| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥59.0億 | ¥52.7億 | +12.0% |
| Operating Income | ¥7.0億 | ¥3.3億 | +110.7% |
| Ordinary Income | ¥7.1億 | ¥-0.2億 | +266.4% |
| Net Income | ¥5.3億 | ¥1.3億 | +299.4% |
| ROE | 5.0% | 1.1% | - |
RPA Holdings achieved a strong third quarter in fiscal 2026, demonstrating solid revenue growth with significant profit expansion. Revenue reached ¥5.9B (+¥0.63B, +12.0%), operating income surged to ¥700M (+¥375M, +110.7%), ordinary income turned to ¥710M (+¥730M, +266.4% from prior period loss), and net income grew to ¥530M (+¥400M, +299.4%). The company's profitability profile strengthened materially, with gross margin improving by approximately 560 basis points to 68.8% and operating margin expanding to 11.9% from 6.3% year-over-year. The dramatic ordinary and net income improvements reflect both core operational leverage and normalization of non-operating losses, particularly reduced equity method losses. With Q3 cumulative net income already exceeding full-year guidance of ¥516M, upward revision potential exists. Revenue↑Profit↑.
Profitability: ROE 4.9%, Operating Margin 11.9%, Net Margin 8.9%, Gross Margin 68.8% Financial Health: D/E 0.28x, Debt/Capital 22.2%, Current Ratio 226.7%, Interest Coverage 25.3x Liquidity: Cash ¥10.4B, Cash/Short-term Debt 6.95x Dividend: ¥5.5 per share, Payout Ratio 65%
The operating margin of 11.9% represents a substantial 560 basis point improvement year-over-year, reflecting enhanced pricing power and product mix optimization. The 12.0% revenue growth accelerated from company's historical trend while maintaining margin expansion discipline.
Asset Efficiency Constraint - Total asset turnover of 0.303 significantly constrains ROE expansion despite improving margins. The accumulation of cash, investments, and intangible assets relative to revenue scale creates structural drag on return metrics, requiring strategic redeployment of capital to unlock shareholder value.
Intangible Asset Concentration - Goodwill increased 41.1% to ¥1.33B following M&A activity, while long-term borrowings expanded 93.0% to ¥1.54B. The elevated goodwill-to-equity ratio warrants monitoring of post-merger integration execution and potential impairment triggers, particularly given the company's moderate ROE profile.
Working Capital Volatility - Other current assets surged 95.3% to ¥1.52B, indicating potential working capital absorption. While contract liabilities of ¥1.30B provide forward revenue visibility, the sharp increase in prepaid expenses and other current assets may pressure cash conversion cycles and requires ongoing monitoring.
Short-term Debt Concentration - Current liabilities represent 49% of total liabilities, including current portions of bonds and long-term debt. While cash coverage remains strong at 6.95x short-term obligations, refinancing execution and term structure management become more critical in a rising rate environment.
Subscription Model Churn Sensitivity - The business model's reliance on subscription-based and deferred revenue structures exposes results to customer retention dynamics. Any uptick in churn rates within the RPA/automation market amid intensifying competition could compress revenue visibility and margin sustainability.
Quality of Earnings Improvement - The profit expansion is driven primarily by sustainable gross margin enhancement rather than one-time cost cuts or non-operating gains. The 560 basis point gross margin improvement combined with stable SG&A expense ratios demonstrates operating leverage and pricing discipline. This foundational earnings quality improvement supports the durability of double-digit operating margins going forward.
Capital Allocation Framework Under Review - The simultaneous execution of treasury share purchases (treasury stock increased to ¥2.18B), M&A investment (goodwill +41.1%), debt expansion (long-term borrowings +93.0%), and 65% payout ratio creates a complex capital allocation picture. With robust cash reserves of ¥10.4B and strong interest coverage of 25.3x, near-term financial flexibility is preserved. However, achieving sustained ROE improvement above the current 4.9% level requires clearer prioritization between inorganic growth investments and shareholder returns, particularly as asset productivity remains the binding constraint on return generation.
This report was automatically generated by integrating XBRL earnings data with AI financial analysis. Final investment decisions are your own responsibility.