Strike (6196) FY2026 Q1 Earnings Report

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Executive Summary

In Q1 of the fiscal year ending September 2026, operating income increased substantially ahead of revenue growth, driven by an increase in the number of closed transactions and a higher proportion of large-scale engagements. Revenue was ¥4.84B (+32.2% YoY), operating income was ¥1.25B (+135.2%), ordinary income was ¥1.24B (+137.1%), and net income was ¥0.85B (+103.6%). The primary drivers of profit growth were an improvement in the cost ratio and restraint in the growth of selling, general and administrative expenses (SG&A). The operating margin expanded significantly from 10.9% in the same period of the previous year to 25.8%. As there was no gain on the sale of investment securities (¥0.09B) recorded in the same period of the previous year, current-period profit was primarily composed of income from the core business.

Factors Affecting Performance

【Revenue】Revenue was ¥4.84B, an increase of +32.2% YoY. The number of closed transactions increased to 66 (up +12 YoY), while the number of large-scale engagements doubled from 7 to 13. The average transaction value increased from ¥67.8M to ¥73.3M, with both higher unit prices and an increase in transaction volume driving revenue growth.

【Profit and Loss】Operating income increased substantially ahead of revenue growth, rising to ¥1.25B (+135.2% YoY). The cost of sales ratio improved, and the gross margin expanded to 55.8% from 51.1% in the same period of the previous year. SG&A expenses increased by only 8.5%, resulting in a decline in the SG&A ratio to 30.0% from 36.6% in the previous year. Optimization of operating advertising expenses and rigorous cost management contributed to the improvement. Ordinary income was ¥1.24B (+137.1% YoY), with only a small divergence from operating income, and no extraordinary gains or losses were recorded. Net income of ¥0.85B reflects an effective tax rate of approximately 31.0% on profit before tax, supporting the conclusion that the company achieved both revenue and profit growth.

Segment Analysis

The company operates as a single segment, the M&A Advisory Business, which is identical to company-wide revenue and profit. As the core business, it drove overall performance, with the increase in closed transactions and the higher proportion of large-scale engagements (7 → 13) directly contributing to operating income growth. The number of signed basic agreements was 96 (up +12 YoY), while basic agreement fees were ¥0.219B, both at record-high levels. These figures serve as leading indicators for transaction closings and profit recognition in subsequent periods.

Key Financial Metrics

Profitability: ROE was 18.0% (annualized), the operating margin was 25.8% (10.9% in the previous year), and the net margin was 17.6%.
Financial soundness: The equity ratio was 86.0%, the current ratio was 640.5%, and the debt-to-equity ratio was 0.16x.
Asset efficiency: Total asset turnover was equivalent to 0.88x on an annualized basis, while cash and deposits of ¥17.46B accounted for 79.3% of total assets.

Cash Flow Analysis

Although detailed data from the statement of cash flows was not included in the disclosed information, the following can be confirmed from the balance sheet. Cash and deposits were ¥17.46B, equivalent to approximately 6.1 times current liabilities of ¥2.84B, indicating substantial financial flexibility. Accounts receivable declined from ¥0.70B in the same period of the previous year to ¥0.45B, suggesting that receivables collection remained healthy even during a period of revenue expansion. Property, plant and equipment was ¥1.17B, broadly unchanged from ¥1.21B in the same period of the previous year, and no major capital investment was identified.

Quality of Earnings

The difference between ordinary income of ¥1.24B and net income of ¥0.85B was primarily attributable to income taxes and other taxes (¥0.38B; effective tax rate of approximately 31.0%), with no temporary factors included. Non-operating income was ¥0.005B and non-operating expenses were ¥0.015B, both immaterial relative to revenue. Accordingly, ordinary income was effectively based on operating income. Whereas profit before tax in the same period of the previous year included a gain on the sale of investment securities of ¥0.09B, this temporary factor was absent in the current period, indicating an improvement in the recurring nature of earnings compared with the same period of the previous year.

Earnings Forecast and Guidance

Progress against the full-year plan was 19.9% for revenue, 14.9% for operating income, 14.7% for ordinary income, and 14.9% for net income, all below the standard quarterly progress rate of 25%. Because success fees in the M&A advisory business are concentrated at the time transactions close, the below-plan progress rates are considered to reflect the timing of transaction closings shifting between periods. The number of signed basic agreements, at 96, and basic agreement fees, at ¥0.219B, were at record-high levels and serve as leading indicators suggesting progress in transaction closings from Q2 onward. The full-year plan calls for revenue of ¥24.35B (+19.8%) and operating income of ¥8.37B (+32.2%), with the progress of closing basic-agreement engagements in the second half determining the degree of achievement.

Shareholder Returns

The full-year dividend forecast is ¥60.0 per share. Based on the average number of shares outstanding during the period of 19,202,762 shares, the annual total dividend is estimated at approximately ¥1.15B, resulting in a payout ratio of approximately 20.1% against the full-year net income forecast of ¥5.74B. While the company’s basic policy is a payout ratio of 50%, it has indicated a policy of maintaining the ¥60 dividend per share through the fiscal year ending September 2027. It has stated that it will increase dividends when the actual payout ratio falls below the policy level of 50%. A 1:3 stock split, with March 31, 2026 as the record date, is scheduled.

Catalysts

【Short term】Progress in closing basic-agreement engagements in Q2 (96 agreements; basic agreement fees of ¥0.219B) and achievement of the first-half plan for revenue and operating income. 【Long term】The establishment of FA and strategic consulting subsidiaries following the planned transition to a holding-company structure in April 2026, the development of growth fields such as healthcare, and a reduction in the investment unit and improvement in liquidity through the 1:3 stock split.

Industry Benchmarks (For Reference; Compiled by the Company)

Profitability and Returns

Because comparative data for the company’s operating margin and net margin within the industry has not been sufficiently compiled, the assessment is limited to their absolute levels.

Growth and Capital Efficiency

The revenue growth rate of 32.2% reflects an increase in closed transactions in the success-fee-based business.
※Source: Compiled by the Company

Risk Factors

1. Risk of transaction closings shifting between periods: Full-year progress for operating income was 14.9%, below the standard rate of 25%. Given the success-fee-based revenue structure, the concentration of transaction closings in particular periods may cause quarterly performance to fluctuate.

2. Personnel dependency risk: The recruitment, development, and retention of advisors influence the company’s ability to secure engagements. The bonus provision of ¥0.94B represents a burden from performance-linked compensation and may become a factor driving future increases in SG&A expenses.

3. Transaction mix risk: The increase in the proportion of large-scale engagements (7 → 13) contributed to the expansion of profit margins. If the transaction mix changes, the operating margin of 25.8% may fluctuate.

Key Earnings Highlights

1. Operating income increased by +135.2% compared with revenue growth of +32.2%, confirming strong operating leverage accompanied by improvements in the cost of sales ratio and SG&A ratio. The accumulation of signed basic agreements warrants attention as a leading indicator of future progress in transaction closings.

2. The divergence between ordinary income and net income was attributable solely to income taxes and other taxes and did not include temporary factors. The gain on the sale of investment securities included in the same period of the previous year did not occur in the current period. This indicates that earnings have become more dependent on the core business than in the same period of the previous year.

3. Although full-year progress was below the standard level, basic agreement fees were at a record-high level, making the realization of transaction closings in the second half the key to achieving the full-year plan.

Theoretical Share Price (Reference Value)

Sensitivity: ¥981–¥1,036 at ±1% for the cost of equity, and ¥1,008–¥1,009 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated through AI-integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. 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 discretion and responsibility, after consulting professionals as necessary.

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