| Metric | Current Period | Prior Year Same Period | YoY |
|---|
| Revenue | ¥309.4B | ¥287.1B | +7.8% |
| Operating Income | ¥89.9B | ¥82.2B | +9.4% |
| Profit Before Tax | ¥90.9B | ¥82.5B | +10.1% |
| Net Income | ¥64.8B | ¥59.1B | +9.7% |
| ROE | 13.8% | 14.1% | - |
The full-year results for the fiscal year ended February 2026 recorded Revenue of ¥309.4B (YoY +¥22.4B, +7.8%), Operating Income of ¥89.9B (YoY +¥7.7B, +9.4%), Ordinary Income of ¥90.9B (YoY +¥8.3B, +10.1%), and Net Income attributable to owners of the parent of ¥65.0B (YoY +¥5.7B, +9.6%), achieving revenue and profit growth across all four key metrics. The operating margin improved 41bp to 29.0% (prior year 28.6%), maintaining a high-profitability profile. The Net Income growth of +9.6% aligns with the Operating Income increase of +9.4%, supported by improvements in financial results and equity-method investments. EPS rose to ¥187.57 (prior year ¥171.97, +9.1%), with improved capital efficiency. Contract liabilities of ¥80.9B (26.2% of Revenue) indicate a revenue pipeline for subsequent periods and reinforce visibility toward the guidance of Full Year Operating Income ¥106.0B (+17.9%).
- Revenue: Top-line grew +7.8% to ¥309.4B, aided by expanded consolidation scope from M&A and accumulation of subscription and maintenance revenue. Contract liabilities remained roughly flat during the period, suggesting a balance between new bookings and recognized revenue, with stable retention and upsell among existing customers. Accounts receivable surged to ¥39.0B (prior year ¥24.5B, +59.1%), rising faster than Revenue and indicating quarter-end large billing or changes in collection terms. Monitoring collections and credit risk is necessary going forward.
- Profitability: Operating Income grew +9.4%, outpacing revenue growth, and operating margin improved to 29.0% (prior year 28.6%, +41bp). Personnel expenses increased to ¥81.0B (26.2% of Revenue, prior year 25.6%) and R&D rose to ¥36.2B (11.7% of Revenue, prior year 11.5%), but were absorbed by revenue growth and scale effects. Outsourcing and contractor fees expanded significantly to ¥34.1B (prior year ¥29.1B, +17.3%), reflecting variable cost increases with business expansion. Payment fees decreased to ¥11.4B (prior year ¥13.5B, -15.6%), showing effective cost control. Non-operating items: financial income ¥1.93B and financial expenses ¥1.43B produced a net improvement of ¥0.50B (prior year +¥0.33B), and equity-method investment income was ¥0.47B (prior year ¥0.05B), boosting Ordinary Income. Profit Before Tax was ¥90.9B (+10.1%); corporate taxes of ¥26.1B imply an effective tax rate of 28.7%, within normal range. No extraordinary items disclosed, suggesting limited one-off volatility. The gap from Ordinary Income ¥90.9B to Net Income attributable to owners of the parent ¥65.0B is explained by taxes ¥26.1B and non-controlling interests -¥0.21B, indicating good quality of earnings. In conclusion, revenue and profit growth were achieved with a durable high operating margin.
- Profitability: Operating margin remained high at 29.0% (prior year 28.6%, +41bp), and Net margin improved to 21.0% (prior year 20.6%, +36bp). ROE slightly declined to 14.6% (prior year 14.7%, -10bp) but remains strong.
- Cash Quality: Operating Cash Flow (OCF) / Net Income was 1.11x (¥72.0B / ¥64.8B), indicating good cash realization of earnings. Free Cash Flow (FCF) was ¥43.0B (OCF ¥72.0B - Investing CF ¥28.9B), remaining positive and covering dividends of ¥39.6B by 1.09x. Cash conversion (OCF / Net Income) at 1.11x is slightly below the industry median of 1.28x but healthy given corporate tax payments of ¥28.3B.
- Investment Efficiency: Total asset turnover was 0.42x (Revenue ¥309.4B / Average total assets ¥710.7B), significantly below the industry median 0.89x due to accumulation of goodwill and intangible assets. CapEx was ¥1.8B versus depreciation & amortization ¥18.1B, yielding a CapEx/Depreciation ratio of 0.10x, lower than the industry median 0.42x and consistent with a low capital-intensity software business.
- Financial Soundness: Equity Ratio improved to 64.0% (prior year 61.1%), exceeding the industry median 59.2%. Current ratio was 1.18x (current assets ¥180.1B / current liabilities ¥153.0B), below the industry median 2.44x, but short-term liquidity is secured by cash ¥133.4B and contract liabilities (deferred revenue) ¥80.9B. Interest-bearing debt (short- and long-term borrowings) totaled ¥71.2B versus cash ¥133.4B, resulting in net cash ¥62.2B; Net Debt/EBITDA was -0.58x (industry median -1.79x), indicating ample financial capacity. Interest coverage (Operating Income ¥89.9B / interest expense ¥1.2B) is approximately 75x, showing negligible interest burden.
OCF decreased to ¥72.0B (prior year ¥82.0B, -12.2%), primarily due to working capital changes of -¥14.9B against Profit Before Tax ¥90.9B (accounts receivable increase ¥14.5B, contract liabilities decrease ¥0.5B, other increases ¥3.0B). OCF before working capital changes was ¥99.6B, exceeding Profit Before Tax, aided by non-cash additions such as depreciation & amortization ¥18.1B and adjustments for equity-method and financial items. Corporate tax payments ¥28.3B, interest paid ¥1.2B, and lease payments ¥4.2B were in line with profit levels. Investing CF was -¥28.9B (prior year -¥16.6B), largely driven by subsidiary acquisitions ¥22.7B, indicating ongoing M&A-led growth investments. CapEx ¥1.8B and intangible asset acquisitions ¥3.9B were modest maintenance investments. Acquisitions of marketable securities ¥0.4B were limited. FCF was ¥43.0B (prior year ¥65.4B), down but still above dividend payments ¥39.5B, supporting sustainability of shareholder returns. Financing CF was -¥57.9B (prior year -¥48.0B), comprising long-term borrowing repayments ¥14.5B, lease repayments ¥4.2B, and dividend payments ¥39.5B. Proceeds from share issuance ¥0.38B were minimal. Cash and cash equivalents declined to ¥133.4B (prior year ¥147.2B, -13.8%) but remain ample, with foreign-exchange effects contributing +¥1.1B. No signs of unusual working capital manipulation were detected; the OCF decline is attributable to natural cash absorption from accounts receivable growth.
The bridge from Operating Income ¥89.9B to Ordinary Income ¥90.9B reflects non-operating income ¥1.9B - non-operating expenses ¥1.4B + equity-method income ¥0.5B, producing a net positive contribution of ¥1.0B and demonstrating recurring improvement. Financial income ¥1.9B (prior year ¥1.4B) and financial expenses ¥1.4B (prior year ¥1.0B) net to +¥0.5B, likely from deposit interest and FX gains, and appear to be sustainable based on asset holdings and funding structure. Equity-method investment income ¥0.47B (prior year ¥0.05B) reflects improved performance at associates and is high-quality non-operating revenue. No special gains/losses were disclosed, indicating no material one-offs. The OCF-to-Net Income ratio of 1.11x indicates earnings are backed by cash. The accounts receivable increase of ¥14.5B corresponds with revenue growth, with no signs of fictitious sales or premature revenue recognition. Contract liabilities ¥80.9B (prior year ¥80.8B) were essentially unchanged, suggesting balance between revenue recognition and new bookings and low risk of earnings inflation via advance receipts. Comprehensive income ¥89.2B exceeded Net Income ¥64.8B by ¥24.4B, driven by other comprehensive income: valuation gains on financial assets measured at fair value through other comprehensive income ¥22.3B (prior year -¥4.0B) and foreign currency translation adjustments from overseas operations ¥2.1B (prior year -¥0.3B). The valuation gain ¥22.3B is unrealized and has limited impact on Net Income quality but is reflected in Other Components of Equity increasing by ¥44.9B (prior year ¥20.6B, +¥24.3B), introducing market value fluctuation risk. Overall, Net Income reflects high-quality earnings from recurring operations and improved financial results, with no evidence of one-off effects or accounting manipulation.
The full-year guidance projects Revenue ¥343.0B (vs. current results ¥309.4B +10.9%), Operating Income ¥106.0B (+17.9%), and Net Income attributable to owners of the parent ¥74.2B (+14.2%), expecting further revenue and profit growth. The implied operating margin from Revenue ¥343.0B and Operating Income ¥106.0B is 30.9% (+1.9pt vs. current 29.0%), assuming scale effects and deeper efficiency improvements. Current contract liabilities ¥80.9B (26.2% of Revenue) indicate a revenue pipeline for next fiscal year, and the year-to-date Operating Income progress ratio is 84.8% (¥89.9B / FY forecast ¥106.0B), leaving 15.2% to be achieved through new bookings, M&A effects, and cost controls—deemed achievable. The effective tax rate assumption underlying Net Income ¥74.2B is expected to remain in the high-20% range, similar to the current period. The guidance lists dividends forecast as ¥0, but given current-period dividends of ¥104 (payout ratio 60.8%), it is likely the dividend will be maintained or increased and the guidance not updated. Key risks include delays in M&A integration, inflation in personnel and outsourcing costs, slower accounts receivable collections, and a slowdown in new bookings; however, the cushion of contract liabilities and high operating margin provide a buffer. Overall, visibility to achieving guidance is assessed as moderate-to-high.
Annual dividend is ¥104 (interim ¥52, year-end ¥52), with a payout ratio of 60.8% (total dividends ¥39.6B / Net Income attributable to owners of the parent ¥65.0B), reflecting an active shareholder-return stance. The payout ratio is unchanged from the prior year and indicates a stable dividend policy. Share buybacks were ¥0.0B (cash flow statement shows -¥176 thousand, negligible), so the total return ratio equals the payout ratio at 60.8%. With FCF ¥43.0B versus dividend payments ¥39.5B, dividend coverage is 1.09x, a sustainable level funded from internal cash. DOE (Dividends / Equity) is 8.9% (dividends ¥39.6B / year-end equity ¥470.3B), demonstrating efficient return on shareholders’ equity. Retained earnings increased to ¥291.5B (prior year ¥266.1B, +¥25.4B), where Net Income ¥65.0B - dividends ¥39.6B = ¥25.4B was retained to secure funds for growth investments. Assuming guidance Net Income ¥74.2B (+14.2%), maintaining dividends at ¥104 would reduce the payout ratio to 52%, leaving room for dividend increases. Historically the company has kept the payout ratio in the 60% range, so continuation of similar returns is expected. The balance between shareholder returns and growth investment is favorable, with capital allocation supporting dividends within FCF while pursuing M&A.
- Goodwill impairment risk: Goodwill of ¥302.1B represents 64.2% of equity ¥470.3B and 41.1% of total assets ¥734.9B, a high level that could be subject to a write-down if acquisitions underperform or the business environment deteriorates. With EBITDA approximately ¥108B (Operating Income ¥89.9B + depreciation & amortization ¥18.1B), the goodwill multiple of 2.8x is within recoverable range, but adverse macro conditions could undermine impairment-test assumptions (quantitative metrics: goodwill/equity 64.2%, goodwill/EBITDA 2.8x).
- Working capital deterioration risk: Accounts receivable ¥39.0B (YoY +¥14.5B, +59.1%) grew much faster than Revenue growth +7.8%, likely due to extended collection terms or concentrated large billings. Days sales outstanding are about 46 days (accounts receivable ¥39.0B / daily revenue ¥0.847B), close to the industry median 48.76 days, but further increases could strain liquidity or increase credit loss risk.
- Personnel and outsourcing cost inflation risk: Personnel expenses ¥81.0B (26.2% of Revenue, prior year 25.6%) and outsourcing/contractor fees ¥34.1B (11.0% of Revenue, prior year 10.1%) rising faster than revenue could compress operating margins. In a structural environment of IT talent shortages and wage inflation, margin defense will require price pass-through and productivity improvements (quantitative: combined personnel and outsourcing ¥115.1B equals 37.2% of Revenue, +1.6pt YoY).
- Industry Position (reference, company analysis): Compared with medians for the IT & Communications sector (FY2025, n=319 companies), the company’s operating margin of 29.0% far exceeds the industry median 8.1%, placing it among the top 10% of highly profitable firms. Net margin 21.0% also well exceeds the industry median 5.8%, reflecting the high-margin nature of software/SaaS businesses. ROE 14.6% is above the industry median 10.1%, indicating good capital efficiency. Conversely, total asset turnover 0.42x is well below the industry median 0.89x, attributable to a business model concentrated in goodwill and intangibles. Current ratio 1.18x is lower than the industry median 2.44x, but considering contract liabilities (deferred revenue) liquidity concerns are limited. Payout ratio 60.8% is materially higher than the industry median 31%, showing an aggressive shareholder-return stance. Net Debt/EBITDA -0.58x indicates smaller net cash relative to the industry median -1.79x, but interest-bearing debt burden is light and financial soundness is high. Revenue growth +7.8% is slightly below the industry median 10.1% but reflects sustainable growth including M&A contribution. Cash conversion 1.11x is slightly below the industry median 1.28x, but acceptable when accounting for seasonal working capital swings. Overall, the company is differentiated within the industry by high margins and returns, mid-level growth, and strong financial health, positioning it as a high-profit, high-return company.
- Continued improvement in operating margin to 29.0% (prior year 28.6%, +41bp) and further expansion to forecast 30.9% next year indicate strong scale effects and pricing power. Contract liabilities ¥80.9B (26.2% of Revenue) strengthen revenue visibility and increase the probability of achieving the full-year Operating Income guidance ¥106.0B (+17.9%).
- M&A-driven growth strategy persists, with accumulated goodwill ¥302.1B (64.2% of equity) embodying both high return potential and elevated risk. Goodwill multiple to EBITDA of 2.8x is within a reasonable range, but integration execution and impairment monitoring are central investment considerations.
- Generation of OCF ¥72.0B and FCF ¥43.0B demonstrates capacity to fund dividends with a payout ratio of 60.8% from internal resources while continuing growth investments. The sharp increase in accounts receivable (+59.1%) warrants monitoring of collection periods and credit risk.
- ROE 14.6% is high, but the low total asset turnover 0.42x constrains capital efficiency; further improvement will require margin expansion or asset efficiency (utilization/return of surplus assets). Rule of 40 (revenue growth 7.8% + operating margin 29.0% = 36.8%) approaches 40%, indicating a good balance between growth and profitability for a SaaS-style business. Overall, a high-profit, high-return, M&A-enabled growth model is established, with next-year guidance achievement and further capital efficiency improvements as the focus.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions should be made at your own responsibility and, where appropriate, after consulting a professional advisor.
