| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥174.2B | ¥116.5B | +49.6% |
| Operating Income | ¥33.9B | ¥24.6B | +37.8% |
| Profit Before Tax | ¥33.7B | ¥24.6B | +37.0% |
| Net Income | ¥24.6B | ¥18.0B | +36.6% |
| ROE | 31.8% | 39.4% | - |
For the fiscal year ending February 2026, the full-year results delivered substantial revenue and profit growth: Revenue ¥174.2B (YoY +¥57.7B +49.6%), Operating Income ¥33.9B (YoY +¥9.3B +37.8%), Ordinary Income ¥20.1B (YoY +¥1.8B +9.9%), and Net Income ¥24.6B (YoY +¥6.6B +36.6%). Contributions from four newly consolidated subsidiaries drove approximately a 50% increase in revenue, achieving high growth, while profits attained double-digit increases with Operating Income up +37.8% and Net Income up +36.6%. Operating margin declined by about 1.6pt to 19.5% (prior year 21.1%), but remained at a high level due to SG&A efficiency. ROE indicated extremely high capital efficiency at 40.0%.
[Revenue] Revenue reached ¥174.2B (YoY +49.6%), a large increase primarily due to contributions from four newly consolidated subsidiaries, reflecting pronounced M&A-driven external growth. Accounts receivable increased to ¥26.0B (prior year ¥15.8B), up +64.9%, consistent with top-line expansion. Gross margin was 34.4% (prior year 36.6%), down about 2.2pt, likely influenced by changes in the mix from newly consolidated businesses and changes in revenue composition. Gross profit was ¥59.9B (prior year ¥42.7B), up +40.4%, meaning the decline in gross margin was offset by revenue expansion.
[Profitability] SG&A was ¥26.1B (prior year ¥17.9B), up +45.8%, but below the revenue growth rate of +49.6%, resulting in positive operating leverage. SG&A ratio improved about 0.4pt to 15.0% (prior year 15.4%). Operating Income was ¥33.9B, up +37.8%, with an operating margin of 19.5% (prior year 21.1%); despite the decline driven by gross margin compression, margins remained high. Financial income was ¥0.1B and financial expenses ¥0.3B, so non-operating impacts were minor. Ordinary Income of ¥20.1B was up +9.9% YoY, lagging the Operating Income growth rate; this is attributable to differences between IFRS disclosure items and the Japanese GAAP concept of Ordinary Income, and the divergence from Profit Before Tax ¥33.7B is small. After deducting income taxes of ¥9.1B (effective tax rate 27.1%), Net Income was ¥24.6B (+36.6%). In conclusion, the decline in gross margin associated with M&A integration was absorbed by SG&A efficiency, achieving both revenue and profit growth.
[Profitability] Operating margin 19.5% (prior year 21.1%) worsened by about 1.6pt due to gross margin decline but remains at an industry-leading level. Net margin 14.1% (prior year 15.4%) is also high. ROE was 40.0% (prior year 40.8%), which can be explained by DuPont decomposition as Net Margin 14.1% × Total Asset Turnover 1.24x × Financial Leverage 1.82x. [Cash Quality] Operating Cash Flow (OCF) was ¥28.7B, exceeding Net Income ¥24.6B (OCF/Net Income = 1.17x), indicating good cash backing of earnings. Accrual ratio is approximately -3.0%, indicating a cash-driven earnings profile. [Investment Efficiency] Total Asset Turnover of 1.24x (prior year 1.35x) declined due to asset expansion, primarily driven by goodwill increase (¥49.4B, prior year ¥20.3B). Days Sales Outstanding are approximately 54 days (Accounts Receivable ¥26.0B ÷ Daily Revenue ¥0.48B), which is standard. [Financial Soundness] Equity Ratio 55.0% (prior year 53.1%), current ratio 167% (Current assets ¥73.7B / Current liabilities ¥44.0B) — healthy. Interest-bearing debt (borrowings + bonds) increased to ¥19.0B (prior year ¥13.3B), but D/E ratio is a conservative 0.25x (Interest-bearing debt ¥19.0B / Net assets ¥77.2B). Cash of ¥43.7B versus short-term interest-bearing debt ¥6.1B implies low liquidity risk. However, goodwill of ¥49.4B accounts for 64.0% of net assets, making impairment resilience the primary monitoring point.
Operating Cash Flow was ¥28.7B (prior year ¥19.1B, +50.5%), exceeding Net Income ¥24.6B, demonstrating strong cash generation. Operating cash flow before working capital changes totaled ¥36.9B, a high level; increases in accounts receivable (-¥4.2B) and decreases in accounts payable (-¥0.2B) reflect natural working capital increases associated with growth, but even after corporate tax payments (-¥8.0B), cash remained ample. Investing Cash Flow was -¥13.7B, with ¥-13.6B of subsidiary acquisition expenditures as the main component. Capital expenditures were modest at ¥0.2B, and depreciation was ¥2.8B, indicating low investment intensity; most growth investment was allocated to M&A. Financing Cash Flow was -¥6.2B, consisting of long-term borrowings ¥8.0B offset by repayments -¥7.2B, bond redemption -¥1.0B, share repurchases -¥2.6B, and lease repayments -¥3.3B. Free Cash Flow (Operating CF + Investing CF) was ¥15.0B, sufficiently covering dividends ¥2.4B, and even including share buybacks, liquidity remained strong. Cash balance at period end was ¥43.7B (prior year ¥34.9B, +¥8.9B), liquidity is ample, and there are no signs of accrual manipulation.
The majority of earnings are derived from operating activities; non-operating results are minor (Financial income ¥0.1B, Financial expenses ¥0.3B, Other income ¥0.4B, Other expenses ¥0.3B), and one-off items are limited. The difference between Ordinary Income ¥20.1B and Profit Before Tax ¥33.7B stems from differences in item classification under IFRS disclosure, and there is no material extraordinary gain or loss. Operating CF ¥28.7B exceeds Net Income ¥24.6B by 17%, and the accrual ratio of -3.0% indicates high cash backing of earnings. Comprehensive income ¥25.1B is almost identical to Net Income ¥24.6B (the ¥0.5B difference is Other Comprehensive Income consisting of fair value changes of financial assets +¥0.5B), indicating no distortion in recurring revenue structure.
The full-year forecast for the fiscal year ending February 2027 projects Revenue ¥235.0B (YoY +34.8%), Operating Income ¥44.1B (+30.0%), and Net Income ¥31.3B (+27.5%), expecting double-digit growth. Progress rates relative to the full-year forecast, based on prior year results, correspond to Revenue 74.1%, Operating Income 76.9%, and Net Income 78.4%, indicating generally steady progress. The company's forecasted operating margin is 18.8% (actual 19.5%), assuming an approximate 0.7pt decline, which can be interpreted as a conservative range incorporating integration costs and revenue mix changes. Forecast EPS is ¥100.85 against actual ¥79.09 and diluted EPS ¥78.64, supporting the earnings improvement outlook. Forecasted dividend is ¥0, reflecting a policy to prioritize internal reserves and growth investment.
A year-end dividend of ¥7.58 was paid, with a payout ratio of 9.6% (based on Net Income), which is extremely conservative. Against Free Cash Flow ¥15.0B, total dividends were ¥2.4B, giving an FCF coverage of 6.3x, indicating very high sustainability. Share repurchases amounted to ¥2.6B; combined with dividends ¥2.4B, total return was ¥5.0B, and the Total Return Ratio is approximately 20.3% (relative to Net Income ¥24.6B), which is low. The company’s capital allocation clearly prioritizes internal reserves and M&A investment, keeping payout ratio in single digits. Given the current high goodwill ratio, cash allocation must balance integration investment and maintaining financial soundness; although there is ample room for dividend increases, the stance of prioritizing growth investment is expected to continue for the time being.
Goodwill impairment risk: Goodwill ¥49.4B represents 64.0% of net assets ¥77.2B, exceeding the industry caution threshold (50%). If synergy realization from the four newly consolidated subsidiaries is delayed or business conditions deteriorate, an impairment charge could occur, materially damaging equity. The reasonableness of impairment test assumptions (WACC, growth rates, recoverable amounts) and quarterly trends should be closely monitored.
Risk of continued gross margin decline: Gross margin was 34.4% (prior year 36.6%), down about 2.2pt, impacted by changes in mix from newly consolidated businesses and an increased share of lower-margin projects. If margin improvement from integration is delayed, further declines in operating margin may follow. Progress on price revisions and cost optimization and quarterly gross margin trends should be monitored.
Short-term cash pressure from working capital increases: Accounts receivable increased +64.9%, and natural working capital increases accompanying revenue expansion have partially constrained Operating CF. If high growth continues, working capital increases may materialize as cash pressure, potentially constraining growth investment and shareholder returns. Effective management of DSO/DPO and credit policies is critical.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 40.0% | 10.1% (2.2%–17.8%) | +29.9pt |
| Operating Margin | 19.5% | 8.1% (3.6%–16.0%) | +11.4pt |
| Net Margin | 14.1% | 5.8% (1.2%–11.6%) | +8.3pt |
Profitability metrics significantly exceed industry medians, placing the company in the upper group within the IT & Telecommunications sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 49.6% | 10.1% (1.7%–20.2%) | +39.5pt |
Revenue growth rate outpaces the industry median by approximately 40pt, reflecting pronounced M&A-driven external growth.
※ Source: Company aggregation
Realization of M&A integration synergies is the primary focus. Revenue increased by about 50% due to acquisitions of four newly consolidated subsidiaries, but gross margin declined by about 2.2pt. If integration progress leads to margin improvement and further SG&A efficiency, there is upside potential above the company’s operating margin forecast of 18.8%. Quarterly gross margin trends and segment-level margin improvements will be indicators of synergy realization.
Impairment resilience for goodwill ¥49.4B (64.0% of net assets) is the most important valuation issue. There are currently no signs of impairment, and Operating CF of ¥28.7B indicates strong cash generation, but delays in synergy realization or business deterioration could trigger impairment charges that materially erode equity. Continuous monitoring of impairment test assumptions (WACC, growth rates, recoverable amounts) and quarterly performance trends is necessary.
The company maintains high growth and high ROE while confirming a healthy cash-generating profile where Operating CF exceeds Net Income. Free Cash Flow ¥15.0B sufficiently covers dividends and share buybacks; payout ratio 9.6% and Total Return Ratio 20.3% are extremely conservative, leaving substantial room for dividend increases. The company maintains double-digit growth guidance for FY2027, and if external growth and synergy realization are both achieved, sustained high growth can be expected.
This report is a financial analysis document automatically generated by AI analyzing XBRL financial statement disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on publicly disclosed financial statements. Investment decisions should be made at your own responsibility; consult professionals as necessary.