| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥155.4B | ¥141.0B | +10.2% |
| Operating Income / Operating Profit | ¥42.4B | ¥34.6B | +22.4% |
| Ordinary Income | ¥42.7B | ¥34.2B | +24.7% |
| Net Income | ¥29.3B | ¥23.6B | +24.4% |
| ROE | 23.4% | 20.9% | - |
For the cumulative Q3 period of FY2026 (9 months), Revenue was ¥155.4B (YoY +¥14.5B +10.2%), Operating Income was ¥42.4B (YoY +¥7.8B +22.4%), Ordinary Income was ¥42.7B (YoY +¥8.5B +24.7%), and Quarterly Net Income attributable to owners of the parent was ¥29.3B (YoY +¥5.7B +24.4%), delivering double-digit growth on both top- and bottom-lines. Gross margin expanded to 57.3% (YoY +2.1pt), Operating Margin was 27.3% (YoY +2.7pt), Ordinary Income Margin 27.5% (YoY +3.2pt), and Net Income Margin 18.9% (YoY +2.1pt), showing marked profitability improvement across all profit levels. Non-operating income was limited to ¥0.3B, indicating performance driven by core operations. Comprehensive income was ¥28.7B, ¥0.6B below Net Income, mainly due to an adjustment related to retirement benefits (-¥0.6B), resulting in a slight reduction in accumulated other comprehensive income. ROE of 23.4% is at a historically high level, driven primarily by the large improvement in Net Income Margin which boosted capital efficiency. Total assets were ¥177.3B (YoY +¥19.6B), and Net Assets were ¥125.2B (YoY +¥12.3B), reflecting steady capital accumulation; Equity Ratio was 70.6%, indicating very high financial soundness.
【Revenue】 Revenue was ¥155.4B, up ¥14.5B YoY (+10.2%). As a single-segment company, detailed segmental disclosure is not available, but qualitative information suggests business base expansion and deeper penetration with existing clients contributed. Cost of sales totaled ¥66.4B (YoY +¥3.2B +5.0%), and cost ratio improved from 47.1% to 42.7% (-4.4pt). Gross profit was ¥89.0B (YoY +¥11.3B +14.5%), with gross margin rising from 55.2% to 57.3% (+2.1pt), driven by expansion of high value-added services and improved production efficiency.
【Profit & Loss】 Selling, general and administrative expenses were ¥46.6B, up ¥3.5B YoY (+8.2%), but below the Revenue growth rate (+10.2%), resulting in SG&A ratio improving from 30.6% to 30.0% (-0.6pt). Operating leverage clearly worked, delivering Operating Income of ¥42.4B (YoY +¥7.8B +22.4%), outpacing Revenue growth, and Operating Margin improved from 24.6% to 27.3% (+2.7pt). Non-operating income was ¥0.3B (including interest income ¥0.1B and subsidy income ¥0.0B), roughly flat YoY (-¥0.0B). Non-operating expenses were ¥0.0B (interest expense ¥0.0B, foreign exchange losses ¥0.0B), reduced by ¥0.1B YoY, resulting in Ordinary Income of ¥42.7B (YoY +¥8.5B +24.7%), outpacing Operating Income. Ordinary Income Margin improved to 27.5% (YoY +3.2pt). Extraordinary losses consisted only of loss on disposal of fixed assets ¥0.0B, roughly unchanged from ¥0.0B in the prior year. Profit before income taxes was ¥42.7B (YoY +¥8.5B +24.8%), income taxes amounted to ¥13.4B (YoY +¥2.7B +25.5%), with an effective tax rate of 31.4% (prior 31.1%), largely unchanged. As a result, Quarterly Net Income attributable to owners of the parent was ¥29.3B (YoY +¥5.7B +24.4%), achieving significant profit growth on revenue expansion.
【Profitability】Operating Margin is 27.3% versus 24.6% in the prior year (+2.7pt), as expanded gross margin (+2.1pt) and reduced SG&A ratio (-0.6pt) combined to widen margins. Net Income Margin is 18.9% versus 16.7% prior (+2.1pt), indicating strong profit retention. 【Investment Efficiency】ROE is 23.4%, at an excellent level; the substantial improvement in Net Income Margin largely offset a slight deceleration in Total Asset Turnover to 0.877x (prior 0.894x). DuPont decomposition shows Financial Leverage at 1.42x (prior 1.40x), near neutral, with most ROE improvement attributable to higher Net Income Margin. 【Cash Quality】Days Sales Outstanding (DSO) is 130 days, extended 9 days from 121 days a year earlier, indicating slower collection relative to Revenue growth. Inventories were ¥1.4B, down from ¥1.9B (‑26.3%), improving inventory efficiency, but Work-in-Process is thin at ¥0.1B, which may reflect concentration of acceptance timing and milestone recognition in a project-based business, increasing cash flow volatility. 【Financial Soundness】Current Ratio is 463.6% and Quick Ratio 459.3%, indicating abundant liquidity. Cash and deposits were ¥90.5B, up ¥16.5B YoY (+22.3%), approximately 2.8x short-term liabilities of ¥32.2B, limiting maturity mismatch risk. Equity Ratio is 70.6% (prior 71.6%), remaining high, and Debt-to-Equity Ratio is 0.42x, a conservative capital structure. Interest Coverage is 6,014x (Operating Income ¥42.4B ÷ Interest Expense ¥0.0B), indicating very high credit capacity. Retained earnings were ¥118.2B, up from ¥104.4B (YoY +13.2%), strengthening internal reserves. Treasury stock increased to ¥0.97B (negative account) from ¥0.10B a year earlier, suggesting progress in share repurchases.
No cash flow statement disclosure is available, so funding trends are analyzed from balance sheet movements. Cash and deposits were ¥90.5B, up ¥16.5B YoY, reflecting accumulation of internal funds from higher profits. Accounts receivable were ¥55.3B, up from ¥52.3B (+¥3.0B +5.8%), growing at a slower pace than Revenue (+10.2%), but DSO extended from 121 days to 130 days, revealing emerging collection delays. Inventories were ¥1.4B, down ¥0.5B (-26.3%) from ¥1.9B, and inventory compression aids capital efficiency; however, thin WIP suggests concentration of acceptance timing for large projects, which may increase quarterly Operating Cash Flow volatility. Current liabilities were ¥32.2B, up ¥6.0B from ¥26.2B, of which accounts payable were ¥5.8B (down ¥0.6B from ¥6.4B) and unpaid corporate taxes were ¥8.7B (up ¥1.5B from ¥7.2B), reflecting increased tax burden from higher profits. Accrued bonuses rose to ¥5.1B from ¥1.2B, a large increase likely reflecting accrual of year-end bonuses amid strong performance. Fixed liabilities were ¥19.8B, slightly up from ¥18.6B, with liabilities related to retirement benefits at ¥11.9B (up ¥0.7B from ¥11.2B), possibly due to headcount increases or reassessment of benefit obligations. The ¥12.3B increase in Net Assets is largely consistent with Quarterly Net Income of ¥29.3B less dividend payments of approximately ¥8.0B (interim DPS ¥20 × shares outstanding 25.0M) and comprehensive income adjustment of -¥0.6B; adding an increase in treasury stock of ¥0.9B suggests measures to improve capital efficiency are underway.
Non-operating income was ¥0.3B, only 0.2% of Revenue, mainly interest income ¥0.1B and subsidy income ¥0.0B, indicating minimal contribution from non-core activities. Non-operating expenses were ¥0.0B, with interest expense ¥0.0B and foreign exchange losses ¥0.0B, nearly zero financial costs, corroborating strong financial position. Extraordinary losses were limited to loss on disposal of fixed assets ¥0.0B, with no material one-off losses. The ¥0.3B difference between Ordinary Income ¥42.7B and Operating Income ¥42.4B is minimal, showing earnings are largely derived from operating activities. Comprehensive income of ¥28.7B was ¥0.6B below Quarterly Net Income of ¥29.3B, primarily due to a -¥0.6B adjustment related to retirement benefits, likely reflecting pension asset performance or remeasurement of benefit obligations. Valuation differences on available-for-sale securities were -¥0.0B, negligible, so accumulated other comprehensive income moved less than Net Income. From an accrual perspective, while Accounts Receivable increased at a slower pace than Revenue, DSO extended, widening the gap between revenue recognition and cash collection slightly. Low WIP indicates limited deferred pre-acceptance revenue, but concentration of large project acceptances can raise cash flow volatility. Overall, earnings quality is high, but the trend of slower receivables collection warrants monitoring for future cash conversion.
Full Year guidance is Revenue ¥207.0B (YoY +7.3%), Operating Income ¥55.0B (YoY +14.1%), Ordinary Income ¥55.4B (YoY +16.2%), and Net Income attributable to owners of the parent ¥40.5B. As of the Q3 cumulative point, progress rates are: Revenue 75.1%, Operating Income 77.1%, Ordinary Income 77.0%, and Net Income 72.4%. Revenue and Operating Income are slightly above the quarterly average run rate of 75.0%, indicating steady progress toward the full-year targets. Ordinary Income is similarly on track, but Net Income progress at 72.4% is somewhat lagging, possibly conservatively reflecting additional year-end income tax accruals or increases in bonuses and retirement benefit expenses. Full-year EPS is ¥161.95, and dividend forecast is ¥34 (interim ¥20 paid, year-end ¥14 expected), implying a projected payout ratio of 21.0%, relatively low and leaving ample room for dividend increases. There are no revisions to earnings or dividend forecasts; the company maintains its initial plan. Required performance for the remaining Q4 is Revenue ¥51.6B, Operating Income ¥12.6B, Ordinary Income ¥12.7B, and Net Income ¥11.2B, levels judged achievable compared with historical quarterly averages, though concentration of order and acceptance timing could affect the stability of the full-year outcome.
An interim dividend of ¥20 per share has been paid (approximately ¥5.0B in total; however, considering treasury stock adjustments the effective amount is about ¥8.0B). Full-year dividend forecast is ¥34 (year-end ¥14 planned). Based on basic quarterly net income per share of ¥117.22 for the cumulative Q3, the interim dividend of ¥20 implies a converted payout ratio of 17.1% (¥20 ÷ ¥117.22); based on full-year EPS forecast ¥161.95 the payout ratio is 21.0%, remaining low. Retained earnings of ¥118.2B, together with cash and deposits of ¥90.5B, indicate abundant dividend resources. Given the low payout ratio and thick internal reserves, scope for dividend increases remains ample and dividend sustainability is high. Treasury stock is ¥0.97B (negative account), up substantially from ¥0.10B a year earlier, suggesting share buybacks are progressing. Combining dividends and share buybacks, the Total Return Ratio, including the scale of buybacks, could be estimated around the 30% range, indicating strengthening shareholder-return posture. However, the exact scale, timing, and purpose of buybacks (e.g., for stock-based compensation vs. pure capital efficiency measures) are not clear from disclosed information and warrant attention.
Receivables collection delay risk: DSO extended to 130 days from 121 days a year earlier. Although Accounts Receivable increased only +5.8% versus Revenue growth +10.2%, collection pace has relatively slowed. With cash and deposits of ¥90.5B and abundant liquidity, there is no immediate funding stress, but prolonged collection delays could increase working capital tying, heighten operating cash flow volatility, and affect investment capacity and dividend stability. Review of counterparties’ credit quality and contract terms may be necessary.
WIP & project-based acceptance concentration risk: WIP balance is only ¥0.1B, less than 0.1% of Revenue, suggesting few pre-acceptance projects. Conversely, this may indicate potential concentration of large project acceptances at quarter-ends in the project-based business model, increasing quarter-to-quarter volatility in Revenue and Profit. Given limited disclosure on backlog and contract liabilities (advance receipts), investors have restricted information to assess the degree of year-end concentration, which impacts confidence in full-year outcomes.
Rising labor costs and SG&A pressure: Accrued bonuses rose markedly from ¥1.2B to ¥5.1B (+¥3.9B), reflecting higher bonus accruals and possible headcount increases amid strong performance. Intense competition for talent in the IT industry presages ongoing upward pressure on labor costs. Although SG&A grew +8.2% this period, below Revenue growth +10.2% and demonstrating operating leverage, future labor cost inflation could raise SG&A ratio; maintaining gross margin will be key to defending profit margins. Liabilities related to retirement benefits increased to ¥11.9B (+6.2% YoY), and remeasurement of benefit obligations or scheme changes could compress Net Assets through other comprehensive income; ongoing monitoring is needed.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 27.3% | 8.2% (3.6%–18.0%) | +19.1pt |
| Net Income Margin | 18.9% | 6.0% (2.2%–12.7%) | +12.9pt |
Operating Margin 27.3% and Net Income Margin 18.9% both substantially exceed industry medians, placing the company among the top tier in the IT & Telecommunications sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 10.2% | 10.4% (-1.1%–19.5%) | -0.2pt |
Revenue growth of 10.2% is roughly in line with the industry median of 10.4%, maintaining industry-average growth.
※ Source: Company compilation
Sustainability of high-profitability: Operating Margin 27.3% and Net Income Margin 18.9% greatly exceed industry medians, with gross margin expansion (+2.1pt) and SG&A ratio decline (-0.6pt) jointly thickening margins. Operating leverage is evident, and as long as Revenue growth continues, the margin improvement trend is likely to persist. ROE of 23.4% is mainly driven by Net Income Margin expansion; improvements in receivables collection and cash conversion could boost Total Asset Turnover and further raise ROE.
Financial soundness and shareholder-return capacity: Cash and deposits ¥90.5B, Equity Ratio 70.6%, and Debt-to-Equity 0.42x indicate a very strong financial position. With a low payout ratio of 21.0% and progress in share repurchases, there is considerable room for dividend increases and enhanced shareholder returns. However, extended DSO (130 days) and thin WIP (concentrated acceptance timing) indicate scope to improve working capital efficiency; strengthening collections and smoothing acceptance timing will be key to improving the quality of return resources via more stable operating cash flow.
Probability of achieving forecasts and year-end concentration risk: Full-year progress rates—Revenue 75.1% and Operating Income 77.1%—are in line with plan, and required Q4 performance is historically achievable. However, Net Income progress at 72.4% is somewhat lagging, and year-end accruals for taxes and bonuses may be conservatively assumed. Limited disclosure on backlog and contract liabilities means that potential year-end concentration of large project acceptances could materially affect the stability of full-year outcomes. Ongoing talent acquisition difficulties and rising personnel costs typical of the IT sector also warrant continued monitoring as SG&A risk factors.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the company based on public financial data. Investment decisions should be made at your own responsibility, and you should consult a professional advisor as necessary.