| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥409.7B | ¥383.1B | +7.0% |
| Operating Income | ¥-74.1B | ¥-76.7B | +3.4% |
| Profit Before Tax | ¥29.7B | ¥-102.2B | +129.0% |
| Net Income | ¥11.0B | ¥-74.8B | +114.7% |
| ROE | 1.4% | -9.6% | - |
For the fiscal year ended March 2026, Revenue was ¥409.7B (YoY +¥26.7B +7.0%), Operating Income was ¥-74.1B (YoY +¥2.6B +3.4%), Ordinary Income was ¥27.1B (YoY +¥12.3B +83.0%), and Net Income was ¥11.0B (YoY +¥85.8B +114.7%). Revenue increased driven by expansion of platform solutions centered on payments, but an increase in SG&A of ¥234.9B (YoY +¥21.8B +10.1%) resulted in a continued operating loss. Conversely, equity-method investment income of ¥30.9B (¥-12.2B ▲28.3%) and financial income of ¥12.8B (YoY +¥11.9B +1,437.9%) substantially boosted results from the ordinary-income stage onward, turning a prior-year net loss of ¥-74.8B into a profit. By segment, Platform Solutions recorded Revenue of ¥251.9B (+11.3%) and Segment Income of ¥90.7B (+3.6%), remaining solid; Long-term Incubation had Revenue of ¥126.5B (▲6.8%) but Income of ¥17.5B (+80.8%), showing a marked improvement in profitability; Global Investment Incubation significantly reduced its loss to ¥-12.2B. Profit recovery relied heavily on non-operating income and equity-method gains, so strengthening operating-level profitability remains an ongoing challenge.
[Revenue] Revenue was ¥409.7B (+7.0%). Breakdown: recurring-revenue businesses produced ¥351.9B (+9.3%), expanding mainly in the core payments business; financial income surged to ¥12.8B (+1,437.9%), while other income declined to ¥13.9B (▲18.8%). By segment, Platform Solutions continued double-digit growth at ¥245.9B (+12.1%), accounting for 60.0% of consolidated Revenue. Growth was driven by expansion in payment transaction volume and enhanced ancillary services. Long-term Incubation declined to ¥120.1B (▲7.7%), while Global Investment Incubation nearly doubled to ¥11.5B (+95.1%).
[Profitability] Cost of sales was ¥132.8B (+2.6%), a slight increase, leaving Gross Profit at ¥276.9B (+9.3%) and Gross Margin at 67.6% (prior year 67.9%, ▲0.3pt), remaining high. SG&A rose to ¥234.9B (+10.1%), outpacing Revenue growth, pushing SG&A ratio to 57.3% (prior year 56.5%, +0.8pt). As a result, Operating Loss was ¥-74.1B (prior year ¥-76.7B), a ¥2.6B improvement but still a deficit. Non-operating items included equity-method investment income of ¥30.9B, financial income of ¥12.8B, and other income of ¥13.8B, totaling ¥57.5B, which more than offset financial expenses of ¥6.8B and made a material contribution beyond the operating loss. Consequently, Ordinary Income improved significantly to ¥27.1B (+83.0%), and Profit Before Tax turned positive to ¥29.7B (prior year ¥-102.2B). After deducting corporate tax and others of ¥18.7B (effective tax rate 63.0%), Net Income was ¥11.0B (prior year ¥-74.8B), returning to profit. In conclusion, while Revenue increased and Net Income turned positive, the structure shows continued operating-stage losses and heavy reliance on non-operating income, resulting in Revenue growth with operating-stage profit deterioration but turnaround at ordinary and net levels.
Platform Solutions: External Revenue ¥251.9B (+11.3%), Segment Income ¥90.7B (+3.6%), Margin 36.0% (prior year 38.7%, ▲2.7pt). Expansion in payment transaction volume and broadened ancillary services drove Revenue, but increased SG&A reduced margins. Long-term Incubation: External Revenue ¥126.5B (▲6.8%), Segment Income ¥17.5B (+80.8%), Margin 13.8% (prior year 7.1%, +6.7pt). Equity-method investment income of ¥29.6B (prior year ¥39.0B) accounted for the majority, and despite Revenue decline, margin improved substantially. Global Investment Incubation: External Revenue ¥11.5B (+97.1%), Segment Loss ¥-12.2B (significant improvement from prior year ¥-89.5B). Recognition of ¥0.3B in gains on trading securities and the reversal from a large prior-year loss (¥-72.9B) were the main drivers. Corporate adjustments (loss of ¥-66.4B) include management costs and financial expenses. While Platform underpins the revenue base, Long-term improved margins, and Global Investment reduced losses, ongoing Platform operating deficits and corporate cost burden continue to pressure consolidated profitability.
[Profitability] ROE 1.7% (prior year ▲8.7%) improved substantially due to the swing to Net Income but remains low. Operating Margin ▲18.1% (prior year ▲20.0%, +1.9pt) narrowed the deficit but remains deeply negative. Gross Profit Margin 67.6% (▲0.3pt) remains high; SG&A Ratio 57.3% (+0.8pt) is the primary driver of the operating loss. Net Profit Margin 2.7% (prior year ▲19.5%) turned positive, but dependence on non-operating income is substantial. [Cash Quality] Operating Cash Flow (OCF) was ¥-49.4B (prior year +¥317.3B), falling sharply into negative territory. OCF/Net Income was ▲4.5x, indicating a severe gap in cash realization. Working-capital deterioration—Accounts receivable increase ¥53.5B and Accounts payable decrease ¥73.4B—was the main driver. Adding Depreciation & Amortization of ¥42.6B yields EBITDA of ¥-31.5B, and an EBITDA margin of ▲7.7%, indicating weak core cash-generation ability. [Investment Efficiency] Total Asset Turnover 0.19x (prior year 0.17x) improved but remains low. Intangible asset acquisitions ¥56.4B (prior year ¥40.1B) show continued active investment. [Financial Soundness] Equity Ratio 34.6% (prior year 33.3%, +1.3pt), Current Ratio 150.7% (prior year 148.1%) are in a safe range. Interest-bearing debt ¥620.5B (short-term ¥263.7B, long-term ¥356.9B) against EBIT ¥-74.1B makes interest-coverage calculation infeasible. Cash of ¥404.7B is ample, but negative OCF raises concerns about sustainability of liquidity.
Operating Cash Flow was ¥-49.4B (prior year +¥317.3B, change ▲¥366.7B), a sharp swing to negative. Despite Profit Before Tax of ¥29.7B, working capital deterioration—Accounts receivable increase ¥53.5B and Accounts payable decrease ¥73.4B, totaling ¥-126.9B—was the primary cause. The payment cycle characteristics of the payments business, leading to timing effects of increased AR and decreased AP, had a large impact. At the subtotal stage, cash flow was ¥-67.1B, falling well below Net Income; after adding interest and dividend receipts of ¥29.6B and subtracting corporate tax payments ¥-5.5B, the operating CF deficit widened. Investing CF was ¥-72.6B (prior year ¥-100.0B, +¥27.4B), with intangible asset acquisitions of ¥-56.4B as the largest item. Capex was restrained at ¥-3.5B, and equity-method investment acquisitions ¥-5.0B were nearly offset by sale proceeds of ¥5.9B. FCF was ¥-122.0B (Operating CF ¥-49.4B + Investing CF ¥-72.6B), a large deficit caused by growth investments and working-capital deterioration. Financing CF was ¥-34.5B: despite ¥95.5B of long-term borrowings raised, repayments of ¥-73.4B, short-term borrowings repayments ¥-18.0B, dividend payments ¥-24.3B, and share buybacks ¥-45.1B (may be categorized as "equity-settled share-based payments" in the cash-flow statement) were executed. Cash decreased by ¥-156.1B to ¥404.7B, and the negative FCF plus shareholder returns have pressured liquidity.
Net Income of ¥11.0B for the period was composed such that, against an Operating Loss of ¥-74.1B, non-operating income totaling ¥57.5B (equity-method investment income ¥30.9B, financial income ¥12.8B, other income ¥13.8B) boosted profit. Equity-method income accounts for approximately 104% of Profit Before Tax ¥29.7B, indicating extremely high dependence. Financial income rose sharply from ¥0.8B in the prior year to ¥12.8B, likely due to investment valuation gains and interest income. On the other hand, financial expenses declined substantially to ¥6.8B (prior year ¥46.9B, ▲85.5%), reflecting a reversal of prior-year investment-related losses. The gap between Ordinary Income and Net Income reflects corporate tax and other charges of ¥18.7B (effective tax rate 63.0%), with deferred tax liabilities of ¥109.8B in the background. Operating CF of ¥-49.4B is far below Net Income, mainly due to working-capital swings, indicating weak cash conversion of profits. Recurring Revenue of ¥351.9B can be viewed as a recurring earnings base, but continued operating-stage deficits and dependence on non-operating income require a cautious assessment of earnings quality.
A year-end dividend of ¥47 per share (ordinary dividend ¥43 + commemorative dividend ¥4) was paid, making the annual dividend ¥47 (prior year ¥0). Total dividends were ¥2.44B against Net Income ¥11.0B, yielding a Payout Ratio of 168.1%, effectively over 100%. Additionally, share buybacks of ¥4.51B (as shown in the cash-flow statement) were executed, bringing total returns to ¥6.95B. Large-scale returns while FCF is ¥-122.0B and Operating CF is ¥-49.4B rely on ample cash on hand of ¥404.7B. Cash and deposits decreased by ¥-156.1B year-on-year, and absent improvement in Operating CF, the sustainability of the return level should be carefully evaluated. Stable implementation of the dividend policy requires operating profitability and improved cash generation through working-capital efficiency.
Working-capital deterioration risk: In the period, Accounts receivable increased ¥53.5B and operating liabilities decreased ¥73.4B, driving Operating CF to ¥-49.4B. The payment-cycle characteristics of the payments business cause timing effects of AR increases and AP decreases; if trends of prolonged DSO and shortened DPO continue, short-term funding stress will rise. Although cash of ¥404.7B is ample, continued negative OCF and shareholder returns (total returns ¥6.95B) raise concerns about depletion of liquidity buffers.
Continued operating deficits and SG&A rigidity risk: Operating Loss of ¥-74.1B marks a second consecutive period, with SG&A of ¥234.9B (+10.1%) growing faster than Revenue (+7.0%). SG&A Ratio rising to 57.3% (+0.8pt) indicates scale economies are not fully realized. Investments associated with Platform expansion (intangible asset acquisitions ¥56.4B) may have a time lag before monetization; if SG&A growth control and unit-economics improvement lag, the risk of entrenched operating deficits rises.
Dependence on equity-method investment income risk: Equity-method income of ¥30.9B accounts for 104% of Profit Before Tax ¥29.7B, more than offsetting operating losses. If earnings at equity-method affiliates such as Kakaku.com deteriorate or market conditions worsen, consolidated profits could swing significantly. In the prior year, despite equity-method income of ¥43.2B, consolidated Net Loss was ¥-74.8B, highlighting the volatility introduced by unstable non-operating income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 1.7% | 10.1% (2.2%–17.8%) | -8.4pt |
| Operating Margin | -18.1% | 8.1% (3.6%–16.0%) | -26.2pt |
| Net Profit Margin | 2.7% | 5.8% (1.2%–11.6%) | -3.2pt |
Profitability metrics are well below industry medians; in particular, Operating Margin of ▲18.1% is 26.2pt below the median of +8.1%. Continued operating losses are the main cause, indicating substantial room for improvement in profitability within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.0% | 10.1% (1.7%–20.2%) | -3.1pt |
Revenue growth of 7.0% is 3.1pt below the median 10.1%, but it is above the 1st quartile 1.7%, placing the company in the mid-range of sector growth. Continued expansion of the platform business could bring the company closer to the median.
※ Source: Company aggregation
Priority is achieving operating profitability and improving SG&A efficiency. Operating Loss of ¥-74.1B has persisted for two consecutive periods, and SG&A Ratio rising to 57.3% (+0.8pt) is weighing on profitability. Realizing scale benefits in Platform Solutions (establishing a sustained pattern where Revenue growth > SG&A growth) and maintaining unit pricing and gross margins are key to turning operating results positive. Monitor the payback pace of intangible asset investments ¥56.4B and trends in take rates as payment transaction volumes expand.
Normalizing working capital and restoring cash-generation capability are prerequisites for sustainability. Operating CF of ¥-49.4B implies OCF/Net Income of ▲4.5x, a severe divergence. Working-capital deterioration—AR increase ¥53.5B and AP decrease ¥73.4B—was the main cause, with payment-cycle timing effects significant. Trends in DSO, DPO, and improvements in working-capital turnover will determine the sustainability of shareholder returns (Payout Ratio 168.1%, total returns ¥6.95B). While cash of ¥404.7B is ample, continuing negative OCF coupled with large returns reduces liquidity buffers, making medium-term restoration of cash-generation essential.
Reducing dependence on equity-method investment income and strengthening operating capabilities are medium-term structural priorities. Equity-method income of ¥30.9B representing 104% of Profit Before Tax ¥29.7B indicates high external dependency and amplifies earnings volatility. Improvements in ARR of the payments platform, profitability gains in Long-term Incubation (margin 13.8%, +6.7pt), and narrowed losses in Global Investment Incubation (¥-12.2B, prior year ¥-89.5B) show segments moving in the right direction, but achieving operating profitability in the Platform remains the primary task. Metrics for intangible-investment outcomes (new feature releases, ARPU, NRR) and containment of SG&A growth will be key indicators of intrinsic earnings-strengthening.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as necessary.