| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥97.5B | ¥87.1B | +12.0% |
| Operating Income | ¥15.3B | ¥11.7B | +30.8% |
| Ordinary Income | ¥15.8B | ¥11.9B | +32.4% |
| Net Income | ¥9.5B | ¥7.3B | +30.3% |
| ROE | 9.0% | 7.3% | - |
FY2026 Q1 (October-December 2025) results show revenue of 97.5 billion yen (YoY +12.0%), operating income of 15.3 billion yen (YoY +30.8%), ordinary income of 15.8 billion yen (YoY +32.4%), and net income of 9.5 billion yen (YoY +30.3%). The company achieved accelerated profit growth outpacing revenue expansion, driven by strong performance across core tutoring segments. Operating margin reached 15.7%, expanding 2.3 percentage points from the prior year period's 13.4%, while net margin improved to 9.8% from 8.4%. Total assets grew to 232.7 billion yen from 224.8 billion yen, with equity increasing to 106.1 billion yen. The quarterly performance demonstrates operational leverage with gross margin maintained at 37.2% and SG&A expense ratio declining to 21.5%.
Revenue growth of 12.0% was driven by expansion across all three core tutoring segments. Mori Juku (cram school) segment contributed 5.4 billion yen in revenue, up 14.6% YoY, Shonan Seminar segment generated 2.6 billion yen, up 5.6% YoY, and Kawai Juku Manavis segment recorded 843 million yen, up 9.6% YoY. Other segments including new businesses, Jiritsugakushu RED, Sora Juku, and education-related services contributed 867 million yen. The segment notes indicate these results reflect customer contract revenues derived from tutoring services and educational support offerings. Gross profit increased 14.6% to 36.3 billion yen as cost of sales grew at a slower pace (11.0%) than revenue. Operating income surged 30.8% as SG&A expenses increased only 8.9% to 20.9 billion yen, demonstrating effective cost management. The SG&A-to-revenue ratio improved 0.7 percentage points to 21.5%. Non-operating income contributed a net positive 0.5 billion yen, including equity method investment gains of 0.25 billion yen and minimal interest expense of 0.03 billion yen. Profit before tax of 15.8 billion yen translated to net income of 9.5 billion yen after tax expenses of 6.3 billion yen, representing an effective tax rate of approximately 40%. No extraordinary items or impairment losses were disclosed in the segment notes. The pattern is revenue up, profit up with accelerating profit growth driven by operational leverage.
Mori Juku represents the core business, generating 5.4 billion yen in revenue (60.7% of reportable segment total) with operating income of 1.8 billion yen and a segment margin of 34.1%. Shonan Seminar contributed 2.6 billion yen in revenue (29.8% share) with operating income of 554 million yen and a segment margin of 20.9%. Kawai Juku Manavis recorded 843 million yen in revenue (9.5% share) with operating income of 71 million yen and a segment margin of 8.4%. Material margin differences exist across segments, with Mori Juku's 34.1% margin significantly exceeding Shonan Seminar's 20.9% and Kawai Juku Manavis's 8.4%. Other segments recorded negative operating income of 266 million yen on revenue of 867 million yen, reflecting investments in new businesses and research and development activities. Corporate expenses not allocated to segments totaled 667 million yen compared to 561 million yen in the prior year period.
[Profitability] ROE of 9.0% represents solid capital efficiency though remains below the 10% threshold typically expected by institutional investors. Operating margin of 15.7% improved 2.3 percentage points from the prior year's 13.4%, demonstrating operational leverage as revenue growth outpaced cost increases. Net profit margin of 9.8% expanded from 8.4% YoY, supported by effective SG&A management. Gross profit margin maintained at 37.2% indicates stable pricing power and cost structure. [Cash Quality] Cash and deposits of 68.0 billion yen provide coverage of 4.5 times short-term borrowings of 15.1 billion yen, ensuring strong liquidity. Working capital exhibits expansion with inventories increasing to 6.0 billion yen from 3.6 billion yen and accounts payable rising to 3.6 billion yen from 1.5 billion yen, reflecting business scaling and potential seasonal factors. [Investment Efficiency] Total asset turnover of 0.42 remains relatively stable, with total assets of 232.7 billion yen supporting annualized revenue run-rate. Goodwill of 19.6 billion yen and intangible assets of 29.0 billion yen represent significant invested capital requiring ongoing monitoring for impairment risk. [Financial Health] Equity ratio of 45.6% demonstrates moderate financial stability with total equity of 106.1 billion yen against total assets of 232.7 billion yen. Current ratio of 107.3% (current assets 121.2 billion yen versus current liabilities 113.0 billion yen) indicates adequate short-term solvency. Financial leverage of 2.19 times remains manageable. Debt-to-equity ratio is low with only 0.5 billion yen in long-term loans, though short-term borrowings increased substantially to 15.1 billion yen from 7.3 billion yen YoY. Short-term liabilities represent 96.7% of total liabilities, creating refinancing risk that warrants monitoring despite strong cash position.
Cash and deposits increased 16.7 billion yen YoY to 68.0 billion yen, reflecting strong earnings contribution and working capital management. The substantial cash accumulation alongside net income growth of 2.2 billion yen suggests healthy operating cash generation capacity. Working capital changes show inventories expanding 2.4 billion yen to 6.0 billion yen, indicating inventory build-up potentially related to business expansion or seasonal patterns, while accounts payable increased 2.1 billion yen to 3.6 billion yen, reflecting extended supplier credit utilization that supports liquidity. Short-term borrowings rose 7.8 billion yen to 15.1 billion yen, suggesting financing activity to support operations or strategic initiatives. Current assets of 121.2 billion yen against current liabilities of 113.0 billion yen yield net working capital of 8.2 billion yen. Cash coverage of short-term borrowings stands at 4.5 times, indicating robust liquidity buffer despite the elevated short-term debt ratio. The balance sheet positioning suggests adequate liquidity management though the refinancing profile of short-term obligations requires ongoing attention.
Ordinary income of 15.8 billion yen compared to operating income of 15.3 billion yen indicates non-operating net contribution of approximately 0.5 billion yen, comprising primarily equity method investment gains of 0.25 billion yen and financial income. Non-operating income represents 0.5% of revenue, consisting of interest and dividend income of 0.38 billion yen and minor foreign exchange effects, while non-operating expenses totaled 0.34 billion yen including minimal interest expense of 0.03 billion yen. The alignment between operating and ordinary income demonstrates earnings quality driven by core business operations rather than non-recurring items. No impairment losses or restructuring charges were disclosed in the segment notes, supporting the recurring nature of reported profits. The effective tax rate of approximately 40% on profit before tax is within normal ranges. With cash and deposits substantially exceeding net income and strong operating margin expansion, earnings exhibit healthy cash-backed quality, though formal operating cash flow disclosure would provide definitive confirmation of cash conversion efficiency.
Full-year guidance targets revenue of 380.0 billion yen (YoY +8.2%), operating income of 24.0 billion yen (YoY +10.6%), and ordinary income of 25.0 billion yen (YoY +12.7%). Q1 progress rates are revenue 25.7%, operating income 63.8%, and ordinary income 63.2% against full-year targets. Operating income progress significantly exceeds the standard Q1 baseline of 25%, suggesting strong first-quarter performance relative to expectations. This outperformance likely reflects seasonal strength in the tutoring business during the school term period and effective cost management. The implied full-year net income target of approximately 14.0 billion yen (derived from EPS forecast of 77.87 yen) indicates Q1 progress of 68.0%, also ahead of the 25% baseline. Given the seasonal nature of the education business with typical strength in Q1 and Q3 (exam preparation periods), the elevated progress rate is consistent with industry patterns. Forecast assumptions from available disclosure indicate annual dividend of 19.00 yen maintained at current levels. The strong Q1 performance provides solid foundation toward full-year targets, though sustaining operating margin expansion and managing SG&A growth as revenue scales will be critical execution factors through remaining quarters.
Annual dividend forecast of 19.00 yen per share consists of interim dividend of 19.00 yen, maintaining the prior year level. Based on net income of 9.5 billion yen for Q1 and average shares outstanding of 17,644 thousand shares yielding basic EPS of 54.12 yen, the annualized payout ratio would be approximately 71.6% against the quarterly run-rate. Using the full-year net income guidance implied by EPS forecast of 77.87 yen, the payout ratio calculates to approximately 24.4%, which represents more sustainable level. The quarterly calculation reflects typical seasonal earnings concentration. No share buyback activity was disclosed in the available data. The dividend policy demonstrates commitment to shareholder returns, though the sustainability of distributions should be evaluated against operating cash flow generation and capital allocation priorities including working capital needs and growth investments. The high quarterly payout ratio calculation underscores the importance of confirming full-year earnings trajectory and free cash flow adequacy to support the stated dividend while maintaining financial flexibility.
Student enrollment volatility and contract renewal rates represent primary revenue risk given the company's dependence on tutoring service subscriptions. Industry competition, demographic trends affecting student populations, and shifts in educational preferences could impact customer acquisition and retention. Profitability of Other segments including new businesses shows negative operating income of 266 million yen, indicating execution risk and uncertain return timelines on growth investments and R&D spending. Goodwill of 19.6 billion yen and intangible assets of 29.0 billion yen create impairment risk if business performance deteriorates or acquisition synergies fail to materialize, though no impairment charges were recorded this period. Short-term liabilities representing 96.7% of total liabilities with short-term borrowings of 15.1 billion yen create refinancing risk despite strong cash coverage, as adverse market conditions or credit availability changes could increase financing costs or restrict liquidity. Working capital expansion evidenced by inventory increase to 6.0 billion yen and accounts payable growth requires monitoring as inefficient management could strain cash generation.
[Industry Position] (Reference - Proprietary Analysis) The company operates in the education services sector, specifically tutoring and cram school services. Available benchmark data from IT and telecom sectors shows limited direct comparability. Operating margin of 15.7% substantially exceeds the industry median of 5.3% for the benchmark cohort (IQR: 3.0%-26.3%, n=3), positioning in the upper tier of operational efficiency. Net profit margin of 9.8% significantly outperforms the benchmark median of 0.6% (IQR: 0.5%-16.6%, n=3), indicating strong bottom-line conversion. Revenue growth of 12.0% YoY underperforms the benchmark median of 25.5% (IQR: 20.9%-26.2%, n=3), though the education sector typically exhibits more moderate growth rates than technology sectors. ROE of 9.0% substantially exceeds the benchmark median of 0.2% (IQR: 0.1%-2.3%, n=3), demonstrating superior capital efficiency. Equity ratio of 45.6% is lower than the benchmark median of 68.9% (IQR: 64.1%-79.9%, n=3), reflecting higher leverage positioning. Asset turnover of 0.42 exceeds the benchmark median of 0.18 (IQR: 0.15-0.19, n=3), indicating more efficient asset utilization. Given sector differences, direct comparison has limitations, but the company demonstrates strong profitability metrics relative to available reference data.
Accelerating profit growth with operating income expanding 30.8% versus revenue growth of 12.0% demonstrates operational leverage and margin expansion capability as the core tutoring business scales. The 2.3 percentage point improvement in operating margin to 15.7% reflects effective cost management and business model efficiency. Strong cash position of 68.0 billion yen providing 4.5 times coverage of short-term borrowings mitigates near-term liquidity concerns, though the 96.7% short-term liability composition and elevated inventory levels warrant monitoring for working capital efficiency and refinancing dynamics. Q1 operating income progress of 63.8% against full-year guidance substantially exceeds standard quarterly baseline, indicating positive momentum though seasonal patterns in the education business require consideration when evaluating full-year trajectory. Dividend policy targeting 19.00 yen annual distribution reflects shareholder return commitment, with sustainability dependent on full-year earnings achievement and operating cash flow generation against capital allocation needs including growth investments in underperforming Other segments.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.