| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥60.8B | ¥53.1B | +14.5% |
| Operating Income | ¥11.7B | ¥9.7B | +20.9% |
| Ordinary Income | ¥11.7B | ¥9.9B | +18.3% |
| Net Income | ¥6.9B | ¥7.0B | -2.2% |
| ROE | 9.7% | 10.7% | - |
In FY2026 Q3 consolidated results, Revenue was ¥60.8B (¥53.1B a year ago, +¥7.7B, +14.5%), Operating Income was ¥11.7B (¥9.7B, +¥2.0B, +20.9%), Ordinary Income was ¥11.7B (¥9.9B, +¥1.8B, +18.3%), and Net Income was ¥6.9B (¥7.0B, -¥0.1B, -2.2%). While profitability improved with Operating Income growth of +20.9% outpacing top-line growth, Net Income declined slightly due to higher tax burden (effective tax rate 34.9%). Full-year guidance calls for Revenue of ¥82.0B (+10.2%), Operating Income of ¥15.7B (+10.5%), and Net Income of ¥9.7B, with cumulative Q3 progress at 74.1% for Revenue and 74.5% for Operating Income, indicating steady progress.
[Profitability] ROE 9.7% (improved YoY), Operating Margin 19.2% (+0.9pt from 18.3% a year ago), and Gross Margin 47.0% remain high. DuPont decomposition: Net Profit Margin 11.3%, Total Asset Turnover 0.594x, and Financial Leverage 1.44x combine to produce ROE. EPS ¥42.59 (diluted ¥40.22). [Cash Quality] Cash and deposits of ¥55.7B account for 54.4% of total assets; short-term liability coverage is a high 1.99x. [Investment Efficiency] Total Asset Turnover 0.594x (equivalent to 0.79x annualized) dipped slightly YoY due to increased fixed assets. Investment securities expanded from ¥1.6B to ¥4.6B, up +189%, indicating broader capital allocation. [Financial Soundness] Equity Ratio 69.7%, Current Ratio 254.2%, Quick Ratio 254.1%, and Debt-to-Equity Ratio 0.44x reflect a conservative financial structure.
Cash and deposits increased by +¥8.0B YoY to ¥55.7B, with Operating Income growth and improved working capital management contributing to cash generation. Working capital stands at ¥43.2B, with contract liabilities of ¥17.3B functioning as deferred revenue of a prepayment nature and serving as a funding source. Trade receivables of ¥12.2B equate to about two months of Revenue, indicating efficient collections. Fixed assets rose from ¥24.8B to ¥31.1B, a +¥6.3B increase, reflecting growth investments in software assets and capital expenditures. Investment securities increased by +¥3.0B, expanding capital allocation to financial management and/or equity investments. Cash coverage of short-term liabilities of ¥28.0B is 1.99x, providing ample liquidity and ensuring capacity to cover near-term dividend outlays (year-end ¥23.00 assumed) and maintain investment flexibility.
Ordinary Income of ¥11.7B nearly matches Operating Income of ¥11.7B, with non-operating income and expenses netting to a small positive. Non-operating income was ¥0.8B (equity in earnings of affiliates, interest and dividend income, etc.), while non-operating expenses were ¥0.8B (foreign exchange losses, interest expenses, etc.), offsetting each other and limiting non-operating impacts at the Ordinary stage. Against Profit before income taxes of ¥10.6B, income taxes of ¥3.7B (effective tax rate 34.9%) were recorded, resulting in Net Income of ¥6.9B. Cash and deposits of ¥55.7B are about eight times Net Income of ¥6.9B, indicating strong cash backing. Contract liabilities of ¥17.3B represent the prepayment portion of revenue recognition, and deferral based on ongoing service contracts suggests stability. With limited impact from non-operating items and Operating-level earnings constituting the core of profits, the quality of earnings is solid.
Market price volatility risk and recovery risk associated with the increase in investment securities (+189% to ¥4.6B). Rising fixed assets (+25% to ¥31.1B) could expand depreciation expense and potentially reduce Return on Invested Capital (ROIC). The effective tax rate of 34.9% is relatively high, and tax law changes or the reversal of deferred tax assets could cause fluctuations in Net Income. If revenue concentration in key customers/services materializes, there is a downside risk to Revenue. Total Asset Turnover is trending lower YoY, and deterioration in asset efficiency could affect growth potential.
[Industry Position] (Reference information; our research) Profitability: Operating Margin of 19.2% significantly exceeds the industry median of 6.4% (2025-Q3, IT & Communications, 68 companies, IQR 2.0%–13.5%), above the upper quartile. Net Profit Margin of 11.3% also exceeds the industry median of 4.8% (IQR 0.6%–9.4%), indicating superior profitability within the industry. ROE of 9.7% slightly exceeds the industry median of 7.3% (IQR 0.9%–12.1%). Growth: Revenue growth of +14.5% is close to the industry median of +12.0% (IQR +2.0%–+24.5%), healthy but not top quartile. Soundness: Equity Ratio of 69.7% exceeds the industry median of 55.2% (IQR 42.5%–67.3%); Current Ratio of 254.2% is also in the upper range versus the industry median of 208% (IQR 156%–301%), indicating strong financial stability. Efficiency: Return on Assets is Net Income ¥6.9B ÷ Total Assets ¥102.3B = 6.7%, above the industry median of 3.8% (IQR 0.5%–6.0%). Overall, the company ranks high in profitability and financial soundness within the industry, while maintaining growth roughly in line with the industry average. (Industry: IT & Communications, N=68 companies, comparison: 2025-Q3, source: our compilation)
First, with an Operating Margin of 19.2% and a Gross Margin of 47.0% far above industry medians, the company operates a highly profitable model, and cumulative Q3 Operating Income growth of +20.9% outpacing Revenue growth of +14.5% indicates operating leverage at work. Second, investment securities increased +189% from ¥1.6B to ¥4.6B, and fixed assets rose +25% to ¥31.1B, signaling accelerated growth investments; the recovery of invested capital (ROIC trends) will drive future capital efficiency. Third, strong liquidity indicated by cash and deposits of ¥55.7B and a Current Ratio of 254% supports the sustainability of a Payout Ratio of 55.3% (year-end ¥23.00) for the time being; however, the slight decline in Net Income partly reflects higher tax burden, warranting continued monitoring of the balance between profit growth and dividends.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data and is not a solicitation or recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company from publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before investing.