Progress toward the full-year plan is slightly below the standard Q3 pace, with Operating Income progress at 68.3%. The accumulation of revenue and profits in Q4 will be a key point to monitor in future earnings results.

3. The increase in contract liabilities and deferred revenue improves future revenue visibility. At the same time, the business mix is highly concentrated in the Idle Asset Utilization Business at 98.3%, and project progress and acceptance timing, including the increase in work in progress, will be key monitoring points.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from 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 of any specific investment action.

Sensitivity: ¥974–¥1,034 at ±1% for the cost of equity, and ¥989–¥1,024 at ±0.1 for ω.

Notes:

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

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / 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 through analysis of 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 a professional as necessary.

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