Rentracks (6045) FY2026 Q3 Earnings Report

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Executive Summary

Although Revenue increased, Operating Income, Ordinary Income, and Net Income all declined slightly, resulting in an earnings profile of higher revenue but lower earnings. Revenue was ¥3.297B (+14.6% YoY), Operating Income was ¥0.881B (-1.0%), Ordinary Income was ¥0.875B (-1.2%), and Net Income was ¥0.560B (-4.8%). While the rapid expansion of the used construction equipment marketplace-related business drove the increase in Revenue, the growing sales mix of this lower-gross-margin business and higher SG&A expenses pressured margins, indicating a structure in which revenue growth is not translating into earnings growth.

Factors Affecting Earnings Fluctuations

【Revenue】Revenue was ¥3.297B, representing a 14.6% increase YoY. By segment, the used construction equipment marketplace-related business grew substantially to ¥1.328B (+51.2%), while the search-linked advertising agency business also expanded rapidly to ¥0.126B (+226.6%). Meanwhile, the core performance-based advertising services business (affiliate business) was ¥1.617B, remaining largely flat (-1.0%); the primary driver of growth was the expansion of non-core businesses.

【Profit and Loss】Operating Income was ¥0.881B (-1.0%), Ordinary Income was ¥0.875B (-1.2%), and Net Income was ¥0.560B (-4.8%), with all three declining. The gross margin of 60.7% declined from the previous year (approximately 69.4%), as the increased weighting of the lower-margin used construction equipment business (16.1% profit margin) depressed the overall gross margin. SG&A expenses were ¥1.119B (¥1.108B in the previous year), remaining largely flat; however, the modest growth in gross profit pressured Operating Income. An impairment loss on investment securities of ¥0.03B was recorded as an extraordinary loss, further reducing Profit Before Tax and Net Income. In conclusion, the Company posted higher revenue but lower earnings.

Segment Analysis

By segment, Revenue (on a gross-profit basis) from the performance-based advertising services business (formerly AffiliateServiceProvider) was ¥1.617B (-1.0%), representing 49.0% of the total and maintaining extremely high profitability with a 99.0% profit margin, although growth has stagnated. The used construction equipment marketplace-related business expanded rapidly to ¥1.328B (+51.2%), accounting for 40.3% of the total, but its profit margin of 16.1% was substantially lower than that of the core business. The search-linked advertising agency business achieved high growth at ¥0.126B (+226.6%), despite its small scale, with a 41.6% profit margin. By region, Japan accounted for ¥2.047B and Asia for ¥1.190B, both representing substantial increases from the previous year (Asia reflects the expansion of the used construction equipment business), resulting in a higher overseas sales ratio. Overall, while growth in the highly profitable core business is slowing, expansion of lower-profit businesses is supporting Revenue. This structural change warrants close monitoring as a factor that will influence future margin trends.

Key Financial Indicators

【Profitability】The Operating Margin was 26.7% and the Net Profit Margin was 17.0%, both high levels; however, both the gross margin and profit margin have shown a slight declining trend from the previous year. 【Cash Quality】Disclosure of detailed cash flow items, including Operating Cash Flow (OCF), is limited. Cash and deposits were ¥4.328B, down 29.2% from ¥6.115B in the same period of the previous year, confirming a contraction in cash balances. 【Investment Efficiency】Annualized ROE was 19.3%. Under a DuPont decomposition, the calculated ROE is in the approximately 14% range based on a combination of a 17.0% Net Profit Margin, total asset turnover of 0.371, and financial leverage of approximately 2.29x. Total assets decreased 16.6% YoY, indicating that asset reduction contributed to maintaining ROE. 【Financial Soundness】The Equity Ratio improved to 43.6% from 33.6% in the previous year; however, short-term borrowings accounted for ¥2.302B of current liabilities of ¥4.858B, indicating a high dependence on short-term liabilities.

Cash Flow Analysis

As disclosure of the details in the statement of cash flows is limited, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥4.328B, down ¥1.787B (29.2%) from ¥6.115B in the same period of the previous year, while short-term borrowings also decreased by ¥1.350B (37.0%), from ¥3.652B to ¥2.302B. As both balances contracted simultaneously, the Company appears to have been using cash to repay borrowings. Accounts receivable were ¥3.297B and accounts payable were ¥2.142B, leaving working capital in positive territory; however, the large scale of accounts receivable means that collection conditions affect liquidity. The cash-to-short-term-borrowings ratio was 1.88x, indicating that short-term payment capacity itself remains secured.

Earnings Quality

Non-operating expenses of ¥0.03B, primarily interest expense of ¥0.02B, exceeded non-operating income of ¥0.02B, including dividends received of ¥0.01B, resulting in Ordinary Income being slightly below Operating Income. An impairment loss on investment securities of ¥0.03B was recorded as an extraordinary loss and treated as a temporary factor; Profit Before Tax of ¥0.845B was reduced from Ordinary Income of ¥0.875B by the amount of the extraordinary loss. Comprehensive Income was ¥0.574B, only slightly above Net Income of ¥0.560B, indicating a limited impact from valuation differences such as foreign currency translation adjustments of ¥0.01B. Although the Net Profit Margin of 17.0% is high, the changing gross-profit mix resulting from the expansion of sales in lower-margin businesses is an important consideration in assessing earnings sustainability.

Earnings Forecast and Guidance

The full-year earnings forecast remains unchanged at Revenue of ¥4.102B (+6.2% YoY), Operating Income of ¥1.317B (+15.4%), and Ordinary Income of ¥1.279B (+13.6%). Through the cumulative Q3 period, Revenue had reached 80.4% of the full-year forecast and Operating Income had reached 66.9%. While Revenue is progressing steadily, the progress rate for Operating Income is relatively low, and the plan assumes substantial earnings growth in Q4. Against forecast EPS of ¥91.6, cumulative EPS was ¥71.37, representing a progress rate of 77.9%.

Shareholder Returns

The annual dividend forecast is ¥24.00, comprising ¥12.00 for Q2 and ¥12.00 for the year-end dividend, with no revision. Based on cumulative Net Income of ¥0.560B and the annual dividend forecast using the number of shares outstanding (excluding treasury shares), the estimated Payout Ratio is approximately 33%, which is considered sustainable relative to the current earnings level. No disclosure regarding share repurchases has been made.

Risk Factors

1. Dependence on short-term liabilities: Short-term borrowings account for ¥2.302B of current liabilities of ¥4.858B, resulting in a high short-term liability ratio. The structure is relatively susceptible to increased refinancing risk when the funding environment changes.

2. Accounts receivable collection risk: Accounts receivable were ¥3.297B, representing 37.1% of total assets, and are substantial in scale. Any delay in collections could place further pressure on cash balances, which have declined 29.2% YoY.

3. Profitability risk from changes in business composition: The used construction equipment marketplace-related business, which has a low profit margin of 16.1%, has expanded to account for 40.3% of Revenue. If growth in the highly profitable core business slows, the Company-wide gross margin and profit margin could decline structurally.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The Company’s profitability significantly exceeds the industry median and places it in the top group.

Growth and Capital Efficiency

The Revenue growth rate also exceeds the industry median and is positioned in the upper range of the IQR.

※Source: Company compilation

Key Points from the Earnings Results

1. Regarding the structure of higher revenue but lower earnings, the profit margin of the used construction equipment marketplace-related business driving growth (16.1%) is substantially lower than that of the core performance-based advertising business (99.0%). The change in business composition is therefore a structural factor behind the Company-wide decline in gross margin.

2. While cash and deposits decreased 29.2% YoY, short-term borrowings also decreased 37.0%, indicating that the funding structure is being compressed. Dependence on short-term liabilities remains high, making changes in the liquidity structure a key monitoring point.

3. Progress against the full-year forecast differs between Revenue at 80.4% and Operating Income at 66.9%; the trend in earnings progress during Q4 will be a key indicator for assessing achievement of the full-year forecast.

Theoretical Share Price (Reference Value)

Sensitivity: ¥606–¥642 at Cost of Equity ±1%; ¥621–¥629 at ω±0.1.

Notes:

• Net Income is substantially compressed relative to Operating Income due to tax burden, acquisition-related expenses, non-controlling interests, and other factors (Net Income ÷ Operating Income 55%). This value reflects that compression at face value; if the factors are temporary, normalized earnings may be higher.
• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, 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 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast 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 professionals as necessary.

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