| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3453.9B | ¥3168.3B | +9.0% |
| Operating Income / Operating Profit | ¥348.4B | ¥301.0B | +15.7% |
| Profit Before Tax | ¥352.4B | ¥291.8B | +20.8% |
| Net Income | ¥244.1B | ¥201.0B | +21.4% |
| ROE | 15.3% | 14.1% | - |
For the fiscal year ended March 2026, Revenue totaled ¥3,453.9B (YoY +¥285.6B +9.0%), Operating Income was ¥348.4B (YoY +¥47.3B +15.7%), Ordinary Income was ¥288.4B (YoY +¥43.4B +17.7%), and Net Income attributable to owners of parent was ¥241.9B (YoY +¥42.6B +21.3%), recording near-double-digit growth for both top-line and bottom-line. Expansion in the Network Services and System Integration (SI) businesses drove sales, and profitability improved stepwise as profit growth outpaced revenue growth. Operating margin improved by +0.6pt to 10.1% (prior year 9.5%), and expansion of financial income (¥2.29B, YoY +¥1.71B) accelerated growth below ordinary income.
[Revenue] Revenue expanded steadily to ¥3,453.9B (YoY +9.0%). Network Services and SI Business accounted for ¥3,423.8B (YoY +9.1%), and ATM Operation Business ¥30.2B (YoY +2.4%), with Network Services and SI Business representing 99.1% of total revenue. The segment comprised Network Services revenue of ¥1,787.4B and System Integration revenue of ¥1,636.4B, supported by increased demand for enterprise network/cloud services and outsourced operations. Cost of sales was controlled to ¥2,692.3B (YoY +8.4%), growing less than revenue, resulting in Gross Profit of ¥761.7B (YoY +13.9%) and a gross margin improvement of +0.5pt to 22.1% (prior year 21.6%).
[Profitability] Selling, General and Administrative Expenses were ¥424.4B (YoY +10.8%)—an increase slightly above revenue growth (+9.0%)—allowing operating leverage to come through. Operating Income was ¥348.4B (YoY +15.7%), and Operating Margin improved by +0.6pt to 10.1% (prior year 9.5%). Financial income expanded to ¥22.9B (prior year ¥5.8B), a 3.9x increase, and Other Income rose to ¥13.1B (prior year ¥1.5B); Financial expenses increased slightly to ¥14.1B (prior year ¥10.9B), and equity-method income was -¥4.7B (prior year -¥4.1B), widening the loss. As a result, Profit Before Tax was ¥352.4B (YoY +20.8%); after deducting corporate income tax expense of ¥108.3B, Net Income was ¥244.1B (YoY +21.4%), with Net Income attributable to owners of parent at ¥241.9B (YoY +21.3%). Net margin improved by +0.7pt to 7.0% (prior year 6.3%), achieving revenue and profit growth.
Network Services and SI Business reported Revenue of ¥3,423.8B (YoY +9.1%), Operating Income of ¥336.0B (YoY +16.1%), and margin of 9.8% (prior year 9.2%), improving profitability by +0.6pt. As the core business accounting for the majority of sales, operational efficiency and scale benefits contributed to margin expansion. ATM Operation Business posted Revenue of ¥30.2B (YoY +2.4%), Operating Income of ¥12.3B (YoY +5.1%), and margin of 40.8% (prior year 40.0%), maintaining high profitability. Though small in scale, it functions as a stable cash cow.
[Profitability] ROE 16.2% (prior year 15.0%) exceeds the company’s historical levels; DuPont decomposition shows Net Margin 7.0% (prior year 6.3%, +0.7pt), Total Asset Turnover 1.00x (prior year 1.01x), and Financial Leverage 2.18x (prior year 2.20x), indicating that Net Margin improvement is the main driver. Operating Margin 10.1% (prior year 9.5%, +0.6pt) and Net Margin 7.0% (prior year +0.7pt) reflect stepwise improvement in profitability. [Cash Quality] Operating Cash Flow (OCF) of ¥504.6B is 2.07x Net Income of ¥244.1B, indicating very high cash conversion of earnings. The accrual ratio (OCF - Net Income) / Total Assets is +7.5%, showing high cash generation. [Investment Efficiency] Tangible fixed assets ¥451.1B (prior year ¥337.7B, +33.6%) indicate continued active investment. Total assets ¥3,469.3B (prior year ¥3,124.3B, +11.0%) yield an asset turnover of 1.00x, unchanged. [Financial Health] Equity Ratio 45.5% (prior year 45.0%), Debt/Capital 18.2% (including short-term borrowings of ¥355.7B) indicate soundness. Cash and cash equivalents ¥383.9B and current ratio 1.17x provide some short-term liquidity buffer, but high short-term liabilities make maturity management important.
Operating Cash Flow was ¥504.6B (prior year ¥285.3B, +76.9%), a substantial increase. Starting from Profit Before Tax ¥352.4B and adding Depreciation & Amortization ¥326.7B, changes in working capital included contract liabilities contributing ¥122.4B cash inflow, while trade receivables -¥51.8B and inventories -¥21.8B were cash outflows. After corporate taxes paid ¥100.5B and interest paid ¥14.1B, working capital improvements still boosted OCF. Investing Cash Flow was -¥263.3B, with tangible fixed asset acquisitions -¥203.8B and intangible asset acquisitions -¥81.1B reflecting continued growth investments. Proceeds from disposals ¥27.6B partially offset this. Free Cash Flow (FCF) of ¥241.3B (OCF ¥504.6B - Investing CF ¥263.3B) covered dividend payments of ¥65.5B comfortably. Financing Cash Flow was -¥191.1B: net increase in short-term borrowings ¥20.0B and other financial liabilities proceeds ¥104.6B were offset by other financial liabilities repayments -¥248.0B and dividend payments -¥65.5B. Adding foreign exchange translation effects +¥8.4B, cash increased from ¥325.3B at the beginning of the period to ¥383.9B at period-end, a +¥58.6B increase.
With Net Income ¥244.1B and OCF ¥504.6B (2.07x), earnings quality is high. The increase in Financial Income to ¥22.9B (from ¥5.8B, +¥17.1B) lifted results below Ordinary Income; its composition includes interest/dividend income ¥5.1B and FX/other items, and its sustainability depends on the financial asset portfolio and currency movements. Equity-method loss -¥4.7B (prior year -¥4.1B) is likely linked to associate performance and is a recurring factor rather than purely one-off. The increase in Other Income to ¥13.1B (prior year ¥1.5B) may include one-off items, indicating that non-operating items can significantly affect the bottom line. Comprehensive income ¥238.2B was ¥5.9B below Net Income ¥244.1B, driven by Other Comprehensive Income -¥5.9B (fair value changes -¥22.6B, defined benefit remeasurements +¥3.6B, foreign currency translation +¥12.8B, etc.). The accrual ratio +7.5% confirms a cash-generative structure where OCF significantly exceeds Net Income.
Full Year guidance expects Revenue ¥3,850.0B (vs. current year +11.5%), Operating Income ¥385.0B (vs. current year +10.5%), and Net Income attributable to owners of parent ¥250.0B (vs. current year +3.4%). Current period progress rates are 89.7% for Revenue, 90.5% for Operating Income, and 96.8% for Net Income—already exceeding 90% of the full-year guidance. If seasonal revenue accumulation occurs in Q4, achieving guidance is plausible, but Net Income is already near 97% of guidance; absent reproduction of financial income or one-off cost reductions, upside is limited. Dividend guidance is annual ¥21.5 per share (note differences in presentation vs. current period actual ¥39.0 per share).
Annual dividend comprised ¥19.5 at the end of H1 and ¥19.5 at year-end, totaling ¥39.0 (prior year ¥17.5, +¥21.5, +122.9%), a substantial increase. With Net Income attributable to owners of parent ¥241.9B and EPS ¥136.51, the payout ratio is 28.6% (¥39 ÷ ¥136.51), a conservative level. Total dividends ¥65.5B represent 27.1% of FCF ¥241.3B, and FCF coverage is 3.68x, indicating ample dividend funding. No share buybacks were executed (zero in Financing CF statement); shareholder returns are dividend-focused. The next-period dividend guidance of ¥21.5 appears lower than the current ¥39.0, but this may reflect differences in disclosure format (quarterly vs. full-year basis) and requires further scrutiny. Retained earnings ¥981.6B (prior year ¥798.9B, +¥182.7B) indicate accumulated internal reserves supporting concurrent growth investment and dividends.
Short-term funding dependence risk: Short-term borrowings ¥355.7B and other current financial liabilities ¥238.8B result in a high short-term liability ratio, making refinancing costs at maturities and market conditions material to performance. Cash ¥383.9B provides a buffer, but rising interest rates pose the risk of increased financial costs.
Trade receivables collection risk: Trade receivables ¥620.8B (prior year ¥563.6B, +10.1%), Days Sales Outstanding (DSO) approx. 66 days (¥620.8B ÷ ¥3,453.9B × 365 days) indicate a trend toward lengthening. Acceptance timing for large projects and customer credit risk could affect OCF and the balance sheet.
Business concentration risk: Network Services and SI Business account for 99.1% of revenue and 96.5% of operating income, creating high concentration. Price competition in the sector, shifts in technology trends, or cybersecurity incidents could directly impact results.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 16.2% | 10.1% (2.2%–17.8%) | +6.1pt |
| Operating Margin | 10.1% | 8.1% (3.6%–16.0%) | +2.0pt |
| Net Margin | 7.1% | 5.8% (1.2%–11.6%) | +1.2pt |
ROE, Operating Margin, and Net Margin all exceed industry medians, placing profitability in the upper tier within the IT & Communications sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 9.0% | 10.1% (1.7%–20.2%) | -1.1pt |
Revenue growth is slightly below the industry median but within the IQR, positioning the company as a stable-growth player.
※Source: Company aggregation
Stepwise improvement in profitability: Operating Margin 10.1% (prior year 9.5%), Net Margin 7.0% (prior year 6.3%), ROE 16.2% (prior year 15.0%)—profitability metrics improved together. Gross margin improvement (22.1%) and controlled SG&A growth (SG&A +10.8% vs. Revenue +9.0%) produced operating leverage, suggesting a medium-term trend of margin improvement. Accumulation of contract liabilities ¥227.8B (prior year ¥156.9B, +45.2%) underpins expansion of recurring revenue base, supporting continued stable revenue.
Strong cash generation and investment capacity: OCF ¥504.6B is 2.07x Net Income ¥244.1B, and FCF ¥241.3B covers dividend payments ¥65.5B by 3.68x. The company executed capital expenditure ¥203.8B (tangible fixed assets +33.6%) and intangible investment ¥81.1B while retaining FCF, balancing growth investment and shareholder returns. Cash ¥383.9B and Equity Ratio 45.5% indicate sufficient financial safety.
Short-term funding management and DSO as monitoring metrics: Short-term borrowings ¥355.7B and current financial liabilities ¥238.8B indicate high short-term funding dependence; interest rate trends and maturity management are therefore critical. Trade receivables DSO approx. 66 days is somewhat long; improving collection cycles and working capital efficiency will be important for future financial soundness. Next-year guidance incorporates continued revenue and profit growth, but Net Income growth (+3.4%) is forecast to decelerate from the current period (+21.3%), making reproduction of financial income and cost control key to achieving targets.
This report was generated automatically by AI analyzing XBRL financial filing data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.