MINKABU THE INFONOID (4436) FY2026 Q3 Earnings Report

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Executive Summary

Cumulative results for the Q3 showed higher profit without revenue growth, with cost structure reforms substantially improving earnings being the key point. Revenue declined to ¥66.2B (△5.5% YoY), but Operating Income reached ¥3.95B, resulting in a return to profitability from the ¥9.85B Operating Loss recorded in the same period of the previous year. Ordinary Income was ¥2.89B (previous year: △¥10.4B), while Net Income was ¥2.84B (previous year: △¥9.71B), with both turning profitable. The primary driver of profit growth was fixed-cost reduction through a 27.6% reduction in SG&A expenses, while Net Income benefited from ¥2.01B in extraordinary gains, including a ¥1.85B gain on the sale of investment securities.

Factors Affecting Performance

【Revenue】Revenue was ¥66.22B, down 5.5% YoY. By segment, the Media Business (59.0% of revenue) recorded external revenue of ¥39.04B, down 7.6% YoY, primarily due to declines in advertising revenue and media-related revenue. The Solutions Business (41.0% of revenue) generated ¥27.18B, down 2.5%; within this figure, recurring revenue increased 5.9% to ¥21.37B, while initial and one-time revenue declined 24.5% to ¥5.82B. While the structural shift toward recurring revenue is progressing, the contraction in project-dependent one-time revenue is weighing on overall revenue.

【Profit and Loss】Despite the decline in revenue, SG&A expenses decreased 27.6% to ¥25.78B from ¥35.61B in the same period of the previous year, resulting in Operating Income of ¥3.95B and a return to profitability from the ¥9.85B Operating Loss recorded in the same period of the previous year. The gross profit margin also improved to 44.9% from 36.7% in the same period of the previous year, increasing fixed-cost absorption capacity. Ordinary Income was ¥2.89B, with ¥0.90B in interest expense acting as a pressure factor. Net Income was ¥2.84B; however, ¥2.01B in extraordinary gains, including a ¥1.85B gain on the sale of investment securities, contributed to the increase. Recurring earnings power should therefore be evaluated at the Operating Income and Ordinary Income levels. Overall, the results represent higher profit despite lower revenue.

Segment Analysis

The Solutions Business recorded external revenue of ¥27.18B, Segment Profit of ¥2.63B, and a profit margin of 9.7%, making it the largest contributor to company-wide profit. Recurring revenue accounted for 78.6% of the segment’s revenue, supporting earnings stability. The Media Business recorded external revenue of ¥39.04B, Segment Profit of ¥0.28B, and a profit margin of 0.7%. Although it returned to profitability from a substantial loss in the same period of the previous year, its earnings power remains limited as advertising and media-related revenue continue to decline. The difference in profit margins between the two businesses reached 9.0pt, indicating increasing dependence on the Solutions Business in terms of the earnings mix.

Key Financial Metrics

【Profitability】The Operating Profit Margin improved substantially to 6.0% from negative 14.1% in the same period of the previous year, while the Net Profit Margin improved to 4.3% from negative 13.9%. However, because Net Income includes extraordinary gains, recurring earnings power must be assessed based on the 6.0% Operating Profit Margin.【Cash Flow Quality】Of Profit Before Tax of ¥4.79B, extraordinary gains of ¥2.01B, primarily comprising a ¥1.85B gain on the sale of investment securities, contributed significantly. From an accrual perspective, earnings quality reflects a combination of operating improvement and non-recurring items. Comprehensive Income of ¥6.60B exceeded Net Income of ¥2.84B by ¥3.76B, mainly due to an increase in the valuation difference on other securities.【Investment Efficiency】Annualized ROE was 34.1%; however, this figure was driven by the small denominator of Net Assets of ¥11.06B and high financial leverage. Caution is therefore warranted when using it as an indicator of the underlying earnings power of the business.【Financial Soundness】The Equity Ratio improved to 10.8% from 3.1% in the same period of the previous year, but remains low. Short-term borrowings reached ¥77.17B, accounting for 75.4% of Total Assets. Current Assets stood at only ¥24.63B against Current Liabilities of ¥86.60B, indicating the need to closely monitor the short-term funding structure.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is not available, changes in the balance sheet provide insight into funding trends. Cash and deposits doubled to ¥11.27B from ¥5.43B in the same period of the previous year, while short-term borrowings increased significantly to ¥77.17B from ¥21.00B. Long-term borrowings of ¥47.93B and the portion due within one year of ¥10.25B, which existed in the same period of the previous year, were not observed in the current period, suggesting that the liability structure shifted from long-term to short-term financing. Investment securities increased to ¥8.24B, and the recording of a ¥1.85B gain on the sale of investment securities as an extraordinary gain suggests that some asset replacement took place. The recording of Net Income of ¥2.84B and changes in the funding structure are believed to have contributed to the improvement in cash levels.

Earnings Quality

Of Net Income of ¥2.84B, extraordinary gains of ¥2.01B, primarily comprising a ¥1.85B gain on the sale of investment securities, were a contributing factor. Accordingly, recurring earnings power should appropriately be evaluated based on Operating Income of ¥3.95B and Ordinary Income of ¥2.89B. In non-operating income and expenses, while non-operating income was almost negligible, non-operating expenses of ¥1.10B, mainly comprising ¥0.90B in interest expense, were incurred, reducing profit by ¥1.06B between Operating Income and Ordinary Income. Comprehensive Income of ¥6.60B exceeded Net Income by ¥3.76B, mainly due to an increase of ¥3.83B in the valuation difference on other securities. Therefore, the improvement in Net Assets during the period reflects not only business earnings but also the impact of market price fluctuations. Overall, the improvement in earnings during the period consisted of both the structural factor of SG&A reductions and the temporary factor of gains on the sale of investment securities.

Earnings Forecast and Guidance

The cumulative Q3 progress rates against the Full-Year plan (Revenue of ¥88.0B, Operating Income of ¥4.0B, and Ordinary Income of ¥2.5B) were 75.3% for Revenue, 98.9% for Operating Income, and 115.6% for Ordinary Income. Revenue progress was close to the standard 75% level, while Operating Income and Ordinary Income had already achieved most or all of their Full-Year plans. In particular, cumulative Ordinary Income of ¥2.89B exceeded the Full-Year plan of ¥2.50B, suggesting that the Full-Year plan incorporates increases in expenses, higher interest burdens, and other factors in Q4. No revisions were made to either the earnings forecast or the dividend forecast during the quarter.

Shareholder Returns

The Q2 dividend was ¥0 per share, and the Full-Year dividend forecast is also ¥0. The Payout Ratio is 0%. The no-dividend policy can be viewed as a decision to prioritize retained earnings under the current funding structure, which is characterized by a low current ratio and a high degree of dependence on short-term borrowings. No data on share repurchases has been disclosed.

Risk Factors

1. Funding Liquidity Risk: Current Liabilities of ¥86.60B exceed Current Assets of ¥24.63B, with Short-Term Borrowings of ¥77.17B accounting for just under 90% of Current Liabilities. Any changes in refinancing terms could affect the company’s funding position.

2. Capital Structure Leverage Risk: The Equity Ratio is 10.8%, which, although improved from 3.1% in the same period of the previous year, remains low. Interest expense of ¥0.90B is weighing on Ordinary Income, resulting in relatively high sensitivity to changes in the interest-rate environment.

3. Goodwill and Intangible Asset Valuation Risk: Goodwill of ¥27.61B is equivalent to 249.6% of Net Assets of ¥11.06B, while Intangible Fixed Assets of ¥61.37B account for 59.9% of Total Assets. If the profitability of acquired businesses falls below plan, impairment losses could have a significant impact on Net Assets.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Return

Compared with the industry median, both the Operating Profit Margin and Net Profit Margin are lower, indicating that profitability remains relatively low within the industry even after the return to profitability.

Growth and Capital Efficiency

While peer companies generally secured revenue growth, the Company recorded a revenue decline, placing it at a low level within the industry in terms of top-line growth.

※Source: Compiled by the Company

Key Points from the Financial Results

1. A return from an Operating Loss to Operating Income of ¥3.95B was achieved through a 27.6% reduction in SG&A expenses and an improved gross profit margin. Whether this improvement can continue without a recovery in revenue is a key structural point of focus.

2. In the Solutions Business, recurring revenue accounted for 78.6% of revenue and the 9.7% profit margin contributed to the stability of the earnings base. Meanwhile, the Media Business remained at a profit margin of 0.7%, with the difference in earnings power between the businesses widening.

3. Net Income includes ¥2.01B in extraordinary gains, primarily comprising gains on the sale of investment securities. Distinguishing recurring earnings power on an Operating Income and Ordinary Income basis from Net Income including extraordinary gains is important for understanding the financial results.

Theoretical Share Price (Reference Value)

Sensitivity: ¥131–¥139 at Cost of Equity ±1%, and ¥133–¥138 at ω±0.1.

Notes:

• The ratio of goodwill to Net Assets is high, and the assumptions may change substantially if impairment occurs.
• Net Assets as of the quarter-end are used (there is a timing difference relative to the Full-Year forecast).

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest-rate reference month: 2026-07 / Mechanically calculated values based solely on publicly disclosed data; these are not forecasts of the market share price or recommendations of any specific investment action, and do not predict or guarantee future share prices.)

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This report is an automatically generated financial results analysis document created 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 financial results data. Investment decisions should be made at your own discretion and responsibility, after consulting experts as necessary.

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