| Indicator | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥223.3B | ¥210.4B | +6.1% |
| Operating Income | ¥25.3B | ¥24.7B | +2.5% |
| Ordinary Income | ¥26.8B | ¥26.3B | +2.0% |
| Net Income | ¥17.0B | ¥17.2B | -1.3% |
| ROE | 5.5% | 5.6% | - |
FY2026 (ending May) Q3 cumulative results: Revenue ¥223.3B (vs prior year +¥12.9B +6.1%), Operating Income ¥25.3B (vs prior year +¥0.6B +2.5%), Ordinary Income ¥26.8B (vs prior year +¥0.5B +2.0%), Net Income attributable to owners of parent for the quarter ¥17.0B (vs prior year -¥0.2B -1.3%). Top-line expanded steadily, but growth in SG&A dampened Operating Income expansion and Net Income declined slightly. Gross profit margin improved to 41.6% (prior 41.2%) up +0.4pt, while SG&A ratio rose to 30.3% (prior 29.5%) up +0.8pt, resulting in Operating Margin of 11.3% (prior 11.7%) down -0.4pt. By segment, Disclosure-related Business reported Revenue ¥156.8B (+5.8%) and Operating Income ¥18.7B (+3.1%), while Interpretation & Translation Business reported Revenue ¥75.3B (+7.8%) and Operating Income ¥5.2B (+44.1%); both segments achieved revenue growth, with notable profit growth in Interpretation & Translation.
[Revenue] The YoY +6.1% revenue increase was driven by steady performance in the Disclosure-related Business: Financial Instruments and Exchange Act-related products ¥70.8B (+7.9%), Companies Act-related products ¥31.5B (+11.0%), IR-related products ¥42.4B (-0.5%), and other products ¥12.2B (+3.9%), plus expansion of the Interpretation & Translation Business to ¥66.5B (external sales +7.0%). Revenue mix: Disclosure-related 70.2%, Interpretation & Translation 29.8%, with the core business continuing to lead. Gross profit margin improved to 41.6% (+0.4pt), reflecting improved cost management efficiency.
[Profitability] Operating Income was limited to ¥25.3B (+2.5%) due to an increase in SG&A to ¥67.6B (prior ¥62.0B, +9.0%). Breakdown: salaries and allowances ¥30.4B (+10.0%), goodwill amortization ¥2.6B (prior ¥1.6B, +68.0%), depreciation ¥2.3B (+7.5%), lease payments ¥2.9B (-2.5%), etc. The +0.8pt rise in SG&A ratio was mainly due to higher personnel costs and increased goodwill amortization. Non-operating income was ¥1.7B, with dividends received ¥1.2B (+27.1%) and interest received ¥0.2B (+373%) contributing steadily. Non-operating expenses were minor at ¥0.2B (foreign exchange loss ¥0.2B, etc.). Ordinary Income was ¥26.8B (+2.0%), with non-operating items supporting profit. Extraordinary gains/losses largely offset (extraordinary gains ¥0.2B, extraordinary losses ¥0.2B), with minimal impact. Income before income taxes ¥26.8B incurred income taxes of ¥9.8B (effective tax rate 36.6%), resulting in Net Income attributable to owners of parent ¥17.0B (-1.3%). Net margin was 7.6% (prior 8.1%) down -0.5pt — despite revenue and operating income growth, profit growth did not keep pace with top-line expansion.
Disclosure-related Business: Revenue ¥156.8B (prior ¥148.3B, +5.8%), Operating Income ¥18.7B (prior ¥18.2B, +3.1%), margin 11.9%, serving as the company’s profit core. Interpretation & Translation Business: Revenue ¥75.3B (prior ¥69.8B, +7.8%), Operating Income ¥5.2B (prior ¥3.6B, +44.1%), margin 6.8%. Interpretation & Translation margin improved from 5.1% prior year by +1.7pt, likely driven by higher utilization and price improvements. Both segments achieved revenue growth, with the large profit increase in Interpretation & Translation being a key driver of consolidated profit growth. Segment adjustments of ¥1.4B include holding company P&L and narrowed from ¥2.9B prior year.
[Profitability] ROE 5.5% remains near prior-year level. Operating margin 11.3% down from 11.7% (-0.4pt), Net margin 7.6% down from 8.1% (-0.5pt). Improvement in gross margin to 41.6% (prior 41.2%) was offset by SG&A ratio rising to 30.3% (prior 29.5%), creating slight headwinds for operating leverage.
[Cash Quality] Accounts receivable decreased significantly to ¥25.0B (prior ¥55.4B), indicating collection progress. Contract liabilities ¥13.1B (prior ¥14.8B) remain at a high level. Work in process ¥7.9B (prior ¥11.3B) decreased but still represents about 4% of current assets.
[Investment Efficiency] Total asset turnover is 0.60x (Revenue ¥223.3B ÷ Total Assets ¥374.2B, annualized), improved from 0.53x prior year. Tangible fixed assets increased substantially to ¥64.7B (prior ¥36.9B, +75%), lowering fixed asset turnover, attributable to a one-off office building acquisition.
[Financial Soundness] Equity Ratio 82.4% (prior 75.7%), Current Ratio 416.6% (prior 345.1%), Cash and Deposits ¥160.0B — balance sheet is extremely robust. Interest-bearing debt total ¥0.7B (prior ¥2.1B) maintaining net cash status; interest coverage approximately 1,152x, indicating negligible debt burden.
Operating Cash Flow benefitted from a large decrease in Accounts Receivable from ¥55.4B to ¥25.0B, while a decrease in Accounts Payable from ¥20.5B to ¥8.7B partially offset cash generation. Contract liabilities decreased slightly from ¥14.8B to ¥13.1B. Work in process declined from ¥11.3B to ¥7.9B, improving working capital efficiency. Investing Cash Flow included an increase in tangible fixed assets by ¥27.8B due to the office building acquisition, and Cash and Deposits decreased from ¥191.5B to ¥160.0B. Investment securities also increased by ¥8.5B to ¥40.6B (prior ¥32.1B), indicating active investment activity. Financing Cash Flow saw repayment of long-term borrowings from ¥0.9B to ¥0.2B, continuing the reduction of interest-bearing debt. Cash at period-end remained ¥160.0B, providing roughly 3.4x short-term liabilities (¥47.7B) in liquidity; cash position is very strong. Free Cash Flow was temporarily compressed by large investing activities, but funding risk is limited given stable operating base and ample cash.
With Ordinary Income ¥26.8B and extraordinary items nearly offsetting (extraordinary gains ¥0.2B, extraordinary losses ¥0.2B), recurring earnings constitute the bulk of profit. Non-operating income ¥1.7B is 0.8% of Revenue, mainly dividends received ¥1.2B and interest received ¥0.2B, representing stable non-core income. Goodwill amortization ¥2.6B under JGAAP persistently reduces Operating Income and Net Income; therefore, comparison with IFRS peers should consider pre-goodwill-amortization metrics (e.g., EBITDA). The gap from income before taxes ¥26.8B to Net Income ¥17.0B is due to income taxes ¥9.8B (effective tax rate 36.6%), a standard tax burden. Total comprehensive income ¥21.2B exceeds Net Income ¥17.0B, driven mainly by ¥6.0B valuation gains on available-for-sale securities. Unrealized gains on securities are boosting equity but are unrealized, so short-term impact on earnings quality is limited. The divergence between Ordinary Income and Net Income is mainly tax-related; one-off or non-recurring effects are minor, indicating high quality of earnings.
Full-year guidance remains: Revenue ¥330.0B (YoY +11.2%), Operating Income ¥44.0B (YoY +8.7%). Annual dividend forecast unchanged at ¥60 (ordinary dividend ¥45 + special dividend ¥30 included in year-end portion). Q3 cumulative progress rates: Revenue 67.7%, Operating Income 57.5%, Net Income 54.8% (¥17.0B vs forecast ¥31.0B). Q4 is the busy season for statutory disclosures and securities filings, so a back-loaded assumption for Revenue and profit is in place. To achieve the full-year target, Q4 requires Revenue ¥106.7B (approx. +15% YoY) and Operating Income ¥18.7B; considering seasonality this is within reach, but given rising SG&A trends, securing pricing and rapid project execution are key. Full-year EPS is forecast ¥240.06; with Q3 cumulative EPS ¥130.27, approximately ¥110 remaining is required. Payout Ratio ~25% (full-year forecast basis) is conservative and dividend capacity is ample.
No interim dividend was paid; year-end dividend forecast ¥60 (including ordinary ¥45 and special ¥30 anticipated at year-end). With full-year Net Income forecast ¥31.0B, total dividends amount to approximately ¥7.7B (payout ratio ~25%), a conservative level. Treasury stock decreased to ¥2.5B (prior ¥4.0B), indicating limited buyback impact. Given payout ratio, Equity Ratio 82%, and Cash ¥160.0B, the dividend level is sustainable and there is financial room for future increases. Total Return Ratio combining dividends and buybacks is not disclosed, but policy appears dividend-focused.
[Industry Position] (reference — company estimates) Compared with the manufacturing sector 2025 Q3 benchmark (median), Operating Margin 11.3% exceeds industry median 8.9% by +2.4pt, indicating strong profitability. Net Margin 7.6% is +1.1pt above industry median 6.5%. Equity Ratio 82.4% substantially exceeds industry median 63.8%, placing financial soundness among the top in the sector. Total Asset Turnover 0.60x (annualized) is near industry median 0.56x, indicating standard efficiency. ROE 5.5% slightly lags industry median 5.8%, with high equity ratio suppressing leverage and capital efficiency. Revenue growth +6.1% outperforms industry median +2.8%, reflecting relatively strong growth. Current Ratio 416.6% far exceeds industry median 287%, indicating extremely high short-term liquidity. Net Debt/EBITDA is effectively negative (net cash), and compared with industry median -1.11x, financial capacity is outstanding. Overall, the balance among profitability, growth, and financial soundness is favorable within the industry; improving capital efficiency remains a future challenge.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; please consult a professional if necessary.
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