| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥177.4B | ¥131.0B | +20.9% |
| Operating Income | ¥25.1B | ¥15.3B | +63.2% |
| Profit Before Tax | ¥23.8B | ¥14.7B | +62.3% |
| Net Income | ¥20.6B | ¥9.7B | +111.7% |
| ROE | 10.4% | 5.9% | - |
For the cumulative Q2 of FY2026, Revenue was ¥177.4B (YoY +¥46.4B +35.4%), Operating Income was ¥25.1B (YoY +¥9.8B +63.9%), Ordinary Income was ¥23.8B (YoY +¥9.2B +62.3%), and Net Income attributable to owners of parent was ¥18.7B (YoY +¥9.6B +106.4%). Stable online travel demand, consolidation expansion of the IT Development segment, a sharp rebound in inbound demand, and higher profitability in the Investment segment drove profit growth. Operating margin improved to 14.1% (from 11.7% YoY +2.4pt), evidencing operating leverage, while gross margin declined to 51.3% (from 56.2% YoY -4.9pt), reflecting changes in business mix and cost pressures.
[Revenue] Revenue of ¥177.4B (YoY +35.4%) was driven by consolidation scope expansion of IT Development (¥31.5B, YoY +349x+), a surge in inbound demand (¥19.9B, +39.2%), and revenue growth in the Investment segment (¥3.4B, +73.5%). Core Online Travel recorded ¥90.8B (+2.2%), a slight increase, and retained its central position with a 51.2% revenue share. Other Within The AirTrip Economic Zone was strong at ¥31.7B (+23.1%). By segment, the revenue contribution from IT Development consolidation (+¥31.4B) accounted for about 68% of company-wide growth. Cost of sales rose to ¥86.4B (+50.6%), outpacing revenue growth, and gross margin fell to 51.3% (from 56.2% YoY -4.9pt), affected by IT Development’s relatively low margins and increased variable costs with travel demand recovery.
[Profitability] SG&A was ¥69.8B (+17.4%), growing below revenue growth and improving the SG&A ratio to 39.3% (from 45.4% YoY -6.1pt). Operating Income was ¥25.1B (YoY +63.9%), and operating margin rose to 14.1% (from 11.7% YoY +2.4pt), showing clear economies of scale. Non-operating items included financial income ¥0.1B, financial expenses ¥1.3B (of which interest expense ¥1.0B), other income ¥3.7B, other expenses ¥0.2B, and equity in earnings of affiliates -¥0.2B. Although financial expenses increased YoY (from ¥0.7B +¥0.6B), other income (from ¥1.7B +¥2.0B) outweighed this, resulting in a positive non-operating contribution. Ordinary Income was ¥23.8B (YoY +62.3%), reflecting operating profit increases. From Profit Before Tax ¥23.8B (YoY +62.3%), after deducting income taxes of ¥3.2B (effective tax rate 13.6%), Net Income was ¥20.6B (YoY +111.7%), and Net Income attributable to owners of parent was ¥18.7B (YoY +106.4%), achieving revenue and profit growth.
Online Travel: Revenue ¥90.8B (YoY +2.2%), Operating Income ¥17.2B (YoY -3.5%), margin 18.9%. Revenue slightly increased but profit slightly declined, pressured by intensifying competition and rising costs.
IT Development: Revenue ¥31.5B (YoY +349x+), Operating Income ¥1.1B (YoY +318.4%), margin 3.4%. Consolidation expansion drove rapid revenue growth, but margins remained low due to start-up stage cost burdens.
Inbound Segment: Revenue ¥19.9B (YoY +39.2%), Operating Income ¥2.5B (YoY +79.4%), margin 12.7%. Recovery in inbound demand led to revenue and profit growth with margin improvement.
Investment: Revenue ¥3.4B (YoY +73.5%), Operating Income ¥4.1B (YoY +153.1%), margin 120.6%. Highly profitable but includes valuation gains and disposal gains, indicating a temporary nature.
Other Within The AirTrip Economic Zone: Revenue ¥31.7B (YoY +23.1%), Operating Income ¥2.5B (YoY +35.9%), margin 7.9%. Revenue and profit both grew, with mid-level margins.
[Profitability] Operating margin of 14.1% improved by +2.4pt from 11.7% YoY, aided by a decline in SG&A ratio to 39.3% (from 45.4% YoY -6.1pt). Net margin improved to 11.6% (from 7.4% YoY +4.2pt), driven by operating leverage and a low effective tax rate (13.6%). Gross margin of 51.3% declined by -4.9pt from 56.2% YoY, impacted by business mix shifts and cost increases. ROE 10.4% improved YoY due to net margin enhancement, while total asset turnover was 0.435x (annualized 0.87x) showing only slight YoY increase, and financial leverage (D/E) at 2.06x remained in a similar range.
[Cash Quality] Operating Cash Flow was ¥19.5B versus Net Income ¥20.6B, giving a CF/Net Income ratio of 0.95x, generally healthy, but accounts receivable increase (YoY +¥23.0B) pressured working capital, partially offset by accounts payable increase (+¥13.4B) and contract liabilities increase (+¥4.4B). Days Sales Outstanding (DSO) extended to 106 days (from 79 days YoY +27 days), indicating longer collection terms. Accrual ratio (Net Income - Operating CF)/Total Assets was -0.2%, in a favorable range.
[Investment Efficiency] Growth investments totaled ¥8.8B: capital expenditures ¥0.8B, intangible asset acquisitions ¥4.8B, and subsidiary acquisitions ¥3.2B, with a clear policy to accelerate growth via intangibles and M&A. Investment CF was -¥14.2B versus FCF ¥5.3B, covering dividend payments ¥2.2B.
[Financial Soundness] Equity Ratio was 41.9% (from 47.4% YoY -5.5pt), declining because total assets increased (YoY +¥86.6B) while equity rose only +¥32.6B, but remaining in a healthy range. Interest-bearing debt was ¥48.9B (D/E ratio 0.25x), and interest coverage was 18.7x, indicating light interest burden. Goodwill was ¥40.9B (10.0% of total assets, 20.7% of equity) up ¥25.9B YoY, signaling more aggressive M&A, but future impairment risk management is important.
Operating CF was ¥19.5B (YoY -7.4%), where increases in profit before tax to ¥23.8B (from ¥14.7B prior year) were offset by working capital changes. Operating CF before working capital changes was ¥23.4B; working capital impacts were accounts receivable increase -¥12.8B, inventories decrease +¥1.0B, accounts payable increase +¥8.2B, contract liabilities increase +¥4.4B, and others -¥2.1B, with accounts receivable accumulation the largest cash outflow driver. After income taxes paid ¥2.9B, interest paid ¥1.0B, and lease payments ¥2.1B, Operating CF produced ¥19.5B. Investment CF was -¥14.2B, composed of capex ¥0.8B, intangible acquisitions ¥4.8B, subsidiary acquisitions ¥3.2B, and purchase of investment securities ¥5.6B (sales proceeds ¥0.5B), indicating active growth investment. FCF (Operating CF + Investment CF) was ¥5.3B, and Financing CF was ¥3.8B: borrowings executed ¥8.2B, repayments of long-term borrowings ¥3.9B, dividend payments ¥2.2B, bond redemptions ¥0.9B, short-term borrowings increase ¥2.7B, etc., resulting in cash increasing by ¥9.8B (including FX impact +¥0.7B) to ending cash ¥141.0B. The expansion of working capital (particularly receivables) continues to pressure Operating CF, though increases in contract liabilities and payables partially mitigate this and FCF remains positive.
Of Operating Income ¥25.1B, the combined Operating Income from Online Travel and Inbound Segment of ¥19.7B forms the core of recurring earnings, indicating relatively high stability. Conversely, Investment segment Operating Income ¥4.1B (margin 120.6%) is subject to valuation and disposal gains and contains one-off elements. Other income ¥3.7B (2.1% of Revenue) breakdown is unclear, but non-operating items did not materially erode Operating Income; the gap to Ordinary Income ¥23.8B is limited, absorbing financial expenses increase ¥1.3B. Operating CF ¥19.5B equals 95% of Net Income ¥20.6B, and accrual ratio -0.2% is favorable, so earnings quality is broadly healthy. However, rapid accounts receivable growth (+¥23.0B) and longer collection terms (DSO 106 days) hinder CF generation, leaving room to improve cash conversion efficiency. The effective tax rate of 13.6% fell substantially from 33.7% YoY, suggesting use of tax loss carryforwards or tax credits, which boosted net margin but could normalize in the future.
Full Year guidance is Revenue ¥340.0B (YoY +20.9%), Operating Income ¥15.0B (YoY -48.4%), and Net Income attributable to owners of parent ¥6.0B (YoY -33.7%), reflecting post-Q2 revision. Progress against the full-year plan at Q2 cumulative is 52.2% for Revenue, 167.0% for Operating Income, and 311.2% for Net Income attributable to owners of parent — substantial outperformance on profit metrics — and the guidance is conservative, embedding significant profit decline in H2. This reflects assumptions such as a reversion of Investment segment earnings (one-off high H1 profitability), ramp-up costs for IT Development, and intensifying competition in Online Travel. The full-year Operating Income plan ¥15.0B is below last year’s ¥29.1B (estimated: Q2 Operating Income ¥25.1B annualized), implying expected H2 cost increases or one-off losses. While the strong profit progress suggests upside revision potential, management remains cautious.
No interim dividend was declared in Q2; dividend payments during the period ¥2.2B likely related to prior-year dividend payments. With Net Income attributable to owners of parent ¥18.7B and dividend payments ¥2.2B, the payout ratio is 11.8%, low. FCF ¥5.3B is about 2.4x dividend payments ¥2.2B, indicating sufficient dividend-paying capacity, but goodwill increase (+¥25.9B), intangible acquisitions (¥4.8B), and subsidiary acquisitions (¥3.2B) show a capital allocation policy prioritizing growth investments and M&A, suggesting a near-term focus on internal reserves accumulation and preserving M&A firepower. Cash ¥141.0B, equity ¥197.7B, and interest-bearing debt ¥48.9B indicate strong financial flexibility; dividend enhancement timing is likely to follow the completion of growth investments.
Working capital risk: Accounts receivable ¥51.4B up +81.3% YoY, DSO 106 days (from 79 days YoY +27 days), indicating receivables expansion outpacing revenue growth. Increased credit risk and higher Operating CF volatility are concerns; deterioration in counterparties’ credit could lead to bad debt losses or collection delays, pressuring profits and cash.
Goodwill impairment risk: Goodwill ¥40.9B (10.0% of total assets, 20.7% of equity) up +172.3% YoY reflects aggressive M&A. If invested capital recovery does not proceed as planned, economic downturns or intensified competition could cause business plans to fall short, triggering impairment losses and eroding equity.
Business concentration risk: Online Travel accounts for 51.2% of revenue and about 69% of Operating Income, making performance sensitive to travel demand cycles, competitive environment, and external shocks (epidemics, disasters, etc.). Investment segment shows high margin (120.6%) but is one-off and volatile, lacking persistence. While diversification continues, dependence on the core business remains high, increasing downside risk on demand shocks.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.1% | 14.0% (3.8%–18.5%) | +0.2pt |
| Net Margin | 11.6% | 9.2% (1.1%–14.0%) | +2.4pt |
Operating margin is in line with the industry median, and net margin exceeds the median by +2.4pt, placing the company in a relatively high profitability position due to tax advantages and operating leverage.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 20.9% | 21.0% (15.5%–26.8%) | -0.1pt |
Revenue growth is roughly in line with the industry median, maintaining a standard growth pace within IT & Telecom sectors.
※ Source: Company aggregation
Operating leverage materialization: Operating margin improved to 14.1% (from 11.7% YoY +2.4pt) and SG&A ratio improved to 39.3% (from 45.4% YoY -6.1pt), demonstrating economies of scale and delivering revenue and profit growth. Progress against the full-year plan is 167% for Operating Income and 311% for Net Income attributable to owners of parent, materially exceeding targets; despite conservative H2 outlook, there is substantial upside revision potential and a strong positive bias.
Balance between growth investment and cash generation: Goodwill ¥40.9B (YoY +172.3%), intangible acquisitions ¥4.8B, and subsidiary acquisitions ¥3.2B indicate aggressive investment, while Operating CF ¥19.5B and FCF ¥5.3B were secured and covered dividends ¥2.2B. Receivables expansion (DSO 106 days, YoY +27 days) pressures working capital but contract liabilities and payables increases partly mitigate this, preserving cash-generating ability. Going forward, improving receivables collection and progress on investment returns are keys to sustaining cash generation.
This report is an AI-generated earnings analysis derived from 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 from public financial statements. Investment decisions are your own responsibility; consult a professional if necessary before acting.
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