| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥146.7B | ¥117.1B | +25.3% |
| Operating Income / Operating Profit | ¥1.7B | ¥-5.8B | +129.0% |
| Ordinary Income | ¥-1.9B | ¥-7.3B | +74.5% |
| Net Income / Net Profit | ¥17.8B | ¥-7.4B | +341.7% |
| ROE | 3.1% | -1.3% | - |
For the quarter ended February 2026 (Q1), revenue was ¥146.7B (¥117.1B in the same period last year, +¥29.6B +25.3%), operating income was ¥1.7B (¥-5.8B, +¥7.5B +129.0%), ordinary income was ¥-1.9B (¥-7.3B, +¥5.4B +74.5%), and quarterly net income attributable to owners of parent was ¥18.3B (¥-11.2B, +¥29.5B +263.6%). Gross margin improved significantly to 72.6% (68.6% prior year, +4.0pt), and the Company turned to operating profit. Net income was substantially boosted by special gains of ¥26.9B, primarily investment securities sale gains of ¥24.1B; however, ordinary-stage results remain negative, indicating core earning power is still improving. High growth in the Business segment (revenue YoY +58.6%) and scale benefits from improved gross margin were the main drivers of operating profitability.
[Revenue] Revenue reached ¥146.7B (YoY +25.3%), achieving high growth. By segment, Business recorded ¥123.8B (YoY +58.6%), showing notable expansion of the core business and accounting for 84.4% of total revenue. HOME was ¥12.8B (YoY +4.7%), maintaining stable growth and representing 8.7% of the total. X declined to ¥9.3B (YoY -22.5%), and Finance revenue effectively disappeared (¥0.0B, down -99.9% from ¥7.5B). The SaaS Marketing segment present in the prior-year period was excluded from reporting this period due to the full transfer of SmartCamp Co., Ltd., so segment continuity should be noted. Cost of sales was contained at ¥40.2B (cost ratio 27.4%), driving gross margin up to 72.6% (68.6% prior year, +4.0pt).
[Profitability] Gross profit expanded to ¥106.5B (¥80.3B prior year, +32.7%), outpacing revenue growth. SG&A was ¥104.8B (¥86.1B prior year, +21.7%), but gross profit growth outstripped SG&A, leading to operating income of ¥1.7B (¥-5.8B prior year), turning operating profit positive. Operating margin improved to 1.1% (prior year -5.0%, +6.1pt) but remains low. Non-operating items included interest income ¥0.5B versus interest expense ¥0.9B and equity-method investment losses, with total non-operating expenses of ¥4.1B, resulting in ordinary income of ¥-1.9B (¥-7.3B prior year) — a narrower deficit but still negative. With special gains of ¥26.9B (mainly investment securities sale gains of ¥24.1B), pre-tax income was ¥22.8B; after income taxes of ¥5.0B, quarterly net income attributable to owners of parent was ¥18.3B (¥-11.2B prior year), a substantial swing to profit. In conclusion, the company delivered higher revenue and profit, but most net income depended on special gains, and improving ordinary-stage profitability remains a challenge.
The Business segment recorded revenue of ¥123.9B (¥78.1B prior year, +58.6%) and operating income of ¥7.9B (¥-3.4B prior year), turning profitable with a margin of 6.4%. As the core business representing 84.4% of consolidated revenue, profitability has improved alongside growth investments. The HOME segment posted revenue of ¥12.8B (¥12.2B prior year, +4.7%) and operating income of ¥2.4B (¥1.3B prior year, +85.0%), with a high margin of 19.1%, serving as a stable earnings source. The X segment had revenue of ¥9.3B (¥12.0B prior year, -22.5%) and operating income of ¥1.1B (¥1.3B prior year, -16.0%), maintaining an 11.8% margin despite revenue decline; reaccelerating growth is a challenge. The Finance segment collapsed to revenue ¥0.0B (¥7.5B prior year, -99.9%) with operating loss ¥0.7B (operating income ¥0.4B prior year), suggesting substantial downsizing and likely ongoing business restructuring. Among segments, HOME has the highest margin, Business is achieving growth with improving profitability, and revitalizing X and Finance is necessary to lift overall corporate profitability.
[Profitability] Operating margin improved materially to 1.1% (prior year -5.0%, +6.1pt), though the level remains low; improvements in gross margin to 72.6% (prior year 68.6%, +4.0pt) and scale effects contributed. Net margin is 12.5% but is driven by special gains and thus of limited sustainability. ROE is 3.1% (Dupont: net margin 12.5% × asset turnover 0.092 × financial leverage 2.77), remaining low; improving asset efficiency is critical.
[Cash Quality] Interest coverage is operating income ¥1.7B ÷ interest expense ¥0.9B = 1.88x, a concerning level with limited resilience to higher interest costs. Working capital indicators show DSO 192 days (accounts receivable ¥77.0B ÷ revenue ¥146.7B × 365 days) and CCC 174 days, indicating prolonged cycles and vulnerability in cash generation.
[Investment Efficiency] Asset turnover is 0.092 (revenue ¥146.7B ÷ total assets ¥1602.6B), low, with total assets rising to ¥1602.6B (¥1275.7B prior year, +25.6%) and revenue growth lagging somewhat. Intangible assets stand at ¥275.3B (17.2% of total assets) and goodwill at ¥65.3B (11.3% of equity), reflecting significant investment in intellectual assets and highlighting the importance of impairment risk management.
[Financial Soundness] Equity ratio is 36.0% (prior year 43.8%, -7.8pt), down but within an acceptable range. Current ratio is 140.3% (current assets ¥1015.3B ÷ current liabilities ¥723.4B), indicating solid short-term liquidity. Cash of ¥693.2B can comfortably cover total near-term debt obligations of ¥113.9B (short-term borrowings ¥51.2B, long-term borrowings maturing within one year ¥52.7B, bonds maturing within one year ¥10.0B). Interest-bearing debt totals ¥302.2B (short-term borrowings ¥51.2B, long-term borrowings ¥131.0B, bonds ¥120.0B), with Debt/Capital ratio 23.9% and moderate leverage, though sensitivity to interest rate increases is elevated given low interest coverage.
Operating cash flow data has not been disclosed, but given that net income ¥18.3B includes special gains of ¥26.9B, the ordinary-stage loss of ¥-1.9B better reflects core earnings capacity. There is a sizable divergence between accounting profit and cash generation. Working capital metrics show DSO 192 days, DIO 11 days, DPO 29 days, and CCC 174 days, indicating prolonged accounts receivable collection that hinders cash conversion. Cash balance increased by ¥285.9B (+70.2%) from ¥407.3B to ¥693.2B, suggesting financing or realization of sale gains. Contract liabilities (deferred revenue) of ¥101.1B represent future performance obligations but contribute to cash inflows due to timing differences between service provision and receipt of consideration. With interest expense ¥0.9B and operating income ¥1.7B thinly covering it, sustained build-up of operating cash flow and improvement in working capital efficiency are essential to secure financial stability and free cash flow.
Earnings quality warrants cautious assessment. Operating income was ¥1.7B while special gains of ¥26.9B (investment securities sale gains ¥24.1B, fixed assets sale gains ¥0.0B, etc.) substantially lifted net income to ¥18.3B. Ordinary income was ¥-1.9B, indicating net income largely depended on non-recurring items. Non-operating income was small at ¥0.6B (0.4% of revenue), including dividend income ¥0.0B and other non-operating income ¥0.1B. Non-operating expenses totaled ¥4.1B (2.8% of revenue), including interest expense ¥0.9B, equity-method investment losses ¥1.6B, and fees ¥1.1B, which pressured ordinary-stage profitability. Comprehensive income was ¥18.5B (parent company portion ¥19.0B) versus net income ¥18.3B (parent portion ¥18.3B), with a small difference primarily driven by other comprehensive income of ¥0.7B (foreign currency translation adjustment ¥1.4B, valuation difference on available-for-sale securities -¥0.8B, equity-method OCI ¥0.0B). From an accruals perspective, prolonged DSO at 192 days signals receivable build-up and a need to narrow the gap with operating cash flow. The company recorded impairment losses of ¥2.2B (software) this period, underscoring the importance of monitoring the return on intangible assets.
Forecast data are disclosed, but specific figures are not provided. The company revised its forecasts during the period (Q1 forecast revision: Yes), indicating adjustments to the initial outlook. Dividend forecast remains unchanged at no dividend (¥0.00). As full-year guidance figures are not disclosed, progress rates cannot be calculated, but Q1 achieved operating profitability and substantial net income improvement; the key focus is whether core (ex-special items) performance will be sufficient to meet full-year plans.
No dividend was declared this period (¥0.00), maintaining a zero dividend policy. Payout ratio is 0%. Given that operating income only recently turned positive and net income is driven by special gains, the zero dividend policy aligns with priorities of strengthening the balance sheet and prioritizing growth investment. No share buyback was disclosed, suggesting the company favors internal reserves to reinforce the business base and improve capital efficiency over shareholder distributions. If sustainable operating margin improvement and stable operating cash flow are confirmed, consideration of future dividend introduction could arise.
Weakness of core earning power: Operating margin is low at 1.1% and ordinary income is negative at ¥-1.9B. With SG&A at ¥104.8B (71.5% of revenue) and a high cost structure, a slowdown in revenue growth risks reverting to operating losses. Interest coverage of 1.88x indicates low resilience to interest burdens; changes in borrowing terms or rising interest rates could compress earnings.
Deterioration in working capital efficiency: DSO 192 days and CCC 174 days demonstrate prolonged receivable collections and vulnerability in cash generation. Continued working capital growth relative to revenue could increase funding pressure and liquidity risk. Failure to fulfill obligations related to contract liabilities of ¥101.1B (deferred revenue) could affect revenue recognition and customer trust.
Impairment risk on intangible assets: Intangible assets ¥275.3B (17.2% of total assets) and goodwill ¥65.3B (11.3% of equity) reflect large investments in intellectual assets; the company recorded impairment losses of ¥2.2B this period. Segment-level impairment may arise in Business and HOME due to revisions in software development plans, and further impairment risk may materialize with changes in business environment or technology trends.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.1% | 6.2% (4.2%–17.2%) | -5.1pt |
| Net Margin | 12.1% | 2.8% (0.6%–11.9%) | +9.3pt |
Operating margin is 5.1pt below the industry median, indicating significant room to improve cost structure, while net margin exceeds the industry median mainly due to contribution from special gains.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 25.3% | 20.9% (12.5%–25.8%) | +4.4pt |
Revenue growth outpaces the industry median, maintaining a top-tier growth pace within the IT & Telecom sector.
※Source: Company aggregation
The company achieved operating profitability driven by revenue growth of +25.3% and high growth in the Business segment (+58.6%), while gross margin improved to 72.6% (+4.0pt). Expansion of core businesses and scale effects contributed to operating-stage earnings improvement. However, operating margin remains low at 1.1%, and controlling SG&A while sustaining revenue growth will be key to margin expansion.
Quarterly net income of ¥18.3B heavily depends on special gains of ¥26.9B (investment securities sale gains ¥24.1B), while ordinary income remains negative at ¥-1.9B. Core earnings excluding one-off items are still improving, and attention should focus on the impact of the drop-off in special gains in subsequent periods and the company’s ability to achieve ordinary-stage profitability.
Cash of ¥693.2B and current ratio of 140.3% indicate solid short-term liquidity, but interest coverage of 1.88x, DSO 192 days, and asset turnover 0.092 highlight substantial room for improvement in interest burden resilience, working capital efficiency, and asset efficiency. HOME maintains a high margin of 19.1%, and Business is turning profitable, while revitalizing X and Finance is necessary to lift overall corporate profitability. Maintaining the zero dividend policy is consistent with prioritizing growth investment, but improving operating cash flow generation and financial efficiency are prerequisites for medium-to-long-term value enhancement and introduction of shareholder returns.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as appropriate.