BeMap (4316) FY2026 Q3 Earnings Report

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Executive Summary

Despite higher revenue, the operating loss widened due to deterioration in the gross profit margin, making the decline in project profitability the key issue for the current period. Revenue was ¥10.4B (+7.6% YoY), while operating income was ¥-2.6B (deteriorating from ¥-2.3B in the previous year), ordinary income was ¥-2.5B, and net income was ¥-2.6B. As cost of sales increased 26.2% YoY, significantly outpacing revenue growth, the gross profit margin declined to 32.4%, offsetting the effect of selling, general and administrative expense reductions.

Factors Affecting Performance

【Revenue】Revenue was ¥10.4B, representing a +7.6% increase YoY. The Company has consolidated its operations into a single “Systems and Solutions Business” segment, and a breakdown by the former three businesses is not disclosed. Progress against the full-year forecast of ¥19.0B was only 54.6%, below the standard progress rate of 75%, indicating that the plan assumes revenue concentration in Q4.

【Profit and Loss】Gross profit was ¥3.4B (gross profit margin: 32.4%), down approximately 10.0pt from 42.4% in the previous year, primarily because the increase in cost of sales (+26.2%) exceeded revenue growth. SG&A expenses were contained at ¥5.9B (-7.3% YoY), and the SG&A ratio improved by approximately 9.1pt to 57.1%; however, this was insufficient to offset the deterioration in the gross profit margin. In non-recurring gains and losses, the Company recorded a ¥0.1B gain on the sale of investment securities (non-recurring factor), while also recording a ¥0.2B impairment loss (non-recurring factor), resulting in a loss before tax of ¥2.6B. The Company experienced higher revenue but lower earnings, with declining project profitability being the primary driver of the profit and loss results.

Segment Analysis

From the consolidated cumulative Q3 period, the former three segments—“Mobility Innovation Business,” “Wireless Innovation Business,” and “Solutions Business”—were discontinued and changed to a single reporting segment, the “Systems and Solutions Business.” Accordingly, disclosure of segment profit and loss, including for the same period of the previous year, has been omitted, making it impossible for external parties to identify the factors behind changes by business.

Key Financial Indicators

【Profitability】The operating margin was -24.7% (previous year: -23.8%), while the net profit margin was -25.2% (previous year: -24.4%); both deteriorated slightly. The gross profit margin was 32.4%, down approximately 10.0pt from 42.4% in the previous year, with the primary cause of the deterioration in profitability being the increase in the cost ratio.【Cash Flow Quality】Cash and deposits were ¥1.3B, down from ¥1.6B in the previous year. While accounts receivable declined substantially to ¥1.5B, contract assets increased from ¥0.1B to ¥1.0B, indicating an accumulation of projects for which revenue has been recognized but billing has not yet occurred.【Investment Efficiency】Annualized ROE was -106.2%, a substantially negative figure, indicating that recurring net losses have materially impaired capital efficiency.【Financial Soundness】The equity ratio was 56.8%, up from 54.3% in the previous year. Although interest-bearing debt was limited, retained earnings expanded to ¥-8.4B, while net assets declined to ¥3.3B.

Cash Flow Analysis

As detailed cash flow statement information has not been disclosed, cash trends are assessed based on changes in the balance sheet. Cash and deposits declined from ¥1.6B in the previous year to ¥1.3B, apparently reflecting the impact of the net loss and changes in working capital. While accounts receivable declined substantially from ¥5.3B in the previous year to ¥1.5B, contract assets increased from ¥0.03B to ¥1.0B, indicating that projects for which revenue has been recognized but billing has not yet occurred are awaiting conversion into cash. Accounts payable also declined from ¥1.8B to ¥0.7B, indicating progress in reducing payments for purchases and outsourcing. Overall, collection of accounts receivable is progressing, while the increase in contract assets suggests delays in cash conversion. Progress in billing and collection from Q4 onward warrants close monitoring from a liquidity perspective.

Quality of Earnings

The current-period loss includes non-recurring items, which must be distinguished when evaluating earnings quality. The Company recorded a ¥0.1B gain on the sale of investment securities as an extraordinary gain, while recording a ¥0.2B impairment loss as an extraordinary loss. Excluding these items, the operating loss of ¥2.6B is closer to the underlying business performance. Non-operating gains and losses were minimal, with both non-operating income and expenses remaining in the ¥0.0B range, resulting in only a small divergence between ordinary income and net income. Comprehensive income was ¥-2.8B, slightly below net income of ¥-2.6B, due to a ¥0.1B deterioration in valuation difference on securities. The increase in contract assets from ¥0.03B to ¥1.0B warrants attention from an accrual perspective, indicating that revenue recognition is preceding conversion into cash or accounts receivable.

Earnings Forecast and Guidance

The full-year Company forecast is revenue of ¥19.0B (+27.1% YoY), operating income of ¥0.5B, ordinary income of ¥0.5B, and net income of ¥0.3B (forecast EPS: ¥9.25). Cumulative Q3 revenue of ¥10.4B represents a progress rate of only 54.6%, below the standard progress rate of 75%. As cumulative Q3 operating income was ¥-2.6B, achieving full-year profitability will require standalone Q4 operating income of more than ¥3B and revenue of approximately ¥8.6B, making concentrated year-end project acceptance a prerequisite for achievement.

Shareholder Returns

The Q2 dividend was ¥0 per share, and the full-year forecast dividend is also ¥0, with the Company continuing to pay no dividend. As cumulative Q3 net loss attributable to owners of the parent was ¥2.6B, the payout ratio is not applicable. Retained earnings have expanded to ¥-8.4B, placing the Company in a position where securing internal reserves through continued non-payment of dividends is likely to remain a priority for the time being.

Risk Factors

1. Profitability risk from gross margin deterioration: While revenue increased +7.6%, cost of sales increased +26.2%, causing the gross profit margin to decline by approximately 10.0pt to 32.4%. If project-specific cost overruns and delays in passing through price increases continue, the structure in which revenue growth leads to greater losses will persist.

2. Risk of failing to achieve the full-year forecast: Achieving the full-year forecast requires standalone Q4 revenue of approximately ¥8.6B and operating income of more than ¥3B. The cumulative Q3 progress rate was 54.6%, below the standard progress rate of 75%, creating a risk of failure to meet the forecast due to the concentration of project acceptance at the fiscal year-end.

3. Capital impairment risk: Net assets declined by ¥1.7B from ¥5.0B in the same period of the previous year to ¥3.3B, while retained earnings expanded to ¥-8.4B. If losses continue, further deterioration in capital resources is a concern.

Industry Benchmark (For Reference; Company Analysis)

Profitability and Returns

While the industry median is in profitable territory, the Company has substantial operating and net losses and ranks notably low within the industry.

Growth and Capital Efficiency

The revenue growth rate is slightly below the industry median but remains within the IQR range, indicating that growth itself is not extremely weak.

※Source: Company analysis

Key Takeaways from the Earnings Results

1. Despite higher revenue, the gross profit margin declined by approximately 10.0pt, making improvement in project profitability, rather than revenue growth, the key to earnings recovery. The current ratio remains high, providing support for short-term liquidity.

2. Achieving the forecast of full-year profitability requires a substantial improvement in standalone Q4 performance. The conversion of contract assets of ¥1.0B into project acceptance and billing will be a key item to monitor going forward.

3. Net assets declined by ¥1.7B YoY, while retained earnings expanded to ¥-8.4B. Continued losses are structurally placing pressure on capital resources, making normalization of the gross profit margin a central focus.

Theoretical Share Price (Reference Value)

Sensitivity: ¥90–¥96 at cost of equity ±1%; ¥93–¥93 at ω±0.1.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end 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: 2026-08 / Mechanically calculated value based solely on publicly disclosed data; this 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 release 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 discretion and responsibility, after consulting with a professional advisor as necessary.

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