| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥244.4B | ¥207.8B | +17.6% |
| Operating Income / Operating Profit | ¥64.1B | ¥46.8B | +37.1% |
| Ordinary Income | ¥64.3B | ¥46.8B | +37.5% |
| Net Income / Net Profit | ¥45.3B | ¥30.9B | +46.8% |
| ROE | 28.2% | 23.0% | - |
For the fiscal year ended March 2026, Revenue was ¥244.4B (YoY +¥36.6B +17.6%), Operating Income was ¥64.1B (YoY +¥17.3B +37.1%), Ordinary Income was ¥64.3B (YoY +¥17.6B +37.5%), and Net Income was ¥45.3B (YoY +¥14.4B +46.8%), achieving double-digit increases across all major items. Gross margin improved to 45.6% (YoY +1.8pt), and SG&A ratio fell to 19.4% (‑1.8pt), driving a substantial improvement in operating margin to 26.2% (up +3.7pt from 22.5% a year earlier). Higher value-add in the Products Business and scale effects in the Solutions Business unlocked operating leverage, while price revisions and mix improvements drove structural enhancement in profitability. ROE remained high at 28.2%. Strong cash generation—Operating Cash Flow of ¥59.1B (YoY +67.7%) and Free Cash Flow of ¥47.9B—allowed shareholder returns of dividends ¥16.3B and share buybacks ¥3.6B while cash and deposits increased to ¥121.4B, further strengthening financial soundness.
[Revenue] Revenue of ¥244.4B (YoY +17.6%) saw increases across all segments: Solutions ¥156.0B (+18.4%), Products ¥84.3B (+18.7%), and System Support ¥26.5B (+4.2%). Revenue mix was Solutions 63.8%, Products 34.5%, System Support 10.8%, with Solutions driving scale as the core business. Gross margin improved to 45.6% (up +1.8pt from 43.8% prior year), increasing Gross Profit to ¥111.6B versus Cost of Sales ¥132.9B. The improvement in gross margin was mainly due to a higher share of high-margin Products revenue (margin 38.0%) and lower cost ratios from price revisions and mix improvements.
[Profitability] Operating Income was ¥64.1B (+37.1%), with Operating Margin 26.2% (up +3.7pt from 22.5%), reflecting substantial profitability improvement. SG&A was ¥47.4B (SG&A ratio 19.4%), up ¥3.3B YoY, but grew less than revenue, resulting in a decline in SG&A ratio from 21.2% to 19.4% (‑1.8pt). Economies of scale and productivity improvements enhanced operating leverage. Non-operating income was ¥0.4B (dividend income ¥0.3B etc.), and non-operating expenses were ¥0.2B (fees paid ¥0.1B, foreign exchange loss ¥0.1B etc.), leaving non-operating items roughly neutral. Extraordinary gains were ¥2.4B (gain on sale of investment securities), a temporary factor with limited impact on Pre-Tax Income of ¥66.7B. After Income Taxes of ¥17.8B (effective tax rate 26.7%), Net Income was ¥45.3B (+46.8%), and Net Profit Margin improved to 18.5% (up +3.6pt from 14.9%). Comprehensive Income was ¥46.8B, nearly aligned with Net Income ¥45.3B, indicating limited impact from Other Comprehensive Income (Net change in valuation of securities ‑¥2.2B, Foreign currency translation adjustment ¥0.0B). In conclusion, this was a high-quality earnings beat driven by gross margin improvement and lower SG&A ratio producing operating leverage that lifted margins.
The Solutions Business delivered Revenue ¥156.0B (+18.4%), Operating Income ¥47.5B (+30.7%), and Operating Margin 30.5%, remaining the primary contributor to consolidated Operating Income. The Products Business posted Revenue ¥84.3B (+18.7%), Operating Income ¥32.1B (+21.6%), and Operating Margin 38.0%, the highest margin, as expansion of high-value products drove consolidated profitability. The System Support Business recorded Revenue ¥26.5B (+4.2%), Operating Income ¥5.1B (+1.8%), and Operating Margin 19.2%, providing stable earnings but with a margin below Solutions and Products. Across segments, scale in Solutions and high margins in Products drove the consolidated OPM improvement to 26.2%, and the margin gap between segments (Products 38% vs. System Support 19%) highlights the importance of project mix.
[Profitability] Operating Margin 26.2% improved from 22.5% (+3.7pt), supported by simultaneous improvements in Gross Margin 45.6% (+1.8pt) and SG&A ratio 19.4% (‑1.8pt). Net Profit Margin rose to 18.5% (up +3.6pt from 14.9%), and ROE remained high at 28.2%. [Cash Quality] Operating Cash Flow ¥59.1B is 1.30x Net Income ¥45.3B, indicating healthy cash generation. With Operating CF subtotal ¥75.2B, pre-working-capital profit quality is high, and after corporate tax payments ¥16.4B, OCF still exceeds Net Income. [Investment Efficiency] Total Asset Turnover is 1.13x, showing efficient asset use. EPS was ¥81.78 (prior year ¥55.63, +47.0%), and BPS ¥269.44, reflecting higher per-share value. [Financial Soundness] Equity Ratio 74.7% (up +2.2pt from 72.5%) and Current Ratio 319% indicate a very strong financial base. Cash and deposits ¥121.4B cover Current Liabilities ¥54.0B by 2.2x, and with Short-term Borrowings ¥1.0B and low interest-bearing debt, the company is effectively near net cash management.
Operating Cash Flow was ¥59.1B (YoY +67.7%), and the ratio of OCF to Net Income is 1.30x, indicating high quality. From the Operating CF subtotal ¥75.2B, changes in working capital absorbed ¥‑16.1B (AR increase ¥‑1.4B, AP increase +¥0.6B, bonus reserves decrease ‑¥2.9B, advance receipts increase +¥1.9B, etc.), reflecting that growth-driven increases in working capital delayed some cash realization. Investing Cash Flow was ¥‑11.2B, centered on intangible asset investment ¥11.3B (mainly software), while tangible fixed asset investment was minor at ¥0.3B. The capital-light business model continues strategic investment in in-house software. Financing Cash Flow was ¥‑20.0B, reflecting shareholder returns of dividend payments ¥16.3B and share buybacks ¥3.6B. Free Cash Flow ¥47.9B comfortably covered total shareholder returns ¥19.9B, and cash and deposits rose from ¥93.5B to ¥121.4B (increase ¥27.9B). Depreciation ¥9.3B versus CapEx ¥0.3B yields a CapEx-to-depreciation ratio of 0.03x, indicating restrained tangible investment, though funds have shifted toward intangible investment consistent with the business model.
Ordinary Income ¥64.3B is almost identical to Operating Income ¥64.1B, indicating neutral non-operating impact. Non-operating income ¥0.4B was mainly dividend income ¥0.3B, and non-operating expenses ¥0.2B comprised fees paid ¥0.1B and foreign exchange losses ¥0.1B, with no dependence on non-recurring income. Extraordinary gains ¥2.4B (gain on sale of investment securities) were temporary and contributed only 3.6% to Pre-Tax Income ¥66.7B, limiting impact on earnings quality. Comprehensive Income ¥46.8B was roughly equal to Net Income ¥45.3B, and Other Comprehensive Income of ‑¥2.1B (Net change in valuation of securities ‑¥2.2B, Foreign currency translation adjustment ¥0.0B) had limited effect. The difference between Operating CF subtotal ¥75.2B and Net Income ¥45.3B is attributable to Pre-Tax Income, tax payments, and non-cash items (depreciation ¥9.3B etc.), and the divergence between profit and cash remains within a healthy range, suggesting limited accrual concerns. Receivables turnover days of 66 days (AR ¥44.2B ÷ Annual Revenue ¥244.4B × 365 days) indicate some working capital absorption, but OCF coverage over Net Income is sufficient and earnings quality is assessed as high.
Full-year company guidance is Revenue ¥268.0B (YoY +9.6%), Operating Income ¥69.0B (+7.6%), Ordinary Income ¥69.0B (+7.2%), and Net Income ¥41.0B (‑9.5%). Compared to guidance, current results represent 91% progress for Revenue (¥244.4B), 93% for Operating Income (¥64.1B), 93% for Ordinary Income (¥64.3B), and 106% for Net Income (¥45.3B), with profits already exceeding full-year Net Income guidance. The projected decline in Net Income (‑9.5%) likely reflects the absence of one-off gains incorporated in this year’s results; guidance for Ordinary Income still suggests YoY growth. Revenue needs an additional ¥23.6B to meet the full-year target, and a 91% progress rate is within a reasonable range, while the profit performance indicates potential for upward revisions. Actual EPS of ¥81.78 versus forecast ¥77.05 is +6.1% ahead, reflecting quicker-than-planned profitability improvements.
Dividends were ¥42 per share (assumed total composed of a year-end dividend ¥26 and an interim dividend ¥78—note: original text likely meant interim ¥16? but preserved as stated), with total dividend payments ¥16.3B. The dividend payout ratio relative to Net Income ¥45.3B was 36.0%, a mid-range level, and Free Cash Flow ¥47.9B sufficiently covers dividend payments. Share buybacks of ¥3.6B were executed, bringing total shareholder returns to ¥19.9B; the Total Return Ratio is 44% (Total Return ¥19.9B ÷ Net Income ¥45.3B), indicating a sound balance between shareholder returns and internal reserves. DOE (Dividend on Equity) is approximately 10% (dividends ¥16.3B ÷ beginning shareholders’ equity ¥133.8B), reflecting shareholder-friendly returns consistent with a high ROE of 28.2%. A 1-for-5 stock split was implemented in January 2026 (1 share → 5 shares), and the year-end dividend ¥26 is based on post-split shares, equivalent to ¥130 on a pre-split basis. With cash and deposits ¥121.4B and a strong financial base, dividend sustainability and further share buybacks to improve capital efficiency remain feasible.
Segment Concentration Risk: With the Solutions Business accounting for 63.8% of Revenue and being the main contributor to Operating Income, delays in large projects or intensified price competition could materially affect consolidated earnings. The Products Business generates high margins (38.0%) but only 34.5% of revenue, so changes in mix can materially impact consolidated OPM.
Working Capital Management Risk: Receivables of ¥44.2B and turnover days of 66 imply material working capital absorption, and deterioration in AR management or collection cycles could pressure Operating Cash Flow. Advance receipts have increased to ¥16.5B during growth phases, but timing differences between contract progress and revenue recognition may introduce seasonality in cash flow via working capital movements.
Investment Securities Valuation Risk: Holdings of investment securities total ¥9.3B, and this period recorded a Net change in valuation of securities of ‑¥2.2B in Other Comprehensive Income. Although realized gains of ¥2.4B (sale gains) were captured as extraordinary income, mark-to-market fluctuations of the remaining balance could affect Equity through Comprehensive Income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 26.2% | 8.1% (3.6%–16.0%) | +18.1pt |
| Net Profit Margin | 18.5% | 5.8% (1.2%–11.6%) | +12.7pt |
The company’s Operating Margin 26.2% and Net Profit Margin 18.5% substantially exceed industry medians, placing its profitability among the top in the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 17.6% | 10.1% (1.7%–20.2%) | +7.5pt |
Revenue growth of 17.6% outpaces the industry median of 10.1%, indicating above-median growth within the sector.
※ Source: Company compilation
Structural improvement in profitability: Operating Margin 26.2% (up +3.7pt YoY) and Net Profit Margin 18.5% (up +3.6pt) reflect a marked improvement in profitability while maintaining a high ROE of 28.2%. Simultaneous improvement in Gross Margin and reduction in SG&A ratio manifested operating leverage. If Products’ high margins and Solutions’ scale effects persist, mid-term stability at elevated margin levels is expected. The company’s margin superiority within the industry (Operating Margin +18.1pt, Net Profit Margin +12.7pt) is notable.
Robust cash generation and shareholder return capacity: Operating CF ¥59.1B and Free CF ¥47.9B enabled dividends ¥16.3B and buybacks ¥3.6B while increasing cash and deposits to ¥121.4B. Total Return Ratio 44% indicates a good balance between returns and internal reserves, supporting dividend sustainability, potential dividend increases, and further buybacks to enhance capital efficiency. Equity Ratio 74.7% and effectively debt-free financial position enable both stable shareholder returns and growth investments.
Indication of upside to full-year guidance: Net Income ¥45.3B already exceeds the full-year forecast of ¥41.0B, with a 106% progress rate, suggesting conservative guidance has been outperformed on profits. Revenue and Operating Income progress rates of 91% and 93% are healthy, and faster-than-planned profitability improvements may prompt future upward revisions or raise expectations for subsequent periods.
This report was auto-generated by AI analyzing XBRL earnings release data to produce a financial analysis document. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from publicly disclosed financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.