Cybozu,Inc. FY2026 Q2 Earnings Report

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Executive Summary

The key feature of the current period was the achievement of higher revenue and earnings while maintaining a highly profitable business structure, supported by a gross margin of 90.9%. Revenue was ¥207.8B (+16.1% YoY), Operating Income was ¥59.6B (+15.5%), Ordinary Income was ¥60.6B (+21.1%), and Net Income was ¥41.4B (+19.6%). A foreign exchange gain of ¥0.8B recorded in non-operating income increased the growth rate at the ordinary income level, resulting in an increase in Ordinary Income that exceeded the growth in Operating Income.

Factors Affecting Financial Performance

【Revenue】Revenue was ¥207.8B, representing double-digit growth of +16.1% YoY. The Company operates in a single segment (software development and sales), and contract liabilities (deferred revenue) increased by +¥5.5B YoY to ¥60.0B, providing a foundation for future revenue recognition. Revenue growth was achieved while continuing growth investments, including research and development expenses of ¥8.9B (4.3% of revenue) and advertising expenses of ¥32.4B.

【Profit and Loss】Operating Income was ¥59.6B (+15.5%). As SG&A expenses (+16.6%) grew slightly faster than revenue, the Operating Income margin contracted marginally from the previous year to 28.7%. Meanwhile, Ordinary Income increased by +21.1% to ¥60.6B, exceeding the growth in Operating Income, due to a foreign exchange gain of ¥0.8B in non-operating income (compared with a foreign exchange loss in the previous year). Although the Company recorded an extraordinary loss of ¥1.3B (including impairment losses on investment securities), Net Income increased by +19.6% to ¥41.4B. The Company achieved higher revenue and earnings, maintaining profitability at a high level within the industry.

Segment Analysis

The reported business consists of a single segment, “Software Development and Sales.” Segment-level profit and loss disclosure has been omitted because its disclosure materiality is limited.

Key Financial Indicators

【Profitability】The Company maintained high margins, with an Operating Income margin of 28.7% and a Net Income margin of 19.9% (Net Income of ¥41.4B / Revenue of ¥207.8B). The gross margin of 90.9% supports a high-contribution-margin business structure.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥43.4B, covering Net Income, but decreased by -19.5% YoY. Increased payments for corporate income taxes and other taxes (-¥28.4B) and an increase in trade receivables (-¥1.9B) restrained cash conversion.【Investment Efficiency】ROE was 23.5% and the Equity Ratio was 59.8%, indicating high capital efficiency without reliance on financial leverage.【Financial Soundness】Long-term borrowings were only ¥0.2B, representing a virtually debt-free financial structure. Current assets of ¥176.3B exceeded current liabilities of ¥116.4B, indicating limited concern regarding short-term liquidity.

Cash Flow Analysis

Operating Cash Flow (OCF) was ¥43.4B, exceeding Net Income of ¥41.4B, but decreased by -19.5% YoY. The primary factors were an increase in payments for corporate income taxes and other taxes to ¥28.4B and an increase in trade receivables (-¥1.9B). Investing Cash Flow was -¥27.8B. Capital expenditures of ¥14.8B exceeded depreciation and amortization of ¥11.2B, indicating the continuation of growth investments. Financing Cash Flow was -¥48.5B, with shareholder returns, including share repurchases of ¥22.4B and dividend payments, serving as the primary source of cash outflow. As a result, Free Cash Flow (FCF) remained at ¥15.6B, and cash and deposits decreased from the previous year to ¥86.7B because total shareholder returns exceeded FCF.

Earnings Quality

The earnings structure is centered on recurring operating business profits. Non-operating income was minor at approximately 0.8% of revenue, and the foreign exchange gain of ¥0.8B is viewed as having limited sustainability because it represented a reversal from the foreign exchange loss recorded in the previous year. The extraordinary loss was ¥1.3B, and temporary factors such as impairment losses on investment securities slightly reduced Net Income. The difference between Ordinary Income of ¥60.6B and Net Income of ¥41.4B was primarily attributable to corporate income taxes and other taxes of ¥17.9B (an effective tax rate of approximately 30%), with no particular abnormalities. The fact that OCF covered Net Income indicates high earnings quality from the perspective of cash realization; however, changes in working capital and increased tax payments partially restrained cash conversion.

Earnings Forecast and Guidance

Progress against the Full-Year plan was 49.3% for revenue (¥207.8B / ¥421.7B), 56.7% for Operating Income (¥59.6B / ¥105.1B), and 56.5% for Ordinary Income (¥60.6B / ¥107.3B). Progress on the earnings front exceeded the standard first-half progress rate of 50%. No revisions have been made to the earnings forecast, and the accumulation of contract liabilities may support revenue recognition in the second half.

Shareholder Returns

No interim dividend will be paid, but the Company has announced a Full-Year dividend forecast of ¥50 per share. Based on the Company’s forecast EPS of ¥163.26, the Payout Ratio is approximately 30.6%. During the period, the Company conducted share repurchases of ¥22.4B. Total shareholder returns, including dividends and share repurchases, exceeded the period’s FCF of ¥15.6B.

Risk Factors

1. Risk of extended collection periods for trade receivables: Accounts receivable and notes receivable totaled ¥54.1B and contributed to the year-on-year decrease in OCF (-19.5%). Trends in collection efficiency may affect the Company’s future cash-generating capacity.

2. Risk of reversal in non-operating factors: Part of the growth in Ordinary Income (+21.1%) depended on the one-time factor of a ¥0.8B foreign exchange gain. If this factor reverses, the pace of earnings growth at the ordinary income level may slow.

3. Funding burden from shareholder returns: Total returns consisting of dividends and share repurchases exceeded FCF of ¥15.6B, and cash and deposits decreased to ¥86.7B. Continued shareholder returns at this pace will require improvements in cash-generating capacity.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin significantly exceeded the industry median, placing the Company among the more profitable companies in the IT and communications sector.

Growth and Capital Efficiency

The revenue growth rate was slightly below the industry median, placing the Company around the middle of the industry in terms of growth speed.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. Against a backdrop of a high gross margin (90.9%) and debt-free management, the Company maintained industry-leading levels in both capital efficiency and profitability, with an Operating Income margin of 28.7% and ROE of 23.5%.

2. Progress against the Full-Year plan was solid, exceeding 50% on the earnings front. The accumulation of contract liabilities (deferred revenue) of ¥60.0B can be observed as a structural factor supporting revenue recognition from the second half onward.

3. The year-on-year decrease in OCF (-19.5%) and the fact that total shareholder returns exceeded FCF warrant attention in terms of the balance between cash-generating capacity and the pace of shareholder returns.

Theoretical Share Price (Reference Value)

Sensitivity: ¥881–¥937 at ±1% for the cost of equity, and ¥892–¥934 at ±0.1 for ω.

Notes:

• Goodwill amortization of ¥4.7 per share has been added back to earnings (to account for a non-cash expense and comparability with IFRS companies).
• Net assets as of the end of the quarter are used (there is a timing difference from the Full-Year forecast).
• Because non-controlling interests are included in net assets, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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