| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥161.8B | ¥144.2B | +12.2% |
| Operating Income | ¥61.0B | ¥51.6B | +18.2% |
| Profit Before Tax | ¥58.3B | ¥49.0B | +19.0% |
| Net Income | ¥40.7B | ¥31.8B | +27.9% |
| ROE | 15.1% | 11.0% | - |
The second quarter delivered higher revenue and earnings, with profitability improving year on year, resulting in a strong performance. Revenue was ¥161.8B (+12.2% YoY), Operating Income was ¥61.0B (+18.2%), and Net Income was ¥40.7B (+27.9%), securing growth in both revenue and earnings, with the earnings growth rate exceeding the revenue growth rate. The Operating Income margin was 37.7%, with cost control and operating leverage serving as the primary factors driving profit growth. Progress against the Full-Year plan was also broadly in line with a linear trajectory, at 48.9% for Revenue, 51.3% for Operating Income, and 51.5% for Net Income.
【Revenue】Revenue increased 12.2% YoY to ¥161.8B. Although segment information is not disclosed, continued business expansion from the previous year appears to have contributed to the revenue increase.
【Profit and Loss】Operating Income was ¥61.0B (+18.2% YoY), Profit Before Tax was ¥58.3B (+19.0%), and Net Income was ¥40.7B (+27.9%), with each showing growth exceeding the revenue growth rate. The Operating Income margin rose to 37.7%. The impact of non-operating financial income of ¥0.3B and financial expenses of ¥2.9B was limited, with most of the earnings growth attributable to improved profitability in the core business. The fact that Net Income growth further exceeded Operating Income growth reflects that the tax burden, with an effective tax rate of 30.2%, did not change significantly from the previous year, resulting in the growth in Profit Before Tax being directly reflected. Overall, the current period delivered higher revenue and earnings and can be evaluated as high-quality growth, with the earnings growth rate exceeding the revenue growth rate.
【Profitability】The Operating Income margin was 37.7% and the Net Income margin was 25.2%, both at high levels, while ROE reached 15.1%. ROE can be explained by the combination of a Net Income margin of 25.2%, total asset turnover of 0.219x, and financial leverage of 2.74x. While the high profit margin is the primary driver of ROE, total asset turnover is relatively low due to the significant proportion of fixed assets, primarily goodwill.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥42.5B, exceeding Net Income of ¥40.7B, resulting in an OCF/NI ratio of approximately 1.04x and indicating strong cash conversion of earnings.【Investment Efficiency】Capital expenditures were small at ¥1.1B, indicating a light investment burden.【Financial Soundness】The Equity Ratio was 36.5%, down slightly from 37.9% in the previous year. Goodwill was ¥360.4B, exceeding net assets of ¥269.9B, and accounted for 48.7% of total assets, which should be noted as a feature of the financial structure.
Operating Cash Flow was ¥42.5B, down 16.8% from ¥51.1B in the previous year, but remained above Net Income of ¥40.7B, indicating strong cash backing for earnings. In terms of working capital, trade receivables increased by ¥9.9B, while income taxes and other taxes paid amounted to ¥25.6B, reducing OCF from the subtotal of ¥70.8B. Investing Cash Flow was -¥2.8B, with both capital expenditures and intangible asset acquisitions remaining small, securing Free Cash Flow of ¥39.7B. Financing Cash Flow was a substantial -¥66.0B, primarily due to dividend payments of ¥18.2B and share repurchases of ¥49.6B. Total returns, comprising dividends and share repurchases, amounted to ¥67.9B, exceeding Free Cash Flow of ¥39.7B, and cash and cash equivalents declined to ¥133.6B.
Current-period earnings were primarily generated by the core business, and earnings quality can be evaluated as high. Non-operating items, including financial income of ¥0.3B and financial expenses of ¥2.9B, as well as other income of ¥2.1B and other expenses of ¥0.0B, were small relative to Revenue, and the impact of temporary factors on Profit Before Tax of ¥58.3B was limited. The effective tax rate was approximately 30.2%, calculated as income taxes and other taxes of ¥17.6B divided by Profit Before Tax of ¥58.3B, and remained stable with no significant change from the previous year. As Operating Cash Flow exceeded Net Income, the divergence between accounting earnings and cash flow was small, with no deterioration in earnings quality due to accrual factors. Comprehensive income was equal to Net Income at ¥40.7B, with no unusual factors causing fluctuations through other comprehensive income.
Progress against the Full-Year forecast was 48.9% for Revenue, calculated as ¥161.8B/¥330.7B; 51.3% for Operating Income, calculated as ¥61.0B/¥119.0B; and 51.5% for Net Income, calculated as ¥40.7B/¥79.0B. These figures are close to the standard 50% progress rate at the Q2 stage, and no strong signal of either front-loaded or back-loaded performance is evident. The Full-Year forecast calls for Revenue growth of +10.9%, Operating Income growth of +20.5%, and Net Income growth of +24.9%, representing a broadly consistent trend with the current-period growth rates of Revenue +12.2%, Operating Income +18.2%, and Net Income +27.9%. There were no revisions to the earnings or dividend forecasts during the current quarter.
The Q2 dividend was ¥38 per share. The Payout Ratio, calculated from dividend payments of ¥18.2B against Net Income of ¥40.7B, was approximately 44.8%. In addition, the company conducted share repurchases of ¥49.6B, bringing total returns, including dividends and share repurchases, to ¥67.9B, exceeding both Free Cash Flow of ¥39.7B and Net Income of ¥40.7B. Dividends alone are at a level that can be fully funded by Free Cash Flow; however, the Total Return Ratio, including share repurchases, is high, and the trend in cash generation will be critical to sustaining this level of returns going forward. A stock split at a ratio of 1 share to 2 shares was conducted in October 2025, and the Q2 dividend amount is stated on a pre-split basis.
Prolonged collection of trade receivables: Trade receivables and notes receivable were ¥127.7B, up from ¥117.8B in the previous year. Their accumulation at a pace exceeding Revenue growth suggests a risk of working capital becoming tied up.
Scale of goodwill: Goodwill was ¥360.4B, exceeding net assets of ¥269.9B and accounting for 48.7% of total assets of ¥739.8B. If the business environment deteriorates, the structure could allow impairment risk to have a significant impact on financial indicators.
Level of total returns: Total returns of ¥67.9B, comprising dividends of ¥18.2B and share repurchases of ¥49.6B, exceeded Free Cash Flow of ¥39.7B. Cash and cash equivalents have declined from the previous year, and securing funding sources for maintaining the same level of returns will be a challenge.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 37.7% | – | – |
| Net Income Margin | 25.2% | – | – |
As industry median data is not yet available, only the company’s figures are presented.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.2% | – | – |
As industry median data is not yet available, only the company’s figures are presented.
Source: Compiled by the Company
Net Income growth of +27.9% exceeded Revenue growth of +12.2%, and the improvement in the Operating Income margin to 37.7% indicates high-quality profit growth.
Operating Cash Flow exceeded Net Income, indicating strong cash conversion of earnings. However, the fact that trade receivables are increasing faster than Revenue warrants attention when monitoring future cash conversion trends.
The structure in which goodwill exceeds net assets is a distinctive feature of the company’s balance sheet. Together with the Equity Ratio declining from 37.9% in the previous year to 36.5%, this should be noted as a change in the capital structure.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the company based on publicly available earnings data. Investment decisions should be made at your own discretion and, where necessary, after consulting with a professional.
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