| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥76.5B | ¥74.7B | +2.3% |
| Operating Income | ¥16.7B | ¥16.0B | +4.3% |
| Ordinary Income | ¥16.8B | ¥16.8B | +0.2% |
| Net Income | ¥13.5B | ¥13.3B | +1.0% |
| ROE | 14.0% | 13.6% | - |
For the fiscal year ended March 2026, Revenue was ¥76.5B (YoY +¥1.7B +2.3%), Operating Income was ¥16.7B (YoY +¥0.7B +4.3%), Ordinary Income was ¥16.8B (YoY +¥0.0B +0.2%), and Net Income attributable to owners of the parent was ¥10.3B (YoY +¥0.0B +0.2%). The operating margin improved to 21.9% (prior year 21.5%), up 0.4pt, while the gross profit margin declined to 77.5% (prior year 79.3%), down 1.8pt; improvement in SG&A ratio (down 2.2pt) offset the decline in gross margin to sustain profitability. Limited movement in Ordinary Income and Net Income reflects minimal non-operating items. Operating Cash Flow was ¥16.2B (YoY +8.4%), about 1.2x Net Income, and Free Cash Flow was ¥10.6B, indicating solid cash generation.
[Revenue] Revenue was ¥76.5B (YoY +2.3%), showing a slight increase. By region, Japan was ¥46.5B (share 60.7%, YoY +1.1%), and Australia was ¥30.0B (share 39.3%, YoY +4.2%), with overseas operations driving the top-line. Segment disclosure is not provided due to a single segment (Human Resources Business), but a positive foreign currency translation adjustment of ¥1.7B suggests overseas growth and yen depreciation contributed to revenue increase. Cost of sales rose to ¥17.2B (prior year ¥15.5B, +10.9%), outpacing revenue growth and pushing the gross profit margin down to 77.5% (prior year 79.3%). Changes in cost structure or project mix may have pressured gross margins.
[Profitability] Operating Income was ¥16.7B (YoY +4.3%), achieving profit growth exceeding revenue growth. SG&A was ¥42.5B (YoY -1.5%), and the SG&A ratio improved to 55.6% (prior year 57.8%), a 2.2pt improvement. Improvements in hiring efficiency and realization of scale effects offset the decline in gross margin through SG&A efficiency. Non-operating items were almost balanced: non-operating income ¥1.6B and non-operating expenses ¥1.5B, leaving Ordinary Income at ¥16.8B (YoY +0.2%). Extraordinary items were negligible at net -¥0.0B; profit before tax was ¥16.8B, from which corporate taxes of ¥6.0B (effective tax rate 35.8%) and Net Income attributable to non-controlling interests of ¥0.4B were deducted, resulting in Net Income attributable to owners of the parent of ¥10.3B (YoY +0.2%). A rise in the effective tax rate dampened Net Income growth, but no one-off factors were evident; overall, the company achieved both revenue and profit growth.
[Profitability] The operating margin of 21.9% improved by 0.4pt YoY, with the decline in gross profit margin offset by improved SG&A ratio. Net profit margin was 13.5% (prior year 13.8%), down 0.3pt. ROE was 14.0%, indicating efficient use of equity. [Cash Quality] Operating Cash Flow was ¥16.2B, 1.2x Net Income of ¥13.5B, indicating good cash backing of profits. The accrual ratio (Operating Cash Flow − Net Income) / Total Assets = -2.5%, low, indicating high earnings quality. [Investment Efficiency] Total asset turnover was 0.7x, a standard level of asset efficiency. [Financial Soundness] Equity Ratio was 89.1% (prior year 89.2%), very high; current ratio 532%, and cash and deposits ¥39.1B, indicating strong short-term payment ability. Interest-bearing debt consists only of lease liabilities totaling ¥2.1B, minimal, and financial leverage is very low.
Operating Cash Flow was ¥16.2B (YoY +8.4%). Pre-tax profit before income taxes and adjustments was ¥16.8B; adding back non-cash expenses (depreciation ¥1.6B, goodwill amortization ¥3.1B) produced an operating cash flow subtotal before working capital changes of ¥20.9B. Changes in working capital included an increase in trade receivables causing a cash outflow of ¥0.1B and an increase in accrued expenses causing a cash inflow of ¥0.3B, making working capital changes minor. After deducting corporate tax payments of ¥5.8B, Operating Cash Flow amounted to ¥16.2B. Investing Cash Flow was -¥5.6B, mainly due to purchases of investment securities of ¥15.7B, partially offset by sales/redemptions of securities of ¥10.0B, resulting in net investment outflow. Capital expenditures were ¥0.2B and intangible asset acquisitions were ¥0.6B, indicating limited growth investment. Free Cash Flow was ¥10.6B, maintaining stable cash generation from operations. Financing Cash Flow was -¥14.8B, primarily driven by dividend payments of ¥13.9B and share buybacks of ¥1.7B for shareholder returns. Cash and cash equivalents at period-end were ¥38.5B, preserving ample liquidity.
Of Ordinary Income ¥16.8B, non-operating income was ¥1.6B (as a percentage of sales 2.1%) and non-operating expenses were ¥1.5B (as a percentage of sales 2.0%), both limited, indicating a business driven by core operations. Non-operating income comprised interest on securities ¥0.8B, foreign exchange gains ¥0.3B, and investment partnership gains ¥0.3B, all recurring items. Extraordinary items were negligible at net -¥0.0B, with no transient profit or loss drivers observed. The difference between Comprehensive Income of ¥12.9B and Net Income of ¥13.5B is attributable to foreign currency translation adjustments ¥1.7B and valuation differences on securities ¥0.3B, reflecting translation of overseas operations and market value fluctuations of investment securities. Operating Cash Flow exceeded Net Income and the accrual quality is high, indicating stable cash realization of earnings.
Full year guidance projects Revenue of ¥81.7B (YoY +6.9%), Operating Income of ¥18.0B (YoY +7.4%), Ordinary Income of ¥18.3B (YoY +8.9%), and Net Income attributable to owners of the parent of ¥10.8B. The plan assumes Revenue increase of ¥5.2B versus current-period results of ¥76.5B and an operating margin around 22.0%. Management assumes operating margin will remain roughly flat from the current-period 21.9%, with continued SG&A efficiency and stable gross margins being critical to achieving targets. Dividend guidance is stated as ¥0, but this refers to the planned year-end dividend and the actual dividend policy will be decided separately. While management plans to accelerate the top line, maintaining cost control is important; if gross margin recovers, there is upside to the plan.
A year-end dividend of ¥56 per share was paid, resulting in an annual payout ratio of 135%. Total dividends amounted to ¥13.9B, exceeding Net Income attributable to owners of the parent of ¥10.3B. Share buybacks of ¥1.7B were executed, bringing total shareholder returns to ¥15.6B. The Total Return Ratio was 151%, a high level, and exceeded Free Cash Flow of ¥10.6B. Both the payout ratio and Total Return Ratio exceed 100%, meaning returns in the year cannot be fully covered by single-year profit and cash flow. While cash and deposits of ¥39.1B provide liquidity buffer, sustaining the same level of dividends would require profit growth or improved cash generation. Full-year guidance assumes a dividend forecast of ¥0, and future dividend policy will be flexibly determined based on profit levels and cash flow conditions.
Gross margin deterioration risk: Gross profit margin fell to 77.5% (prior year 79.3%), down 1.8pt, likely due to changes in project mix or rising outsourced costs. If similar pressures persist, recovery of gross margins through price adjustments or project selection may be delayed, making it difficult to maintain operating margin.
Goodwill amortization burden: Goodwill balance of ¥26.5B accounts for 27.5% of net assets, and annual amortization of ¥3.1B equals 18.5% of Operating Income. The JGAAP-specific amortization burden continues to press on profits, and monitoring is required including potential impairment risk.
Sustainability of high payout ratios: With payout ratio 135% and Total Return Ratio 151%, shareholder returns exceed profit and Free Cash Flow, and continuing at this level would require using internal funds or drawing down cash on hand. If profit growth does not proceed as planned, dividend cuts or deterioration in liquidity are possible concerns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 21.9% | 8.1% (3.6%–16.0%) | +13.8pt |
| Net Profit Margin | 17.6% | 5.8% (1.2%–11.6%) | +11.8pt |
Profitability ranks in the upper range within the industry, with both operating and net margins substantially above the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.3% | 10.1% (1.7%–20.2%) | -7.8pt |
Revenue growth rate is below the industry median, indicating a modest pace of top-line expansion relative to peers.
※ Source: Company aggregation
Improvement in SG&A efficiency led to a 0.4pt improvement in Operating Income margin, offsetting the decline in gross margin. SG&A tightening is expected to continue, supporting maintenance of Operating Income margin in the 21–22% range. If gross margin recovers, there is upside potential for further operating margin expansion.
Operating Cash Flow of ¥16.2B and Free Cash Flow of ¥10.6B underpin a financial base that can balance growth investment and shareholder returns. Although the payout ratio is high at 135%, substantial cash on hand of ¥39.1B and an Equity Ratio of 89.1% support continued returns. Sustained returns will depend on cash flow expansion driven by profit growth.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.