| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1352.1B | ¥1212.4B | +11.5% |
| Operating Income | ¥888.2B | ¥783.8B | +13.3% |
| Ordinary Income | ¥1047.8B | ¥897.7B | +16.7% |
| Net Income | ¥694.4B | ¥597.0B | +16.3% |
| ROE | 13.5% | 13.8% | - |
For the fiscal year ended March 2026, Revenue was ¥1352.1B (YoY +¥139.7B, +11.5%), Operating Income was ¥888.2B (YoY +¥104.5B, +13.3%), Ordinary Income was ¥1047.8B (YoY +¥150.1B, +16.7%), and Net Income attributable to owners of the parent was ¥694.4B (YoY +¥97.4B, +16.3%), resulting in double-digit growth across all key metrics. Operating margin improved to 65.7% (prior year 64.6%) (+1.1pt), driven by growth in recurring revenue at SystemSupport (+13.5%) and expansion in SystemIntegration (+9.8%). At the ordinary income level, non-operating income of ¥175.3B (13.0% of Revenue), including equity-method investment income of ¥66.3B and dividend income of ¥50.1B, accelerated profit growth. ROE was 13.5% and the Equity Ratio was 83.4%, balancing profitability and financial soundness. Strong financial assets — cash and deposits of ¥2,073.8B and investment securities of ¥3,323.8B — supported expanded shareholder returns.
[Revenue] Revenue of ¥1352.1B (+11.5%) expanded solidly with growth across all segments. SystemSupport recorded ¥715.1B (+13.5%), with high-recurring maintenance and operations support services comprising 52.9% of Revenue and serving as the primary growth driver. SystemIntegration totaled ¥552.5B (+9.8%), accounting for 40.8% of Revenue, with steady demand for integrated core business system development. OfficeAutomation was ¥87.0B (+9.0%), small but steadily expanding and contributing 6.4% of Revenue. Consolidated Revenue after eliminating intersegment transactions increased by ¥139.7B YoY, maintaining a balanced growth structure led by the two core businesses.
[Profitability] Cost of sales was ¥295.4B (cost of sales ratio 21.9%), resulting in Gross Profit of ¥1056.7B (gross margin 78.1%), preserving high added value. SG&A was ¥168.4B (SG&A ratio 12.5%, improved -0.7pt from 13.2% prior year) as scale absorption progressed, leading to Operating Income of ¥888.2B (Operating margin 65.7%). Non-operating income of ¥175.3B — including interest income ¥4.1B, dividend income ¥50.1B, equity-method investment income ¥66.3B, and net rental income approximately ¥5.9B — boosted Ordinary Income to ¥1047.8B (+16.7%). Extraordinary items were minimal, with only an extraordinary loss of ¥0.4B (loss on retirement of fixed assets). After income taxes of ¥295.5B (effective tax rate 28.2% on pre-tax income ¥1,047.4B), Net Income attributable to owners of the parent was ¥694.4B (net margin 51.4%). Comprehensive income expanded to ¥1,464.4B, helped by an increase in valuation difference on available-for-sale securities of ¥711.0B.
SystemSupport contributed the most to consolidated profits with Operating Income of ¥528.96B (Operating margin 74.0%). Operating income grew +15.2% YoY, outpacing revenue growth as the high-margin recurring revenue model became more apparent. SystemIntegration recorded Operating Income of ¥329.82B (Operating margin 59.7%), up +10.3% YoY, with profit growth broadly in line with revenue growth. OfficeAutomation achieved Operating Income of ¥29.44B (Operating margin 33.9%), up +14.5% YoY, recording high profit growth despite its smaller scale. Profitability was maintained or improved across all segments, advancing portfolio-wide profitability.
[Profitability] Operating margin was 65.7% (prior year 64.6%, +1.1pt improvement) and net margin was 51.4% (prior year 49.2%, +2.2pt improvement), sustaining industry-leading levels. ROE was 13.5% (down from 15.5% prior year but still in a healthy range), decomposed as Net Margin 55.6% × Total Asset Turnover 0.219 × Financial Leverage 1.20. SG&A ratio improved to 12.5% (prior year 13.2%, -0.7pt) as scale absorption advanced. [Cash Quality] Operating Cash Flow / Net Income was 0.98x, broadly healthy, while Operating Cash Flow / EBITDA (simple) was 0.81x, slightly lower. Increases in trade receivables and contract assets (approximately ¥8.0B) restrained cash conversion, but FCF was ¥717.2B, largely sufficient to cover total dividends and buybacks of ¥644.0B. [Investment Efficiency] Capital expenditure / Depreciation was 0.82x, remaining at a maintenance level with a cautious stance on growth investments. EPS was ¥171.61 (prior year ¥146.90, +16.8%), and BPS was ¥1,190.80 (prior year ¥986.26, +20.7%), steadily increasing per-share value. [Financial Soundness] Equity Ratio was 83.4% (prior year 86.7%), remaining extremely robust. Current ratio was 653.8%, and cash and deposits of ¥2,073.8B provided ample liquidity against short-term liabilities of ¥348.5B. Thick financial assets including investment securities of ¥3,323.8B form a safety net; no interest-bearing debt was disclosed, effectively indicating debt-free operations.
Operating Cash Flow was ¥737.5B (prior year ¥627.9B, +17.4%), covering Net Income of ¥694.4B at a ratio of 1.06x, which is favorable. Subtotal (before working capital changes) was ¥928.8B; after income taxes paid ¥273.6B, net increase in trade receivables and contract assets approx. ¥8.0B, slight inventory increase ¥0.8B, and increase in accounts payable ¥6.0B, final Operating Cash Flow landed at ¥737.5B. Investing Cash Flow was -¥20.2B: capital expenditures ¥22.2B (prior year ¥20.7B) and purchases of investment securities ¥43.2B were offset by proceeds from sale of investment securities ¥47.7B and investments in equity-method affiliates ¥34.1B, resulting in minor net outflow. Financing Cash Flow was -¥644.0B, primarily due to dividend payments ¥329.9B and share buybacks ¥314.1B. FCF (Operating CF + Investing CF) was ¥717.2B, exceeding shareholder returns of ¥644.0B, indicating sustainability of returns. Cash and deposits rose from ¥2,000.7B at the beginning of the period to ¥2,073.8B at period-end (+¥73.2B), maintaining abundant liquidity.
Core recurring earnings are Operating Income ¥888.2B; extraordinary items were minimal with only an extraordinary loss of ¥0.4B. Non-operating income ¥175.3B (13.0% of Revenue) is mainly financial and investment income — dividend income ¥50.1B, equity-method investment income ¥66.3B, interest income ¥4.1B, and net rental income approx. ¥5.9B — and contains market-linked volatility. The accrual ratio (Net Income − Operating CF) / Total Assets is approximately -0.7%, indicating that Operating CF broadly backs Net Income and earnings quality is high. Operating CF / Net Income is 0.98x, confirming cash backing. The divergence between Ordinary Income and Net Income is driven by income taxes of ¥295.5B (effective tax rate 28.2%) and is not anomalous. Expansion of comprehensive income to ¥1,464.4B stems from an increase in valuation difference on available-for-sale securities of ¥711.0B, so note that part of the profit increase is valuation-related.
Full Year guidance is Revenue ¥1487.0B (YoY +10.0%), Operating Income ¥980.0B (YoY +10.3%), Ordinary Income ¥1145.0B (YoY +9.3%), Net Income attributable to owners of the parent ¥820.0B, projected EPS ¥189.23, and forecast dividend ¥47.00. Progress vs. current results is Revenue 90.9%, Operating Income 90.6%, Ordinary Income 91.5%, and Net Income attributable to owners of the parent 84.7% (actual ¥694.4B / forecast ¥820.0B) — all high levels. Approximately ¥13.5B of Revenue and ¥9.2B of Operating Income need to be added in the remaining Q4, and considering historical seasonality and current order environment, achievability is high and there remains upside risk to the conservative guidance.
Dividends were interim ¥37 and year-end ¥47, which after adjusting for the stock split (1 share → 5 shares on October 1, 2024) equates to an annual dividend of ¥70 equivalent. Total dividends of ¥329.9B against Net Income attributable to owners of the parent ¥694.4B result in a payout ratio of 47.5%, within an appropriate range. Share buybacks of ¥314.1B were executed, bringing total shareholder returns to ¥644.0B and a Total Return Ratio of approximately 92.7%, a high level. FCF was ¥717.2B, exceeding total returns, and abundant cash and deposits of ¥2,073.8B and robust financial assets support the sustainability of returns. Full-year dividend guidance is ¥47, assuming continuation of actual dividends.
Concentration risk of recurring revenue: SystemSupport accounts for 52.9% of Revenue and 59.5% of Operating Income, representing a high concentration. If maintenance contract cancellation rates rise or price competition intensifies, there could be a material impact on consolidated earnings. Ongoing monitoring of renewal rates and NRR is essential.
Volatility risk of non-operating income: Of non-operating income ¥175.3B (16.7% of Ordinary Income), equity-method investment income ¥66.3B, dividend income ¥50.1B, and gains on sale of investment securities ¥32.6B are market-linked and highly variable. In a market downturn, Ordinary Income may fall materially relative to Operating Income, so stability of earnings structure warrants attention.
Working capital increase and cash conversion slowdown risk: Trade receivables and contract assets increased by approximately ¥8.0B, leading Operating CF / EBITDA to decline to 0.81x. While this may be a temporary factor in a revenue expansion phase, if project durations extend causing delayed acceptance or if work-in-progress ratio (WIP) at 85.7% remains high, cash generation and capital efficiency could deteriorate. Monitoring DSO and WIP turnover rates is important.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 65.7% | 8.1% (3.6%–16.0%) | +57.6pt |
| Net Margin | 51.4% | 5.8% (1.2%–11.6%) | +45.5pt |
Profitability significantly exceeds the industry median, maintaining an exceptionally high-return structure within the IT & Communications sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.5% | 10.1% (1.7%–20.2%) | +1.4pt |
Growth rate modestly exceeds the industry median, sustaining a steady expansion pace.
※ Source: Company aggregation
Sustainability of high-margin structure: Operating margin of 65.7% remains at industry-leading levels, and SystemSupport’s recurring revenue (margin 74.0%) drives corporate stability. Continued improvement in SG&A ratio (-0.7pt) is enabling operating leverage, leaving room for further margin expansion with scale. While expansion of non-operating income has boosted short-term profits, it introduces market-linked volatility.
Sustainability of shareholder returns and capital efficiency: Total Return Ratio 92.7% (dividends + buybacks ¥644.0B) reflects aggressive shareholder returns, while FCF ¥717.2B indicates self-sufficiency. Thick financial assets — cash and deposits ¥2,073.8B and investment securities ¥3,323.8B — support high return capacity with payout ratio 47.5% within an appropriate range. Share buybacks have improved capital efficiency and are expected to help maintain or raise ROE.
Balance between cash conversion and growth investment: Increase in trade receivables and contract assets reduced Operating CF / EBITDA to 0.81x, warranting attention to short-term cash conversion efficiency. Capital expenditure remains restrained (CapEx / Depreciation 0.82x), leaving scope to accelerate M&A and growth investments. Future growth acceleration will hinge on improving working capital management and strategically deploying financial assets.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement disclosure data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.