| Metric | Current Period | Prior-year period | YoY |
|---|---|---|---|
| Revenue | ¥208.8B | ¥170.8B | +22.3% |
| Operating Income | ¥19.8B | ¥10.9B | +82.3% |
| Ordinary Income | ¥20.4B | ¥11.4B | +79.1% |
| Net Income | ¥14.7B | ¥7.6B | +94.1% |
| ROE | 9.3% | 5.2% | - |
For FY2026 cumulative to Q3, Revenue was ¥208.8B (YoY +¥38.0B +22.3%), Operating Income was ¥19.8B (YoY +¥8.9B +82.3%), Ordinary Income was ¥20.4B (YoY +¥9.0B +79.1%), and Net Income was ¥14.7B (YoY +¥7.1B +94.1%), showing significant increases across all indicators. Operating leverage materialized as selling, general and administrative expenses were contained relative to topline growth, improving the operating margin to 9.5%. By segment, Information Processing Services ¥91.2B (Operating Income ¥16.3B), Software Development ¥75.0B (¥14.5B), Value-added Information Services ¥26.6B (¥5.0B), and IT Equipment Sales ¥16.0B (¥0.8B), with the core information processing and development units maintaining high profitability. Full-year forecast calls for Revenue of ¥280B (YoY +12.6%), Operating Income of ¥23.5B (YoY +27.0%), and Net Income of ¥16.9B, with progress through Q3 at 74.6% for Revenue, 84.4% for Operating Income, and 87.0% for Net Income, tracking well.
[Profitability] Operating margin 9.5% (improved by +3.1pt from 6.4% a year earlier), net margin 7.0% (improved by +2.5pt from 4.5%), and ROE 9.3% (improved by +4.1pt from 5.2%), indicating a substantial enhancement in profitability. A DuPont breakdown explains ROE 9.3% as net margin 7.0% × total asset turnover 0.954x × financial leverage 1.39x. The primary driver of operating income growth was operating leverage from restraining SG&A relative to the 22.3% increase in revenue; gross margin also improved to 26.3% (+0.9pt from 25.4% a year earlier). Operating CF/Net Income ratio was 0.87x, and with EBITDA of ¥29.0B (Operating Income ¥19.8B + Depreciation ¥9.2B), OCF/EBITDA was 0.44x, indicating room to improve profit cash conversion. [Cash Quality] Cash and deposits ¥57.3B (down -¥11.0B from ¥68.3B a year earlier), Operating CF ¥12.8B, Investing CF -¥2.9B, FCF ¥9.9B, and dividend FCF coverage 2.40x. A ¥1.6B gain on sale of investment securities lifted Ordinary Income, warranting attention as a non-recurring factor. [Investment Efficiency] Total asset turnover 0.954x; with Capex at ¥2.3B versus Depreciation at ¥9.2B, the Capex/Depreciation ratio was 0.25x, suggesting investment restraint. Inventories decreased sharply from ¥7.3B to ¥4.4B (-40.6%), contributing to improved working capital efficiency. [Financial Soundness] Total assets ¥218.9B, net assets ¥157.5B, financial leverage 1.39x, current ratio 280.7%, quick ratio 271.2%, and interest coverage 74.24x, indicating strong short-term solvency and financial health. Lease liabilities were ¥0.5B current and ¥1.0B non-current, implying a light financial burden. The debt-to-equity ratio was 0.39x, maintaining a conservative capital structure.
Cash and deposits decreased by -¥11.0B from ¥68.3B to ¥57.3B, while investment securities increased by +¥6.2B from ¥16.3B to ¥22.5B, resulting in a slight decrease in total current assets from ¥131.5B to ¥129.3B. Operating CF was ¥12.8B, equivalent to 0.87x of Net Income of ¥14.7B, providing broadly adequate cash backing; however, at 0.44x of EBITDA of ¥29.0B, it is low, signaling room to improve working capital recovery and cash realization of earnings. Investing CF was -¥2.9B, mainly due to ¥2.3B in Capex, generating FCF of ¥9.9B. Against expected dividend payments of approximately ¥4.1B (annual ¥16, based on 16,720 thousand shares), FCF coverage was 2.40x, indicating ample dividend sustainability. Inventories decreased by -¥3.0B, improving working capital efficiency, while accounts receivable declined by -¥1.6B from ¥54.4B to ¥52.8B and accounts payable decreased by -¥1.0B from ¥14.8B to ¥13.8B, reflecting changes in transaction volume. Short-term liabilities of ¥46.1B are covered by cash and deposits of ¥57.3B for a cash coverage of 1.24x, and including current assets of ¥129.3B yields a current ratio of 280.7%, indicating extremely low liquidity risk. The fact that Capex is well below depreciation warrants monitoring from the standpoint of medium- to long-term growth investment.
Against Ordinary Income of ¥20.4B, Operating Income was ¥19.8B, with net non-operating income of about ¥0.6B. Components include non-operating income of ¥1.9B such as interest income of ¥0.08B and gain on sale of investment securities of ¥1.6B, accounting for 0.9% of revenue. Interest expense of ¥0.3B is minimal, and interest coverage of 74.24x indicates an extremely low interest burden. The ¥1.6B gain on sale of investment securities is non-recurring and should be excluded when assessing recurring earnings power. While Operating CF is 0.87x of Net Income and broadly sound, OCF/EBITDA of 0.44x is low, indicating earnings are not sufficiently monetized, leaving room to improve earnings quality. The tax burden coefficient (NI/EBT) is 0.679 with an effective tax rate of approximately 32.1%, a standard tax cost on earnings. The substantial decline in inventories suggests a one-off working capital improvement from inventory rationalization; however, excessive compression could entail supply constraint risk. Overall, Operating Income growth is driven by structural operating leverage, but one-off items such as gains on securities and the low cash conversion partly constrain earnings quality.
[Position within Industry] (Reference information / Our survey) Profitability: Operating margin 9.5% (industry median 6.4%, top quartile 13.5%) exceeds the industry median by +3.1pt, indicating solid profitability within the industry. Net margin 7.0% (industry median 4.8%) is also +2.2pt higher. ROE 9.3% (industry median 7.3%) is +2.0pt above, positioned above the median though short of the top quartile at 12.1%. Revenue growth of 22.3% (industry median 12.0%, top quartile 24.5%) indicates a top-tier growth pace within the industry. Soundness: Current ratio 280.7% (industry median 208%), net debt/EBITDA multiple around -2.0x (cash and deposits ¥57.3B - estimated interest-bearing debt / EBITDA ¥29.0B, industry median -2.88x) indicates high liquidity and low leverage roughly in line with the industry average. Debt-to-equity ratio of 0.39x is conservative, placing financial soundness in the upper tier within the industry. Efficiency: Return on assets 6.7% (Net Income ¥14.7B / Total assets ¥218.9B) significantly exceeds the industry median of 3.8%, indicating good asset efficiency. Capex/Depreciation of 0.25x is estimated to be low even within the industry, suggesting investment aggressiveness may be below the industry average. Industry: IT & Telecommunications (N=68 companies); comparison set: FY2025 Q3 results; source: public financial data aggregated by us. In this result, the Company ranks high in both profitability and growth within the industry and maintains good financial soundness, while lower investment levels and cash conversion efficiency emerge as relative challenges.
This report is an earnings analysis automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by us based on public financial statements. Investment decisions are your own responsibility; consult a professional as needed before investing.