| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥83.7B | ¥75.6B | +10.7% |
| Operating Income / Operating Profit | ¥29.2B | ¥23.1B | +26.7% |
| Ordinary Income | ¥30.7B | ¥24.3B | +26.4% |
| Net Income / Net Profit | ¥22.2B | ¥19.3B | +15.2% |
| ROE | 19.5% | 21.7% | - |
For the fiscal year ended March 2026, Revenue was ¥83.7B (YoY +¥8.1B +10.7%), Operating Income was ¥29.2B (YoY +¥6.2B +26.7%), Ordinary Income was ¥30.7B (YoY +¥6.4B +26.4%), and Net Income was ¥22.2B (YoY +¥2.9B +15.2%), achieving year-over-year increases across all profit lines. The core Package Solution Business drove performance with Revenue +11.1% and Operating Income +26.8%, and Operating Margin improved substantially to 34.9% (up +4.4pt from 30.5% a year earlier). Net margin also rose to 26.6% (up +1.1pt from 25.5%), highlighting an increasingly high-profit business profile.
[Revenue] Top line maintained steady growth at ¥83.7B (+10.7%). By product, Package (the core of Package Solution) was ¥58.7B (+12.3%) and Maintenance was ¥23.7B (+8.2%), both solid, while Other Business operations and management declined to ¥1.4B (-9.7%). The Package Solution Business accounted for 98.0% of Revenue, and contract liabilities increased to ¥9.6B (from ¥7.5B, +¥2.1B), confirming backlog accumulation that supports future revenue recognition. Gross profit was ¥47.7B, and gross margin improved to 57.0% (up +1.1pt from 55.9%).
[Profitability] Operating Income was ¥29.2B (+26.7%), with Operating Margin rising sharply to 34.9% (up +4.4pt from 30.5%). SG&A was ¥18.5B, down in absolute terms from ¥19.2B a year earlier, producing clear operating leverage versus Revenue growth of +10.7%. Ordinary Income was ¥30.7B (+26.4%), aided by non-operating income of ¥1.5B (mainly interest income ¥0.6B and dividend income ¥0.5B). Non-operating income accounted for 1.8% of Revenue, indicating low dependence and a business-led earnings structure. Extraordinary items were limited: extraordinary gains ¥0.7B (primarily gain on reclassification of stock acquisition rights) and extraordinary losses ¥0.5B, with limited impact on Net Income. Profit before tax was ¥31.0B (+23.1%); after deducting income taxes of ¥8.7B, Net Income was ¥22.2B (+15.2%), and Net Margin was 26.6% (up +1.1pt from 25.5%).
The Package Solution Business posted Revenue ¥82.4B (+11.1%), Operating Income ¥28.9B (+26.8%), and Operating Margin 35.1% (up +4.3pt from 30.8%), achieving significant profitability improvement. Other Business recorded Revenue ¥1.7B (-10.2%), Operating Income ¥0.3B (+19.2%), and Operating Margin 18.7% (up +4.6pt from 14.1%)—declining Revenue but improved margin. The Package Solution Business is highly concentrated, accounting for 98.0% of total Revenue and roughly 99% of Operating Income; its high margin (35.1%) drives corporate profitability, while concentration risk is notable.
[Profitability] Operating Margin of 34.9% improved by +4.4pt from 30.5%, and Net Margin of 26.6% rose by +1.1pt from 25.5%. ROE was 19.5%, slightly lower than 21.7% a year earlier but still at a high level. DuPont analysis shows Net Margin expansion contributed positively, while Total Asset Turnover declined to 0.588 (from 0.665), driven by accumulation of cash and increased intangible asset investments which raised the denominator. Financial leverage was 1.25 (down from 1.28), indicating a thicker equity base. [Cash Quality] Operating Cash Flow (OCF) was ¥27.6B, exceeding Net Income ¥22.2B (OCF/NI = 1.24x), indicating good cash backing of profits. OCF/EBITDA (Operating Income + Depreciation) was 0.89x, partly aided by contract liability increase (+¥2.1B). The accrual ratio ((Net Income - OCF)/Total Assets) was -3.8%, suggesting cash-driven profit recognition. [Investment Efficiency] Total Asset Turnover 0.588 declined from 0.665, leaving room to improve capital efficiency. Intangible fixed assets rose materially to ¥9.1B (from ¥4.6B, +96.9%), reflecting expanded in-house software investment. Tangible fixed assets remained small at ¥0.7B (from ¥0.5B), maintaining an asset-light structure. [Financial Soundness] Equity Ratio was 80.1% (from 76.8%) and Current Ratio 491% (from 476%), indicating very strong solvency. Cash and deposits ¥90.2B represent 63% of total assets, far exceeding short-term liabilities ¥23.9B. Debt-to-equity ratio was 0.25x, effectively debt-free, and interest coverage is in surplus due to interest income.
Operating Cash Flow was ¥27.6B (up +87.6% from ¥14.7B), substantially higher, and cash conversion of pretax profit ¥31.0B was healthy. Pre-working-capital subtotal of OCF was ¥35.3B, and after paying corporate taxes ¥8.7B, cash levels remained robust. Decrease in trade receivables ¥0.4B and increase in contract liabilities ¥2.1B contributed positively, while net increase in time deposits of -¥20.0B was a negative contributor. Investing Cash Flow was -¥24.8B, driven by net purchases of short-term securities -¥1.1B, purchases of investment securities -¥2.9B, redemptions of securities ¥6.5B (net), and acquisition of intangible assets -¥6.7B. Capital expenditure was limited to ¥0.4B, and CapEx/Depreciation ratio was 0.21x (Depreciation ¥2.0B), indicating minimal investment in tangible assets and concentration of resources into intangible assets (in-house software). Financing Cash Flow was ¥2.7B, mainly from disposal of treasury stock ¥5.1B and dividend payments -¥7.8B. Free Cash Flow (OCF + Investing CF) was ¥2.9B, which is below aggregate year-end dividends of approximately ¥7.8B, leaving FCF-based dividend coverage insufficient. While ample cash reserves can cover the gap in the short term, stable dividends going forward will require sustained upside in OCF and normalization of Investing CF.
The bulk of earnings is from core operations: Operating Income ¥29.2B. Non-operating income ¥1.5B (1.8% of Revenue) is mainly interest income ¥0.6B and dividend income ¥0.5B, showing low reliance. Extraordinary gains ¥0.7B (reclassification of stock acquisition rights) and extraordinary losses ¥0.5B are limited, indicating high quality of recurring earnings. OCF ¥27.6B exceeds Net Income ¥22.2B (OCF/NI = 1.24x), so cash backing is good; however, the contract liability increase (+¥2.1B) partially contributed and its smoothing trends should be monitored. The gap between Ordinary Income ¥30.7B and Net Income ¥22.2B is due to tax burden (income taxes ¥8.7B, effective tax rate 28.2%) and is within acceptable range. Comprehensive income ¥22.4B is broadly consistent with Net Income ¥22.2B, and the impact of other securities valuation difference ¥0.2B is minor.
The full-year forecast for the fiscal year ending March 2027 is Revenue ¥100.0B (YoY +19.4%), Operating Income ¥32.5B (YoY +11.1%), Ordinary Income ¥33.5B (YoY +9.0%), and Net Income ¥23.5B (YoY +5.9%), a plan for higher Revenue and earnings. The planned Revenue growth of +19.4% exceeds projected profit growth (Operating +11.1%, Ordinary +9.0%), implying a conservative range that likely incorporates upfront development and personnel expenses and mix changes. Contract liabilities accumulation (¥9.6B) is a tailwind as an initial condition, and continuation of existing maintenance contracts plus acquisition of new licenses will be key to execution. Forecast EPS is ¥91.27; dividend forecast has not been disclosed.
Year-end dividend is ¥40 (ordinary dividend ¥35 + commemorative dividend ¥5), with payout ratio 40.4% (based on reported figures). Total dividends are approximately ¥7.8B (based on average shares outstanding during the period), substantially exceeding Free Cash Flow ¥2.9B, so FCF-based dividend coverage is insufficient. This can be covered by ample cash deposits ¥90.2B in the short term, but stable dividends in future years will require sustained OCF upside and smoothing of Investing CF. DOE (total dividends / equity) is about 9.6%, a level balanced with equity growth. Share buybacks were minimal at -¥0.0B in Financing CF, so dividends are the primary shareholder return. Note that a stock split (1 share → 2 shares, effective October 1, 2025) was implemented, and the year-end dividend ¥40 is on a post-split basis.
Segment concentration risk: The Package Solution Business accounts for 98.0% of Revenue and roughly 99% of Operating Income, a highly concentrated structure; deterioration in that segment’s market or intensified competition would directly impact corporate performance. To sustain high margin of 35.1%, avoiding price competition and monopolization of large upgrade projects and providing differentiated products and services is essential.
Working capital management risk: Trade receivables ¥15.4B (DSO approximately 67 days) and WIP ¥1.2B levels persist, posing potential risk of extended collection periods or delayed acceptance. In project-based business, delays in progress management can directly erode margins or increase bad-debt risk; continuous credit control and optimization of acceptance timing remain priorities.
FCF and dividend coverage: Free Cash Flow ¥2.9B versus total dividends approximately ¥7.8B yields insufficient FCF-based dividend coverage. While cash holdings ¥90.2B mitigate short-term concern, medium- to long-term dividend sustainability depends on OCF expansion and Investing CF smoothing. Continued expansion in intangible asset investment (-¥6.7B) would warrant attention to the pace of FCF improvement.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 34.9% | 8.1% (3.6%–16.0%) | +26.8pt |
| Net Margin | 26.6% | 5.8% (1.2%–11.6%) | +20.7pt |
Operating Margin 34.9% and Net Margin 26.6% far exceed industry medians in IT & Communications, indicating an exceptionally high-profit profile even within peers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 10.7% | 10.1% (1.7%–20.2%) | +0.6pt |
Revenue growth 10.7% is in line with industry median 10.1%, reflecting a good balance of profitability and growth.
※ Source: Company compilation
Very high profitability with Gross Margin 57.0% and Operating Margin 34.9%; ROE 19.5% remains at a high level. Reduction in absolute SG&A has produced operating leverage and high-quality margin improvement. The Package Solution Business margin 35.1% drives corporate performance, and continuation of maintenance contracts and acquisition of new licenses are keys to medium-term growth.
Financial soundness is very strong with Equity Ratio 80.1% and Cash & Deposits ¥90.2B, eliminating short-term liquidity risk. Expansion of intangible fixed assets (+¥4.5B) strengthens product competitiveness, while the decline in Total Asset Turnover to 0.588 indicates room to improve capital efficiency. Accumulation of contract liabilities ¥9.6B supports future revenue recognition and underpins the guidance (Revenue ¥100B, +19.4%).
Free Cash Flow ¥2.9B is below total dividends approximately ¥7.8B, so FCF-based dividend coverage is insufficient, though ample cash reserves can cover it in the short term. For medium- to long-term stable dividends, sustained OCF upside and smoothing of Investing CF are prerequisites; thus, shortening cash conversion cycle (DSO ~67 days, WIP ¥1.2B) and improving efficiency of intangible investments are focal points.
This report is an earnings analysis automatically generated by AI based on XBRL financial statement data. It does not recommend investment in any specific securities. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional if necessary.