ASTERIA (3853) FY2026 Q3 Earnings Report

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Executive Summary

Cumulative results for Q3 showed increases in both revenue and earnings, mainly due to an improvement in gains and losses on the valuation of the investment business, with both Operating Income and Net Income recording substantial growth. Revenue was ¥24.6B (¥23.3B in the same period of the previous year, +5.4% YoY), Operating Income was ¥9.4B (¥3.5B in the previous year, +170.9%), Profit Before Tax was ¥8.8B (¥4.2B in the previous year, +111.5%), and Net Income attributable to owners of the parent was ¥7.4B (¥2.3B in the previous year, +220.9%). The Operating Margin rose substantially to 38.0% from 14.8% in the same period of the previous year; however, the primary reason for the increase was not an improvement in the profitability of the core software business, but rather the investment business segment’s turnaround from a ¥2.4B loss in the same period of the previous year to a ¥3.7B profit. Segment profit of the software business alone was ¥5.3B, down 7.6% YoY, so the investment business and the core business must be considered separately when assessing the quality of earnings growth.

Factors Affecting Performance

【Revenue】Revenue increased to ¥24.6B, up +5.4% YoY. The entire amount was generated by the software business, whose revenue expanded by +5.4% YoY. Meanwhile, Gross Profit remained at ¥21.7B (+4.2%), and the Gross Margin declined slightly to 88.0% from 89.1% in the same period of the previous year. SG&A expenses increased to ¥16.5B (+6.4%), growing at a faster pace than revenue, and the SG&A ratio rose 60bp to 67.1%.

【Profit and Loss】Operating Income surged to ¥9.4B (+170.9%), as the ¥5.3B segment profit of the software business (▲7.6% YoY) was more than offset by the investment business segment profit of ¥3.7B (▲¥2.4B in the previous year). Other income increased substantially to ¥4.2B from ¥0.6B in the previous year and appears to include valuation gains on investment assets. Finance costs increased to ¥0.7B from ¥0.2B in the previous year, resulting in Profit Before Tax of ¥8.8B (+111.5%) and Net Income of ¥7.7B (+273.2%). The fact that Net Income growth exceeded Profit Before Tax growth reflects changes in the effective tax rate resulting from relatively high income taxes in the same period of the previous year. Although revenue and earnings increased, it should be noted that the primary driver of earnings growth was an improvement in gains and losses on the valuation of the investment business, rather than earnings growth in the core software business.

Segment Analysis

The software business generated revenue of ¥24.6B (the entire amount of external revenue) and segment profit of ¥5.3B (21.7% margin), down from segment profit of ¥5.8B (24.7% margin) in the same period of the previous year. The investment business does not record external revenue, but its segment profit improved by ¥6.1B, from a ¥2.4B loss in the same period of the previous year to a ¥3.7B profit in the current period, making it the primary driver of the increase in consolidated Operating Income. As the investment business’s profit includes fair value gains and losses on financial assets held, it is susceptible to market fluctuations. Of consolidated Operating Income of ¥9.4B, the investment business accounted for ¥3.7B and the software business for ¥5.3B, resulting in a structure in which more than half of earnings growth depends on the investment business.

Key Financial Indicators

【Profitability】The Operating Margin was 38.0%, while the Net Margin was 29.9% based on Net Income for the current period (equivalent to 29.9% based on profit attributable to owners of the parent). Both increased substantially from the same period of the previous year (Operating Margin of 14.8% and Net Margin of 9.9%), although the primary driver of the increase was the improvement in gains and losses on the valuation of the investment business.【Cash Quality】Accounts receivable increased to ¥5.5B from ¥2.4B in the same period of the previous year, an increase of +126.0%, significantly outpacing revenue growth of +5.4%. This is an item requiring confirmation of collection conditions. Inventories were minimal at ¥0.04B, and inventory-related concerns are limited.【Investment Efficiency】Annualized ROE was 14.1%, exceeding the level in the same period of the previous year. Total asset turnover is suppressed by the substantial level of cash and other financial assets.【Financial Soundness】The Equity Ratio was 74.2% (slightly down from 77.7% in the previous year), interest-bearing debt was ¥7.0B, and Debt/EBITDA remained low, indicating limited financial leverage. Total assets increased +21.6% YoY to ¥95.6B, reflecting changes in the asset composition, including the newly recognized ¥8.0B in goodwill.

Cash Flow Analysis

Detailed figures for the Cash Flow Statement—Operating Cash Flow (OCF), investing cash flow, and financing cash flow—are not included in the available data; however, cash and cash equivalents were ¥28.4B, largely unchanged from ¥28.1B in the same period of the previous year. Meanwhile, accounts receivable increased by +¥3.1B (+126.0%) YoY, expanding at a rate significantly exceeding revenue growth of +5.4%. This sharp increase in accounts receivable suggests that the conversion of profit into cash may not have progressed to the same extent, making collection trends in the subsequent periods an item requiring monitoring. Inventories were minimal at ¥0.04B, limiting their impact on working capital. Depreciation and amortization was ¥2.2B, and the continued expansion of Operating Income despite absorbing the amortization burden can be viewed positively from the perspective of cash-generation capacity. The newly recognized ¥5.6B in long-term borrowings and ¥8.0B in goodwill indicate that funds were allocated during the period to business acquisitions or similar purposes.

Quality of Earnings

The increase in current-period profit depends substantially on the non-recurring factor of improved gains and losses on the valuation of financial assets in the investment business, rather than on expansion of recurring business activities—the software business—making a simple comparison of earnings quality with the same period of the previous year difficult. Other income increased substantially to ¥4.2B from ¥0.6B in the same period of the previous year, and this increase was the primary driver of the sharp rise in Operating Income. Segment profit of the software business declined 7.6% YoY, indicating that the earning power of the core business actually weakened moderately. Comprehensive income was ¥12.3B, exceeding Net Income attributable to owners of the parent of ¥7.4B by ¥4.9B. This difference resulted from a ¥2.6B change in the fair value of financial assets and a ¥2.0B foreign currency translation difference included in Other Comprehensive Income. The divergence between Net Income and Comprehensive Income indicates that some of the factors increasing equity are valuation differences linked to market prices and foreign exchange rates, which differ in nature from the accumulation of recurring earnings.

Earnings Forecast and Guidance

The full-year company forecast is Revenue of ¥35.0B, Operating Income of ¥9.0B (+15.2% YoY), and a forecast dividend of ¥9.00. The Q3 cumulative Revenue achievement rate was 70.3%, slightly below the simple quarterly progress benchmark of 75%, while the Operating Income achievement rate was 103.9%, already exceeding the full-year forecast. This means that Q3 cumulative Operating Income of ¥9.4B has exceeded the full-year forecast of ¥9.0B, suggesting that the full-year forecast may be conservative or may assume a reversal in gains and losses on the valuation of the investment business. Going forward, attention will focus on fluctuations in valuation gains and losses in the investment business during Q4 and whether the full-year forecast is revised.

Shareholder Returns

The forecast annual dividend is ¥9.00, an increase from ¥8.00 in the previous year. Based on forecast full-year profit attributable to owners of the parent of ¥7.0B and the weighted average number of shares outstanding during the period after deducting treasury shares (approximately 1,652万 shares), the total dividend would represent a high level relative to forecast annual profit. Given that the increase in current-period profit includes gains and losses on the valuation of the investment business, attention should be paid to the sustainability of profit as a source of dividends. On the other hand, the financial foundation of ¥28.4B in cash and cash equivalents and an Equity Ratio of 74.2% supports the feasibility of dividend payments. No specific data on the implementation amount of share repurchases is available, while treasury shares increased by +¥1.8B YoY.

Risk Factors

1. Dependence on valuation gains and losses in the investment business: Most of the increase in consolidated Operating Income was attributable to the improvement in investment business segment profit (from ▲¥2.4B in the previous year to +¥3.7B in the current period). This profit includes fair value measurement of financial assets and may reverse due to market fluctuations.

2. Declining profitability of the core software business: Segment profit of the software business was ¥5.3B, down ▲7.6% YoY, and the segment profit margin declined from 24.7% to 21.7%. This was attributable to SG&A expenses expanding by +6.4%, exceeding revenue growth of +5.4%.

3. Increase in trade receivables: Accounts receivable increased +126.0% YoY to ¥5.5B, expanding at a rate significantly exceeding revenue growth of +5.4%. Changes in the collection cycle or fluctuations in the composition of period-end revenue may have contributed, and future collection trends require monitoring.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (it_telecom)

Profitability and Returns

The company’s profitability metrics are substantially above the industry median; however, they must be interpreted with consideration that they include gains and losses on the valuation of the investment business.

Growth and Capital Efficiency

The revenue growth rate is slightly below the industry median, indicating that the pace of top-line expansion is relatively moderate within the industry.

※Source: Company research

Key Takeaways from the Earnings

1. The substantial earnings growth in the current period depends heavily on the improvement in gains and losses on the valuation of the investment business, so caution is required when viewing the Operating Margin of 38.0% as sustainable earning power. Segment profit of the software business alone declined YoY.

2. Against the full-year company forecast, the Q3 cumulative Operating Income achievement rate was 103.9%, and the achievement rate for profit attributable to owners of the parent was 105.2%, already exceeding the full-year forecasts. Future points of focus include fluctuations in investment business profit and loss in Q4 and whether the full-year forecasts are revised.

3. Accounts receivable increased at a pace significantly exceeding revenue growth, providing an indicator for monitoring the conversion of profit into cash. Financial soundness—an Equity Ratio of 74.2% and a low level of interest-bearing debt—supports resilience against fluctuations in current-period earnings.

Theoretical Share Price (Reference Value)

Sensitivity: 431円〜456円 at Cost of Equity ±1%, and 443円〜444円 at ω±0.1.

Notes:

• Because the progress of Net Income against the full-year forecast (105%) exceeds the standard benchmark (75%), forecast EPS has been adjusted upward within a maximum range of +10%（because companies ahead of forecast progress tend to outperform their forecasts. For businesses with strong seasonality, the adjustment may be excessive）.
• Net assets as of the quarter-end have been used（there is a timing difference from the full-year forecast）.

（Calculation model: Residual Income Model（Ohlson type, explicit 5-year fade） / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee the future share price）

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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 responsibility, after consulting professionals as necessary.

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