| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥275.2B | ¥256.2B | +7.4% |
| Operating Income | ¥24.8B | ¥23.9B | +4.1% |
| Ordinary Income | ¥25.1B | ¥24.0B | +4.6% |
| Net Income | ¥16.1B | ¥15.0B | +7.9% |
| ROE | 10.3% | 9.9% | - |
FY2026 Q3 consolidated results for Waseda Academy show revenue of 27.52B yen (YoY +7.4%), operating income of 2.48B yen (+4.1%), ordinary income of 2.51B yen (+4.6%), and net income of 1.61B yen (+7.9%). Revenue increased from 25.62B yen in the prior year period, with gross profit margin at 31.0% supporting profitability. Operating margin stands at 9.0% with non-operating items contributing minimally (non-operating income 0.06B yen, expenses 0.03B yen). The company maintains a conservative financial position with total assets of 26.35B yen and equity of 15.73B yen. Cash and deposits of 8.46B yen represent 32.1% of total assets, providing substantial liquidity buffer. Notable balance sheet movements include inventory increasing 162% from 0.14B yen to 0.36B yen and accounts payable rising 77.5% from 0.37B yen to 0.65B yen, indicating significant working capital adjustments. Full-year guidance projects revenue of 37.68B yen, operating income of 3.67B yen, and net income of 2.59B yen, with Q3 results tracking in line with expectations.
[Profitability] Return on equity of 10.3% demonstrates solid profitability, decomposed into net profit margin of 5.9%, asset turnover of 1.044, and financial leverage of 1.67x. Operating margin of 9.0% reflects effective cost management with gross profit margin at 31.0%. The tax burden coefficient of 0.629 indicates an effective tax rate of approximately 37.1%, while the interest burden of 1.034 shows minimal financing costs. [Cash Quality] Cash and deposits of 8.46B yen provide strong liquidity, representing 2.8x coverage of quarterly net income. The high cash balance relative to total assets at 32.1% indicates conservative cash management. [Investment Efficiency] Asset turnover of 1.044 demonstrates efficient asset utilization. Total assets increased from 24.48B yen to 26.35B yen, growing at 7.6% in line with revenue growth of 7.4%. [Financial Health] Equity ratio of 59.7% (equity 15.73B yen divided by total assets 26.35B yen) indicates solid financial stability. Current ratio of 192.0% and quick ratio of 186.8% demonstrate excellent short-term liquidity. Debt-to-equity ratio of 0.67 reflects conservative leverage with total liabilities of 10.62B yen. Financial leverage of 1.67x remains moderate, supporting sustainable capital structure.
Cash and deposits increased to 8.46B yen, representing 32.1% of total assets and providing substantial liquidity cushion. The cash position supports coverage of current liabilities at 1.9x, indicating strong short-term payment capacity. Working capital exhibits notable movements with inventory rising 2.24B yen (162% increase) from 0.14B yen to 0.36B yen, suggesting advance procurement or business expansion preparation. Accounts payable increased 2.83B yen (77.5% increase) from 0.37B yen to 0.65B yen, reflecting extended supplier credit utilization that provides favorable financing for operations. The significant buildup in both inventory and payables indicates potential seasonal factors or strategic positioning ahead of peak enrollment periods. Net income of 1.61B yen combined with high cash reserves suggests underlying cash generation capability, though detailed operating cash flow metrics would provide more precise assessment of earnings quality and sustainability. The balance sheet structure with 69.24B yen in current liabilities against 132.94B yen in current assets maintains a comfortable liquidity buffer of 1.92x coverage.
Ordinary income of 2.51B yen versus operating income of 2.48B yen indicates net non-operating contribution of approximately 0.03B yen, representing just 0.1% of revenue and demonstrating that profitability derives primarily from core operations. Non-operating income of 0.06B yen against non-operating expenses of 0.03B yen shows minimal impact from financial activities. The effective tax rate of 37.1% (tax expense 0.95B yen on pre-tax income of 2.57B yen) aligns with standard corporate tax rates. Operating profit margin of 9.0% combined with net profit margin of 5.9% reflects appropriate progression from operating to bottom-line earnings. The absence of significant non-recurring items or extraordinary gains indicates earnings are derived from recurring educational services. The company's profitability chain flows consistently from gross profit of 8.54B yen (31.0% margin) through operating income to net income without material distortions. While operating cash flow data is not disclosed for this quarterly period, the substantial cash balance growth and positive net income suggest earnings are translating to cash, though detailed cash flow statement would provide definitive confirmation of earnings quality and accrual patterns.
Demographic headwinds from declining birthrate in Japan pose structural pressure on student enrollment, potentially constraining long-term revenue growth and requiring increased market share capture or service expansion to offset population trends. Operating leverage risk exists from rising personnel costs, particularly instructor wages and recruitment expenses in a competitive labor market, which could compress margins if revenue growth decelerates, especially given the labor-intensive nature of educational services. Working capital management requires attention as inventory increased 162% and accounts payable rose 77.5%, with inventory of 0.36B yen now representing 1.4% of revenue; rapid changes in working capital components warrant monitoring to ensure operational efficiency and avoid cash flow pressure from inventory buildup or payable normalization.
[Industry Position] (Reference - Proprietary Analysis)
Waseda Academy demonstrates above-median profitability compared to the IT and telecom services sector benchmark. Operating margin of 9.0% exceeds the industry median of 8.0% (Q3 2025, n=99), placing the company in a favorable competitive position. Net profit margin of 5.9% aligns closely with the industry median of 5.6%, indicating comparable bottom-line efficiency. Return on equity of 10.3% surpasses the industry median of 8.2% (IQR: 3.5%-13.3%), reflecting stronger shareholder value generation. Return on assets of 6.1% (calculated as 1.61B net income / 26.35B assets) exceeds the industry median of 4.2%, demonstrating superior asset utilization. Revenue growth of 7.4% trails the industry median of 10.5%, suggesting more moderate top-line expansion in the educational services segment. Financial leverage of 1.67x matches the industry median of 1.66, indicating typical capital structure. Equity ratio of 59.7% aligns with the industry median of 59.5%, reflecting standard financial stability. Current ratio of 192.0% (1.92x) falls below the industry median of 2.13x but remains strong. Asset turnover of 1.044 significantly exceeds the industry median of 0.68, highlighting operational efficiency advantages in the education sector model.
(Industry: IT and Telecom Services (99 companies), Comparison: Q3 2025 period, Source: Proprietary analysis)
Waseda Academy demonstrates consistent profitability expansion with net income growing 7.9% YoY despite operating income growth of 4.1%, indicating effective cost control below the operating line and sustained earnings quality derived from core educational operations. The company's operating margin of 9.0% and net margin of 5.9% both meet or exceed industry medians, positioning it favorably within the competitive landscape while maintaining asset turnover of 1.044 that significantly outpaces the industry median of 0.68, reflecting the capital-light nature of educational services.
Financial stability remains robust with equity ratio of 59.7%, current ratio of 192%, and cash holdings of 8.46B yen representing 32% of total assets, providing substantial flexibility for strategic investments or dividend distributions, though the calculated payout ratio approaching 65% suggests limited room for further dividend increases without profit acceleration. The company's return on equity of 10.3% exceeds both the industry median of 8.2% and demonstrates efficient capital deployment with moderate leverage of 1.67x.
Working capital dynamics warrant attention as inventory surged 162% and accounts payable increased 77.5% YoY, suggesting either operational scaling, seasonal patterns, or business model adjustments that merit monitoring in subsequent periods to confirm whether these represent sustainable efficiency improvements or temporary timing effects that could reverse and impact cash generation.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.