Quick View
| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥10.3B | ¥11.0B | −5.7% |
| Operating Income | ¥0.3B | ¥0.8B | −58.9% |
| Profit Before Tax | ¥0.3B | ¥0.7B | −63.0% |
| Net Income | - | ¥0.4B | −100.0% |
Executive Summary
The Company posted a decline in both revenue and earnings for the quarter, led by a particularly significant deterioration in earnings in the BPO Business. Revenue was ¥10.3B (¥11.0B in the prior year, YoY -5.7%), while operating income was ¥0.3B (¥0.8B in the prior year, YoY -58.9%). Profit before tax was ¥0.3B (¥0.7B in the prior year), while quarterly profit attributable to owners of the parent was -¥0.01B (¥0.4B in the prior year), representing a shift from a profit in the prior year to a loss. The gross profit margin remained at 36.6%, but the operating profit margin declined to 3.1% (7.2% in the prior year) due to an increase in SG&A expenses.
Factors Affecting Performance
【Revenue】Revenue was ¥10.3B, representing a YoY decline of -5.7%. By segment, the DX Business was ¥5.2B (YoY -2.3%), remaining broadly flat, while the BPO Business declined to ¥5.1B (YoY -9.0%), leading the overall revenue decline. The revenue mix was almost evenly divided, with the DX Business accounting for 50.5% and the BPO Business for 49.5%.
【Profit and Loss】Operating income declined significantly to ¥0.3B (YoY -58.9%). The DX Business maintained a high profit margin of 25.2% (profit of ¥1.3B, YoY -1.1%), while the BPO Business’s profit margin declined to 8.7% (profit of ¥0.4B, YoY -40.7%). The decline in revenue reduced the absorption of fixed costs, putting pressure on earnings. The increased burden of company-wide expense adjustments (from -¥1.30B in the prior year to -¥1.44B in the current period) also contributed to the deterioration in earnings. SG&A expenses increased to ¥3.56B (¥3.49B in the prior year), and the increase in SG&A expenses amid declining revenue resulted in a lower operating profit margin. Corporate income taxes and other taxes of ¥0.3B were recorded against profit before tax of ¥0.3B, resulting in quarterly profit attributable to owners of the parent of -¥0.01B. In conclusion, the Company recorded declines in both revenue and earnings.
Segment Analysis
The DX Business maintained a highly profitable business structure, with revenue of ¥5.2B (YoY -2.3%), operating income of ¥1.3B (YoY -1.1%), and a profit margin of 25.2%. In contrast, the BPO Business deteriorated significantly, with revenue of ¥5.1B (YoY -9.0%), operating income of ¥0.4B (YoY -40.7%), and a profit margin of 8.7%. The decline in revenue in the BPO Business indicates a structure that is susceptible to fluctuations in demand, while the high sensitivity of revenue declines to fixed costs underlies the deterioration in the profit margin. Company-wide adjustments, including head office expenses after intersegment eliminations, increased from -¥1.30B in the prior year to -¥1.44B in the current period, widening the reduction from total reportable segment profit of ¥1.76B to consolidated operating income of ¥0.32B.
Key Financial Indicators
【Profitability】The operating profit margin was 3.1%, down 4.1pt from 7.2% in the prior year. While the gross profit margin remained broadly at the same level at 36.6% (39.0% in the prior year), the SG&A expense ratio rose to 34.4% (31.8% in the prior year), becoming the primary factor behind the deterioration in profitability. 【Cash Quality】Operating cash flow was -¥0.7B compared with profit before tax of ¥0.3B, representing a divergence. The primary reason was that payments for corporate income taxes and other taxes (¥0.9B) exceeded the operating cash flow subtotal of ¥0.3B. 【Investment Efficiency】The total asset turnover ratio was approximately 0.28x (revenue of ¥10.3B / total assets of ¥37.3B), a low level. Intangible assets of ¥8.4B and goodwill of ¥6.3B accounted for approximately 39% of total assets. 【Financial Soundness】The equity ratio was 47.3%, improving from 44.1% in the prior year, while net assets were ¥17.6B, remaining broadly unchanged from the prior year. Cash and cash equivalents were ¥10.7B, down from ¥13.6B in the prior year.
Cash Flow Analysis
Operating cash flow was -¥0.7B, deteriorating from ¥0.7B in the prior year, and free cash flow was -¥2.0B. Although the operating cash flow subtotal before changes in working capital was positive at ¥0.3B, payments for corporate income taxes and other taxes of ¥0.9B weighed heavily on cash flow and reduced operating cash flow. Investing cash flow was -¥1.4B, with the principal outflows consisting of ¥0.5B for the acquisition of intangible assets and ¥0.7B for the acquisition of investment securities. The acquisition of property, plant and equipment was limited to ¥0.04B. Financing cash flow was -¥0.8B, primarily due to repayments of ¥0.6B on long-term borrowings and ¥0.3B on lease liabilities. As a result, cash and cash equivalents declined from ¥13.6B at the beginning of the period to ¥10.7B at the end of the period. The combination of lower cash generation from operating activities and investment expenditures resulted in a decline in the cash balance during the quarter.
Earnings Quality
The impact of one-time special gains and losses on earnings during the quarter was limited. Other income of ¥0.1B and other expenses of ¥0.01B were modest in scale, and most of the profit and loss consisted of recurring earnings generated by the Company’s core operating activities. However, corporate income taxes and other taxes of ¥0.3B were recorded against profit before tax of ¥0.3B, resulting in an effective tax rate significantly exceeding the nominal statutory tax rate. The impact of quarterly tax allocation or timing may therefore have weighed on earnings. A clear divergence was observed between operating earnings and cash generation: operating cash flow was -¥0.7B against profit before tax of ¥0.3B, primarily because tax payments of ¥0.9B exceeded the operating cash flow subtotal of ¥0.3B. Comprehensive income was -¥0.01B, broadly in line with quarterly profit attributable to owners of the parent. No other comprehensive income items arose, and no significant divergence was observed between comprehensive income and net income.
Shareholder Returns
The dividend forecast for the current period is ¥0 on an annual basis, and the Company intends to continue paying no dividends. The Company paid dividends of ¥0.37B in the same period of the prior year, whereas no dividend payment occurred in the current period. Share repurchases were limited in scale at less than ¥0.01B during the quarter, and the total return ratio also remained limited. The Company is scheduled to become the dissolving company through an absorption-type merger, effective May 1, 2026, and is scheduled to be delisted on April 28, 2026. Accordingly, no dividend forecast for the fiscal year ending September 2026 has been disclosed.
Risk Factors
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Prolonged collection period for accounts receivable: Trade and other receivables were ¥5.1B. Compared with quarterly revenue of ¥10.3B, the collection period may be prolonged, creating a factor that could impede the conversion of cash flows into cash.
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Continued negative operating cash flow: Operating cash flow was -¥0.7B and free cash flow was -¥2.0B for the quarter, indicating that the Company was unable to fund investing and financing activities with internally generated funds.
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Impairment risk relating to goodwill and intangible assets: Goodwill of ¥6.3B and intangible assets of ¥8.4B accounted for approximately 39% of total assets. If the BPO Business continues to experience declines in revenue and earnings, the potential for impairment based on future profitability assessments will require monitoring.
Industry Benchmark (For Reference; Compiled by the Company)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Profit Margin | 3.1% | – | – |
| The operating profit margin was 3.1%; comparative data against the industry median is currently limited. |
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | −5.7% | – | – |
| The revenue growth rate was -5.7%; comparative data against the industry median is currently limited. |
※Source: Compiled by the Company
Key Takeaways from the Financial Results
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The profit margin of the BPO Business declined from the equivalent of 17.2% in the prior year to 8.7%. The reduced absorption of fixed costs accompanying the revenue decline is a key point of focus in the earnings structure.
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Operating cash flow was -¥0.7B and free cash flow was -¥2.0B, representing a significant divergence from profit before tax of ¥0.3B. The timing of payments for corporate income taxes and other taxes affected cash generation during the quarter, which is a notable feature of the financial results.
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The Company is scheduled to be delisted following an absorption-type merger in May 2026, and no dividend forecast for the fiscal year ending September 2026 has been disclosed.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not constitute a recommendation to invest 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 responsibility, and you should consult a professional adviser as necessary.
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