Kanamic Network Co.,LTD FY2026 Q3 Earnings Report

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Executive Summary

In addition to higher revenue and earnings, Operating Income grew at a rate exceeding revenue growth, making this a quarter in which the qualitative improvement in profitability progressed. Revenue was ¥46.3B (+15.2% YoY), Operating Income was ¥15.0B (+29.5%), Ordinary Income was ¥15.2B (+30.7%), and Net Income (Net Income attributable to owners of the parent) was ¥10.2B (+27.5%). In addition to the year-on-year improvement in the SG&A expense ratio, the maintenance of high margins in the core Medical and Nursing Care Cloud Platform Business and growth in the Healthy Life Expectancy Extension Business were the primary factors behind earnings growth exceeding revenue growth.

Factors Affecting Business Performance

【Revenue】Revenue was ¥46.3B, representing a year-on-year increase of +15.2%. By segment, the Medical and Nursing Care Cloud Platform Business led the core operations with revenue of ¥30.7B (+15.5%, composition ratio 64.8%), while the Healthy Life Expectancy Extension Business posted the highest growth rate at ¥10.5B (+26.2%). The Solutions Development Business remained at ¥6.2B (+10.2%), with a relatively moderate growth rate.

【Profit and Loss】Operating Income was ¥15.0B (+29.5%) and Ordinary Income was ¥15.2B (+30.7%), with both growing faster than revenue. The Operating Income margin improved to 32.5% (28.9% in the previous year), while the gross profit margin improved to 64.7% (64.3% in the previous year) and the SG&A expense ratio declined to 32.2% (35.4% in the previous year), which were the primary drivers of earnings growth. Net Income was ¥10.2B (+27.5%), with the ¥5.0B burden of income taxes and other taxes (effective tax rate of approximately 33.1%) remaining at a level comparable to the previous year. Both non-operating and extraordinary gains and losses were minor, and the gap between Ordinary Income and Net Income was primarily attributable to the tax burden. Revenue and earnings increased.

Segment Analysis

The Medical and Nursing Care Cloud Platform Business generated revenue of ¥30.7B (+15.5%) and Operating Income of ¥14.1B (+27.8%), with a profit margin of 46.0%, making it the core contributor to consolidated earnings. The Healthy Life Expectancy Extension Business generated revenue of ¥10.5B (+26.2%) and Operating Income of ¥1.7B (+85.6%), with a profit margin of 15.8%; its high earnings growth rate has positioned it as the second growth driver. The Solutions Development Business generated revenue of ¥6.2B (+10.2%), while operating profit and loss was ▲0.02B (deteriorating from +0.6B in the previous year), as amortization of goodwill and other factors pressured its profit margin. Consolidated Operating Income was ¥15.0B, reflecting an adjustment of ▲0.7B, including goodwill amortization, against total segment profit of ¥15.8B.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 32.5% (28.9% in the previous year), while the Net Income margin was approximately 22.0% (approximately 19.8% in the previous year), indicating an improving trend in both metrics. ROE was 18.9%, primarily due to the improvement in the Net Income margin.【Cash Flow Quality】Accounts receivable were ¥1.8B, a small amount relative to the scale of revenue, indicating efficient collection. Contract liabilities accumulated to ¥6.1B (¥2.9B in the previous year), with the increase in deferred revenue supporting cash generation capacity.【Investment Efficiency】The total asset turnover ratio was generally in the 0.6x range, indicating stable asset efficiency under conservative leverage.【Financial Soundness】The Equity Ratio remained high at 72.2% (71.1% in the previous year), while long-term borrowings were reduced to ¥1.1B. Cash and deposits of ¥41.0B substantially exceeded current liabilities of ¥17.2B, indicating strong short-term payment capacity.

Cash Flow Analysis

Although detailed information from the statement of cash flows is not included in the disclosed data, trends in the balance sheet indicate that cash and deposits increased to ¥41.0B (¥33.3B in the previous year), while retained earnings accumulated to ¥53.7B (¥47.1B in the previous year). Contract liabilities more than doubled to ¥6.1B (¥2.9B in the previous year), indicating that the increase in deferred revenue generated an advance inflow of funds. Long-term borrowings were reduced to ¥1.1B (¥3.1B in the previous year), lowering reliance on external liabilities. Goodwill amortization (approximately ¥0.7B for Q3 cumulative) is an expense recognized in profit or loss but does not involve a cash outflow; therefore, the company’s underlying cash generation capacity is considered to be at a higher level relative to Net Income.

Quality of Earnings

Non-operating income of ¥0.2B and non-operating expenses of ¥0.1B were both minor, and the increase from Operating Income of ¥15.0B to Ordinary Income of ¥15.2B was primarily attributable to earnings from the core business. Extraordinary gains and losses were also limited (gain on sale of property, plant and equipment of ¥0.06B and loss on disposal of property, plant and equipment of ¥0.03B), with no indication that temporary factors materially affected performance. Net Income of ¥10.2B reflects an effective tax rate of approximately 33.1% against pretax income of ¥15.2B, within a standard range. Goodwill amortization (approximately ¥0.7B for Q3 cumulative) is a non-cash expense that does not involve a cash outflow; taking this into account, underlying cash generation capacity can be assessed as somewhat higher than reported Net Income.

Earnings Forecast and Guidance

Progress against the full-year forecast was 72.9% for Revenue (¥46.3B/¥63.5B), 73.4% for Operating Income (¥15.0B/¥20.5B), and 74.2% for Net Income (¥10.2B/¥13.7B), which is close to a standard level of progress for Q3 cumulative results (a guideline of approximately 75%). Neither the earnings forecast nor the dividend forecast was revised, and progress to date is broadly consistent with the full-year plan for Revenue growth of +15.4% and Operating Income growth of +27.5%. Assuming continued growth in the core segments, the likelihood of achieving the plan is considered high, depending on the expense recognition trend in Q4.

Shareholder Returns

The dividend paid for the Q3 cumulative period was ¥0, but the full-year dividend forecast is ¥9.00 per share, resulting in a Payout Ratio of approximately 31.2% against forecast EPS of ¥28.87. Based on approximately 4,746 ten thousand shares outstanding (excluding treasury shares), the annual total dividend is estimated at approximately ¥4.3B, which is amply covered by cash and deposits of ¥41.0B. As there has been no revision to the dividend forecast, the continuity of the dividend policy is considered high, supported by low leverage and substantial cash on hand.

Risk Factors

1. Business concentration risk: The Medical and Nursing Care Cloud Platform Business accounts for 64.8% of the revenue composition and the majority of segment profit; consequently, a slowdown in growth or changes in the competitive environment in this business could have a relatively significant impact on consolidated performance.

2. Delayed monetization of the Solutions Development Business: Against revenue of ¥6.2B (+10.2%), operating profit and loss was ▲0.02B, deteriorating from the previous year. Including the burden of goodwill amortization, the timing of its return to profitability could affect the consolidated margin.

3. Amortization burden related to goodwill and intangible assets: The company holds goodwill of ¥7.5B and total intangible assets of ¥14.7B, and recognized approximately ¥0.7B in goodwill amortization for Q3 cumulative. Additional M&A activity or changes in the business environment could cause future amortization and impairment charges to affect earnings.

Industry Benchmark (For Reference; Company Analysis)

Profitability and Returns

Growth and Capital Efficiency

※Source: Company analysis

Key Points in the Financial Results

1. The Operating Income margin expanded to 32.5% (28.9% in the previous year), confirming the emergence of operating leverage accompanied by a decline in the SG&A expense ratio. ROE of 18.9% was also driven primarily by the improvement in the Net Income margin rather than financial leverage, representing a structural change indicative of sustainable profitability improvement.

2. Contract liabilities accumulated substantially to ¥6.1B (¥2.9B in the previous year), and the increase in deferred revenue indicates a strengthening foundation for the recurring business model. From the perspective of the visibility of future revenue, this trend is a noteworthy point identifiable from the financial results data.

3. Profit margin differences between segments have widened. While the core business (profit margin 46.0%) and the Healthy Life Expectancy Extension Business (15.8%) are driving earnings, the Solutions Development Business has shifted to an operating loss. The next inflection point for the consolidated margin is likely to be the monetization trend of this business.

Theoretical Share Price (Reference Value)

Sensitivity: ¥171–¥181 at a ±1% change in the cost of equity, and ¥174–¥178 at a change of ±0.1 in ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / A mechanical calculation based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict 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 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 with professionals as necessary.

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