| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1483.3B | ¥1160.6B | +27.8% |
| Operating Income | ¥509.3B | ¥426.1B | +19.5% |
| Profit Before Tax | ¥509.9B | ¥425.5B | +19.8% |
| Net Income | ¥378.4B | ¥307.6B | +23.0% |
| ROE | 32.3% | 32.6% | - |
For the fiscal year ending February 2026, Revenue was ¥1483.3B (YoY +¥322.7B, +27.8%), Operating Income was ¥509.3B (YoY +¥83.2B, +19.5%), Ordinary Income was ¥57.9B (YoY -¥126.8B, -68.7%), and Net Income attributable to owners of the parent was ¥378.4B (YoY +¥71.0B, +23.0%). Revenue continued double-digit growth for the third consecutive year, and Operating Income reached record-high territory in absolute terms; however, the SG&A ratio rose, causing Operating Margin to decline 2.4pt from 36.7% to 34.3%. Although front-loaded growth investments temporarily diluted margins, Gross Margin improved 2.8pt to 56.6% (prior year 53.8%), confirming positive effects from project mix and price improvements. Ordinary Income fell significantly due to fluctuations in non-operating items, but Net Income achieved double-digit growth, maintaining an overall trend of higher revenue and profit.
[Revenue] Revenue of ¥1483.3B (+27.8%) continued double-digit growth supported by expanding consulting demand. A large increase in accounts receivable to ¥366.1B (prior year ¥227.0B, +61.3%) suggests larger and more recurring projects. Inventories declined to ¥6.2B (prior year ¥9.2B, -32.1%), indicating efficient operation of project-based business. Cost of Sales grew to ¥643.5B (prior year ¥536.0B, +20.1%), below Revenue growth, and Gross Margin improved to 56.6% (+2.8pt). Price improvements and acquisition of higher value-added projects likely contributed to Gross Margin expansion.
[Profitability] Gross Profit was ¥839.9B (+28.3%), while SG&A rose sharply to ¥330.7B (prior year ¥198.5B, +66.6%). SG&A ratio increased 5.2pt to 22.3%, primarily driven by headcount expansion, recruitment/training investment, office expansion (lease liabilities current ¥25.1B and non-current ¥38.0B, total ¥63.1B), and higher stock-based compensation expenses of ¥10.0B (prior year ¥7.4B). Operating Income was ¥509.3B (+19.5%), and Operating Margin 34.3% (-2.4pt); despite margin compression from growth investment, the absolute level of Operating Income reached record territory. Non-operating income was minor (financial income ¥1.2B, financial expense ¥0.6B), but Ordinary Income fell to ¥57.9B (-68.7%) due to volatility in non-operating items. Profit Before Tax was ¥509.9B (+19.8%), and after corporate taxes of ¥131.5B (effective tax rate 25.8%), Net Income was ¥378.4B (+23.0%), maintaining a high Net Margin of 25.5%. Special gains/losses were limited, and core business profit drove growth. In conclusion, the company achieved higher revenue and profit, but the increase in SG&A and resulting decline in Operating Margin is a short-term issue.
[Profitability] Operating Margin 34.3% (prior year 36.7%, -2.4pt), Net Margin 25.5% (prior year 26.5%, -1.0pt) remain high, but the rise in SG&A ratio to 22.3% (prior year 17.1%, +5.2pt) has temporarily reduced margins. Improvement in Gross Margin to 56.6% (prior year 53.8%, +2.8pt) indicates favorable project mix and price improvements. ROE is 35.8% (prior year 36.5%), maintaining very high capital efficiency. [Cash Quality] Operating Cash Flow (OCF) ¥376.2B, OCF/Net Income 0.99x, indicating good cash backing of profits. Estimated EBITDA ¥534.6B (Operating Income ¥509.3B + depreciation and amortization ¥25.3B), and OCF/EBITDA 0.70x declined temporarily due to working capital absorption from increased accounts receivable (+¥139.1B). Free Cash Flow (FCF) ¥311.1B comfortably covers dividends ¥132.2B at a coverage of 2.0x. [Investment Efficiency] EPS ¥249.16 (prior year ¥202.16, +23.2%), BPS ¥770.73, indicating steady accumulation of shareholder value. Capital expenditures ¥26.5B and depreciation ¥25.3B indicate maintenance of growth investment pace. Goodwill ¥191.9B represents 16.4% of net assets and an estimated 0.36x of EBITDA, a conservative level with high impairment resilience. [Balance Sheet Soundness] Equity Ratio 74.3% (prior year 75.7%), Interest-bearing debt ¥5.2B (short-term ¥2.6B, long-term ¥2.6B; a substantial decrease from prior year ¥13.1B) implying effectively debt-free. Current ratio approximately 3.2x and Cash and Deposits ¥723.1B provide strong liquidity, minimizing maturity mismatch risk.
OCF was ¥376.2B (prior year ¥326.5B, +15.2%), reflecting Profit Before Tax ¥509.9B minus increases in working capital of ¥131.4B (mainly accounts receivable increase of ¥114.3B) and corporate tax payments of ¥132.1B. OCF/Net Income 0.99x indicates generally solid cash backing for profits, but significant growth in accounts receivable lowered estimated OCF/EBITDA to 0.70x and slightly depressed cash conversion. Investing Cash Flow was -¥65.1B, with capital expenditures ¥26.5B, net increase in time deposits ¥2.0B, security deposits paid ¥13.7B, and loans ¥23.0B as main outflows. FCF was ¥311.1B and fully covered Financing Cash Flow of -¥193.5B (dividend payments ¥132.2B, share buybacks ¥30.1B, loan repayments ¥10.5B, lease payments ¥20.8B). Cash and Cash Equivalents increased to ¥723.1B (prior year ¥605.5B, +19.4%), ensuring ample liquidity. The working capital increase is viewed as temporary absorption associated with growth, and normalization of accounts receivable collections should be a catalyst for improving cash conversion.
Against Operating Income of ¥509.3B, non-operating income was ¥1.3B (financial income ¥1.2B) and non-operating expense ¥0.6B (financial expense ¥0.6B), making non-operating items negligible at 0.05% of Revenue. No significant special items disclosed; core business profit accounts for the majority of earnings. Estimated accrual ratio ((Net Income ¥378.4B - OCF ¥376.2B) / Net Income) = 0.6%, which is very low, indicating high cash backing for accounting profits. The slight shortfall of OCF versus Net Income is mainly due to increase in accounts receivable ¥114.3B and other current liabilities increase ¥70.9B, reflecting working capital movements associated with growth. The large discrepancy between Ordinary Income ¥57.9B and Net Income ¥378.4B stems from volatility in non-operating items used in calculating Ordinary Income; under IFRS, Profit Before Tax ¥509.9B better reflects the underlying operating performance. Overall, earnings quality is high and primarily driven by recurring operating profit, with limited impact from one-off factors.
Full Year guidance projects Revenue ¥1,900.0B, Operating Income ¥648.0B (YoY +27.2%), Net Income ¥481.0B (YoY +27.1%), projected EPS ¥323.79, and forecast dividend ¥65.00. Compared to current period results (Revenue ¥1,483.3B, Operating Income ¥509.3B, Net Income ¥378.4B), the plan implies Revenue +28.1%, Operating Income +27.2%, and Net Income +27.2% — an aggressive plan assuming continuation of the high-growth trend. Progress tracking for the current year is not applicable as the full-year results are finalized, but next fiscal year’s outlook assumes ongoing high growth. The key to achieving guidance will be SG&A control, maintenance of utilization rates, and continued price improvements. As backlog data is undisclosed, monitoring should rely on accounts receivable turnover, net headcount increases, and project win rates as proxies.
Annual dividend is ¥100 per share (interim ¥50, year-end ¥50), with total dividends of ¥132.2B. Dividend payout ratio relative to EPS ¥249.16 is 40.1%; dividend as a percentage of Net Income is 35.0%, balancing retained earnings and shareholder returns. Share buybacks amounted to ¥30.1B (per cash flow statement), bringing total shareholder returns (dividends + buybacks) to ¥162.3B. FCF coverage of shareholder returns is 1.9x on FCF ¥311.1B, indicating ample capacity. Total Return Ratio (dividends + buybacks) / Net Income is approximately 42.9%, balancing growth investments and shareholder returns. Next fiscal year’s dividend forecast ¥65 (down from ¥100 this year) suggests a mid-year dividend policy adjustment, lowering payout ratio to 20.1% against projected EPS ¥323.79, prioritizing growth investment while maintaining stable returns. Cash and Deposits ¥723.1B and OCF ¥376.2B support high dividend sustainability. Treasury stock increased to ¥110.3B (prior year ¥85.7B, +28.6%), contributing to capital efficiency and EPS uplift.
SG&A ratio increase risk: The SG&A ratio rose to 22.3% (prior year 17.1%, +5.2pt), mainly due to headcount expansion, recruitment/training investment, office expansion, and higher stock-based compensation. If SG&A growth of +66.6% continues to significantly exceed Revenue growth of +27.8%, there is risk of a structural decline in Operating Margin. Wage inflation and persistently high hiring costs are concerns, and controlling SG&A via scale benefits and productivity improvements is a key challenge.
Working capital increase risk: A large increase in accounts receivable to ¥366.1B (prior year ¥227.0B, +61.3%) signals project scale expansion but the decline in OCF/EBITDA to 0.70x shows working capital absorption is pressuring cash conversion. Continued project elongation or extended collection terms could weaken cash generation and create liquidity risk. Managing days sales outstanding and credit control is important.
Market demand variability risk: The IT and consulting market depends on corporate DX investment cycles; economic slowdown or client investment restraint could reduce project wins and pressure pricing. While high Operating Margin of 34.3% reflects market advantage, increased competition or tight labor market could constrain supply and compress margins. Lack of disclosed backlog data makes lead indicator monitoring difficult.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 35.8% | 10.1% (2.2%–17.8%) | +25.7pt |
| Operating Margin | 34.3% | 8.1% (3.6%–16.0%) | +26.2pt |
| Net Margin | 25.5% | 5.8% (1.2%–11.6%) | +19.7pt |
Within the IT & Communications sector, profitability ranks in the top tier, with ROE, Operating Margin, and Net Margin all significantly above medians.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 27.8% | 10.1% (1.7%–20.2%) | +17.7pt |
Revenue growth also exceeds the industry median by 17.7pt, confirming positioning as a high-growth company.
※Source: Company compilation
Coexistence of high growth and high profitability: Revenue +27.8%, Operating Margin 34.3% (26.2pt above industry median 8.1%), and ROE 35.8% all demonstrate top-tier growth and profitability in the IT & consulting sector. Gross Margin improvement to 56.6% (+2.8pt) reflects benefits from project mix and price improvements, supporting structural competitive advantage. Although SG&A ratio increases have temporarily compressed margins, recovery of returns is plausible as growth investments are realized.
Strong cash generation and capacity for shareholder returns: FCF ¥311.1B covers dividends ¥132.2B and buybacks ¥30.1B with FCF coverage of 1.9x. Cash and Deposits ¥723.1B, Equity Ratio 74.3%, and effectively debt-free status provide high financial resilience, enabling simultaneous growth investment and shareholder returns. The forecast dividend ¥65 next year (down from ¥100 this year) implies reduced payout, but projected payout ratio 20.1% suggests stable returns under a growth-first policy.
Focus areas: working capital management and cost control: Large increase in accounts receivable (+61.3%) lowered OCF/EBITDA to 0.70x, making cash conversion improvement a priority. SG&A ratio increase of +5.2pt is mainly due to headcount expansion and growth investment, but SG&A growth of +66.6% notably exceeds Revenue growth of +27.8%; sustainability of this trend will shape medium-term margin dynamics. Monitoring days sales outstanding and per-employee productivity is important.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before making investment decisions.