SPRIX (7030) FY2026 Q1 Earnings Report

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Executive Summary

The results showed clear revenue and profit growth, as well as the emergence of operating leverage, driven by higher revenue centered on the three education brands and improved profit margins. Revenue was ¥9.75B (¥8.71B in the previous year, YoY+12.0%), Operating Income was ¥1.53B (¥1.17B in the previous year, YoY+30.8%), Ordinary Income was ¥1.58B (¥1.19B in the previous year, YoY+32.4%), and quarterly Net Income attributable to owners of the parent was ¥0.95B (¥0.73B in the previous year, YoY+30.3%). The fact that profit growth substantially exceeded revenue growth was attributable to an improved gross margin and the relative containment of SG&A expenses.

Factors Affecting Business Performance

【Revenue】Revenue was ¥9.75B, up +12.0% year on year. The core Mori Juku business (revenue of ¥5.39B, YoY+14.6%) was the primary driver of revenue growth, while Shonan Seminar (¥2.65B, YoY+5.6%) and Kawai Juku Manavis (¥0.84B, YoY+9.6%) also secured revenue growth. All three brands posted higher revenue, indicating a low degree of dependence on a single business.

【Profit and Loss】Operating Income was ¥1.53B (YoY+30.8%), Ordinary Income was ¥1.58B (YoY+32.4%), and Net Income was ¥0.95B (YoY+30.3%). The gross margin improved to 37.2% (35.3% in the previous year), while the SG&A expense growth rate of 10.0% was below the revenue growth rate of 12.0%. As a result, the operating margin expanded by 220bp to 15.7% (13.5% in the previous year). While Mori Juku’s segment profit margin of 34.1% is driving overall profitability, corporate expenses increased by 18.9% YoY to ¥0.667B, outpacing revenue growth, making cost discipline a key issue for maintaining profit margins going forward. There were no extraordinary gains or losses, and the gap between Ordinary Income and Net Income was primarily attributable to income taxes and other taxes (effective tax rate of approximately 39.4%). Revenue and profit increased.

Segment Analysis

The reporting segments consist of three brands, all of which recorded higher revenue and profit. Mori Juku generated revenue of ¥5.39B (60.7% of the total), segment profit of ¥1.84B, and a profit margin of 34.1%, making it the most profitable and core business, accounting for 74.6% of total reporting segment profit. Shonan Seminar secured stable earnings with revenue of ¥2.65B and a profit margin of 20.9%. Kawai Juku Manavis remains small in scale, with revenue of ¥0.84B, but profit increased 91.9% year on year and its profit margin improved to 8.4%. Other businesses (including new businesses and Jiritsu Gakushu RED) expanded to revenue of ¥0.867B (YoY+19.3%), but recorded a segment loss of ¥0.266B. The pace at which higher revenue is converted into consolidated profit will be a key area of focus going forward.

Key Financial Indicators

【Profitability】The operating margin was 15.7%, improving by 220bp from 13.5% in the previous year, while the net profit margin also improved by 140bp from 8.4% to 9.8%. The gross margin rose from 35.3% to 37.2%.【Cash Flow Quality】Comprehensive Income was ¥0.96B, nearly in line with Net Income attributable to owners of the parent of ¥0.95B, indicating that the impact of valuation differences on other securities and foreign currency translation adjustments was limited.【Investment Efficiency】Annualized ROE was 36.0%, and the Equity Ratio was 45.6% (improving from 44.2% in the previous year).【Financial Soundness】Cash and deposits of ¥6.80B cover approximately 4.5 times the ¥1.51B in short-term borrowings, although short-term borrowings increased 106.8% year on year, indicating a change in the funding structure. The current ratio was approximately 107%; while exceeding 100%, its buffer remains limited.

Cash Flow Analysis

As individual data from the cash flow statement are not included in the disclosed information, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥6.80B, an increase of ¥0.34B from ¥6.46B in the previous year, indicating that cash generation from business activities remains ongoing. Meanwhile, inventories increased to ¥0.60B (up +68.6% year on year), and accounts payable increased to ¥0.36B (up +134.6%), indicating an increase in working capital accompanying business expansion. Short-term borrowings increased 106.8% year on year to ¥1.51B, indicating a higher degree of dependence on short-term funding. Net assets increased by ¥0.63B to ¥10.61B, with the accumulation of retained earnings strengthening the capital base. Overall, the company exhibits a structure in which the accumulation of internal funds through earnings growth coexists with simultaneous expansion in working capital and short-term borrowings.

Quality of Earnings

The profit increase for the period resulted from an improvement in recurring business activities without extraordinary gains or losses, with neither extraordinary gains nor extraordinary losses recorded. Non-operating income and expenses were small, comprising non-operating income of ¥0.05B and non-operating expenses of ¥0.01B. Ordinary Income of ¥1.58B was therefore close to Operating Income of ¥1.53B, indicating that the earnings power of the core business essentially formed Ordinary Income. Against Profit Before Tax of ¥1.58B, income taxes and other taxes amounted to ¥0.62B, resulting in a high effective tax rate of approximately 39.4%; thus, the increase in Profit Before Tax was not fully converted into Net Income. Comprehensive Income of ¥0.96B was nearly in line with Net Income attributable to owners of the parent of ¥0.95B, and the quality of Net Income for the period can be assessed as generally sound given the limited impact of valuation differences on other securities and foreign currency translation adjustments.

Earnings Forecast and Guidance

The full-year forecast is revenue of ¥38.00B (YoY+8.2%), Operating Income of ¥2.40B (YoY+10.6%), Ordinary Income of ¥2.50B (YoY+12.7%), and EPS of ¥77.87. The Q1 cumulative progress rates were 25.7% for revenue and 63.8% for Operating Income, with Operating Income progress substantially exceeding the standard quarterly progress rate of 25%. This was attributable to the improved gross margin and the relative containment of SG&A expenses. However, as the education services business may exhibit intra-year seasonality, it would not be appropriate to mechanically anticipate full-year upside based solely on the high Q1 progress rate; quarterly trends, including expense movements in the second half, need to be monitored.

Shareholder Returns

The full-year dividend forecast is ¥38.00 per share. As the previous year’s dividend was ¥19.00, the company has indicated a policy of increasing the full-year dividend. Based on the weighted-average number of shares outstanding during the period of 17,643,860 shares and the full-year Net Income forecast of ¥1.40B, the calculated Payout Ratio is approximately 47.9%, below the 60% level generally regarded as an indicator of sustainability. Given the relationship between cash and deposits of ¥6.80B and interest-bearing debt of ¥1.56B, the balance sheet provides sufficient financial capacity to support the forecast dividend.

Risk Factors

1. Increased dependence on short-term funding: Short-term borrowings increased +106.8% year on year to ¥1.51B, and the short-term liabilities ratio reached approximately 97%. Cash and deposits of ¥6.80B cover approximately 4.5 times the short-term borrowings, providing ample immediate liquidity; however, a structure in which debt maturities are concentrated in the short term may increase volatility in cash management.

2. Profitability of non-core businesses: Other businesses (including new businesses) expanded to revenue of ¥0.867B (YoY+19.3%), but recorded a segment loss of ¥0.266B. Although the loss narrowed from ¥0.363B in the previous year, the timing of conversion from higher revenue to consolidated profit remains uncertain and may affect the sustainability of margin improvement, together with the increase in corporate expenses (YoY+18.9%).

3. Expansion of working capital: Inventories increased +68.6% year on year and accounts payable increased +134.6%, both substantially outpacing the revenue growth rate of 12.0%. Although this appears to be a natural increase accompanying business expansion, changes in inventory turnover and purchasing terms may affect the funding burden of working capital.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (it_telecom)

Profitability and Returns

The operating margin exceeds the industry median, while the net profit margin is approximately in line with the industry median, partly due to the impact of the tax burden.

Growth and Capital Efficiency

The revenue growth rate is approximately in line with the industry median and is positioned around the middle of the IQR.

※Source: Company analysis

Key Points from the Results

1. Operating Income growth of 30.8% versus revenue growth of 12.0% resulted in a growth differential of 18.8 percentage points, confirming the clear emergence of operating leverage driven by gross margin improvement (35.3%→37.2%) and the relative containment of SG&A expenses.

2. The core Mori Juku business has continued to achieve double-digit revenue growth while maintaining a segment profit margin of 34.1%, driving consolidated performance as an earnings base accounting for 74.6% of total reporting segment profit.

3. Q1 progress toward the full-year Operating Income forecast was 63.8%, substantially exceeding the standard progress rate; however, the doubling of short-term borrowings and the high short-term liabilities ratio are points to monitor in terms of the funding structure. Monitoring in conjunction with expense trends in the second half is considered useful.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥642–¥678 for ±1% in the cost of equity, and ¥658–¥661 for ±0.1 in ω.

Notes:

• Because the progress of Net Income toward the full-year forecast (68%) exceeds the standard rate (25%), forecast EPS has been adjusted upward within a maximum range of +10% (as companies whose progress is ahead of schedule tend to exceed forecasts. The adjustment may be excessive for businesses with strong seasonality).
• Net assets as of the end of the quarter are used (there is a time gap relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit five-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market stock price or a recommendation of any specific investment action, and does not predict or guarantee future stock prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. 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 with a professional as necessary.

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