| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥602.9B | ¥489.0B | +23.3% |
| Operating Income | ¥173.4B | ¥101.9B | +70.2% |
| Ordinary Income | ¥174.4B | ¥102.2B | +70.7% |
| Net Income | ¥141.2B | ¥79.8B | +76.9% |
| ROE | 54.2% | 36.3% | - |
For the fiscal year ended March 2026, Revenue was ¥602.9B (YoY +¥113.9B +23.3%), Operating Income was ¥173.4B (YoY +¥71.5B +70.2%), Ordinary Income was ¥174.4B (YoY +¥72.2B +70.7%), and Net Income was ¥141.2B (YoY +¥61.4B +76.9%), achieving significant year-over-year growth in both top-line and profits. Gross margin improved by +100bp to 75.3% (prior year 74.3%), and SG&A ratio decreased by -680bp to 46.6% (prior year 53.4%), resulting in Operating Margin expansion of +800bp to 28.8% (prior year 20.8%). High profitability driven by core operations is evident. Non-operating items were immaterial (non-operating income ¥1.1B, expenses ¥0.1B). Extraordinary gains of ¥15.0B (mainly ¥14.9B gain on sale of investment securities) lifted pre-tax income, but the contribution to Net Income was limited and does not materially distort assessment of core profitability. Operating Cash Flow (OCF) was ¥133.9B (YoY +48.7%) and consistent at 0.95x of Net Income, though working capital increases somewhat constrained cash conversion. Free Cash Flow (FCF) was ¥105.6B and ample, broadly covering total shareholder distributions including dividends (¥8.15B) and share buybacks (¥70.1B).
[Revenue] Revenue reached ¥602.9B (prior year ¥489.0B, YoY +23.3%), achieving high growth. By segment, the core CloudService grew substantially to ¥517.7B (prior year ¥418.6B, YoY +23.7%, 85.9% of revenue), driving consolidated growth. HumanResource followed with ¥85.3B (prior year ¥70.6B, YoY +20.8%, 14.1% of revenue) and sustained double-digit growth. By geography, sales to external domestic customers account for over 90% of consolidated Revenue, indicating a domestic-centric business. Cost of Sales was ¥148.7B (prior year ¥125.9B, YoY +18.1%), increasing at a slower pace than Revenue and enabling Gross Margin improvement to 75.3% (prior year 74.3%, +100bp).
[Profitability] Gross Profit was ¥454.2B (prior year ¥363.1B, YoY +25.1%), while SG&A was contained at ¥280.8B (prior year ¥261.2B, YoY +7.5%), leading to a rapid expansion in Operating Income to ¥173.4B (prior year ¥101.9B, YoY +70.2%). SG&A ratio improved by -680bp to 46.6% (prior year 53.4%), and Operating Margin widened by +800bp to 28.8% (prior year 20.8%). Operating leverage manifested clearly. Non-operating items remained small—non-operating income ¥1.1B (dividends received ¥0.4B, interest income ¥0.4B, etc.) and non-operating expenses ¥0.1B—yielding Ordinary Income of ¥174.4B (prior year ¥102.2B, YoY +70.7%). In extraordinary items, Extraordinary Gains of ¥15.0B (gain on sale of investment securities ¥14.9B, etc.) were recorded and Extraordinary Losses were negligible at ¥0.0B, resulting in Pre-tax Income of ¥189.4B (prior year ¥102.2B, YoY +85.4%). Income taxes were ¥56.5B, and Net Income was ¥141.2B (prior year ¥79.8B, YoY +76.9%). Comprehensive Income was ¥118.7B (prior year ¥90.5B, YoY +31.1%), with the divergence from Net Income mainly due to a ¥-14.4B valuation difference on investment securities. In conclusion, high gross margin and controlled SG&A drove strong operating leverage and substantial top-line and bottom-line growth.
CloudService delivered Revenue of ¥517.7B (prior year ¥418.6B, YoY +23.7%), Operating Income of ¥160.3B (prior year ¥93.7B, YoY +71.1%), and Operating Margin of 31.0% (prior year 22.4%), achieving substantial revenue and profit growth and a margin improvement of +860bp. Core cloud products such as “Rakuraku Seisan” and “Rakuraku Meisai” led growth, with expansion driven by accumulation of recurring revenue and improved marketing efficiency. HumanResource achieved Revenue of ¥85.3B (prior year ¥70.6B, YoY +20.8%), Operating Income of ¥13.2B (prior year ¥8.3B, YoY +59.4%), and Operating Margin of 15.5% (prior year 11.7%), continuing double-digit growth and a margin improvement of +380bp, supported by high utilization of IT engineer dispatch and improved project profitability. CloudService accounted for 92.4% of consolidated Operating Income and forms the core of the profit structure, while HumanResource (14.1% of revenue) complements overall stability.
[Profitability] Operating Margin improved to 28.8% (prior year 20.8%, +800bp), driven by Gross Margin of 75.3% (prior year 74.3%, +100bp) and SG&A ratio of 46.6% (prior year 53.4%, -680bp). ROE is extremely high at 54.2% (prior year 45.3%), mainly due to Net Profit Margin improvement to 23.4% (prior year 16.3%, +710bp). ROA improved significantly to 51.1% (prior year 38.6%), supported by both asset turnover of 1.648x and improved Net Profit Margin. [Cash Quality] Operating Cash Flow / Operating Income is 0.77x (prior year 0.88x), with increases in accounts receivable slightly suppressing cash conversion. The accrual ratio is -0.3% and favorable, but OCF/EBITDA (based on subtotal of Operating Cash Flow) is 0.76x, below a benchmark of 0.9x, reflecting working capital variability. [Investment Efficiency] Basic EPS was ¥36.91 (prior year ¥22.09, YoY +67.1%), and BPS was ¥73.52, indicating Net Income growth is being reflected in shareholder value at PBR-equivalent levels. [Financial Soundness] Equity Ratio is 71.2% (prior year 69.4%), with current ratio 225.3% and quick ratio 225.3%, indicating ample short-term liquidity. Interest-bearing debt is effectively zero, and cash of ¥138.9B positions the company as practically debt-free.
Operating Cash Flow was ¥133.9B (prior year ¥90.1B, YoY +48.7%), derived from an Operating Cash Flow subtotal of ¥175.9B less working capital changes and income tax payments of -¥42.4B. An increase in accounts receivable of -¥13.7B was a headwind to working capital, and income tax payments rose substantially from -¥18.6B in the prior year. Depreciation and amortization was ¥9.6B (prior year ¥8.0B), and Operating Cash Flow / Operating Income fell to 0.77x from 0.88x. Investing Cash Flow was -¥28.3B (prior year -¥34.7B), with capital expenditures at -¥10.4B (prior year -¥12.7B) kept within reasonable bounds, and net purchases/sales of investment securities (purchases -¥41.6B, sales +¥25.4B) being the main driver. FCF was ¥105.6B (prior year ¥55.4B), substantially higher, covering dividend payments of -¥8.15B by 12.96x and total dividends plus share buybacks of -¥78.3B by 1.35x. Financing Cash Flow was -¥80.5B (prior year -¥11.8B), mainly due to large-scale share buybacks of -¥70.1B (prior year -¥0.01B). Cash and cash equivalents at period-end increased to ¥138.9B (prior year ¥113.7B, YoY +¥25.2B), indicating very stable liquidity.
As Operating Income of ¥173.4B flows to Ordinary Income of ¥174.4B and Net Income of ¥141.2B, the business-driven revenue structure is confirmed. Non-operating income was ¥1.1B (dividends received ¥0.4B, interest income ¥0.4B, etc.), less than 0.2% of Revenue and immaterial, indicating very low reliance on non-operating income. Extraordinary Gains of ¥15.0B (gain on sale of investment securities ¥14.9B, etc.) are one-off items; their contribution to Net Income is estimated at roughly ¥10B, but given the levels of Operating Income and OCF, this does not materially distort assessment of core profitability. The accrual ratio of -0.3% is favorable, indicating good alignment between recognized profits and cash generation. Meanwhile, the ratio of Operating Cash Flow subtotal to Operating Cash Flow is 0.76x, and increases in accounts receivable (-¥13.7B) and decreases in other liabilities suppressed cash conversion. Comprehensive Income of ¥118.7B was below Net Income of ¥141.2B, mainly due to valuation differences on investment securities of -¥14.4B. Valuation swings of investment securities affect shareholders’ equity through AOCI, so attention is needed to fluctuations in comprehensive income driven by market conditions. Overall, earnings quality is good with core operating profit central, but monitoring is warranted for working capital headwinds from increased accounts receivable and valuation volatility of investment securities.
The company plans Full Year Revenue of ¥597.0B (YoY -1.0%), Operating Income ¥205.0B (YoY +18.2%), Ordinary Income ¥205.0B (YoY +17.5%), and EPS forecast of ¥71.16. The Revenue assumption is slightly conservative, while Operating Income guidance is bullish at +18.2%, implying further Operating Margin expansion to 34.3% (current 28.8%, +550bp). This assumes continued optimization of marketing efficiency and productivity gains in fixed costs, allowing operating leverage even with flat Revenue. Assumptions include accumulation of CloudService recurring revenue and stable churn, plus maintained utilization in HumanResource. Progress rate on Operating Income is high at 84.6% (¥173.4B / ¥205.0B), requiring approximately ¥31.6B more for the remainder of the year; achievement is feasible if operating leverage and cost control continue. The -1.0% Revenue assumption may reflect temporary restraint in growth investment or conservative market assumptions, making the balance between growth and profitability a key point of focus.
Year-end dividend is ¥7.0 (prior year ¥0), with total dividends of approximately ¥8.15B and a Payout Ratio of 18.7% (based on Net Income ¥141.2B). Considering the 2-for-1 stock split effective October 1, 2025, the pre-split equivalent dividend is ¥14.0. The company executed large share buybacks of -¥70.1B (prior year -¥0.01B) this period, bringing total returns to approximately ¥78.3B and raising the Total Return Ratio to 55.4%. Coverage of total returns by FCF of ¥105.6B is 1.35x, indicating cash generation broadly supports shareholder distributions. With ¥138.9B in cash and effectively no debt, together with stable OCF generation of ¥133.9B, sustainability of dividends and buybacks is high. The Payout Ratio of 18.7% is low, suggesting significant room for future dividend increases. Share buybacks can be seen as a flexible allocation prioritizing capital efficiency.
Product concentration risk: CloudService accounts for 85.9% of Revenue and 92.4% of Operating Income, indicating very high dependence on specific product suites. If competitors enhance functionality or change pricing strategies, or customer churn rises, consolidated performance could be materially impacted. Continuous monitoring of churn and NRR (Net Revenue Retention) is required.
Working capital expansion risk: Accounts receivable stood at ¥86.8B (prior year ¥72.1B, YoY +20.4%), increasing slightly below Revenue growth of +23.3%, and Operating Cash Flow / Operating Income declined to 0.77x (prior year 0.88x). If relaxed collection terms or growth-driven receivable accumulation continue, cash conversion efficiency may weaken and pressure FCF. Ongoing attention to days sales outstanding and collection terms is necessary.
Valuation volatility of investment securities: Investment securities amounted to ¥49.0B (prior year ¥38.8B), representing 13.4% of total assets, and valuation differences on investment securities swung from prior year +¥9.9B to current period -¥4.5B (a change of -¥14.4B). Market deterioration or performance swings in held securities could cause AOCI fluctuations, affecting equity and comprehensive income volatility. Monitoring of investment policy and realized/unrealized gains/losses is required.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 28.8% | 8.1% (3.6%–16.0%) | +20.7pt |
| Net Profit Margin | 23.4% | 5.8% (1.2%–11.6%) | +17.6pt |
Profitability is extremely high within the industry, with Operating Margin +20.7pt and Net Profit Margin +17.6pt above the medians, placing the company in the upper tier.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 23.3% | 10.1% (1.7%–20.2%) | +13.2pt |
Revenue growth exceeds the median by +13.2pt, maintaining a top-tier growth pace within the industry.
※ Source: Company compilation
Clear high-margin, business-driven profitability: Gross Margin 75.3% and Operating Margin 28.8% improved significantly YoY, confirming the emergence of operating leverage. High margins in CloudService (31.0%) are driving the company, with marketing efficiency and economies of scale effective. Next-year guidance assumes flat Revenue and Operating Income +18.2%, embedding further operating leverage; continued cost control will be the litmus test.
Ample FCF and flexible capital allocation: With FCF of ¥105.6B, the company returned ¥78.3B (dividends + buybacks, Total Return Ratio 55.4%), demonstrating a clear orientation to return cash to shareholders. Cash ¥138.9B and effectively no debt, plus stable OCF generation, provide considerable flexibility for growth investment, shareholder returns, and M&A. The Payout Ratio of 18.7% is low, indicating substantial upside for dividend increases.
Monitoring working capital and Cloud concentration: Growth in accounts receivable reduced Operating Cash Flow / Operating Income to 0.77x, indicating room to improve cash conversion. While CloudService concentration (85.9% of revenue) is the source of high profitability, it also concentrates risk around competition, pricing, and churn. Stability of churn (churn) and NRR and managing collection terms are key to sustainable growth.
This report was auto-generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.