| Metric | Current Period | Previous Period | YoY |
|---|---|---|---|
| Revenue | ¥29.9B | ¥34.6B | -13.6% |
| Operating Income | ¥-1.9B | ¥-4.6B | -75.6% |
| Ordinary Income | ¥-1.6B | ¥-3.9B | -76.3% |
| Net Income | ¥-5.8B | ¥-4.3B | -34.2% |
| ROE | -30.1% | -17.2% | - |
During the current period, revenue declined as the CREADITS service, which had been part of the core business, was effectively scaled back and overseas revenue decreased significantly. Although the operating loss narrowed from the previous year due to reductions in SG&A expenses, the net loss widened as a result of extraordinary losses. Revenue was ¥29.9B (¥34.6B in the previous year, YoY -13.6%), Operating Income was ¥-1.9B (¥-4.6B in the previous year), and Ordinary Income was ¥-1.6B (¥-3.9B in the previous year). Consolidated Net Income was ¥-5.8B (¥-4.3B in the previous year, YoY -34.2%), while Net Income Attributable to Owners of the Parent was ¥-7.4B (¥-5.2B in the previous year, YoY -44.0%), indicating a larger deterioration in the bottom-line result excluding the portion attributable to non-controlling interests. The primary cause of the widening loss was the recognition of ¥7.5B in extraordinary losses, including impairment losses on investment securities, which could not be fully offset by ¥3.8B in extraordinary income from the sale of investment securities.
【Revenue】Revenue was ¥29.9B, representing a year-on-year decline of -13.6%. By product and service, the CREADITS service effectively disappeared, declining from ¥4.26B to ¥0.02B (-99.5%), and was the primary cause of the revenue decline. The Marketing Services business remained approximately flat at ¥29.9B (-1.6%). By region, overseas revenue (the combined total for the United States and other regions) plunged -65.0%, from ¥5.0B to ¥1.8B, and its faster contraction than domestic revenue of ¥28.2B (-4.9%) also contributed to the overall decline.
【Profit and Loss】Gross profit was ¥20.3B, and the gross profit margin declined slightly to 67.8% from 68.9% in the previous year. Meanwhile, SG&A expenses were substantially reduced to ¥22.1B (¥28.5B in the previous year, -22.2%), improving the SG&A ratio by 8.1pt to 74.1% from 82.2%. As a result, the Operating Income margin improved by 7.0pt to -6.3% (from -13.3% in the previous year); however, the operating loss has not been eliminated because the SG&A expense level remains above the gross profit margin. Ordinary Income narrowed to ¥-1.6B, primarily due to foreign exchange gains of ¥0.7B and other factors. However, extraordinary losses of ¥7.5B (including impairment losses on investment securities) exceeded extraordinary income of ¥3.8B (gain on sale of investment securities), causing Profit Before Tax to widen to ¥-5.3B. Given the revenue decline and the widening bottom-line loss, the results can be characterized as lower revenue and lower profit.
As the Company has a single segment, Operating Income and loss by reportable segment are not disclosed; however, revenue composition by product and service and by region is disclosed. By product, Marketing Services accounted for 99.9% of revenue and remained approximately flat at ¥29.9B (前年比-1.6%), while the CREADITS service contracted to ¥0.02B (¥4.26B in the previous year, -99.5%), resulting in further concentration of the business portfolio in Marketing Services. By region, Japan generated ¥28.2B (94.1% of total revenue, -4.9% year on year), while overseas revenue, including the United States and other regions, was ¥1.8B (5.9% of total revenue, -65.0% year on year). Overseas operations have contracted to the extent that U.S. revenue, which had been disclosed separately in the previous year, was consolidated into “other regions” in the current period. The rising dependence on Japan indicates that the retrenchment of overseas expansion is underway.
【Profitability】The Operating Income margin was -6.3%, improving by 7.0pt from -13.3% in the previous year. However, the SG&A ratio of 74.1% (82.2% in the previous year) remains higher than the gross profit margin of 67.8% (68.9% in the previous year), and the Company continues to report an operating loss. 【Cash Flow Quality】Operating Cash Flow (OCF) deteriorated to ¥-8.6B from ¥-1.1B in the previous year, while the subtotal before changes in working capital was also negative at ¥-9.5B, indicating that cash generation capacity has further lagged accounting earnings. On a per-share basis, EPS attributable to owners of the parent was ¥-51.81 (¥-36.33 in the previous year), while BPS was ¥112.48 (¥168 in the previous year, -33.0%), indicating a continued decline in equity per share. 【Investment Efficiency】ROE was -30.1%, remaining negative for the second consecutive period. Capital expenditures were ¥0.0B, below depreciation and amortization of ¥1.0B, indicating restrained investment in asset replacement. 【Financial Soundness】The Equity Ratio remained high at 59.7%. Interest-bearing debt was limited, with long-term borrowings of ¥2.8B against cash and deposits of ¥15.3B, while the current ratio was 259.0%, indicating ample short-term liquidity.
Operating Cash Flow was ¥-8.6B, deteriorating from ¥-1.1B in the previous year. Investing Cash Flow was +¥3.1B (¥-1.4B in the previous year), primarily due to the sale of investment securities (proceeds of ¥3.9B). Financing Cash Flow was +¥1.4B (＋¥3.1B in the previous year), driven by new long-term borrowings of ¥5.0B and repayments of ¥1.7B, among other factors. Free Cash Flow, calculated as the sum of Operating Cash Flow and Investing Cash Flow, was ¥-5.5B (¥-2.5B in the previous year), indicating a further widening of the deficit. In terms of working capital, a ¥1.0B decrease in trade receivables contributed to cash generation, while a ¥0.6B decrease in trade payables was a use of cash. As a result, cash and cash equivalents declined to ¥15.3B at period-end (¥19.4B in the previous year). Although cash was temporarily supplemented through the sale of investment securities, the Company continues to lack sufficient cash generation from its core business.
The Company recognized ¥3.8B in extraordinary income, primarily gains on the sale of investment securities, and ¥7.5B in extraordinary losses, including impairment losses on investment securities. The resulting net temporary loss factor of ¥-3.7B reduced Profit Before Tax, and most of the difference between Ordinary Income of ¥-1.6B and Profit Before Tax of ¥-5.3B was attributable to these temporary items. Non-operating income was centered on foreign exchange gains of ¥1.0B, resulting in a structure that depends on income outside the core business. Comprehensive Income was ¥-9.1B, and the difference from Net Income Attributable to Owners of the Parent of ¥-7.4B was attributable to valuation differences on available-for-sale securities of ¥-1.8B, with valuation fluctuations in held shares further widening the loss. Operating Cash Flow of ¥-8.6B, substantially below net income, indicates a significant divergence between accounting earnings and cash flow, or high accruals. From a quality-of-earnings perspective, the Company continues to face challenges in converting earnings into cash.
For the next fiscal year (FY2026 ending December 2026), the Company has disclosed full-year forecasts of Revenue of ¥30.0B (前年比+0.3%), Operating Income of ¥0.5B, Ordinary Income of ¥0.5B, and forecast EPS of ¥1.26. Although the forecast calls for a return to profitability from the current-period operating loss of ¥-1.9B, achieving the plan will depend on further improvement in the cost structure and stable revenue generation, given that current-period Operating Cash Flow was negative at ¥-8.6B and the SG&A ratio remains high at 74.1%.
Dividend per share was ¥0 in both the previous and current periods, and the Company continues to pay no dividends. The current period recorded a Net Loss Attributable to Owners of the Parent of ¥-7.4B, and retained earnings fell from +¥3.0B at the end of the previous period to -¥4.4B at the end of the current period. Accordingly, distributable profit for calculating the Payout Ratio has not been secured. There was no disclosure regarding share repurchases, and the Total Return Ratio was not calculated.
Profitability Risk: While Revenue declined -13.6% year on year, the SG&A ratio of 74.1% exceeded the gross profit margin of 67.8%, and the operating loss of ¥-1.9B continues. Although the absolute amount of SG&A expenses has been reduced (-22.2% year on year), the Company has not yet reached its break-even point.
Cash Flow Risk: Operating Cash Flow was ¥-8.6B and Free Cash Flow was ¥-5.5B, with both deficits widening. Cash and deposits declined to ¥15.3B at period-end (¥19.4B in the previous year, -21.2%). If temporary funding through the sale of investment securities continues, the asset base may continue to contract.
Risk Related to Capital Quality: Retained earnings fell from +¥3.0B at the end of the previous period to -¥4.4B at the end of the current period, resulting in negative internal reserves. In addition, the recognition of ¥7.5B in extraordinary losses has increased volatility in net income, making it difficult to assess the underlying business condition based solely on annual earnings trends.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | -6.3% | – | – |
| Net Income Margin | -19.5% | – | – |
Both the Company’s Operating Income margin and Net Income margin are negative. Although industry comparison data has not been established, the Company’s standalone results confirm that improving profitability remains a challenge.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | -13.6% | – | – |
The Revenue growth rate was -13.6%, representing negative growth. Although comparison data against the industry median has not been established, the contractionary trend in the Company’s top line is clear.
※Source: Compiled by the Company
The SG&A ratio improved by 8.1pt to 74.1% from 82.2% in the previous year, contributing to a reduction in the operating loss. However, given an earnings base below the gross profit margin of 67.8%, further improvement in the cost structure is required to reach the break-even point.
Revenue from the CREADITS service effectively disappeared, declining from ¥4.26B in the previous year to ¥0.02B, and the business is converging toward a single-business structure centered on Marketing Services. Overseas revenue also plunged -65.0%, and the rise in dependence on Japan to 94.1% indicates a change in the business composition.
The next-period forecast calls for a return to profitability, with Operating Income of ¥0.5B. However, given that current-period Operating Cash Flow was negative at ¥-8.6B and the balance of investment securities contracted -50.9% year on year, recovery in cash generation capacity will be a key factor determining the feasibility of achieving the plan.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment 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, where necessary, after consulting with a professional.
---End of Report---
These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.