Quick View
| Metric | Current Period | YoY | YoY |
|---|---|---|---|
| Revenue | ¥14.6B | ¥9.8B | +49.2% |
| Operating Income | ¥3.3B | ¥1.0B | +232.6% |
| Ordinary Income | ¥3.3B | ¥1.0B | +231.7% |
| Net Income | ¥2.9B | ¥1.0B | +178.7% |
| ROE | 5.1% | 1.9% | - |
Executive Summary
FY2026 Q1 results delivered substantial top-line and bottom-line growth across all metrics: Revenue ¥14.6B (YoY +¥4.8B, +49.2%), Operating Income ¥3.3B (YoY +¥2.3B, +232.6%), Ordinary Income ¥3.3B (YoY +¥2.3B, +231.7%), and Net Income ¥2.9B (YoY +¥1.9B, +178.7%). Gross profit margin remained high at 73.5%, and the operating margin improved significantly to 22.8% (up +12.6pt from 10.2% in the prior-year period).
Key Financial Metrics
[Profitability] ROE 5.1% (improved from 2.8% in the prior-year period), Operating Margin 22.8% (up +12.6pt from 10.2% in the prior-year period), Net Margin 19.8% (up +9.2pt from 10.6% in the prior-year period), Gross Profit Margin 73.5%. [Cash Quality] Cash and Deposits ¥47.9B, Short-term Debt Coverage 2.2x. [Capital Efficiency] Asset Turnover 0.185x (annualized 0.74x). [Financial Soundness] Equity Ratio 71.5%, Current Ratio 331.1%, Debt-to-Equity Ratio 0.39x.
Cash Flow Analysis
Cash and deposits increased by ¥0.9B YoY to ¥47.9B, maintaining ample liquidity. Retained earnings rose by ¥2.9B from ¥4.1B at the beginning of the period to ¥7.0B, indicating capital accumulation with the full amount of current net income retained internally. Cash coverage of short-term borrowings of ¥21.5B is 2.2x, indicating sufficient liquidity. Deposits received of ¥16.1B reflect a current liabilities structure aligned with business characteristics; however, given the larger cash balance, resilience against refund risk is high. Working capital is positive at ¥49.6B, maintaining a conservative funding structure with cash and deposits far exceeding accounts receivable of ¥5.8B.
Quality of Earnings
Ordinary Income of ¥3.3B and Operating Income of ¥3.3B are nearly the same level, indicating a very limited impact from non-operating items. Non-operating income, including interest and dividends received, was ¥0.01B, and non-operating expenses were ¥0.01B, demonstrating that earnings are primarily driven by core operations. The effective tax rate on Net Income of ¥2.9B is approximately 13.3%, indicating a light tax burden. The operating margin of 22.8% reflects the difference between the gross profit margin of 73.5% and the SG&A ratio of 50.7%, confirming a high gross margin structure and disciplined SG&A control. While Operating Cash Flow is not disclosed, the increase in retained earnings nearly matches net income, indicating a clear accounting profit recognition process.
Risk Factors
Dependence on a high gross margin structure poses a risk, as maintaining a gross profit margin of 73.5% underpins profitability; any decline in margin due to changes in product/service mix or price competition would have a significant impact on profits. Regarding refund risk on deposits received of ¥16.1B, monitoring is required for potential cash outflows from sudden cancellations or contract changes; however, short-term payment capacity is secured with cash holdings of ¥47.9B. Asset turnover is low at 0.185x; if sales generation relative to total assets of ¥79.2B does not improve, enhancement of capital efficiency will be limited. The Full Year forecast embeds a decline in profits from Q2 onward, with Operating Income of 400百万円 (Q1 progress rate 83.4%), warranting attention to potential seasonality and cost increases.
Industry Benchmark (Reference; In-house Research)
[Position within Industry] (Reference information; in-house research) The company’s Operating Margin of 22.8% has improved significantly from 10.2% in the prior-year period, confirming a trend of profitability enhancement. ROE at 5.1% has improved from 2.8% in the prior-year period; however, the absolute level remains low compared to general profitability benchmarks, suggesting room for improvement in capital efficiency. The revenue growth rate of 49.2% indicates high growth, but the asset turnover of 0.185x is at a level requiring improvement from an asset efficiency perspective. The Equity Ratio of 71.5% indicates a conservative financial structure and high financial soundness. Versus historical results, both the operating margin and net margin reached record levels in FY2026 Q1, showing a pronounced improvement in earnings quality.
Key Takeaways from Results
Key takeaways include: first, the sustained high gross profit margin of 73.5% and the significant improvement in the operating margin to 22.8%, quantitatively demonstrating improved earnings quality driven by a higher mix of high-margin products/services and SG&A control. Second, the ratio of cash and deposits of ¥47.9B to total assets of ¥79.2B stands at 60.5%, indicating abundant liquidity, and under a no-dividend policy, a conservative capital policy prioritizing internal reserves continues. Third, versus the Full Year forecast, with Operating Income of 400百万円 and Q1 at ¥3.3B (progress rate 83.4%), earnings appear front-loaded, suggesting the importance of monitoring earnings trends and cost progression from Q2 onward.
This report is an earnings analysis document automatically generated by AI based on XBRL financial summary data. It does not constitute a recommendation to invest in any particular security. The industry benchmark is reference information compiled by our company based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any decisions.
AI Financial Analysis
Executive Summary
Makuake delivered a very strong FY2026 Q1 earnings outcome, with revenue growth translating into disproportionate operating and net-profit expansion. Revenue rose 49.2% year on year to ¥1.463bn. Gross profit increased to ¥1.075bn from ¥0.757bn in the prior-year quarter. Operating income more than tripled, rising 232.6% to ¥0.334bn. Ordinary income similarly increased 231.7% to ¥0.334bn. Net income rose 178.7% to ¥0.290bn, equivalent to basic EPS of ¥22.76. The operating margin expanded to 22.8% from 10.2%, an improvement of approximately 1,260 basis points. Net margin increased to 19.8% from 10.6%, an expansion of approximately 920 basis points. Gross margin declined to 73.5% from approximately 77.3%, a compression of roughly 380 basis points. However, SG&A expense growth of 12.7% was substantially below revenue growth of 49.2%, reducing the SG&A-to-sales ratio to 50.6% from 67.0%. This operating leverage more than offset the lower gross margin and was the principal driver of profit growth. Q1 ordinary income was almost entirely generated from operations, as non-operating income was immaterial. The effective tax rate was 13.3%, resulting in a tax burden factor of 0.867 and supporting conversion of pre-tax profit into net income. The balance sheet remains highly liquid, with cash and deposits of ¥4.793bn representing 60.6% of total assets and a current ratio of 331.1%. The company has no planned FY2026 dividend, preserving internally generated capital for operations and balance-sheet flexibility. Q1 revenue has reached 30.7% of the full-year revenue forecast, while operating profit and net income have already reached 83.5% and 81.7%, respectively, of their respective full-year forecasts. The exceptionally high profit progress rate indicates that either the earnings outlook is conservative or the company expects meaningful margin normalization during the remaining quarters. The key forward implication is whether the Q1 SG&A efficiency and elevated operating margin can be maintained while preserving marketplace growth and service quality.
Profitability Analysis
The reported annualized DuPont ROE is 20.3%, comprising a 19.8% net profit margin, 0.739x annualized asset turnover, and 1.39x financial leverage. The strongest contributor to returns is profitability rather than balance-sheet leverage, as the 1.39x leverage factor is moderate and equity finances 72.1% of total assets. The principal year-on-year change was margin expansion: operating margin rose by about 1,260 basis points to 22.8%, while net margin improved by about 920 basis points to 19.8%. Revenue growth of 49.2% materially exceeded the 12.7% increase in SG&A expenses, producing powerful operating leverage. SG&A fell to 50.6% of revenue from 67.0% in the prior-year quarter, a reduction of approximately 1,640 basis points. This was sufficient to offset a gross-margin decline of approximately 380 basis points to 73.5%. Accordingly, the earnings improvement appears driven by improved cost absorption and operating scale rather than by financial engineering or non-operating gains. Ordinary income of ¥0.334bn was essentially equivalent to operating income, confirming that core operations generated the quarter's profit. The interest burden factor of 1.002 indicates that financing costs were immaterial relative to EBIT. The tax burden factor of 0.867 is healthy, with the 13.3% effective tax rate allowing a high proportion of pre-tax profit to reach shareholders. The annualized ROE exceeds the 15% excellent benchmark, although its durability depends on sustaining the Q1 operating margin rather than reverting toward the full-year forecast operating margin of 8.4%.
Growth Assessment
Revenue increased 49.2% year on year to ¥1.463bn, demonstrating a substantial acceleration in business volume. Gross profit grew 41.9% to ¥1.075bn, slower than revenue because the gross margin declined to 73.5%. Operating income growth of 232.6% significantly outpaced revenue growth, showing that incremental revenue was converted efficiently into earnings through fixed-cost absorption. Net income increased 178.7%, slightly slower than operating income growth because the current effective tax rate was higher than the unusually low prior-year level. The FY2026 full-year forecast calls for revenue of ¥4.763bn, up 4.0% year on year, operating income of ¥0.400bn, down 10.6%, and net income of ¥0.355bn, down 12.8%. Q1 revenue progress against the annual forecast is 30.7%, above the standard 25% Q1 progress rate by 5.7 percentage points. Operating-income progress is 83.5%, exceeding the standard rate by 58.5 percentage points. Net-income progress is 81.7%, exceeding the standard rate by 56.7 percentage points. This gap between Q1 performance and the annual plan makes the trajectory of gross margin, SG&A intensity, and subsequent quarterly revenue especially important. The forecast implies significant moderation after the first quarter, particularly in profitability, and therefore Q1 results should not be extrapolated mechanically to the full year.
Financial Health
Financial health is strong on reported balance-sheet metrics. Current assets of ¥7.112bn exceed current liabilities of ¥2.148bn by ¥4.964bn, producing working capital of ¥4.964bn. The current ratio and quick ratio are both 331.1%, well above conventional liquidity thresholds. Cash and deposits total ¥4.793bn, equal to 60.6% of total assets and more than twice total liabilities of ¥2.210bn. Total equity is ¥5.706bn, representing a 72.1% equity ratio. The reported debt-to-equity ratio is 0.39x, indicating a conservative overall liability burden relative to equity and remaining well below the 2.0x warning threshold. Financial leverage of 1.39x further confirms that returns are not dependent on aggressive leverage. Current liabilities include ¥1.606bn of deposits received, which account for approximately 74.8% of current liabilities; this structure supports liquidity but requires continued operational management of settlement-related obligations. Noncurrent liabilities are limited to ¥0.062bn. Intangible assets total ¥0.693bn, or 8.8% of total assets, remaining below the 20% benchmark for balance-sheet concentration. Retained earnings increased ¥0.290bn year on year to ¥0.697bn, reflecting the quarter's profitability and strengthening internally generated capital.
Notable B/S Changes
Retained earnings: +¥0.290bn (+71.2%) to ¥0.697bn — Q1 profitability increased accumulated equity, reinforcing the company's internally funded capital base.
Cash Flow Quality
Dividend Sustainability
The FY2026 forecast specifies a dividend per share of ¥0. As a result, the dividend payout ratio is 0% on the forecast basis. The absence of a dividend means that current earnings are retained within the company rather than distributed to shareholders. Retained earnings stood at ¥0.697bn at the end of Q1, up 71.2% year on year. With no dividend commitment, there is no near-term dividend coverage pressure on the balance sheet. Capital-allocation assessment should focus on whether retained earnings continue to support profitable growth and whether the company establishes a future shareholder-return policy as profitability matures.
Risk Assessment
Business risks include Margin normalization risk: Q1 gross margin declined by approximately 380 basis points year on year to 73.5%, and continued gross-margin pressure could reduce the benefit of SG&A leverage., Growth deceleration risk: the full-year revenue forecast implies only 4.0% growth despite Q1 revenue growth of 49.2%, indicating an expectation of materially slower activity in subsequent quarters., Platform and marketplace execution risk: sustaining high transaction activity requires continued attraction of both project operators and supporters, while maintaining service quality and platform trust., Competitive risk: crowdfunding and product-launch support services face competition from alternative digital marketplaces, direct-to-consumer channels, and larger platform operators..
Financial risks include Earnings-expectation risk: Q1 operating income already represents 83.5% of the full-year forecast, so future results and any forecast revision will be closely scrutinized., Settlement-liability management risk: deposits received of ¥1.606bn are a significant component of current liabilities and require disciplined management of settlement timing and associated obligations., Intangible-asset value risk: intangible assets of ¥0.693bn represent 8.8% of assets; while not concentrated, their value depends on continued economic benefit from the underlying platform and software assets..
Key concerns include The central issue is the sustainability of the 22.8% Q1 operating margin versus the 8.4% margin implied by the full-year operating-income forecast., The Q1 earnings profile was operationally strong, with ordinary income virtually identical to operating income; the key test is whether this level of core profitability persists through the fiscal year., The decline in gross margin should be monitored alongside the sharply improved SG&A ratio, as a reversal in either trend would affect operating leverage..
Investment Implications
Key takeaways include Revenue grew 49.2% year on year to ¥1.463bn, while operating income rose 232.6% to ¥0.334bn., Operating margin improved to 22.8%, driven by SG&A growing far more slowly than revenue., The reported annualized ROE of 20.3% is strong and is primarily supported by high net profitability rather than leverage., Liquidity is robust, with ¥4.793bn in cash and deposits, a 331.1% current ratio, and a 72.1% equity ratio., Q1 operating-income and net-income progress rates of 83.5% and 81.7% versus full-year guidance create a substantial focus on the outlook for subsequent quarters..
Metrics to watch include Revenue growth relative to the 4.0% full-year growth forecast, Gross margin following the Q1 decline to 73.5%, SG&A-to-sales ratio following the Q1 improvement to 50.6%, Operating margin relative to the 22.8% Q1 outcome and 8.4% full-year implied level, Deposits received and their relationship to current liabilities, Retained-earnings accumulation and any change in shareholder-return policy.
Regarding relative positioning, Makuake's Q1 profitability metrics are strong relative to the stated benchmarks: operating margin of 22.8%, net margin of 19.8%, and reported annualized ROE of 20.3% all exceed the respective excellent thresholds. Its balance sheet is also conservatively positioned, with substantial liquidity and moderate financial leverage. The distinguishing analytical issue is not current financial resilience, but the unusually large divergence between Q1 profit delivery and the full-year earnings forecast.