| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥127.5B | ¥118.2B | +7.8% |
| Operating Income | ¥33.7B | ¥30.8B | +9.5% |
| Ordinary Income | ¥37.3B | ¥31.6B | +18.1% |
| Net Income | ¥26.9B | ¥21.9B | +22.7% |
| ROE | 17.1% | 17.0% | - |
For the full year ended March 2026, Revenue was ¥127.5B (YoY +¥9.3B +7.8%), Operating Income was ¥33.7B (YoY +¥2.9B +9.5%), Ordinary Income was ¥37.3B (YoY +¥5.7B +18.1%), and Net Income was ¥26.9B (YoY +¥5.0B +22.7%), achieving both top-line and bottom-line growth. Operating margin improved by 40bp to 26.4% (prior year 26.0%), driven by the core DDS (Digital Data Service) segment with Revenue of ¥75.1B (+8.9%) and Operating Income of ¥24.0B (+12.1%, margin 32.0%). At the ordinary income level, received dividends of ¥2.3B (prior year ¥1.4B) and equity-method investment income of ¥1.8B (prior year loss ¥0.2B) contributed, expanding the ordinary income margin by 250bp to 29.3%. Net margin improved by 260bp to 21.1% (prior year 18.5%), and ROE was maintained at 17.1% (prior year 17.5%). Operating Cash Flow (OCF) was ¥33.4B (YoY +17.5%), Free Cash Flow (FCF) generated was ¥15.7B, covering dividend payments of ¥10.4B by 1.51x.
[Revenue] Revenue expanded steadily to ¥127.5B (YoY +7.8%). By segment, the DDS Business was central at ¥75.1B (+8.9%), accounting for 58.9% of consolidated Revenue. DDS breakdown consisted of other income including leases ¥45.2B and contract revenue with customers ¥29.9B, with subscription-type revenues such as cloud storage and video services driving growth. The SMS (Survey & Measurement Systems) Business recorded double-digit growth at ¥38.7B (+10.4%), supported by higher utilization of rental measurement equipment such as GNSS and increased sales. Other businesses declined to ¥13.7B (-3.7%), but the impact on consolidated results was limited.
[Profitability] Operating Income rose to ¥33.7B (+9.5%), outpacing revenue growth. Gross profit was ¥65.5B (gross margin 51.4%, prior year 51.4% unchanged), and SG&A was ¥31.8B (SG&A ratio 24.9%, improved 50bp from 25.4% prior year), reflecting operating leverage. By segment, DDS Operating Income was ¥24.0B (margin 32.0%, improved 90bp from 31.1% prior year), SMS Operating Income was ¥7.5B (margin 19.4%, improved 70bp from 18.7% prior year), with profitability rising in both segments. Other businesses had Operating Income of ¥2.1B (-22.5%) but represented only 6.3% of consolidated Operating Income, so the overall impact was minor. Ordinary Income reached ¥37.3B (+18.1%), aided by non-operating income of ¥4.2B (including received dividends ¥2.3B, +64% from prior year ¥1.4B) and equity-method investment income of ¥1.8B (prior year loss ¥0.2B). Special gains included investment securities sale gains of ¥0.3B, bringing pre-tax income to ¥37.6B (+19.0%). After deducting income taxes of ¥10.8B (effective tax rate 28.6%), Net Income was ¥26.9B (+22.7%). Comprehensive income was ¥39.8B (+52.6%), driven by an increase in unrealized gains on securities of ¥12.9B (prior year ¥4.1B), producing comprehensive income substantially above Net Income. In conclusion, revenue and operating income growth in DDS and SMS, expanded non-operating income, and modest special items resulted in overall revenue and profit increases.
The DDS Business generated Operating Income of ¥24.0B (YoY +12.1%), accounting for 71.2% of consolidated Operating Income and serving as the profitability engine. Margin improved to 32.0% (up 90bp from 31.1%) due to expanded cloud service sales and scale effects. The SMS Business delivered Operating Income of ¥7.5B (+14.7%) with margin rising to 19.4% (up 70bp from 18.7%), aided by higher rental equipment utilization and increased sales. Other businesses recorded Operating Income of ¥2.1B (-22.5%) and margin declined to 15.7% (down 380bp from 19.5%), but given the segment's small scale, the effect on consolidated profitability is minor.
[Profitability] Operating margin was 26.4%, improving 40bp from 26.0% prior year, supported by the high-margin DDS structure (32.0%) and scale expansion. Net margin improved substantially to 21.1% (up 260bp from 18.5%), aided by increased non-operating income and stabilization of the effective tax rate (28.6%). ROE remained high at 17.1% (prior year 17.5%), achieved through improved net margin, total asset turnover of 0.62x (slightly down from 0.69x prior year), and financial leverage of 1.31x (prior year 1.33x). [Cash Quality] OCF/Net Income = ¥33.4B/¥26.9B = 1.24x, indicating strong cash conversion; working capital absorption was minimal (accounts receivable -¥0.3B, inventories -¥0.9B, accounts payable +¥0.3B). OCF/EBITDA (Operating Income + Depreciation) = ¥33.4B/¥43.3B = 0.77x, somewhat modest, affected by an increase in tax payments to ¥10.3B (prior year ¥9.8B, +4.4%) and dividend/interest receipts of ¥2.3B. [Investment Efficiency] Total asset turnover declined to 0.62x (prior year 0.69x), primarily due to a large increase in investment securities (prior year ¥62.1B → this period ¥96.3B) which expanded assets. Capital expenditures were tightly controlled at ¥2.8B (0.30x of depreciation ¥9.6B), which supports short-term FCF generation but warrants attention for medium-to-long-term asset renewal and competitiveness. [Financial Soundness] Equity Ratio was 76.2% (up 80bp from 75.4% prior year), current ratio remained high at 282.3% (prior year 292.6%), and with cash of ¥41.7B and zero short-term borrowings, the company is effectively near net cash. Interest-bearing debt (primarily lease liabilities) totaled ¥18.4B (current ¥6.6B + non-current ¥11.8B), and interest coverage was 66.1x (EBIT ¥33.7B / interest expense ¥0.5B), indicating very high interest resilience.
OCF was ¥33.4B (prior year ¥28.4B, +17.5%), generating 1.24x of Net Income ¥26.9B, signaling good cash conversion. OCF subtotal (before working capital changes) was ¥41.9B, from which corporate taxes paid of ¥10.2B and working capital absorption (inventories -¥0.9B, accounts receivable -¥0.3B, accounts payable +¥0.3B; net -¥0.9B) led to final OCF. Investing CF was -¥17.7B (prior year -¥24.5B), with main outflows including capital expenditures -¥2.8B, intangible asset investments -¥1.5B, investment securities acquisitions -¥3.7B, and acquisition of subsidiary shares -¥10.1B; proceeds from investment securities sales ¥0.3B and PPE sales ¥0.02B modestly offset outflows. FCF improved significantly to ¥15.7B (prior year ¥3.9B), covering dividend payments of ¥10.4B by 1.51x. Financing CF was -¥19.3B (prior year -¥28.2B), mainly due to dividend payments -¥11.0B, share buybacks -¥0.5B, and lease liability repayments -¥7.8B. Cash and cash equivalents decreased ¥3.6B from ¥45.3B at the beginning of the period to ¥41.7B at year-end, but liquidity remained ample after dividends and buybacks.
Of Ordinary Income ¥37.3B, Operating Income ¥33.7B accounted for 90.3%, indicating core earnings predominance. Non-operating income of ¥4.2B comprised received dividends ¥2.3B and other ¥0.1B; dividend income functions as a stable return from investment securities totaling ¥96.3B but is also sensitive to market fluctuations. Equity-method investment income of ¥1.8B (turned from a prior year loss of ¥0.2B, a swing of +¥2.0B) may represent a temporary improvement and warrants monitoring for sustainability. Special gains of ¥0.3B (investment securities sale gains) were one-off and had a limited contribution to Net Income. Comprehensive income of ¥39.8B exceeded Net Income by ¥12.9B, mainly due to unrealized gains on other securities, which are market-value driven and represent unrealized profits; therefore, the quality of earnings assessment should focus on stable ordinary income centered on Operating Income. OCF/Net Income 1.24x and accrual ratio (Net Income - OCF)/Total Assets = -3.2% are low, indicating no apparent accounting inflation of profits and solid cash-based profitability.
For the full year ending March 2027, management forecasts Revenue ¥135.0B (YoY +5.9%), Operating Income ¥35.3B (YoY +4.8%), Ordinary Income ¥38.9B (YoY +4.2%), and Net Income ¥27.2B (YoY +1.1%), reflecting a conservative growth scenario. Progress toward the full-year plan stands at Revenue 94.4%, Operating Income 95.5%, Ordinary Income 96.0%, and Net Income 98.9%, indicating results are nearly achieved. The company’s plan assumes continued DDS growth, stable SMS performance, and maintained dividend income, with an assumed Operating margin of 26.1% (down 30bp from 26.4% this period), a somewhat conservative outlook. The slowdown in Net Income growth (+1.1%) may incorporate normalization of non-operating income and tax rates. Dividend guidance is ¥15 per year (payout ratio 22.8% based on Net Income forecast ¥27.2B), a conservative cut compared to actual dividend of ¥29 (payout ratio 47.7%), but there is room for upward revision depending on interim performance.
Annual dividend was ¥29 (interim ¥14, year-end ¥15), with a payout ratio of 47.7% (dividends ¥11.0B / Net Income ¥26.9B), within an appropriate range. Share buybacks of ¥0.5B (cash flow basis) were conducted, resulting in a Total Return Ratio of approximately 48.0%, indicating a balanced approach between shareholder returns and retained earnings. DOE (Dividend on Equity) is approximately 8.3% (dividends ¥11.0B / average shareholders’ equity ¥131.4B), reflecting a return level mindful of capital efficiency. FCF of ¥15.7B covered dividends of ¥11.0B by 1.43x, supporting dividend sustainability. The dividend forecast for FY2027 is ¥15 per year (based on EPS forecast ¥65.92, payout ratio 22.8%), conservatively set but with upside potential depending on full-year results. The prior year paid an annual dividend of ¥29, indicating a stable dividend base with a policy of increasing dividends in line with profit growth.
Business Concentration Risk: The DDS Business accounts for 58.9% of Revenue and 71.2% of Operating Income; a slowdown in the core business would directly affect consolidated performance. Intensified competition in cloud services or increased customer churn could pressure profitability. The SMS Business is also correlated with construction and public investment demand, so utilization rates may decline in an economic downturn.
Market Risk of Investment Securities: High holdings of investment securities at ¥96.3B (46.7% of total assets) expose the company to market risk; a market decline could reduce unrealized gains (harming comprehensive income) and lower received dividend income, pressuring Ordinary Income. Deferred tax liabilities of ¥11.8B (up 96.2% from ¥6.0B prior year) reflect expanded valuation gains but also imply potential unwinding risk upon market reversal.
Risk of Competitive Weakening from Suppressed CapEx: Capital expenditures are highly constrained at ¥2.8B (0.30x of depreciation ¥9.6B), raising concern over delayed asset renewal or technological obsolescence that could weaken competitiveness medium-to-long term. Delayed cloud infrastructure or technology updates in the DDS Business could impair service quality and slow new customer acquisition.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 26.4% | 8.1% (3.6%–16.0%) | +18.3pt |
| Net Margin | 21.1% | 5.8% (1.2%–11.6%) | +15.2pt |
Profitability ranks among the industry’s top, with Operating and Net margins substantially above the median, indicating the advantage of high value-added services.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.8% | 10.1% (1.7%–20.2%) | -2.3pt |
Revenue growth is slightly below the industry median but sits within a stable growth range while maintaining high profitability.
※Source: Company compilation
High profitability of the DDS Business (margin 32.0%) and its scale expansion (Revenue +8.9%, Operating Income +12.1%) drove consolidated performance, maintaining an industry-leading Operating margin of 26.4%. Subscription-type cloud service revenues have high switching costs and are expected to be stable, but the high business concentration (71.2% of Operating Income) warrants monitoring as a risk if the core business slows.
Holdings of investment securities ¥96.3B (46.7% of total assets) have boosted received dividend income ¥2.3B and unrealized gains ¥12.9B, lifting Ordinary and Comprehensive Income, but could become a headwind under market declines. While dividend income is relatively stable, unrealized gains are unrealized and the core business profitability should be the primary basis for earnings quality assessment. The increase in deferred tax liabilities (¥11.8B, YoY +96.2%) reflects expanded valuation gains and also implies potential unwinding risk on market reversal.
Strong cash generation with OCF ¥33.4B and FCF ¥15.7B, covering dividends ¥11.0B by 1.43x. Capital expenditures are very restrained at ¥2.8B (0.30x depreciation), which supports short-term FCF but may require renewed investment to sustain competitiveness in the medium-to-long term. Equity Ratio 76.2% and near-net-cash balance sheet indicate high financial soundness and provide capacity for dividend increases or growth investments.
This report is an AI-generated earnings analysis created by 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 professionals as necessary before making any investment choices.