SAKURA internet Inc. FY2027 Q1 Earnings Report

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Executive Summary

In addition to substantial revenue growth, the key highlight of these results was the turnaround from an operating loss in the same period of the previous year to operating profitability. Revenue was ¥11.13B (¥7.49B in the previous year, YoY+48.6%), Operating Income was ¥1.23B (¥-0.46B in the previous year), Ordinary Income was ¥1.26B (¥-0.44B in the previous year), and Net Income attributable to owners of the parent was ¥0.855B (¥-0.324B in the previous year, YoY+363.9%). Improved operating capacity associated with higher revenue led to an improvement in the gross profit margin, while revenue growth outpaced the increase in SG&A expenses, resulting in a turnaround to operating profitability. The Company operates as a single segment (Internet Infrastructure Business), and no breakdown by business is disclosed.

Factors Affecting Results

【Revenue】Revenue was ¥11.13B, representing substantial growth of +48.6% year on year. The Company operates as a single segment, the Internet Infrastructure Business, and no factors behind changes by segment have been disclosed.

【Profit and Loss】Gross profit was ¥3.42B, with a gross profit margin of 30.7%, an improvement of +10.1pt from 20.6% in the previous year. SG&A expenses were ¥2.19B, equivalent to 19.7% of revenue, down -7.0pt from 26.7% in the previous year, indicating that expense growth was contained relative to revenue growth. As a result, Operating Income was ¥1.23B (¥-0.46B in the previous year), and the operating margin improved to 11.0% (△6.1% in the previous year), marking a turnaround to profitability. Ordinary Income was ¥1.26B; the increase in interest expense to ¥0.181B (¥0.109B in the previous year) was partially offset by non-operating income, including subsidy income (¥0.138B). Extraordinary income of ¥2.504B and extraordinary losses of ¥2.504B were recorded at approximately equal amounts, resulting in a substantially neutral net impact on current-period profit. Net Income attributable to owners of the parent was ¥0.855B, representing results characterized by higher revenue and higher profit.

Key Financial Indicators

【Profitability】The operating margin was 11.0%, a substantial improvement from △6.1% in the previous year, while the net profit margin (based on net income attributable to owners of the parent) was 7.7%. ROE was 2.8%, remaining at a level shortly after the turnaround to profitability. 【Cash Quality】Comprehensive income was ¥0.86B, approximately in line with Net Income attributable to owners of the parent of ¥0.855B. Other comprehensive income items, including valuation differences on available-for-sale securities and foreign currency translation adjustments, were immaterial, and no factor that materially distorted earnings quality was identified. 【Investment Efficiency】Total assets increased to ¥87.55B (¥82.45B in the previous year), and net assets increased to ¥30.99B (¥30.33B in the previous year), indicating continued gradual expansion in both assets and capital. 【Financial Soundness】The Equity Ratio was 35.4%, showing a declining trend from the previous year. Current assets of ¥29.07B versus current liabilities of ¥36.92B resulted in a current ratio of 78.8%. Meanwhile, interest coverage (Operating Income/interest expense) was approximately 6.8x, indicating that the Company has maintained sufficient resilience against its current interest payment burden.

Cash Flow Analysis

As data from the statement of cash flows has not been disclosed, cash trends are assessed based on changes in the balance sheet. Cash and deposits increased to ¥17.27B, up +12.2% from ¥15.39B in the previous year, while short-term borrowings increased to ¥14.74B, up +37.9% from ¥10.69B in the previous year, suggesting that part of the Company’s funding is being covered through short-term borrowings. Long-term borrowings decreased to ¥5.07B from ¥5.78B in the previous year, indicating that the composition of interest-bearing debt has shifted toward short-term debt. Property, plant and equipment increased to ¥48.89B, up +4.6% from ¥46.72B in the previous year, confirming the continuation of capital investment. Inventories declined substantially to ¥0.02B (¥0.41B in the previous year), while accounts payable also decreased to ¥0.55B (¥1.25B in the previous year), indicating reduced working-capital constraints related to inventory.

Earnings Quality

Extraordinary income of ¥2.504B and extraordinary losses of ¥2.504B were recorded at approximately equal amounts. As temporary factors that offset each other, their substantive impact on Net Income for the current period was limited. Within non-operating income and expenses, subsidy income of ¥0.138B accounted for the major portion of non-operating income of ¥0.226B, while non-operating expenses of ¥0.20B primarily consisted of interest expense of ¥0.181B. Both should be distinguished from factors related to the Company’s core business operations. Comprehensive income of ¥0.86B was close to Net Income attributable to owners of the parent of ¥0.855B, and the impact of other comprehensive income items, including valuation differences on securities and foreign currency translation adjustments, was immaterial. No factor that materially distorted the quality of current-period earnings was identified.

Earnings Forecast and Guidance

The Q1 disclosure included a revision to the earnings forecast. The Full-Year forecast is Revenue of ¥45.50B (YoY+28.9%), Operating Income of ¥2.50B, Ordinary Income of ¥2.30B, and Net Income of ¥1.50B (forecast EPS of ¥37.46). Progress against the Full-Year forecast was 24.5% for Revenue, 49.2% for Operating Income, 54.7% for Ordinary Income, and 57.0% for Net Income attributable to owners of the parent, indicating that profit items are progressing ahead of Revenue. Securing more than half of the profit plan as of Q1 demonstrates the rapid pace of earnings recovery during the current fiscal year. However, the uniformity of progress throughout the Full Year will need to be assessed based on trends in subsequent quarters.

Shareholder Returns

The dividend forecast is ¥0, unchanged from the previous year’s actual dividend of ¥0, and there was no revision to the dividend forecast for the current quarter. The Payout Ratio is 0%, confirming the policy of continuing to pay no dividends at this stage while prioritizing growth investment and maintenance of the financial base.

Risk Factors

1. Short-Term Funding Dependence Risk: Current liabilities of ¥36.92B versus current assets of ¥29.07B resulted in a current ratio of 78.8%. Short-term borrowings increased to ¥14.74B, up +37.9% year on year, indicating increased dependence on short-term funding.

2. Risk of Higher Interest Expense: Interest expense was ¥0.181B, up +66.4% from ¥0.109B in the previous year. Interest coverage was approximately 6.8x, indicating sufficient resilience to current interest payments; however, attention should be paid to increases in borrowings and changes in the interest-rate environment.

3. Non-Recurring Nature of Extraordinary Income and Losses: Extraordinary income and extraordinary losses were both recorded at ¥2.504B, approximately equal amounts, and are considered temporary items related to the compression of fixed assets. Although their substantive impact on current-period profit was neutral, whether similar items will continue to be recorded should be monitored.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both profitability metrics exceeded the industry median, indicating profitability above the average level within the IT and telecommunications industries.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeded the industry median, representing an outstanding rate of revenue growth within the industry.

※Source: Compiled by the Company

Key Points from the Results

1. The Company turned from an operating loss in the same period of the previous year to operating profitability, with the operating margin improving to 11.0% (△6.1% in the previous year). Both the gross profit margin (+10.1pt) and SG&A expense ratio (-7.0pt) improved simultaneously, indicating that higher operating capacity associated with revenue growth was the primary driver of the recovery in profitability.

2. Progress against the Full-Year earnings forecast was 49.2% for Operating Income, 54.7% for Ordinary Income, and 57.0% for Net Income. Profit items were progressing ahead of the 24.5% progress for Revenue. In light of the earnings forecast revision made during the current quarter, the degree to which profit progress is leading can be confirmed from the earnings data.

3. Short-term borrowings increased +37.9% year on year, while the current ratio remained at 78.8%. The shift in the funding structure toward short-term debt is an item that requires continued monitoring from the perspective of financial soundness.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥660–¥700 at Cost of Equity ±1%; ¥676–¥682 at ω±0.1.

Notes:

• Because progress of Net Income against the Full-Year forecast (57%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies progressing ahead of plan tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the Cost of Equity, the theoretical value is below Book Value per Share.
• Net assets at the end of the quarter are used (there is a timing difference relative to the Full-Year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated at a somewhat high level.

(Calculation model: Residual Income Model / Interest Reference Month: 2026-06 / This value is not intended to forecast 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 is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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