| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1458.3B | ¥1436.1B | +1.5% |
| Operating Income | ¥126.5B | ¥115.9B | +9.2% |
| Profit Before Tax | ¥122.9B | ¥112.3B | +9.4% |
| Net Income | ¥83.6B | ¥82.6B | +1.2% |
| ROE | 11.2% | 11.7% | - |
For the fiscal year ended February 2026 (IFRS, consolidated), Revenue was ¥1458.3B (YoY +¥22.2B +1.5%), Operating Income was ¥126.5B (YoY +¥10.7B +9.2%), Ordinary Income was ¥23.5B (YoY +¥16.3B +228.6%), and Profit Attributable to Owners of Parent was ¥81.8B (YoY +¥1.8B +2.2%). Operating Income achieved double-digit growth, delivering profit improvement that materially outpaced revenue growth and resulting in higher revenue and earnings. Gross profit margin improved to 18.9% (from 17.7% in the prior year, +1.2pt), and Operating Margin improved to 8.7% (from 8.1%, +0.6pt). SG&A ratio declined to 10.7% (from 11.3%, -0.6pt), reflecting progress in cost efficiency. However, note that one-off proceeds such as gains on sale of subsidiary shares recorded in other income totaled ¥39.9B in the prior year versus ¥9.2B in the current period, so comparisons at the Ordinary Income stage require attention to structural factors. Operating Cash Flow was ¥165.3B (YoY -4.9%), generating 1.98x of Net Income, and Free Cash Flow was ¥159.6B, providing ample coverage of Dividends of ¥44.4B by 3.6x and maintaining strong cash generation capacity.
[Revenue] The core CRM Business recorded Revenue of ¥1455.6B (YoY +1.6%) and accounted for 99.8% of total Revenue, while Other Businesses contracted to ¥2.7B (YoY -34.3%). The CRM Business secured modest revenue growth through continuation of projects with existing large customers and new contract wins, alongside contract price revisions and updated contract terms. Cost of sales rose slightly to ¥1183.1B (YoY +¥1.1B), and Gross Margin improved by 1.2pt to 18.9%. Gross profit increased by 8.3% versus Revenue growth of 1.5%, reflecting successful price pass-through, operational efficiency gains, and productivity improvements. [Profitability] SG&A was compressed to ¥156.1B (YoY -¥5.8B -3.6%), lowering the SG&A-to-Revenue ratio by 0.6pt to 10.7%, supported by fixed cost control and efficiency in sales and administration. Other income fell sharply to ¥9.2B from ¥39.9B in the prior year (the prior year included one-off gains from subsidiary share sales and business transfers). Other expenses decreased to ¥1.8B (prior year ¥16.3B), mainly due to impairment losses narrowing to ¥1.02B (prior year ¥15.7B). Aggregating these items, Operating Income reached ¥126.5B (YoY +9.2%), improving the Operating Margin to 8.7%. Financial expenses increased to ¥7.7B (prior year ¥5.8B, +¥1.9B), but improvements at the operating level supported a Profit Before Tax of ¥122.9B (YoY +9.4%). Income tax expense was ¥39.3B (effective tax rate 32.0%), up ¥10.0B from the prior year, reflecting higher Profit Before Tax. Profit Attributable to Owners of Parent increased to ¥81.8B (YoY +2.2%), and with Non-controlling Interests of ¥1.8B, Net Income was ¥83.6B (YoY +1.2%). In conclusion, revenue growth in the core CRM Business plus improvements in Gross Margin and SG&A ratio drove higher revenue and earnings.
The reportable segment is a single CRM Business, which recorded external Revenue of ¥1455.6B (YoY +1.6%) and Profit Before Tax of ¥116.9B. Other Businesses had external Revenue of ¥2.7B (YoY -34.3%) and Profit Before Tax of ¥6.0B, turning profitable from a prior-year loss of ¥-8.6B. The prior year Other Businesses included impairment losses of ¥10.1B; in the current period impairment narrowed to ¥1.0B, driving the improvement in profitability. The CRM Business bore Depreciation of ¥89.2B, Share of Profit of Investments Accounted for Using the Equity Method of ¥3.8B, and Financial Expenses of ¥7.7B, maintaining a solid operating base. Overall, dependency on CRM Business for Revenue and profit remains above 99%, making price adjustments and productivity maintenance in that business key to overall performance.
[Profitability] Operating Margin of 8.7% improved by 0.6pt from 8.1% in the prior year; Gross Margin 18.9% (prior year 17.7%, +1.2pt) and SG&A ratio 10.7% (prior year 11.3%, -0.6pt) also improved. ROE was 11.4% (prior year 11.7%), a slight decline, while Net Profit Margin remained high at 5.6% (prior year 5.6%, flat). [Cash Quality] Operating Cash Flow (OCF) of ¥165.3B was 1.98x Net Income of ¥83.6B, and FCF of ¥159.6B covered Dividends of ¥44.4B by 3.6x, indicating strong cash generation. From OCF subtotal of ¥201.6B, adjustments for working capital of -¥36.3B (accounts receivable increase -¥16.6B, accounts payable decrease -¥1.9B, etc.) were made, followed by tax payments -¥33.6B, interest payments -¥6.6B, and lease payments -¥65.8B to arrive at OCF. The accrual ratio ((Net Income - OCF)/Total Assets) was -4.8%, a negative value, indicating ample cash backing for reported profits. [Investment Efficiency] Total Asset Turnover improved to 0.859x (prior year 0.823x). Capital expenditures were ¥6.0B, 0.07x of Depreciation of ¥89.5B, indicating restrained investment; use of IFRS16 leases preserved capital efficiency. ROA (on an Ordinary Income basis) improved to 7.1% (prior year 6.4%). [Financial Soundness] Equity Ratio was 43.5% (prior year 40.2%, +3.3pt), a moderate level. Interest-bearing debt totaled ¥487.4B (short-term borrowings ¥173.0B + long-term borrowings ¥314.4B), Debt/Equity was 0.652x, and Debt/Capital was 39.5%, indicating relatively high leverage; however, coverage by OCF was 3.0x (¥487.4B ÷ ¥165.3B), which is healthy. Current Ratio was 0.649x (current assets ¥297.2B ÷ current liabilities ¥457.9B), indicating weaker short-term liquidity, but the increase in long-term borrowings (long-term borrowings +¥81.9B) has extended the maturity profile of liabilities. Cash and cash equivalents of ¥71.9B represented 0.42x of short-term borrowings ¥173.0B, limiting short-term liquidity headroom, although robust OCF provides support.
OCF was ¥165.3B (prior year ¥173.9B, -4.9%). Profit Before Tax ¥122.9B was adjusted by Depreciation ¥83.6B (tangible ¥83.6B), Amortization of Intangibles ¥5.9B, and impairment losses ¥1.0B, and after working capital changes of -¥36.3B (accounts receivable increase -¥16.6B, accounts payable decrease -¥1.9B, consumption taxes etc. increase +¥7.4B, etc.), an OCF subtotal of ¥201.6B was achieved. Interest received ¥3.9B, interest paid -¥6.6B, and corporate tax paid -¥33.6B resulted in OCF of ¥165.3B. Investing Cash Flow was -¥5.7B (prior year -¥36.9B), with major items including acquisition of tangible fixed assets -¥6.0B, acquisition of intangible assets -¥4.3B, proceeds from business transfer +¥3.0B, and security deposit recoveries +¥5.8B, reflecting restrained investment. FCF was ¥159.6B (prior year ¥137.0B, +16.5%) and covered Dividend payments of ¥44.4B by 3.6x. Financing Cash Flow was -¥157.8B (prior year -¥138.9B), with main items being net decrease in short-term borrowings -¥77.0B, new long-term borrowings +¥180.0B, long-term borrowings repayments -¥156.0B, lease repayments -¥65.8B, and dividend payments -¥44.4B. The company progressed with refinancing to shift from short-term to long-term borrowings, lengthening the maturity profile. Cash and cash equivalents increased slightly to ¥71.9B (prior year ¥69.9B, +¥2.0B), including foreign exchange effect +¥0.2B. OCF sustainability is high, working capital management is sound, and there are no signs of opportunistic manipulation of cash flows.
Earnings quality is high, as CRM contract revenues are predominantly recurring, and dependency on one-off other income decreased from ¥39.9B in the prior year (gains on sale of subsidiary shares and business transfers) to ¥9.2B in the current period. Non-operating income totaled ¥9.5B (Financial Income ¥0.3B and Other Income ¥9.2B), representing 0.7% of Revenue, and operating-level earnings support Net Income. Financial expenses of ¥7.7B are mainly interest on borrowings and are recognized as recurring finance costs. The accrual ratio ((Net Income - OCF)/Total Assets) was -4.8%, indicating OCF significantly exceeds Net Income and strong cash backing for profits. Depreciation of ¥89.5B and lease payments of ¥65.8B reflect non-cash IFRS16 depreciation of right-of-use assets and timing differences with actual cash payments, creating divergence between accounting profit and cash, so FCF-based evaluation is appropriate. Comprehensive Income was ¥80.2B, a ¥-3.4B divergence from Net Income of ¥83.6B, primarily due to Other Comprehensive Income of -¥3.4B (Fair value valuation of financial assets -¥4.6B, Foreign currency translation differences +¥0.6B, Equity-method OCI +¥0.5B), which are valuation items and qualitatively neutral. Divergence between Ordinary Income and Net Income is large, but this reflects IFRS definitions (including equity-method profits/losses and financial gains/losses) versus Profit Before Tax; the linkage from Operating Income → Profit Before Tax → Net Income is normal.
Against the company plan (Revenue ¥1520.0B, Operating Income ¥130.0B, Net Income ¥87.0B, EPS ¥114.33, Annual Dividend ¥30.00), results were Revenue ¥1458.3B (achievement rate 96.0%), Operating Income ¥126.5B (97.3%), Net Income ¥81.8B (94.0%), and EPS ¥110.22 (96.4%), generally landing within the planned range but slightly below target. Revenue underperformance may reflect slower-than-planned project expansion toward the fiscal year-end, while Operating Income maintained a high achievement rate due to Gross Margin improvement and SG&A containment. Net Income shortfall was influenced by higher corporate tax burden (effective tax rate 32.0%) and elevated financial expenses. No guidance for the next fiscal year was disclosed; CRM Business order intake, continuation of price revisions, and labor cost trends will be key inputs to the next plan.
Annual dividend per share was ¥60.00 (interim ¥30.00, year-end ¥30.00), with a Payout Ratio of 55.1% (based on EPS ¥110.22) and total dividends of ¥44.4B. The Payout Ratio remains at the prior-year level of 55.1%, within the target range below 60% and sustainable. FCF of ¥159.6B covers Dividend payments of ¥44.4B by 3.6x, indicating strong dividend sustainability. Share buybacks were effectively zero in the period (treasury stock acquisition on the CF statement ¥0.0B), so returns remain dividend-centric. As noted, part of the dividend source includes capital surplus, but given abundant FCF there is no cash strain. As long as stable cash generation continues, maintaining or modestly increasing the dividend is in scope.
[Industry Position] (reference — company analysis) Compared with the median for the IT & Communications industry for FY2025, Operating Margin of 8.7% exceeds the industry median of 8.1%, indicating solid gross margin and expense efficiency. Net Profit Margin of 5.6% is roughly in line with the industry median of 5.8%, maintaining industry-standard profitability. Conversely, Equity Ratio of 43.5% is well below the industry median of 59.2% (IQR 40.8%–72.9%, near the lower bound), confirming higher leverage. Current Ratio 0.65x is substantially below the industry median of 2.44x (IQR 1.73–3.53x), highlighting weak short-term liquidity. Payout Ratio 55.1% exceeds the industry median of 31.0%, indicating a high-return policy. ROE 11.4% slightly exceeds the industry median of 10.1%, suggesting high capital efficiency aided by leverage. Total Asset Turnover 0.859x is similar to the industry median of 0.89x, reflecting the labor-intensive nature of the CRM business. Cash Conversion Ratio of 1.98x well exceeds the industry median of 1.28x, confirming strong cash backing for profits. Overall, profitability and capital efficiency are at or above industry standards, but financial safety (Equity Ratio, Current Ratio) is low within the industry, and high leverage and low liquidity are risk factors.
Key points are as follows. First, improvement to Operating Margin of 8.7%, Gross Margin +1.2pt, and SG&A ratio -0.6pt are outcomes of price revisions and operational efficiency, confirming an improvement trend in core earnings power. Second, OCF/Net Income of 1.98x and FCF of ¥159.6B demonstrate abundant cash generation, underpinning dividend sustainability and financial flexibility, supporting a high Payout Ratio of 55.1%. Third, shortening of short-term borrowings and refinancing into long-term borrowings (short-term -¥135.0B, long-term +¥81.9B) progressed, extending maturities and partially mitigating rollover risk. Conversely, structural vulnerabilities persist: Goodwill ¥946.7B (126.6% of Net Assets) and Current Ratio 0.65x could manifest impairment or liquidity risks under sudden macro or customer shifts. With Revenue concentration in the CRM Business at 99.8%, monitoring large-customer contract renewals, project expansion, and progress of price revisions will be key to assessing sustainability of future performance.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult professionals as needed before making investment decisions.