| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥436.6B | ¥471.6B | -7.4% |
| Operating Income | ¥45.6B | ¥52.9B | -13.9% |
| Ordinary Income | ¥46.5B | ¥53.5B | -13.2% |
| Net Income | ¥33.1B | ¥38.7B | -14.4% |
| ROE | 9.3% | 11.3% | - |
Cumulative results for FY2026 Q3 were lower revenue and profit: Revenue ¥436.6B (YoY -¥35.0B -7.4%), Operating Income ¥45.6B (YoY -¥7.3B -13.9%), Ordinary Income ¥46.5B (YoY -¥7.0B -13.2%), and Net Income ¥33.1B (YoY -¥5.6B -14.4%). The Operating Margin was 10.4%, below the level of the same period last year. Total Assets were ¥521.4B and remained stable; Net Assets increased to ¥357.6B, but weaker performance is compressing margins. Full-year guidance calls for Revenue ¥584.4B (FY YoY -8.7%), Operating Income ¥55.8B (YoY -26.4%), Ordinary Income ¥57.0B (YoY -25.7%), and Net Income ¥39.0B, implying a significant gap versus progress through Q3 and presupposing a recovery in Q4.
[Profitability] ROE 9.0% (downtrend versus last year), Net Profit Margin 7.3%, Operating Margin 10.4% (Operating Income ¥45.6B ÷ Revenue ¥436.6B). Effective Tax Rate was 28.8%, and the EBIT-equivalent margin was 10.4%, below last year’s level. Gross Profit Margin was 24.3%, flat YoY, but the relative increase in SG&A compressed the Operating Margin. [Cash Quality] Cash and Deposits of ¥256.6B accounted for 49.2% of Total Assets, and short-term liability coverage was approximately 8.3x (Cash and Deposits ¥256.6B ÷ Current Liabilities ¥30.8B), an extremely high level. [Investment Efficiency] Total Asset Turnover 0.838x (annualized as Revenue ¥436.6B ÷ Total Assets ¥521.4B × 3 ÷ 9), and Return on Assets is approximately 6.1% (Net Profit Margin 7.3% × Total Asset Turnover 0.838). [Financial Soundness] Equity Ratio 68.6% (Net Assets ¥357.6B ÷ Total Assets ¥521.4B), Current Ratio 381.5%, Quick Ratio 380.7%, Debt-to-Equity Ratio 0.46x, Financial Leverage 1.46x. While no interest-bearing debt is disclosed, the company maintains a conservative financial structure.
Cash and Deposits of ¥256.6B provide ample on-hand liquidity, accounting for about half of Total Assets, with only minor changes YoY. Reviewing working capital structure from balance sheet movements, Accounts Payable decreased by ¥16.5B YoY (-47.1%, ¥34.9B → ¥18.5B), indicating notable compression due to a shortened payment cycle or revised procurement terms. Meanwhile, Inventories increased by ¥0.5B (+125.3%, ¥0.4B → ¥0.8B), reflecting a sharp rise in inventory levels despite the small base. These may have entailed temporary cash outflows in operating activities. Total Current Liabilities decreased by ¥12.3B YoY (¥43.0B → ¥30.8B), indicating progress in short-term debt reduction. Cash coverage of short-term liabilities is 8.3x, implying abundant liquidity and extremely low liquidity risk. The combination of reduced Accounts Payable and elevated cash holdings suggests a more conservative approach to working capital management; however, balancing this against rising dividend payment burdens makes the sustainability of capital allocation a key point.
Ordinary Income was ¥46.5B versus Operating Income of ¥45.6B, with a net increase in Non-operating Income of about ¥0.9B. Non-operating Income totaled ¥1.1B, primarily Dividend Income of ¥0.7B and Interest Income of ¥0.4B. Non-operating Income is only about 0.2% of Revenue, indicating limited contribution to the earnings structure and profits largely driven by core operations. Net Income of ¥33.1B reflects taxes applied to Ordinary Income of ¥46.5B at an Effective Tax Rate of 28.8%. As the statement of cash flows data is not disclosed, the Operating Cash Flow (OCF) to Net Income multiple cannot be calculated; however, with a significant decrease in Accounts Payable as a working capital item, while profits are recorded on an accrual basis, actual payments may have proceeded, and accruals (the gap between accrual items and cash) may have temporarily acted on the negative side. No significant abnormalities are observed in non-operating or extraordinary items, and recurring business profits form the core of earnings.
Risk of continued revenue decline: Revenue decreased 7.4% YoY, and the full-year outlook also anticipates an 8.7% YoY decline. If a recovery in Q4 is not achieved, there is a risk of missing full-year guidance and weakening the earnings base in subsequent periods. Risk of declining Operating Margin: Due to a relative increase in SG&A, Operating Income decreased faster than Revenue (-13.9%). If revenue recovery is delayed, fixed cost burden will weigh more heavily, operating leverage will work in reverse, and margins may deteriorate further. Sustainability risk of high payout ratio: The Q2 dividend of ¥51.0 and the year-end dividend forecast of ¥71.0 total ¥122.0; back-calculating from Q3 cumulative EPS (equivalent to Net Income per Share) implies a Payout Ratio of 119.6%, exceeding profits. The full-year dividend forecast is ¥40.0, but there is a discrepancy with dividend payments as of Q3, posing a risk of drawing down retained earnings or changing the dividend policy. While cash on hand is ample, if profit levels remain low, dividend burdens could pressure equity. Working capital fluctuation risk: The sharp decrease in Accounts Payable (-47.1%) and rapid rise in Inventories (+125.3%) indicate changes in working capital structure, and changes in payment terms or inventory valuation could spill over into cash flows. If the decline in Accounts Payable continues, working capital efficiency may fall and funding needs may increase. Risk of intensifying industry competition: In the IT and information & communications services industry, price competition and business model changes accompanying the cloud shift are progressing; failure to respond to changes in demand structure could further pressure revenue and margins.
[Position within the industry] (Reference information - Our Research) Within the IT and information & communications industry (FY2025 Q3, 68 companies aggregated), the company’s relative position is as follows. Profitability: ROE 9.0% exceeds the industry median of 7.3%, placing it around the second quartile within the industry. The Net Profit Margin of 7.3% is well above the industry median of 4.8%, and the Operating Margin of 10.4% also exceeds the industry median of 6.4%, indicating relatively high profitability within the industry. However, it does not reach the industry third quartile of 13.5% for Operating Margin and thus does not belong to the top group. Soundness: The Equity Ratio of 68.6% significantly exceeds the industry median of 55.2%, highlighting conservative finances even within the industry. The Current Ratio of 381.5% far surpasses the industry median of 208%, placing liquidity among the top tier. While Net Debt/EBITDA is not disclosed in the company’s data, given ample cash and no disclosure of interest-bearing debt, we estimate a net cash position; compared with the industry median of -2.88x, financial flexibility is deemed sufficient. Efficiency: Revenue growth of -7.4% is far below the industry median of +12.0%, placing growth in the lower tier within the industry. Return on Assets (estimated 6.1%) exceeds the industry median of 3.8%, but negative revenue growth constrains profitability expansion. Versus the company’s historical results, FY2026 shows both Net Profit Margin and Operating Margin below FY2025 levels, with negative growth, confirming a retreat from past trends. While the industry overall is on a revenue growth trajectory, the company is in a stagnation phase, and a second-half rebound is key to improving the financial position (comparison base: FY2025 Q3, source: our aggregation of publicly disclosed earnings data).
Ample cash and a conservative financial base: With an Equity Ratio of 68.6%, Current Ratio of 381.5%, and Cash and Deposits of ¥256.6B (49.2% of Total Assets), the financial structure indicates top-tier safety within the industry. Short-term funding risk is extremely low, and resilience to changes in the external environment is high. On the other hand, whether this financial capacity is being utilized for growth investments or shareholder returns is a key evaluation point, and the Payout Ratio exceeding 100% suggests room to reconsider capital allocation. Focus on revenue and profit recovery scenario: Cumulative through Q3, Revenue -7.4% and Operating Income -13.9% indicate continued declines; achieving full-year guidance presupposes a significant improvement in Q4. Full-year guidance calls for Revenue ¥584.4B and Operating Income ¥55.8B, with cumulative progress through Q3 of 74.7% and 81.7%, respectively; whether a recovery in orders and sales and SG&A control in the second half can be realized is the key point to watch. Reduction in Accounts Payable and changes in working capital structure: While Accounts Payable decreased by ¥16.5B YoY (-47.1%), Inventories increased by ¥0.5B (+125.3%), suggesting changes in payment terms or inventory management policies. As these changes entail short-term cash outflows, continued monitoring of the impact on OCF is necessary. Whether the reduction in Accounts Payable is a strategic choice due to improved supplier terms or a temporary phenomenon in response to funding needs is a point to confirm in future disclosures.
This report is an automatically generated financial analysis created by AI using XBRL earnings summary data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly disclosed earnings data. Investment decisions are your own responsibility; consult a professional as needed before making any investment.