Sansan (4443) FY2027 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥14.75B
• Operating Income: ¥2.32B
• Net Income: ¥1.54B
• EPS: ¥12.32

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Segment Information

※ セグメント利益の測定基礎: 調整後営業利益

Full Year Forecast

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AI Financial Analysis

Executive Summary

FY2027 Q1 delivered strong operating leverage, although the improvement was concentrated in Sansan／Bill One. Revenue rose 20.1% year on year to ¥14.753bn. Operating income increased 339.8% to ¥2.321bn. The operating margin expanded approximately 1,144 basis points, from 4.3% to 15.7%. Gross margin remained high at 87.6%, but slipped approximately 24 basis points. SG&A rose only 3.3%, well below revenue growth, reducing its share of revenue by approximately 1,170 basis points. Profit attributable to owners increased 418.4% to ¥1.545bn, and net margin reached 10.5%. The annualized ROE supplied in the financial metrics was 29.3%. Sansan／Bill One generated ¥12.941bn of revenue, or 87.7% of consolidated revenue, making it the core business. Its adjusted operating profit rose to ¥2.734bn from ¥0.673bn. Eight grew revenue 33.7% but posted a wider adjusted operating loss of ¥0.166bn. Segment adjusted profit excludes stock-based compensation and acquisition-related amortization, so it should not be compared directly with consolidated operating profit. Stock-based compensation included in that reconciliation rose to ¥0.128bn from ¥0.019bn. Cash and deposits were ¥35.529bn, while the current ratio was 1.39x. Customer advance receipts represented a substantial ¥22.243bn obligation to deliver future services. Treasury stock's carrying balance became ¥1.259bn more negative year on year, a material capital-allocation development. The reported ROIC alert of −44.8% warrants scrutiny of the invested-capital calculation rather than an automatic conclusion that operations are loss-making. Sustaining the margin improvement depends chiefly on continued Sansan／Bill One growth and SG&A discipline, while narrowing Eight's losses would broaden the earnings base.

Profitability Analysis

The supplied DuPont decomposition gives annualized ROE of 29.3%: 10.5% net margin × 1.123x annualized asset turnover × 2.49x financial leverage. Net margin was the clearest driver of improvement, rising from approximately 2.4% a year earlier as operating margin expanded from 4.3% to 15.7%. Gross profit increased approximately 19.8%, while SG&A increased just 3.3%, indicating strong operating leverage rather than gross-margin expansion. The five-factor decomposition shows a 0.660 tax burden, 1.009 interest burden and 15.7% EBIT margin; interest costs are not the principal drag on returns. Sansan／Bill One is the core profit contributor: revenue rose 18.4% to ¥12.941bn and adjusted operating profit rose 306.2% to ¥2.734bn, lifting its adjusted margin from approximately 6.2% to 21.1%. Eight's revenue rose 33.7% to ¥1.719bn, but its adjusted loss widened from ¥0.057bn to ¥0.166bn and its adjusted margin fell from approximately −4.4% to −9.7%. Other operations generated ¥0.092bn of external revenue and an adjusted loss of ¥0.092bn. Consolidated adjusted segment profit of ¥2.475bn reconciles to ¥2.321bn of reported operating income after ¥0.128bn of stock-based compensation and ¥0.026bn of acquisition-related amortization. The latter is small relative to operating income; the increase in stock-based compensation merits monitoring. Sustained ROE improvement therefore rests primarily on retaining the core segment's margin gains rather than increasing leverage.

Growth Assessment

Revenue increased ¥2.470bn year on year, led by a ¥2.010bn increase in Sansan／Bill One external sales. Eight added ¥0.433bn but did not convert growth into profit. At 20.1% revenue growth plus a 15.7% operating margin, the quarter's Rule-of-40-style sum was 35.8%, below 40%; this is a broad growth-and-profitability comparison, not a measure of subscription retention. The 87.6% gross margin is consistent with attractive software-service economics. Concentration remains material: Sansan／Bill One produced 87.7% of consolidated external revenue, or 88.3% of the two reported segments' combined revenue. The outlook is most sensitive to whether its 21.1% adjusted margin can be maintained as the business scales.

Financial Health

Current assets of ¥41.042bn covered current liabilities of ¥29.544bn by 1.39x, leaving ¥11.498bn of working capital. Cash and deposits of ¥35.529bn covered ¥1.720bn of current loan maturities and ¥0.040bn of current bond maturities comfortably. Long-term loans were ¥0.748bn; including current loan maturities and bonds, identifiable borrowings and bonds totaled approximately ¥2.578bn. The stated 1.49x debt-to-equity ratio largely reflects total liabilities rather than borrowing leverage: advance receipts alone were ¥22.243bn, or approximately 75% of current liabilities. Those receipts support liquidity but also require future service delivery. Cash declined ¥1.477bn year on year, while current liabilities declined ¥2.287bn. Treasury stock's carrying balance moved from −¥1.043bn to −¥2.302bn, becoming ¥1.259bn more negative; this reduced the equity cushion relative to what it otherwise would have been. Retained earnings rose ¥1.230bn to ¥11.081bn. Goodwill of ¥0.840bn was approximately 4.0% of total equity, limiting balance-sheet exposure to goodwill valuation.

Notable B/S Changes

Treasury stock: carrying balance moved from −¥1.043bn to −¥2.302bn, a ¥1.259bn increase in the contra-equity balance (120.7% of its prior magnitude); assess its effect on equity and per-share measures. Property, plant and equipment: increased ¥0.526bn, or approximately 21.7%, to ¥2.945bn; the asset build raises the importance of subsequent utilization and returns. Cash and deposits: declined ¥1.477bn, or 4.0%, to ¥35.529bn; liquidity remains substantial, but the movement should not be equated with quarterly operating cash flow. Advance receipts: increased ¥0.754bn, or 3.5%, to ¥22.243bn and represented approximately 75% of current liabilities; these balances support liquidity while creating future service obligations.

Cash Flow Quality

Profit quality is supported at the income-statement level by operating income of ¥2.321bn versus ¥1.545bn of profit attributable to owners. The ¥0.023bn extraordinary fixed-asset disposal loss was small; the approximately 34.7% gap between ordinary income and profit attributable to owners was driven chiefly by ¥0.799bn of income tax expense. Interest and dividend income of ¥0.062bn was modest beside ¥14.753bn of revenue. Year-on-year receivables fell ¥0.186bn despite revenue growth, while customer advance receipts rose ¥0.754bn; these movements do not, by themselves, establish quarterly cash conversion or working-capital manipulation. The ¥1.477bn year-on-year decline in cash likewise should not be interpreted as a quarterly operating cash outflow.

Dividend Sustainability

The full-year dividend forecast is ¥5 per share. At approximately 125.43m shares outstanding excluding treasury shares, that implies roughly ¥0.627bn of dividends at the current share count, compared with ¥1.545bn of Q1 profit attributable to owners and ¥35.529bn of cash. If Q1 EPS of ¥12.32 were sustained for four quarters, annualized EPS would be ¥49.28 and the indicative dividend payout ratio would be approximately 10.1%; that is a scenario, not an earnings forecast. The more negative treasury-stock balance also makes aggregate shareholder returns relevant, but its balance-sheet movement is not a measure of cash spent on repurchases.

Risk Assessment

Business risks include High concentration in Sansan／Bill One: it generated ¥12.941bn, or 87.7% of consolidated revenue, making group growth and margins sensitive to its execution., Eight's adjusted operating loss widened to ¥0.166bn despite 33.7% revenue growth, indicating that monetization and cost control have not kept pace with expansion., As a business-software provider, Sansan faces cybersecurity, data-privacy and technology-obsolescence risks that could affect customer trust and retention..

Financial risks include Advance receipts of ¥22.243bn are substantial service-delivery obligations; they should not be treated as unrestricted surplus capital., The current ratio of 1.39x is above 1.0x but below the stated 1.5x healthy benchmark, making liquidity management relevant despite the large cash balance., Treasury stock's carrying balance became ¥1.259bn more negative year on year, reducing reported equity relative to a no-change scenario..

Key concerns include The −44.8% ROIC quality alert conflicts with positive operating income and a large net-cash position. A very small or negative invested-capital denominator—potentially affected by customer advances—could make ROIC misleading; the numerator and capital definition should be reconciled before using it to judge value creation., Core-segment margin sustainability matters more than the headline 339.8% operating-profit growth rate, which compares against a low prior-year base., Stock-based compensation in the segment reconciliation increased from ¥0.019bn to ¥0.128bn..

Investment Implications

Key takeaways include Strong Q1 profit growth was principally an SG&A-efficiency and Sansan／Bill One margin story., Eight's faster sales growth has not yet translated into adjusted profitability., Cash substantially exceeds identifiable borrowings and bonds, but advance receipts carry corresponding service obligations..

Metrics to watch include Sansan／Bill One revenue growth and adjusted operating margin, Eight adjusted operating loss and margin, SG&A as a percentage of revenue and stock-based compensation, Advance receipts, cash and current-loan maturities, Reconciled ROIC definition and invested-capital denominator.

Regarding relative positioning, The 87.6% gross margin and 15.7% operating margin compare favorably with the supplied software and profitability benchmarks, while the 35.8% Rule-of-40-style sum and Eight's losses temper the growth-quality assessment.