| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥117.3B | ¥105.8B | +10.9% |
| Operating Income / Operating Profit | ¥19.7B | ¥19.5B | +0.8% |
| Ordinary Income | ¥19.5B | ¥18.6B | +4.7% |
| Net Income / Net Profit | ¥10.7B | ¥11.8B | -9.4% |
| ROE | 11.4% | 13.8% | - |
For the fiscal year ended March 2026, Net Sales were ¥117.3B (YoY +¥11.5B, +10.9%), Operating Income was ¥19.7B (YoY +¥0.2B, +0.8%), Ordinary Income was ¥19.5B (YoY +¥0.9B, +4.7%), and Net Income was ¥10.7B (YoY -¥1.1B, -9.4%), resulting in higher revenue, marginal operating income growth, but lower net income. Revenue maintained double-digit growth, but operating margin fell to 16.8% (down 1.7pt from 18.5% prior year) and net margin fell to 9.1% (down 2.0pt from 11.1%), indicating worsening profitability. The primary drivers of the decline were a 3.5pt drop in gross margin (45.9%, down from 49.4% prior year), impairment on available-for-sale securities of ¥1.7B, and special losses of ¥2.4B (including impairment losses ¥0.3B and loss on disposal of fixed assets ¥0.4B). By segment, the AX Business maintained high profitability with Revenue ¥90.9B (+2.7%) and Operating Income ¥50.0B (+7.4%, margin 54.9%), while the AgriTech Business grew substantially to Revenue ¥26.4B (+52.7%) but widened its operating loss to ¥4.6B (from a loss of ¥4.0B prior year), reflecting reduced profitability from growth investments.
[Revenue] Revenue reached ¥117.3B (YoY +10.9%), achieving double-digit growth. By segment, the AX Business accounted for ¥90.9B (+2.7%), representing 77.5% of the total, with stable sales to major customer KDDI around ¥33.4B. The AgriTech Business expanded rapidly to ¥26.4B (+52.7%), driving overall growth. Gross profit was ¥53.9B with a gross margin of 45.9% (down 3.5pt from 49.4% prior year); the decline was pressured by segment mix shift toward AgriTech’s high growth (including cost of hardware) and increased depreciation and amortization of ¥13.6B (YoY +¥2.6B).
[Profitability] Operating Income was ¥19.7B (+0.8%), a marginal increase, with an operating margin of 16.8% (down 1.7pt from 18.5%). SG&A expenses were ¥34.2B ( +¥1.5B), managed efficiently and growing well below the revenue increase ( +¥11.5B ), but were insufficient to offset the gross margin decline. By segment, AX Business Operating Income of ¥50.0B (+7.4%) supported consolidated profit, while AgriTech Business posted an operating loss of ¥4.6B (worsened from a loss of ¥4.0B), remaining in a growth investment phase. Ordinary Income was ¥19.5B (+4.7%), outpacing Operating Income, although non-operating items included Interest Income ¥0.1B against Equity-method losses ¥0.3B and non-operating expenses ¥0.9B. Profit before tax was ¥17.4B (¥18.6B prior year, -6.5%) impacted by special losses of ¥2.4B (impairment losses ¥0.3B, loss on disposal of fixed assets ¥0.4B, valuation loss on available-for-sale securities ¥1.7B). Income taxes amounted to ¥6.3B (effective tax rate 36.1%), resulting in Net Income ¥10.7B (-9.4%). Conclusion: higher revenue, marginal operating income growth, and lower net income.
The AX Business recorded Revenue ¥90.9B (YoY +2.7%) and Operating Income ¥50.0B (+7.4%), maintaining an extremely high margin of 54.9%. Stability of license sales centered on platform businesses (OPTiM Biz, OPTiM AIR) contributed, and operating margin growth outpaced revenue growth. Revenue to major customer KDDI was ¥33.4B; while dependence on a large customer continues, contract continuity is high. The AgriTech Business expanded rapidly to Revenue ¥26.4B (+52.7%) but posted an operating loss of ¥4.6B (margin -17.4%), widening from a loss of ¥4.0B prior year. Upfront investments for smart agriculture services spanning cultivation to sales and inventory build-up (inventories surged from ¥0.6B to ¥18.0B) pressured profitability. Corporate-level expenses and unallocated amortization of in-house developed software (¥12.5B) were deducted as adjustments, resulting in consolidated Operating Income of ¥19.7B.
[Profitability] Operating margin 16.8% (down 1.7pt from 18.5% prior year), Net margin 9.1% (down 2.0pt from 11.1%) indicate deterioration in profitability. Gross margin 45.9% (down 3.5pt from 49.4%) primarily due to segment mix shift from AgriTech’s high growth and increased depreciation and amortization of ¥13.6B (YoY +¥2.6B). ROE was 11.4% (down 3.6pt from 15.0% prior year), mainly driven by lower net margin. [Cash Quality] Operating Cash Flow (OCF) was ¥15.9B, 1.49x Net Income ¥10.7B, indicating good cash realization of profits, but rapid inventory increase (working capital change -¥17.4B) reduced OCF/EBITDA (Operating Income + D&A) to 0.48x. [Investment Efficiency] Total Asset Turnover was 0.94x (prior year 0.95x), nearly flat, with intangible assets representing 31.0% of total assets. Cash Conversion Cycle (CCC) was 149 days, composed of Days Inventory Outstanding (DIO) 105 days, Days Sales Outstanding (DSO) 61 days, and Days Payable Outstanding (DPO) 17 days. Working capital efficiency deteriorated YoY due to large inventory increase. [Financial Soundness] Equity Ratio was 75.4% (down 1.4pt from 76.8% prior year), and with interest-bearing debt of ¥12.5B versus cash ¥30.1B, the company is net cash. Debt/EBITDA (Operating Income + D&A) was 0.37x and Interest Coverage (EBITDA / Interest Expense) was 327x, indicating very high financial safety. Current Ratio 242.5% and Quick Ratio 180.7% show ample liquidity, but interest-bearing debt consists solely of short-term borrowings, presenting refinancing risk from maturity concentration.
OCF was ¥15.9B (YoY -24.5%), securing cash generation exceeding Net Income ¥10.7B. OCF before working capital changes totaled ¥22.1B, but large inventory build-up (cash outflow -¥17.4B) and a decrease in accounts payable (cash outflow -¥5.4B) pressured OCF. Conversely, a decrease in accounts receivable (cash inflow +¥15.3B) contributed to working capital improvement. Investing Cash Flow was -¥12.9B, centered on intangible asset acquisitions -¥15.4B (capitalization of in-house developed software), while capital expenditure on tangible fixed assets was modest at -¥1.5B. Free Cash Flow (OCF + Investing CF) remained positive at ¥3.0B. Financing Cash Flow was +¥9.7B, driven by net increase in short-term borrowings (+¥12.5B), and the company executed share buybacks of -¥2.8B. Cash at end of period rose to ¥30.1B (YoY +¥12.7B, +73.3%), strengthening liquidity. For working capital management, normalizing inventories and renegotiating accounts payable terms are key to improving cash conversion efficiency.
Ordinary Income ¥19.5B was almost level with Operating Income ¥19.7B; non-operating income ¥0.7B (including gains from investment partnerships ¥0.2B) and non-operating expenses ¥0.9B (including interest expense ¥0.1B) were both small. Equity-method losses ¥0.3B are structural, and ordinary-stage profits can be considered sustainable based on operating activities. However, special items were ¥0.3B profit (subsidy income) versus ¥2.4B loss (valuation loss on available-for-sale securities ¥1.7B, loss on disposal of fixed assets ¥0.4B, impairment losses ¥0.3B), which reduced Net Income by ¥2.1B. The valuation loss on available-for-sale securities of ¥1.7B is a temporary factor but reflects realized risk from reduced market exposure. Comprehensive income ¥11.4B equals Net Income ¥10.7B plus valuation difference on securities ¥0.3B. Given OCF ¥15.9B exceeding Net Income, cash realization of profits is generally good. However, the sharp inventory increase (cash outflow ¥17.4B) expanded working capital, and if inventory digestion stalls, there is a risk of future valuation losses.
Full-year guidance projects Revenue ¥129.8B (YoY +10.6%) and Operating Income ¥19.8B (+0.5%). Given first-half results of Revenue ¥117.3B and Operating Income ¥19.7B, the second half is expected to deliver Revenue ¥12.5B and Operating Income ¥0.1B, implying pronounced seasonality concentrated in the first half. Revenue progress is 90.4% and Operating Income progress is 99.5%, indicating the full-year Operating Income target is nearly achieved. Continued high growth in AgriTech and inventory normalization are expected, while segment mix-driven gross margin decline and increases in amortization and corporate expenses will keep Operating Income flat. Achievability of the full-year outlook is high, but upside depends on AgriTech profitability improvement and progress in inventory digestion.
No dividend was paid this period (Payout Ratio 0%). The company executed share buybacks of ¥2.8B, yielding a Total Return Ratio of approximately 26% relative to Net Income ¥10.7B. Share buybacks of ¥2.8B are roughly matched to Free Cash Flow ¥3.0B, indicating efforts to improve capital efficiency within cash-generating capacity. Cash at period-end was ¥30.1B and net cash (cash - interest-bearing debt) was ¥17.6B, providing ample financial flexibility. While dividend initiation is possible, current capital allocation prioritizes AgriTech growth investments and inventory/working capital normalization. Post buybacks, shares outstanding at period-end were 54.60M shares (including 0.10M treasury shares), EPS was ¥20.25 (prior year ¥21.39, -5.3%), and BPS was ¥170.37 (prior year ¥152.94, +11.4%).
Segment / Customer Concentration Risk: The AX Business accounts for 77.5% of revenue and the majority of operating profit, with sales to major customer KDDI around ¥33.4B, indicating high dependence. Contract renewals and price negotiations have significant impact, and concentration in a single customer/segment poses performance volatility risk. The sustainability of the AX Business’s high operating margin of 54.9% depends on continuation of customer contracts.
Inventory Stagnation / Valuation Loss Risk: Inventories surged from ¥0.6B to ¥18.0B (+2,700%), worsening DIO to 105 days. While inventory build-up is tied to AgriTech growth, the risk of stagnation and obsolescence-driven valuation losses increases under demand fluctuations. Deterioration in working capital management (CCC 149 days) pressures cash generation, and delayed inventory normalization would impair financial flexibility.
Short-Term Debt Concentration / Refinancing Risk: Interest-bearing debt ¥12.5B consists entirely of short-term borrowings maturing within one year. Although covered by cash ¥30.1B, refinancing is assumed for rollover; shifts in credit conditions or deterioration in funding terms could raise refinancing costs or crystallize liquidity risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 16.8% | 8.1% (3.6%–16.0%) | +8.7pt |
| Net Margin | 9.1% | 5.8% (1.2%–11.6%) | +3.2pt |
Profitability significantly exceeds the industry median, driven by high margins in the AX Business.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.9% | 10.1% (1.7%–20.2%) | +0.8pt |
Revenue growth is in line with the industry median, reflecting a balance of high AgriTech growth and stable AX growth.
※ Source: Company aggregation
While the AX Business’s high profitability (Operating Margin 54.9%) drives consolidated profit, the rapid growth (+52.7%) and continued losses (Operating Loss ¥4.6B) in the AgriTech Business changed the segment mix and are the primary cause of the 3.5pt decline in gross margin. Timing of AgriTech breakeven and progress in inventory normalization are key to profitability recovery from next fiscal year onward.
Financial soundness is very high (Equity Ratio 75.4%, Net Cash ¥17.6B, Debt/EBITDA 0.37x) and the company has capacity to continue growth investments, but all interest-bearing debt being short-term exposes the company to refinancing risk due to maturity concentration. Inventory surge (cash outflow ¥17.4B) worsened CCC to 149 days, making inventory digestion and revision of accounts payable terms the top priority to improve cash conversion efficiency.
The valuation loss on available-for-sale securities of ¥1.7B pressured Net Income, but holdings shrank from ¥6.5B to ¥1.6B, reducing market exposure. Future recurrence risk is limited, and ordinary-stage profits are sustainable based on operating activities. Share buybacks of ¥2.8B demonstrate intent to improve capital efficiency; while dividend introduction is possible, prioritizing growth investment and working capital normalization is a rational capital allocation for the time being.
This report is a financial analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult professionals as necessary before making investment decisions.