i-mobile Co.,Ltd. FY2026 FY Earnings Report

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Executive Summary

The Company secured higher revenue and operating income, driven by growth in its core Consumer Business, but net income declined due to the reversal of special gains and losses, making this a somewhat complex set of results from a qualitative perspective. Revenue was ¥221.5B (+2.9% year on year), Operating Income was ¥41.8B (+1.1%), and Ordinary Income was ¥42.8B (+5.1%), while Net Income declined to ¥28.9B (-9.0%). The decline in Net Income was primarily attributable to the absence of gains on the sale of investment securities recognized in the previous fiscal year and the recognition of an impairment loss of ¥1.7B in the current fiscal year. The profitability of the core business itself remained solid.

Factors Affecting Performance

【Revenue】Revenue increased 2.9% year on year to ¥221.5B. While the Consumer Business, which accounts for 89.5% of the revenue mix, led growth with revenue of ¥195.4B (+2.5%), the Internet Advertising Business declined to ¥23.0B (-4.3%). Advertising accounted for only approximately 10% of total Company revenue, and its impact on consolidated performance is limited.

【Profit and Loss】Operating Income increased 1.1% to ¥41.8B, but profit growth was sluggish relative to the increase in revenue, and the Operating Margin declined 30bp to 18.9% from 19.2% in the previous fiscal year. The Consumer Business had a profit margin of 21.0%, compared with just 3.2% for the Advertising Business. Operating Income from the latter fell to ¥0.7B (-51.6%), weighing on the consolidated profit margin. Ordinary Income rose 5.1% to ¥42.8B, partly due to improved non-operating income and expenses, but Net Income declined 9.0% to ¥28.9B due to the absence of special gains recorded in the previous fiscal year and the ¥1.7B impairment loss recognized in the current fiscal year. In conclusion, the results show higher revenue and profit on a core operating basis, but higher revenue and lower profit on a Net Income basis.

Segment Analysis

The Consumer Business is the core business, maintaining high profitability with revenue of ¥195.4B (+2.5% year on year), Operating Income of ¥41.0B (+2.0%), and a profit margin of 21.0%; it accounts for approximately 98% of consolidated Operating Income. The business comprises hometown tax donations, travel, restaurant public relations, point services, and other offerings, and is the substantive driver of performance. The Internet Advertising Business posted lower revenue and profit, with revenue of ¥23.0B (-4.3%), Operating Income of ¥0.7B (-51.6%), and a profit margin of only 3.2%. The profit-margin gap between the two businesses reached 17.8pt, indicating that the profitability of the business portfolio remains highly dependent on the core business.

Key Financial Indicators

【Profitability】The Operating Margin of 18.9% (19.2% in the previous fiscal year) and Net Profit Margin of 13.1% (13.7% in the previous fiscal year) both declined slightly but remained at high levels. ROE was 16.9%, down 180bp from 18.7% in the previous fiscal year, but remained high when viewed as the product of a Net Profit Margin, total asset turnover of 0.61x, and financial leverage of 2.12x. 【Cash Quality】Operating Cash Flow (OCF) reached 2.58x Net Income and 1.66x EBITDA, indicating cash-generation capacity exceeding accounting profit; however, the increase was supported by a ¥110.5B increase in deposits received, and it should be noted that this includes cash inflows differing in nature from business earnings. 【Investment Efficiency】Capital expenditures surged to ¥32.9B, approximately 10.9x depreciation expense of ¥3.0B, while construction in progress accumulated to ¥17.0B. Property, plant and equipment increased 268.8% year on year, indicating a rapid rise in capital intensity; progress in recovering the investment will determine future capital efficiency. 【Financial Soundness】The Equity Ratio was 47.2%, the current ratio was approximately 159%, and cash and deposits totaled ¥214.7B, indicating a sound financial base.

Cash Flow Analysis

Operating Cash Flow was ¥74.4B (+54.5% year on year), substantially exceeding Net Income of ¥28.9B, indicating a high level of cash-generation capacity. However, part of the increase resulted from the accumulation of deposits received of ¥158.2B (up ¥110.5B year on year), while the ¥46.5B increase in other receivables acted as an offsetting cash outflow factor. Investing Cash Flow was -¥28.6B, centered on ¥32.9B of capital expenditures. Although the scale of investment contracted from -¥36.2B in the previous year, the accumulation of construction in progress indicates that the investment phase is continuing. Financing Cash Flow was -¥19.5B, primarily reflecting dividend payments of ¥14.6B and the repurchase of treasury shares of ¥5.0B. Free Cash Flow, calculated as Operating Cash Flow less capital expenditures, was positive at ¥45.8B, providing sufficient financial capacity to fund both investment and shareholder returns.

Earnings Quality

The gap between Ordinary Income and Net Income was primarily attributable to special gains and losses. The Company recognized an impairment loss of ¥1.7B as a special loss in the current fiscal year, while special gains of ¥2.5B, including gains on the sale of investment securities recognized in the previous fiscal year, did not arise in the current fiscal year. This year-on-year change in special gains and losses was the primary reason for the -9.0% year-on-year decline in Net Income, while Operating Income, which reflects core earning power, continued to increase. Non-operating income comprised interest income of ¥0.6B, foreign exchange gains of ¥0.1B, and other items, totaling only 0.6% of revenue; its impact on the quality of Ordinary Income was limited. From an accrual perspective, OCF was 2.58x Net Income, indicating that cash earnings exceeded accounting profit and that the quality of the cash flow underpinning earnings was sound. However, the fact that part of the increase in OCF depended on the accumulation of deposits received must be evaluated separately from sustainable earning power.

Earnings Forecasts and Guidance

Progress against the full-year Company forecast was nearly in line with plan for revenue at 99.8%, while the profit figures finished somewhat below plan, with Operating Income at 92.8%, Ordinary Income at 94.4%, and Net Income at 92.0%. The Company forecast calls for revenue of ¥222.0B (+0.2%), Operating Income of ¥45.0B (+7.7%), and forecast Net Income (forecast EPS of ¥57.00), indicating a plan to improve profit margins in the following fiscal year despite flat revenue. This is a profit-growth plan despite the decline in the Operating Margin in the current fiscal year, making the maintenance of the Consumer Business’s high profitability and improvement in the Advertising Business’s earnings quality key to achieving the plan.

Shareholder Returns

The annual dividend is ¥27.00, with the policy of concentrating the payment in the year-end dividend and paying no interim dividend. The Payout Ratio is 52.3% (based on total dividends), and total dividends of ¥14.9B provide sufficient coverage relative to Free Cash Flow of ¥45.8B. The Company repurchased ¥5.0B of treasury shares during the current fiscal year, bringing total shareholder returns, including dividends and share repurchases, to approximately ¥19.5B. The Company’s forecast also maintains the annual dividend at ¥27.00; based on forecast EPS of ¥57.00, the forecast Payout Ratio is expected to be below the previous fiscal year’s actual level.

Risk Factors

1. Business concentration risk: The Consumer Business accounts for 89.5% of revenue and approximately 98% of consolidated Operating Income. Changes in the hometown tax donation-related system and competing platforms, as well as fluctuations in travel and dining-out demand, have a direct impact on consolidated performance.

2. Deterioration in the profitability of the Internet Advertising Business: Revenue declined -4.3% year on year and Operating Income fell -51.6%, resulting in a substantial decline in profit, while the profit margin decreased to 3.2%. Changes in the advertising demand environment could delay the recovery of this low-profitability business.

3. Capital expenditure and underutilized asset risk: Property, plant and equipment increased 268.8% year on year to ¥40.0B, of which construction in progress accounted for ¥17.0B (42.5% of the total). The high proportion of underutilized assets makes monetization after commencement of operations and the avoidance of impairment ongoing areas of focus.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The Company’s profitability is substantially above the industry median, positioning it among the high-margin companies in the IT and communications industry.

Growth and Capital Efficiency

The revenue growth rate is below the industry median, indicating a relatively moderate growth pace compared with the Company’s high profitability.

※Source: Compiled by the Company

Key Takeaways from the Results

1. The Operating Margin of 18.9%, Net Profit Margin of 13.1%, and ROE of 16.9% all remain above industry-average levels; however, each declined slightly from the previous year, with rising cost ratios and deteriorating profitability in the Internet Advertising Business weighing on margins.

2. The -9.0% year-on-year decline in Net Income was primarily attributable to the year-on-year change in special gains and losses—the absence of gains on the sale of investment securities recognized in the previous fiscal year and the recognition of an impairment loss of ¥1.7B in the current fiscal year. The fact that Operating Income continued to increase is an important point in evaluating the quality of the results.

3. Capital expenditures surged to ¥32.9B, approximately 4.6x the previous year, while construction in progress accounted for 42.5% of property, plant and equipment. This indicates a transition into a growth investment phase, while the contribution to earnings and the trend in capital efficiency after operations commence will be important areas to monitor.

Theoretical Share Price (Reference Value)

Sensitivity: ¥384–¥407 at Cost of Equity ±1%, and ¥393–¥398 at ω ±0.1.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-08 / 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, nor does it predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. 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 responsibility, after consulting professionals as necessary.

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