Riskmonster.com (3768) FY2026 Q3 Earnings Report

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Executive Summary

For the nine months ended Q3 of the fiscal year ending March 2026, the Company recorded increases in both revenue and profit, with margins improving despite a low-growth environment. Revenue was ¥2.85B (¥2.81B in the same period of the previous year, YoY +1.3%), operating income was ¥0.25B (¥0.21B, YoY +21.7%), and ordinary income was ¥0.28B (¥0.22B, YoY +26.5%). Net income attributable to owners of the parent was ¥0.18B, marking a return to profitability from the ¥1.08B loss recorded in the same period of the previous year, which was affected by the recognition of extraordinary losses. The primary drivers of profit growth were the control of SG&A expenses and improved profitability in the core credit management services. The substantial recovery in net income was largely attributable to the reversal of special factors affecting the same period of the previous year.

Factors Affecting Business Performance

【Revenue】Revenue was ¥2.85B, representing a modest 1.3% increase year on year. By segment, credit management services generated ¥1.52B (53.3% of total revenue, up 1.7% year on year), BPO services generated ¥0.74B (26.0%, down 0.6%), the business portal site generated ¥0.47B (16.5%, up 5.0%), and education-related services generated ¥0.14B (4.9%, down 17.0%). While the core credit management services led the increase in revenue, education-related services and BPO services shifted to revenue declines.

【Profit and Loss】Operating income was ¥0.25B (YoY +21.7%), and the operating margin improved to 9.0% from 7.5% in the same period of the previous year. The primary factor behind the improvement was the reduction in SG&A expenses to ¥1.06B (down 2.2% year on year). The decline in the SG&A ratio from 38.5% to 37.2% made a greater contribution than the improvement in the gross margin from 46.0% to 46.2%. Ordinary income was ¥0.28B (YoY +26.5%), supported by ¥0.03B in non-operating income, including ¥0.02B in dividend income. Net income was ¥0.18B, representing a return to profitability from the ¥1.08B loss in the same period of the previous year. However, this was primarily due to the reversal of the ¥1.26B extraordinary loss recorded in the same period of the previous year, while extraordinary gains and losses in the current period remained limited, including a ¥0.01B gain on the sale of investment securities. The Company recorded increases in both revenue and profit.

Segment Analysis

Credit management services are the core business driving consolidated profit growth, with revenue of ¥1.52B (up 1.7% year on year), segment profit of ¥0.26B (up 29.0%), and a segment margin of 17.3% (up from 13.7% in the previous year, or +3.6pt). The business portal site recorded higher revenue of ¥0.47B (up 5.0%), but segment profit declined 3.0% to ¥0.15B, and its margin decreased to 31.1% from 33.8% in the previous year, indicating a slight deterioration in profitability. Education-related services experienced substantial declines in both revenue and profit, with revenue of ¥0.14B (down 17.0%) and segment profit of ¥0.005B (down 82.2%), resulting in a decline in the segment margin to 3.3%. BPO services generated revenue of ¥0.74B (down 0.6%), segment profit of ¥0.002B (down 87.9%), and a margin of 0.2%, making their contribution to profitability extremely limited. Adjustments for corporate expenses and other items decreased year on year, contributing to the increase in consolidated operating income.

Key Financial Indicators

【Profitability】The operating margin of 9.0% improved from 7.5% in the same period of the previous year, while the net margin of 6.2% is a favorable level for an information services company. The gross margin was 46.2%, a slight improvement from 46.0% in the same period of the previous year.【Cash Quality】Cash and deposits stood at ¥1.74B, providing a substantial liquidity buffer, while accounts receivable of ¥0.51B accounted for only 7.0% of total assets. The asset composition is therefore centered on readily monetizable liquidity.【Investment Efficiency】Annualized ROE was 3.9%. The Company held ¥2.19B in intangible assets (30.0% of total assets) and ¥1.55B in investment securities (21.3%), indicating room to improve asset efficiency relative to its substantial equity base.【Financial Soundness】The equity ratio was 85.6%, the current ratio was 363.6%, and interest-bearing debt consisted solely of ¥0.23B in short-term borrowings. Cash was equivalent to 7.4 times short-term borrowings, indicating a conservative and stable financial foundation.

Cash Flow Analysis

Although the cash flow statement has not been disclosed, fund movements can be assessed based on changes in the balance sheet. Cash and deposits were ¥1.74B, an increase of ¥0.51B (+41.7%) from ¥1.23B in the same period of the previous year. At the same time, short-term borrowings decreased by ¥0.12B (-33.3%), from ¥0.35B to ¥0.23B. In addition to the accumulation of internal funds accompanying increases in operating income and ordinary income, interest-bearing debt has been reduced, resulting in a clear year-on-year improvement in the Company’s funding position. Accounts receivable was ¥0.51B, while cash and deposits accounted for the major portion of current assets, providing substantial flexibility in short-term liquidity management.

Quality of Earnings

Profit growth in the current period was primarily driven by improvements at the operating and ordinary income levels, and earnings quality was generally sound. Of the ¥0.03B in non-operating income, ¥0.02B consisted of dividend income, with recurring income from the Company’s securities holdings supporting ordinary income. Extraordinary gains and losses were limited on a net basis, consisting of a ¥0.01B gain on the sale of investment securities and a ¥0.00B loss on the disposal of fixed assets, and their impact on net income was limited. Meanwhile, the ¥1.08B net loss in the same period of the previous year was primarily attributable to the recognition of a ¥1.26B extraordinary loss. Accordingly, the substantial improvement in net income in the current period was strongly influenced by the reversal of special factors, and it is appropriate to assess the underlying improvement in earnings power based on operating income growth of +21.7% and ordinary income growth of +26.5%. Comprehensive income was ¥0.33B, exceeding net income of ¥0.18B, primarily due to a ¥0.14B increase in valuation difference on securities. The increase in comprehensive income in the current period therefore resulted from changes in the market value of the Company’s equity holdings.

Earnings Forecast and Guidance

The full-year company forecasts are revenue of ¥3.90B (YoY +4.6%), operating income of ¥0.38B (YoY +43.9%), ordinary income of ¥0.38B (YoY +31.1%), EPS of ¥27.84, and a dividend of ¥16.0. The Q3 cumulative progress rates were 73.0% for revenue, 67.1% for operating income, and 72.4% for ordinary income, all below the standard quarterly progress rate of 75%. In particular, operating income of ¥0.125B must be generated in the remaining quarter, requiring a margin equivalent to 11.9%. This would require profitability to exceed the cumulative result of 9.0%. The progress rate for net income attributable to owners of the parent was 84.8%, indicating that the full-year net income forecast of ¥0.21B has a relatively high probability of being achieved.

Shareholder Returns

The full-year annual dividend forecast is ¥16.0 per share. Since the Q2 dividend was ¥0, the Company plans to pay the entire dividend at fiscal year-end. Based on the average number of shares outstanding during the period of 7.552M shares, the total annual dividend is expected to be approximately ¥0.12B, resulting in a payout ratio of approximately 57.5% against the full-year net income forecast of ¥0.21B. Cash and deposits of ¥1.74B are equivalent to approximately 14 times the expected total dividend, indicating that sufficient liquidity is available to fund the dividend. As the Company paid no dividend in the same period of the previous year, the current-period dividend represents a resumption of dividend payments.

Risk Factors

1. Declining profitability of education-related services: Revenue decreased 17.0% year on year, while segment profit declined 82.2%, causing the segment margin to fall to 3.3%. Without a recovery in demand or a review of the cost structure, this could exert downward pressure on the Company-wide profit margin.

2. Weak profitability of BPO services: Revenue declined 0.6%, segment profit decreased 87.9%, and the segment margin remained at 0.2%. The ability to pass on cost increases through pricing will be a key focus going forward.

3. Relatively low capital efficiency: Annualized ROE was 3.9%. Although intangible assets (30.0% of total assets) and investment securities (21.3%) together account for more than half of total assets, there remains room to improve the level of ROIC indicating the efficiency of these assets within the industry.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The Company’s profitability indicators are both slightly above the industry median.

Growth and Capital Efficiency

The Company’s revenue growth rate is substantially below the industry median, placing it toward the lower end of the industry in terms of growth.

※Source: Compiled by the Company

Key Takeaways from the Results

1. The operating margin improved by +1.5pt year on year, with the decline in the SG&A ratio driving profit growth despite low revenue growth. The increase in the profit margin of the core credit management services from 13.7% to 17.3% was the primary driver of the improvement in overall profitability.

2. Achieving the full-year operating income forecast requires an operating margin equivalent to 11.9% in Q4, exceeding the cumulative result of 9.0%. The progress rate will be a key indicator to monitor going forward.

3. The financial foundation is conservative, with an equity ratio of 85.6%, a current ratio of 363.6%, and interest-bearing debt consisting solely of ¥0.23B in short-term borrowings. The Company therefore has a high degree of resilience against declining profitability in education-related services and BPO services.

Theoretical Share Price (Reference Value)

Sensitivity: ¥641–¥676 at ±1% for the cost of equity, and ¥654–¥661 at ±0.1 for ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing gap relative to the full-year forecast).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-08 / 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 predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on 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 discretion and responsibility, after consulting a professional advisor as necessary.

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