| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue | ¥42.4B | ¥48.0B | -11.7% |
| Operating Income | ¥0.0B | ¥4.1B | -99.6% |
| Ordinary Income | ¥5.3B | ¥8.0B | -32.9% |
| Net Income | ¥3.7B | ¥5.5B | -33.2% |
| ROE | 3.1% | 4.5% | - |
Cumulative results for 2026 FY Q3 were Revenue of ¥42.4B (YoY -¥5.6B -11.7%), Operating Income of ¥0.0B (YoY -¥4.1B -99.6%), Ordinary Income of ¥5.3B (YoY -¥2.6B -32.9%), and Net Income of ¥3.7B (YoY -¥1.9B -33.2%). While revenue decline led to a significant deterioration in earnings power at the operating level, gains on sale of marketable securities of ¥4.2B were recorded as non-operating income, supporting Ordinary Income and below. Gross margin remained at 62.1%, but SG&A nearly absorbed gross profit, driving Operating Margin down to 0.0%. Dependence on investment income is pronounced; restoring earnings generation from the core business is a key challenge.
[Profitability] ROE 2.9% (below the average of the past five fiscal years), Operating Margin 0.0% (down -9.6pt from 9.6% a year ago, the lowest in the past five fiscal years), Net Margin 8.8% (down -2.8pt from 11.6% a year ago). Profitability at the operating level deteriorated sharply, with final profit supported by gains on sale of marketable securities. Gross margin of 62.1% is high, but SG&A at ¥26.3B (62.0% of Revenue) nearly offsets gross profit. [Cash Quality] Cash and deposits of ¥38.2B (YoY +¥22.4B +140.7%) indicate very strong short-term liquidity, with 3.8x coverage of current liabilities of ¥10.1B. Investment securities increased significantly to ¥28.8B (YoY +¥21.3B +285.5%), reflecting greater allocation to investment assets. [Capital Efficiency] Total asset turnover of 0.33x (about 0.43x annualized) is low. ROA is 2.9%, indicating limited asset efficiency. [Financial Soundness] Equity Ratio 92.3% (+2.1pt from 90.2% a year ago), current ratio 917.6%, and debt-to-equity ratio 0.08x indicate an extremely conservative financial base. Working capital is ¥82.6B, with ample cash on hand.
In the absence of a disclosed cash flow statement, funding trends are analyzed from balance sheet movements. Cash and deposits increased substantially by +¥22.4B YoY to ¥38.2B, and investment securities also rose by +¥21.3B to ¥28.8B, indicating ongoing allocation of funds to investments. The total increase of approximately ¥44B far exceeds Net Income of ¥3.7B (approximately ¥5B on an annualized basis), suggesting a cycle of cash recovery through sales of marketable securities and reinvestment, or a reassessment of the use of carried-over funds from the prior fiscal year-end. Accounts receivable are ¥0.9B and inventories are ¥0.5B, implying minimal working capital needs and limited capital tie-up due to business characteristics. Accounts payable increased by +¥0.3B to ¥0.3B and remain small, providing limited funding benefits from trade payables. Short-term borrowings are zero, indicating low reliance on interest-bearing debt; with cash covering current liabilities of ¥10.1B by 3.8x, liquidity risk is extremely low. However, given Operating Income is near zero, cash generation from operating activities is weak, and proceeds from sales of investment securities are likely a primary funding source.
With Ordinary Income of ¥5.3B versus Operating Income of ¥0.0B, net non-operating income is approximately ¥5.3B. This comprises non-operating income of ¥5.4B less non-operating expenses of ¥0.1B, with non-operating income mainly consisting of gains on sale of marketable securities of ¥4.2B, equity in earnings of affiliates of ¥0.2B, and interest income of ¥0.4B. Non-operating income accounts for 12.6% of Revenue, and about 99% of profit is attributable to non-operating factors. The decline in earnings power at the operating level is pronounced, and reliance on investment income raises concerns about sustainability. Meanwhile, the 62.1% gross margin indicates high value-added in products/services; curbing SG&A of ¥26.3B is key to restoring operating profitability. With no cash flow statement disclosed, Operating Cash Flow versus Net Income cannot be compared; however, given Operating Income is near zero, cash generation from operating activities is presumed limited. The quality of earnings is unstable, influenced by the timing of sales and valuation gains on investment securities, and securing stable earnings from the core business remains a challenge.
[Position within Industry] (Reference information; our research) Profitability: ROE at 2.9% is well below the industry median of 7.3%, placing the company in the lower tier within the industry. Operating Margin of 0.0% is also far below the industry median of 6.4% (IQR 2.0%–13.5%), indicating relatively weak core business profitability versus peers. Net Margin of 8.8% exceeds the industry median of 4.8%, but this relies on non-operating income (gains on sale of marketable securities); at the operating level the structure trails industry averages. Soundness: Equity Ratio of 92.3% is far above the industry median of 55.2%, placing financial stability among the top tier in the industry. The current ratio of 917.6% also vastly exceeds the industry median of 208%, indicating extremely high short-term liquidity. Net debt/EBITDA multiple is not computable (as EBITDA is near zero), but with zero interest-bearing debt, the net cash position is approximately ¥67B (cash ¥38.2B + investment securities ¥28.8B) and ample. Efficiency: Total asset turnover of 0.33x is estimated to be low within the industry, suggesting significant room to improve asset efficiency. Revenue growth of -11.7% trails the industry median of +12.0%, indicating lagging top-line expansion versus peers. Industry: IT & Information and Communications (68 companies), Comparison: 2025 FY Q3, Source: Our compilation
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any decisions.