| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥25.1B | ¥16.4B | +53.0% |
| Operating Income | ¥1.1B | ¥-0.6B | +379.9% |
| Ordinary Income | ¥1.1B | ¥-0.6B | +627.0% |
| Net Income | ¥0.7B | ¥-0.8B | +190.2% |
| ROE | 2.6% | -3.0% | - |
FY2026 Q3 cumulative results show revenue of 25.1B yen (YoY +53.0%), operating income of 1.1B yen (prior period -0.6B yen, turnaround to profitability representing +379.9%), ordinary income of 1.1B yen (+627.0%), and net income of 0.7B yen (prior period -0.8B yen, +190.2%). This marks the first profitable nine-month period after prior year losses. Basic EPS reached 22.22 yen versus -21.06 yen in the prior period (+205.5%). The company maintains strong liquidity with cash and deposits of 18.0B yen and an equity ratio of 60.1%.
Revenue drivers show top-line growth of +53.0% YoY to 25.1B yen, reflecting expansion of the DX business segment. Gross profit reached 11.3B yen with a gross margin of 44.9%, indicating strong pricing power and project profitability. The substantial revenue increase enabled fixed cost absorption, contributing to the turnaround from operating loss. On the profit side, operating income improved dramatically from -0.6B yen to 1.1B yen, achieving an operating margin of 4.5%. This improvement was driven by the combination of revenue scale expansion and maintained gross margin. SG&A expenses were 10.2B yen (40.4% of revenue), representing a high fixed cost burden that compressed operating margin despite the strong gross profit. The gap between ordinary income (1.1B yen) and net income (0.7B yen) of approximately 0.4B yen was primarily due to income tax expense of 0.5B yen. Non-recurring factors include an impairment loss of 0.02B yen recorded as extraordinary loss, though this represents a minimal impact on overall profitability. Non-controlling interests contributed negative 0.1B yen, slightly reducing parent company net income. The performance pattern follows revenue up/profit up, with the transition from losses to profitability marking a significant operational inflection point.
[Profitability] ROE of 2.6% remains modest but represents significant improvement from prior period losses, while operating margin of 4.5% and net profit margin of 2.7% indicate room for efficiency enhancement despite successful revenue scale-up. Gross profit margin of 44.9% demonstrates strong project-level profitability. [Cash Quality] Cash and deposits of 18.0B yen provide coverage of 1.80x against total current liabilities of 16.5B yen, ensuring robust short-term payment capacity. Working capital management shows increasing trade payables of 13.7B yen, up 27.1% YoY, indicating extended supplier credit utilization. [Investment Efficiency] Asset turnover of 0.58 (calculated as 25.1B yen revenue divided by 43.3B yen total assets) reflects moderate capital efficiency. [Financial Health] Equity ratio of 60.1% indicates conservative capital structure, current ratio of 232.4% demonstrates strong liquidity position, and debt-to-equity ratio of 0.66x reflects minimal leverage with total interest-bearing debt of only 0.3B yen.
Cash and deposits increased from 16.8B yen to 18.0B yen, representing growth of 1.2B yen, with the operating profit turnaround contributing to cash accumulation. Current assets expanded from 34.2B yen to 38.4B yen, primarily driven by inventory and work-in-process increases that absorbed working capital. Trade payables increased 2.9B yen YoY to 13.7B yen, reflecting effective supplier credit management that partially funded working capital expansion. Interest-bearing debt declined substantially with short-term borrowings decreasing 55.8% to 0.1B yen and long-term debt falling 50.6% to 0.2B yen, indicating debt repayment from operating cash generation. The cash coverage ratio against short-term liabilities stands at 1.09x, providing adequate liquidity buffer. Working capital intensity has increased as evidenced by growing inventory and payables, requiring monitoring of the cash conversion cycle to ensure efficient capital deployment.
Ordinary income of 1.1B yen versus operating income of 1.1B yen shows minimal non-operating impact, indicating that profitability is primarily driven by core business operations. Non-operating income totaled approximately 0.03B yen with negligible interest income, FX gains, and other non-operating items, representing less than 0.1% of revenue. Non-operating expenses were similarly minimal at approximately 0.01B yen, with limited interest expense reflecting the low debt burden and minimal financing costs. The company recorded an impairment loss of 0.02B yen as extraordinary loss, suggesting asset quality review activities but with immaterial earnings impact. Comprehensive income of 0.7B yen closely aligned with net income indicates minimal other comprehensive income effects. The absence of cash flow statement data for the quarterly period limits assessment of cash-backed earnings quality, though the strong cash position and debt reduction suggest adequate cash generation capability.
Progress against full-year guidance shows revenue of 25.1B yen representing 76.1% of the 33.0B yen forecast, operating income of 1.1B yen at 75.3% of the 1.5B yen target, and ordinary income of 1.1B yen reaching 76.7% of the 1.5B yen projection. With Q3 representing 75% of the fiscal year, the company is tracking closely to plan with operating income progress rate of 75.3% indicating on-target performance. The forecast assumes continued DX business expansion and no material changes in the business environment based on the forward-looking statement disclosures. No forecast revisions were made during this quarter, suggesting management confidence in achieving full-year targets. The implied Q4 performance requires revenue of 7.9B yen, operating income of 0.4B yen, and ordinary income of 0.4B yen, representing a sequential deceleration in profitability that warrants monitoring. Net income guidance of 1.0B yen implies 0.3B yen in Q4, with year-to-date progress of 74.4%.
Customer and project concentration risk in the single DX business segment creates revenue volatility exposure, as performance depends heavily on securing and successfully executing large-scale projects. With DX representing 100% of revenue, loss of major customers or project delays could significantly impact financial results. Operating efficiency risk remains elevated with operating margin of 4.5% substantially below industry standards, reflecting high SG&A burden of 40.4% of revenue that limits profitability despite strong gross margins. Structural margin improvement through cost management and operational leverage realization is critical for sustainable profitability. Working capital management risk is evidenced by work-in-process inventory buildup and payables increase of 27.1% YoY, potentially indicating project execution delays or inefficient cash conversion cycles. Elevated payables relative to revenue growth may signal liquidity pressure if payment terms tighten or project billing is delayed.
[Industry Position] (Reference - Proprietary Analysis)
BlueMeme's operating margin of 4.5% falls significantly below the IT and Telecom industry median of 8.2% (IQR: 3.6%-18.0%), positioning the company in the lower quartile for operational efficiency. Net profit margin of 2.7% also trails the industry median of 6.0% (IQR: 2.2%-12.7%), reflecting the high SG&A cost structure relative to peers. ROE of 2.6% substantially underperforms the industry median of 8.3% (IQR: 3.6%-13.1%), indicating below-average return generation despite conservative capital structure. Equity ratio of 60.1% aligns closely with the industry median of 59.2% (IQR: 42.5%-72.7%), demonstrating comparable financial stability. Current ratio of 232.4% significantly exceeds the industry median of 2.15x, reflecting above-average liquidity positioning. Revenue growth of 53.0% YoY substantially outpaces the industry median of 10.4% (IQR: -1.2%-19.6%), placing the company in the top decile for top-line expansion. Financial leverage of 1.66x matches the industry median precisely, indicating typical capital structure for the sector. Asset turnover of 0.58 falls below the industry median of 0.67 (IQR: 0.49-0.93), suggesting room for improved asset utilization efficiency.
(Industry: IT and Telecom, Comparison: 2025-Q3 period, Source: Proprietary analysis)
Successful transition to profitability with operating income reaching 1.1B yen after prior period loss demonstrates business model viability and revenue scale benefits, though structural margin improvement remains critical as operating margin of 4.5% significantly trails industry standards. Strong revenue momentum of +53.0% YoY positions the company in the top tier of industry growth rates, indicating successful market share capture in the DX business segment, while full-year guidance progress of 76.1% suggests achievable targets with fourth quarter execution. Conservative financial positioning with equity ratio of 60.1%, current ratio of 232.4%, and minimal debt burden of 0.3B yen provides substantial financial flexibility for growth investment, though capital efficiency metrics including ROE of 2.6% and asset turnover of 0.58 indicate underutilization of this strong balance sheet. Working capital dynamics warrant close monitoring as trade payables increased 27.1% YoY while work-in-process inventory accumulation suggests potential project execution or billing delays that could pressure future cash conversion.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.