| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥81.5B | ¥72.2B | +12.8% |
| Operating Income / Operating Profit | ¥10.0B | ¥6.5B | +53.7% |
| Ordinary Income | ¥9.5B | ¥2.3B | +304.4% |
| Net Income / Net Profit | ¥-0.8B | ¥16.1B | -104.9% |
| ROE | -0.7% | 13.5% | - |
For the full year ended February 2026, results landed at Revenue ¥81.5B (vs prior year +¥9.2B +12.8%), Operating Income ¥10.0B (vs prior year +¥3.5B +53.7%), Ordinary Income ¥9.5B (vs prior year +¥7.2B +304.4%), and Net Income attributable to owners of the parent ¥6.4B (vs prior year +¥2.0B +46.8%), marking year-over-year increases in both top-line and profits. Gross margin on Revenue improved to 69.5% (prior year 63.9%) (+5.6pt), and Operating Margin expanded to 12.3% (prior year 9.0%) (+3.3pt), highlighting structural improvements in profitability. The core Intelligent Automation business drove growth with Revenue ¥57.3B (+19.6%) and Operating Income ¥9.6B (+89.3%), achieving high growth and high profitability with a margin of 16.8% (vs prior year 10.7%) (+6.1pt improvement. The Ad Automation business recorded Revenue ¥13.5B (-10.7%) but maintained very high profitability with Operating Income ¥6.5B (+16.3%) and a margin of 47.9%. Versus Full Year guidance (Revenue ¥98.0B, Operating Income ¥11.0B, Ordinary Income ¥10.8B), revenue achievement rate was 83% (short), while Operating Income 91%, Ordinary Income 88%, and Net Income 98% confirmed resilience in profitability. Operating Cash Flow (OCF) was ¥9.0B (YoY +163.0%), and Free Cash Flow (FCF) ¥1.1B was secured; however, cash decreased by ¥19.8B to ¥103.1B at period-end due to total shareholder returns of ¥3.3B in dividends and ¥18.0B in share buybacks. Equity Ratio was 54.3% and Cash/Short-term Debt was 6.9x, maintaining a high level of financial soundness.
[Revenue] Revenue ¥81.5B (YoY +12.8%) was driven by the expansion of the core Intelligent Automation Business. That business accounted for Revenue ¥57.3B (+19.6%) and 70.3% of the mix, with subscription/continuing-contract revenue of ¥46.8B forming the core. The Ad Automation Business recorded Revenue ¥13.5B (-10.7%) and, while down, contributed strongly to profit with a 16.6% share. Other businesses (Sales Outsourcing, Matching Platform) expanded to ¥11.9B (+23.5%). Of revenue from customer contracts, goods/services transferred at a point in time amounted to ¥33.8B, and services transferred over time amounted to ¥47.7B, making stock-type revenue 58.5% of the total. Gross profit was ¥56.6B (gross margin 69.5%), an improvement of +5.6pt from prior year ¥46.2B (63.9%), aided by scale effects from high-value services and automation solutions.
[Profit/Loss] Operating Income was ¥10.0B (YoY +53.7%), with an Operating Margin of 12.3% (prior year 9.0%) (+3.3pt). SG&A was ¥46.6B (SG&A ratio 57.2%) versus prior year ¥39.6B (54.9%), an increase of ¥7.0B, primarily due to higher salaries & allowances ¥12.3B (prior year ¥10.9B) and goodwill amortization ¥1.4B (prior year ¥0.7B); however, gross margin improvement absorbed the cost increases. Non-operating income was ¥1.9B (interest income ¥0.2B, fee income ¥1.6B, etc.), and non-operating expenses were ¥2.4B (interest expense ¥0.4B, fees paid ¥0.4B, investment loss in union ¥1.1B, etc.), with an equity-method investment loss of ¥0.3B also recorded, resulting in Ordinary Income ¥9.5B (+304.4%). Extraordinary income totaled ¥0.2B including gain on sale of investment securities ¥1.5B, while extraordinary loss totaled ¥1.9B including impairment loss ¥1.5B (recorded in Intelligent Automation business) and valuation losses on investment securities ¥0.4B, resulting in Pre-tax Income ¥7.8B (+220.1%). After income taxes of ¥1.4B (effective tax rate 17.8%), Net Income attributable to owners of the parent was ¥6.4B (+46.8%). Comprehensive income was ¥6.6B including valuation difference on available-for-sale securities ¥0.2B. In conclusion, revenue and profit growth was realized due to gross margin expansion and improved operating leverage, absorbing fluctuations in non-operating and extraordinary items and delivering resilient profit growth.
The Intelligent Automation business recorded Revenue ¥57.3B (YoY +19.6%), Operating Income ¥9.6B (+89.3%), and margin 16.8% (prior year 10.7%), a significant improvement. Revenue was driven by accumulation of recurring-billing services and new project wins, and gross margin improved due to scale effects of efficiency and automation tools. Although there was increased goodwill amortization (¥0.8B amortized this period) and an impairment loss of ¥1.5B, fundamental profitability improvement far outweighed these charges. The Ad Automation business experienced Revenue ¥13.5B (-10.7%) due to fluctuations in advertising demand, but Operating Income ¥6.5B (+16.3%) and margin 47.9% (prior year 36.8%) improved by +11.1pt, reinforcing a highly profitable structure by suppressing variable costs through automation and optimization of ad delivery. Other businesses (Sales Outsourcing, Matching Platform) recorded Revenue ¥11.9B (+23.5%) and Operating Income ¥0.4B (+172.5%), turning positive with a margin of 3.6% (prior year 1.6%). Corporate expenses (general & administrative costs not allocated to segments) were ¥6.5B (prior year ¥4.3B), which adjusted segment profit total ¥16.1B down to Operating Income ¥10.0B.
Profitability: Operating Margin improved to 12.3% (prior year 9.0%) (+3.3pt), and gross margin on Revenue expanded to 69.5% (prior year 63.9%) (+5.6pt), reflecting scale effects from high-value services and automation. Net margin improved to 7.8% (prior year 6.0%) (+1.8pt), although goodwill amortization ¥1.4B (prior year ¥0.7B) continues to mechanically compress Net Income under JGAAP. ROE improved to 6.0% (prior year 3.7%) but still has room for further enhancement. Cash quality: Operating CF ¥9.0B is 1.41x Net Income ¥6.4B, which is healthy, but OCF/EBITDA ratio remains at 0.68x, with increases in trade receivables (+¥2.9B) and other receivables (+¥6.1B) absorbing working capital. DSO (days sales outstanding) extended to approximately 128 days (Accounts receivable ¥28.6B ÷ Revenue ¥81.5B × 365), highlighting a trend toward longer collection periods and the need to improve cash conversion efficiency. Investment efficiency: Capex / depreciation ratio is 0.03x, indicating minimal tangible asset investment with focus on R&D and intangible assets (software, etc.). Total asset turnover improved to 0.42x (prior year 0.36x). Financial soundness: Equity Ratio 54.3% (prior year 60.0%) slightly decreased but remains satisfactory; Current Ratio 218.5%, Quick Ratio 218.5% are high. Debt/EBITDA is 2.18x and Interest Coverage (EBIT / interest expense) is 23.3x, indicating ample headroom. Although short-term debt ratio is concentrated at 52.3%, Cash ¥103.1B is 6.9x short-term debt, providing ample liquidity. Goodwill ¥14.0B (13.2% of equity) and goodwill/EBITDA of 1.06x indicate minimal M&A payback burden.
Operating CF was ¥9.0B (prior year ¥3.4B, +163.0%), a substantial increase. Operating CF before working capital changes was ¥8.4B, while increases in trade receivables -¥2.9B and other receivables -¥6.1B absorbed working capital; decreases in accounts payable -¥0.4B and contract liabilities -¥0.2B also contributed negatively. After deducting corporate tax payments of ¥1.1B, Operating CF was ¥9.0B. Investing CF was -¥7.9B, consisting of acquisition of intangible fixed assets -¥2.5B, acquisition of subsidiary shares -¥5.2B, purchase of investment securities -¥0.7B, and proceeds from sale of investment securities +¥16.6B (portion recognized as extraordinary income). Capital expenditures were minimal at -¥0.1B, representing 3.3% of depreciation expense ¥3.1B, indicating highly restrained tangible asset investment. FCF was ¥1.1B (Operating CF ¥9.0B + Investing CF -¥7.9B). Financing CF was -¥20.9B, with proceeds from long-term borrowings +¥9.5B, repayment of long-term borrowings -¥6.0B, redemption of bonds -¥3.9B, acquisition of treasury stock -¥18.0B, and dividend payments -¥3.3B as main items. Total shareholder returns of ¥21.3B (share buybacks ¥18.0B + dividends ¥3.3B) far exceeded FCF ¥1.1B, drawing down cash resources. Cash and cash equivalents decreased by ¥19.8B from the opening balance of ¥122.9B to ¥103.1B at period-end. Including non-cash expenses depreciation ¥3.1B and goodwill amortization ¥1.4B, EBITDA (approx.) was ¥13.2B, and Operating CF of ¥9.0B yields an OCF/EBITDA ratio of 0.68x, indicating significant room to improve cash conversion efficiency.
Of Ordinary Income ¥9.5B, Operating Income ¥10.0B was the main driver, indicating strong core business profitability. Non-operating income/expenses netted to -¥0.5B, where non-operating income ¥1.9B (interest income ¥0.2B, fee income ¥1.6B, etc.) was outweighed by non-operating expenses ¥2.4B (interest expense ¥0.4B, union investment loss ¥1.1B, etc.). Equity-method investment loss ¥0.3B was also a recurring factor. Extraordinary items netted to -¥1.7B, with gain on sale of investment securities ¥1.5B (one-time gain) and impairment loss ¥1.5B (one-time loss) offsetting each other, limiting their contribution to Net Income. Pre-tax Income ¥7.8B incurred income taxes ¥1.4B (effective tax rate 17.8%), and recovery of deferred tax assets and similar items kept tax burden light. Net Income attributable to owners of the parent ¥6.4B represented 67% of Ordinary Income ¥9.5B, absorbing the impacts of extraordinary items and taxes. The difference between Comprehensive Income ¥6.6B and Net Income ¥6.4B was +¥0.2B, primarily valuation differences on available-for-sale securities ¥0.2B, indicating stable earnings quality on a comprehensive basis. Operating CF being 1.41x Net Income suggests healthy accruals and good backing of accounting profits by cash flow. Goodwill amortization ¥1.4B is a non-cash JGAAP-specific expense that mechanically compresses Net Income and should be continuously recognized as a divergence factor from economic reality.
Against the Full Year forecast (Revenue ¥98.0B, Operating Income ¥11.0B, Ordinary Income ¥10.8B, Net Income attributable to owners of the parent ¥6.5B), actuals were Revenue ¥81.5B (achievement rate 83%), Operating Income ¥10.0B (91%), Ordinary Income ¥9.5B (88%), and Net Income ¥6.4B (98%). Revenue missed the forecast by ¥16.5B (17%), while Operating Income was -¥1.0B (-9%), Ordinary Income -¥1.3B (-12%), and Net Income -¥0.1B (-2%), showing that high profitability limited the downside in profits. The primary reason for revenue shortfall is inferred to be a slower-than-expected accumulation of new projects and larger-than-anticipated revenue decline in the advertising business; however, gross margin improvement and cost control resulted in an Operating Margin of 12.3%, exceeding the forecast-based 11.2%. The company paid a year-end dividend of ¥4.9 per share despite a FY dividend forecast of ¥0, demonstrating flexibility in shareholder returns. Future guidance is undisclosed, but drivers of growth include continued buildup of recurring revenue in Intelligent Automation, maintenance of high profitability in Ad Automation, and continued progress toward profitability in Other Businesses, while controlling SG&A growth and improving working capital efficiency will be key to cash generation.
A year-end dividend of ¥4.9 per share (ordinary dividend ¥3.0 + commemorative dividend ¥2.5) was implemented, with total annual dividends of approximately ¥3.3B. Payout Ratio relative to Net Income attributable to owners of the parent ¥6.4B was about 52%, a neutral level. However, dividend coverage relative to FCF ¥1.1B was 0.34x, indicating insufficiency and relying on cash on hand this term. Share buybacks of ¥18.0B (acquiring and holding approximately 28.5% of issued shares) were conducted, and combined with dividends ¥3.3B total shareholder returns were ¥21.3B, yielding a Total Return Ratio of about 333% (Total Return ÷ Net Income), an exceptionally high level. The buybacks adjusted dilution (post-dilution EPS ¥10.89) and contributed to per-share value enhancement. Sustainability of total returns significantly exceeding FCF is a concern; going forward, expansion of Operating CF and working capital efficiency improvements are prerequisite for sustaining the return policy. Dividend policy is inferred to aim for a payout ratio around 50%, combining stable dividends with flexible responses such as commemorative dividends. Treasury stock held at period-end was ¥73.5B (69.1% of equity), and future capital policy (cancellation, reallocation, additional acquisition) will be closely watched.
Working capital absorption risk: DSO approx. 128 days and lengthening trade receivables, with Accounts receivable ¥28.6B (YoY +¥3.7B) and Other receivables ¥6.6B (YoY +¥6.1B) increasing working capital demand. Operating CF ¥9.0B vs Operating CF before working capital changes ¥8.4B indicates that collection delays in trade receivables and other receivables could pressure cash generation. If trade receivables further increase during growth phases, the OCF/EBITDA ratio (current 0.68x) may remain depressed, risking FCF instability and higher external funding dependence. Shortening DSO via automation of collections and revision of billing terms is an important task.
Business concentration risk: The Intelligent Automation business accounts for 70.3% of Revenue and 59.8% of segment Operating Income, resulting in high dependence on a single business. Demand fluctuations in that business (corporate IT spending slowdown, intensified competition, technological obsolescence) directly impact consolidated performance. The Ad Automation business, while only 16.6% of Revenue, contributes 40.2% of segment profit and is subject to cyclical advertising market swings (economic downturns, digital advertising regulation), which can pressure profits. Other businesses are in the process of becoming profitable and lack revenue stability, limiting portfolio diversification benefits.
Short-term debt concentration risk: Of Short-term liabilities ¥67.2B (short-term debt ratio 52.3%), short-term borrowings are ¥15.0B, bonds maturing within one year ¥3.5B, and long-term borrowings due within one year ¥3.5B, indicating concentration of short-term obligations. Although Cash ¥103.1B is 6.9x short-term liabilities providing ample liquidity, continued total returns (share buybacks + dividends ¥21.3B) reduce cash on hand; combined with rising interest rates or deterioration in the refinancing environment, rollover costs could increase and funding constraints could emerge. Long-term borrowings ¥13.7B (YoY +71%) are lengthening, but significant room remains to improve short-term concentration.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.3% | 8.1% (3.6%–16.0%) | +4.2pt |
| Net Margin | -1.0% | 5.8% (1.2%–11.6%) | -6.8pt |
Operating Margin outperforms the industry median by +4.2pt, indicating good profitability, but Net Margin of -1.0% is -6.8pt below the median. Extraordinary items and goodwill amortization are compressing Net Income, creating a notable divergence from operating-level profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.8% | 10.1% (1.7%–20.2%) | +2.7pt |
Revenue growth outpaces the industry median by +2.7pt, maintaining an above-average growth pace.
※Source: Company aggregation
Structural margin improvement was confirmed with gross margin +5.6pt and Operating Margin +3.3pt, driven by a shift to high-value services and scale effects from automation. The core Intelligent Automation business achieved both high growth and high profitability with Revenue +19.6% and margin 16.8% (prior year 10.7%), validating the stability of the recurring-billing business model. The Ad Automation business, despite revenue decline, maintained an extremely high margin of 47.9%, underpinning overall portfolio profitability. Going forward, the pace of backlog accumulation in Intelligent Automation and maintaining high profitability in the Ad business will determine sustainability of growth and margins.
OCF/EBITDA ratio 0.68x and DSO approx. 128 days indicate substantial room to improve cash conversion efficiency, with collection delays in trade receivables and other receivables absorbing working capital. Total shareholder returns (dividends + share buybacks) ¥21.3B far exceeded FCF ¥1.1B, and while cash on hand covered this year, sustainability requires increased Operating CF and working capital efficiency. Short-term debt ratio 52.3% indicates short-term concentration, but Cash/Short-term Debt 6.9x provides ample liquidity and limits near-term refinancing risk. Goodwill ¥14.0B (goodwill/EBITDA 1.06x) and impairment ¥1.5B were recorded, but M&A payback burden is minimal; future focus will be on realizing integration effects and synergies.
Business concentration with 70% of Revenue from Intelligent Automation and the cyclicality of the Ad business are volatility factors. Conversely, strong profitability and abundant cash provide room to balance growth investment, M&A, and shareholder returns. For upcoming periods, DSO reduction to improve working capital efficiency, extension of short-term debt maturities, and strengthening synergies across segments (cross-sell, cost sharing) will be key to improving ROE and sustaining cash generation.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the Company based on publicly disclosed financial statements. Investment decisions should be made at your own responsibility; consult a professional advisor as needed.