| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥55.7B | ¥49.1B | +13.4% |
| Operating Income | ¥4.3B | ¥2.9B | +50.8% |
| Ordinary Income | ¥4.6B | ¥2.8B | +62.9% |
| Net Income | ¥3.5B | ¥2.0B | +71.9% |
| ROE | 3.5% | 2.0% | - |
For FY2026 Q1, Revenue was ¥55.7B (YoY +¥6.6B +13.4%), Operating Income was ¥4.3B (YoY +¥1.5B +50.8%), Ordinary Income was ¥4.6B (YoY +¥1.8B +62.9%), and Net Income was ¥3.5B (YoY +¥1.5B +71.9%), achieving both revenue and profit growth. Operating margin improved by 1.9pt to 7.7% (prior 5.8%), primarily driven by a 3.7pt decline in SG&A ratio to 50.0% (prior 53.7%). By segment, Electronic Authentication & e-Signature accounted for 62.3% of Revenue with a stable 10.0% margin, Cloud Infrastructure showed significant improvement with Revenue +17.4% and Operating Income +96.1%, and DX Business narrowed its loss (‑¥0.2B). Progress against the Full Year forecast was 25.0% for Revenue, 26.5% for Operating Income, 29.1% for Ordinary Income, and 33.0% for Net Income, indicating profit-line progress above the standard 25% Q1 pace.
[Revenue] Revenue was ¥55.7B (+13.4%), maintaining double-digit growth. By segment, Cloud Infrastructure ¥19.9B (+17.4%, 35.7% of total) showed the highest growth rate, Electronic Authentication & e-Signature ¥34.7B (+10.6%, 62.3%) provided a stable base, and DX Business ¥2.5B (+19.2%, 4.5%) also recorded high growth. Gross profit was ¥32.1B with a gross margin of 57.7%, down 1.8pt from 59.5% the prior year. The rise in Cloud Infrastructure mix and changes in cost environment are inferred as factors for the margin decline. Contract liabilities increased to ¥31.6B (prior ¥29.2B), reinforcing a subscription / prepayment revenue base.
[Profitability] SG&A was ¥27.8B (SG&A ratio 50.0%), increasing by only ¥1.4B YoY, significantly below Revenue growth of +13.4%. As a result, Operating Income rose to ¥4.3B (+50.8%) and Operating margin improved to 7.7% (+1.9pt). Non-operating items included interest income of ¥0.2B exceeding interest expense of ¥0.1B, and fund operating gains of ¥0.2B, resulting in a non-operating surplus of +¥0.3B. Foreign exchange loss narrowed to ¥0.1B from ¥0.4B prior, expanding Ordinary Income to ¥4.6B (+62.9%). Pre-tax profit ¥4.6B less corporate taxes ¥1.1B (effective tax rate 24.2%) yielded Net Income ¥3.5B (+71.9%). In summary, double-digit growth in core Electronic Authentication and Cloud Infrastructure combined with SG&A efficiency delivered revenue and profit increases.
Electronic Authentication & e-Signature: Revenue ¥34.7B (+10.6%), Operating Income ¥3.5B (+27.7%), margin 10.0% (prior 8.7%), serving as the company’s primary stable profit source. Cloud Infrastructure: Revenue ¥19.9B (+17.4%), Operating Income ¥0.9B (+96.1%), margin 4.5% (prior 2.7%), showing marked improvements in both growth and profitability. DX Business: Revenue ¥2.5B (+19.2%), Operating loss ¥0.2B (prior -¥0.4B), with a 60.9% reduction in loss and progress toward profitability. Consolidated Operating Income was ¥4.3B while segment total was ¥4.2B, with eliminations of ¥0.01B (inter-segment eliminations) being immaterial.
[Profitability] Operating margin 7.7% (up +1.9pt from 5.8%), Net margin 6.3% (up +2.1pt from 4.2%), both showing improvement. ROE 3.5% is calculated against Equity of ¥100.6B and Net Income ¥3.5B (annualized equivalent ¥14.0B); while low versus historical levels, seasonal effects on a quarterly basis should be considered. Gross margin 57.7% (down 1.8pt YoY), suggesting effects from segment mix and cost environment. [Cash Quality] Cash and deposits ¥94.0B (48.7% of total assets) provide ample liquidity, with current ratio 209% and quick ratio 209% indicating very strong short-term solvency. Interest income ¥0.2B exceeds interest expense ¥0.1B, producing a positive net interest position. [Investment Efficiency] Total asset turnover is approximately 1.16x on an annualized basis (Q1 Revenue ¥55.7B ×4 ÷ Total Assets ¥193.0B), indicating standard asset efficiency. Intangible assets ¥43.7B (22.7% of total assets), primarily software ¥43.2B, reflect accumulated development investment. [Financial Soundness] Equity Ratio 52.1% (prior 54.5%) maintains a safe level, debt-to-equity 0.92x, Debt/Capital ratio 15.4% denote conservative leverage. Long-term borrowings ¥18.4B increased +25.5% from prior ¥14.6B, but interest coverage remains strong at 41.1x (Operating Income ¥4.3B ÷ Interest Expense ¥0.1B, annualized), indicating ample debt service capacity.
In operating activities, the increase in contract liabilities to ¥31.6B (prior ¥29.2B) supports a prepayment-based revenue structure and is expected to produce working capital cash inflows. Cash and deposits increased by ¥4.7B to ¥94.0B (prior ¥89.4B), and with interest income ¥0.2B exceeding interest expense ¥0.1B, cash efficiency remains favorable even in the current interest environment. In investing activities, intangible assets (software) rose slightly to ¥43.2B (prior ¥42.8B), indicating continued development investment. In financing activities, long-term borrowings increased by ¥3.7B to ¥18.4B (prior ¥14.6B); given the strong cash balance and earnings power, this appears to be financing for growth investments and working capital. Tangible fixed assets ¥8.9B (prior ¥9.0B) are stable, with no large-scale capital expenditures observed. Overall, the recurring revenue model and prepayment structure underpin stable operating cash flows, and robust liquidity secures investment capacity.
Operating Income ¥4.3B versus non-operating income ¥0.5B (0.9% of Revenue) is limited; main items are interest income ¥0.2B and fund operating gains ¥0.2B. Non-operating expenses ¥0.2B (interest expense ¥0.1B, foreign exchange loss ¥0.1B) are small, so Ordinary Income ¥4.6B reflects operating profitability. No extraordinary items were recorded; after corporate taxes ¥1.1B (effective tax rate 24.2%) from pre-tax profit ¥4.6B, Net Income ¥3.5B indicates earnings quality without one-off factors. Comprehensive income ¥3.9B exceeded Net Income by +¥0.4B, mainly due to foreign currency translation adjustment +¥0.5B. The predominance of recurring income suggests that improvements at the operating level are translating directly into Net Income.
Full Year forecast remains unchanged at Revenue ¥222.9B (+7.8%), Operating Income ¥16.2B (+10.0%), Ordinary Income ¥15.9B (+10.7%), Net Income ¥10.5B, EPS ¥91.79. Q1 progress rates are Revenue 25.0%, Operating Income 26.5%, Ordinary Income 29.1%, Net Income 33.0%, exceeding the standard 25% Q1 pace on the profit side. Ordinary Income is ahead by +4.1pt and Net Income by +8.0pt, aided by improved non-operating results and tax optimization. Revenue is on the standard pace and Operating Income is +1.5pt ahead, indicating a generally healthy start; considering seasonality in H2 and investment phases, the probability of meeting guidance is assessed as favorable at this time. No forecast revisions have been made.
No dividend was paid in Q1 (DPS ¥0), and the Full Year forecast maintains DPS ¥0, continuing a no-dividend policy. With Cash and deposits ¥94.0B and Net Income ¥3.5B (annualized equivalent ¥14.0B), financial capacity is ample, but management appears to prioritize growth investments (software development, DX profitability, Cloud Infrastructure expansion). Payout Ratio 0% reflects a reinvestment strategy via retained earnings; resumption of dividends in the future will depend on DX profitability, stabilization of Cloud Infrastructure margins, and accumulation of Full Year profits.
Business concentration risk: Electronic Authentication & e-Signature accounts for 62.3% of Revenue and is the main source of Operating Income, indicating high single-segment dependency. Intensified price competition or changes in technical standards in this field could materially impact consolidated earnings; the 1.8pt decline in gross margin may reflect such pricing pressures.
Gross margin decline risk: Gross margin 57.7% is down 1.8pt YoY, likely due to the rising proportion of Cloud Infrastructure (35.7%) and deteriorating cost environment. Although SG&A efficiency absorbed the impact this period, continued margin erosion could undermine the sustainability of operating leverage.
DX Business monetization delay risk: DX Business continues to post an operating loss of ¥0.2B with a margin of -5.9%. While the loss is narrowing, delayed profitability would reduce capital allocation efficiency and constrain improvement in consolidated ROE.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.7% | 6.2% (4.2%–17.2%) | +1.5pt |
| Net Margin | 6.3% | 2.8% (0.6%–11.9%) | +3.5pt |
Profitability exceeds the industry median, placing the company in the upper range within IT & Communications for both Operating and Net margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 13.4% | 20.9% (12.5%–25.8%) | -7.5pt |
Revenue growth trails the median by 7.5pt, positioning the company in the mid-range within the industry.
※ Source: Company aggregation
Realization of operating leverage through SG&A efficiency is notable, with Operating margin improving to 7.7% (+1.9pt). Cloud Infrastructure Operating Income +96.1% and margin 4.5% (+1.8pt) indicate accelerating profitability improvements, and the expanding contribution of this segment is lifting consolidated margins. Q1 profit progress ahead of the standard pace suggests high probability of meeting guidance.
Cash and deposits ¥94.0B (48.7% of total assets) and current ratio 209% indicate very high financial resilience; interest income exceeding interest expense demonstrates cash efficiency that supports continued growth investment (software development, DX profitability). The accumulation of contract liabilities ¥31.6B underpins the stability of the subscription base and is a structural strength supporting recurring revenue continuity.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are compiled by the firm based on public financial statements and are provided for reference. Investment decisions are your own responsibility; consult a professional advisor as needed.