Sansan,Inc. FY2026 FY Earnings Report

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Executive Summary

Sansan reported results that achieved both growth and profitability, with a significant improvement in profit margins in addition to higher revenue. Revenue was ¥537.6B (+24.4% YoY), Operating Income was ¥81.8B (+192.3% YoY; ¥28.0B in the previous year), Ordinary Income was ¥81.7B (+197.8% YoY), and Net Income attributable to owners of the parent was ¥67.8B, representing a substantial increase from ¥4.2B in the previous year. The Operating Income margin rose to 15.2%, an improvement of approximately 8.7pt from 6.5% in the previous year. The primary drivers of the increase in income were economies of scale accompanying higher revenue and improved SG&A efficiency resulting from a decrease in share-based compensation-related expenses.

Factors Affecting Results

【Revenue】Revenue of ¥537.6B represented a 24.4% YoY increase. By segment, the Sansan/Bill One Business generated ¥468.1B in external customer revenue, up 23.6% from ¥378.7B in the previous year, accounting for approximately 87% of total revenue and driving growth as the core business. The Eight Business generated ¥67.0B, up 32.9% from ¥50.4B in the previous year, demonstrating a growth rate exceeding that of the core business. Both businesses recorded higher revenue.

【Profit and Loss】Operating Income increased significantly to ¥81.8B, up 192.3% from ¥28.0B in the previous year. On an adjusted segment profit basis, the Sansan/Bill One Business generated ¥83.4B, compared with ¥35.8B in the previous year, while the Eight Business generated ¥2.4B, compared with ¥0.6B in the previous year, indicating substantial profit improvement in both segments. On a company-wide basis, the reduction in share-based compensation-related expenses from ¥6.2B to ¥1.1B also contributed to the improvement in profit and loss. Ordinary Income of ¥81.7B was approximately at the same level as Operating Income, indicating a limited impact from non-operating income and expenses. Net Income increased substantially from ¥4.2B in the previous year to ¥67.8B, leading to the conclusion that the Company reported higher revenue and higher profit.

Segment Analysis

The reported segments comprise the Sansan/Bill One Business and the Eight Business. The Sansan/Bill One Business generated external revenue of ¥468.1B, compared with ¥378.7B in the previous year, representing a 23.6% increase, and segment profit of ¥83.4B, compared with ¥35.8B in the previous year. Its profit margin reached approximately 17.8%, making it the core business that accounts for the majority of company-wide profit. The Eight Business generated external revenue of ¥67.0B, compared with ¥50.4B in the previous year, representing a 32.9% increase, and segment profit of ¥2.4B, compared with ¥0.6B in the previous year. Although its profit margin remained at approximately 3.5%, its level of profitability expanded year over year, indicating continued improvement in its earnings base. Both businesses recorded higher revenue and higher profit, demonstrating simultaneous growth and profitability improvement across the overall business portfolio.

Key Financial Indicators

【Profitability】The Operating Income margin was 15.2%, improving by approximately 8.7pt from 6.5% in the previous year, while the Net Income margin rose significantly to 12.6% from approximately 1.0% in the previous year. ROE (Net Income as a percentage of net assets) was 38.8%; under DuPont analysis, the sharp improvement in the Net Income margin was the primary driver. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥96.4B, representing coverage of 1.42x Net Income of ¥67.8B, and the cash backing of earnings can be assessed as sound. However, OCF was approximately flat compared with ¥96.5B in the previous year, and its modest growth relative to the sharp increase in profit warrants confirmation of trends in working capital. 【Investment Efficiency】ROA (based on Ordinary Income) improved to 15.9% from 6.4% in the previous year, indicating improved asset efficiency. 【Financial Soundness】The Equity Ratio improved to 38.4% from 31.2% in the previous year, while cash and cash equivalents increased by ¥56.8B year over year to ¥368.5B. Total assets and net assets both expanded to ¥549.6B and ¥210.9B, respectively.

Cash Flow Analysis

Operating Cash Flow (OCF) was ¥96.4B, approximately flat compared with ¥96.5B in the previous year. While Net Income increased substantially, growth in cash generation was moderate. Investing Cash Flow was -¥6.1B, representing a reduction in expenditures from -¥25.5B in the previous year and suggesting a restrained investment stance. Financing Cash Flow was -¥33.7B, with expenditures increasing from -¥6.5B in the previous year, likely reflecting adjustments to the capital structure through dividend payments and other activities. Free Cash Flow, calculated as the sum of OCF and Investing Cash Flow, was a substantial ¥90.3B, indicating ample cash generation capacity even while continuing growth investments. The fact that OCF growth did not keep pace with profit growth is a key point for monitoring the movements of working capital, including accounts receivable and deferred revenue.

Earnings Quality

Ordinary Income of ¥81.7B was approximately at the same level as Operating Income of ¥81.8B, indicating that the impact of non-operating income and expenses was limited and that the increase in profit was attributable to improved earnings from the core business. As extraordinary gains and losses, impairment losses on property, plant and equipment and intangible assets were recorded in the Other segment in both the previous and current periods, amounting to ¥43M in the previous period and ¥231M in the current period; however, their impact on overall profit and loss was limited. OCF provided coverage of 1.42x Net Income, and the consistency between revenue recognition and cash conversion appears generally sound. On the other hand, the fact that OCF was flat compared with the previous year suggests that working capital may have absorbed cash relative to the sharp increase in profit, making it an element that should be monitored when assessing earnings quality.

Shareholder Returns

The dividend for the current period was ¥2.5 per share at year-end, representing an annual dividend, and the Payout Ratio was an extremely conservative 4.7% relative to Net Income of ¥67.8B. Total dividend payments were approximately ¥3.15B, providing ample coverage relative to Free Cash Flow of ¥90.3B. The dividend forecast for the next period is ¥5.0 per share, confirming a policy of increasing the dividend from ¥2.5 per share in the previous period. The current level of shareholder returns remains low, indicating relatively substantial scope for shareholder returns in light of the Company’s cash generation capacity.

Risk Factors

1. Working capital absorption risk: While Net Income increased by +1,498.6% YoY, OCF was ¥96.4B, approximately flat from ¥96.5B in the previous year, indicating that movements in working capital, including accounts receivable and deferred revenue, may not have kept pace with profit growth.

2. Risk of margin dilution accompanying the reacceleration of growth investments: The Operating Income margin improved sharply from 6.5% to 15.2%; however, this improvement was supported by a decrease in share-based compensation-related expenses, from ¥6.2B in the previous year to ¥1.1B in the current period. If personnel expenses expand again due to intensified hiring and other initiatives, margins may partially contract.

3. Risk of impairment of goodwill and intangible assets: Impairment losses in the Other segment increased from ¥43M in the previous period to ¥231M in the current period, requiring attention to the valuation of intangible assets, including the unamortized goodwill balance of ¥8.66B at the end of the current period.

Industry Benchmark (Reference; Prepared by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The Company’s Operating Income margin exceeds the industry median and is near the upper end of the IQR.

Growth and Capital Efficiency

The Company’s Revenue growth rate significantly exceeds the industry median and is above the upper end of the IQR.

※Source: Prepared by the Company

Key Points from the Financial Results

1. In addition to higher revenue, the Operating Income margin improved by approximately 8.7pt from 6.5% in the previous year to 15.2%, indicating a qualitative transformation in the earnings structure. Against a backdrop of reduced share-based compensation-related expenses and economies of scale accompanying higher revenue, the trend toward structural improvement in profitability merits attention.

2. While the Payout Ratio remained at a conservative 4.7%, the dividend forecast for the next period is ¥5.0 per share, indicating a policy of increasing the dividend. Given cash and cash equivalents of ¥368.5B and Free Cash Flow of ¥90.3B, changes in the shareholder return policy will be an important point for future monitoring.

3. The fact that OCF remained flat compared with the previous year contrasts with the sharp expansion in Net Income, making working capital trends an important factor in assessing earnings quality.

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This report is an automatically generated financial analysis document produced 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 available financial results data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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