For the cumulative results through Q3 of the fiscal year ending March 2026, operating revenue was 89.98B (YoY -15.63B, -14.8%), operating income was 38.41B (YoY -17.70B, -31.5%), ordinary income was 38.53B (YoY -17.67B, -31.4%), and net income attributable to owners of the parent for the quarter was 27.47B (YoY -10.75B, -28.2%), resulting in lower revenue and lower profit. Transaction-related revenue decreased due to a prolonged decline in historical volatility of major currencies; although the operating margin remained high at 42.7%, absolute operating income declined significantly. Even on a standalone Q3 basis, quarterly operating revenue of approximately 30B was secured, demonstrating resilience above the average of the previous second half, but the decline in revenue in the cumulative Q1 and Q2 weighed on results. Assets under custody reached 1,315B in November, achieving the fiscal year-end target of 1,300B ahead of schedule, and cumulative customer profits exceeded +220B, indicating steady expansion of the customer base.
[Revenue] Operating revenue was 89.98B (-14.8% from 105.61B in the same period of the previous year). The main reason for the revenue decline was a decrease in customer trading volume due to the prolonged decline in historical volatility of major currency pairs (USD/JPY, MXN/JPY, TRY/JPY). The USD/JPY trading range narrowed to approximately ¥8 in Q2 and approximately ¥9 in Q3 from over ¥10 in past periods. Meanwhile, assets under custody increased by 165B cumulatively through Q3 to 1,315B (YoY +14.7%), and with stabilization of swap point income and expansion on a margin-collateral basis, the business model is shifting toward securing a quarterly operating revenue level of 30B even in a low-volatility environment. [Profit and loss] Operating income was 38.41B (YoY -31.5%), and the operating margin was 42.7% (down approximately -10.4pt from 53.1% in the same period of the previous year). The reason the decrease in operating income exceeded the decrease in operating revenue is primarily the increase in SG&A expenses, which rose +16.4% from 44.30B in the same period of the previous year to 51.57B in the current period. Breakdown items that increased include salaries and bonuses at 14.94B (13.71B in the previous year), rent at 9.80B (9.02B in the previous year), and advertising expenses at 7.89B (6.75B in the previous year); large-scale swap campaign costs and advertising investments for new customer acquisition were factors pressuring profits. Ordinary income of 38.53B and net income attributable to owners of the parent of 27.47B both declined similarly to operating income. The approximately 11.06B gap between ordinary income and net income is due to a corporate tax burden with an effective tax rate of approximately 28.7%, with almost no temporary factors. In conclusion, both revenue and profit declined; the primary driver of lower revenue was the market environment (volatility decline), while lower profit resulted from the combination of higher fixed costs and reduced transaction-related revenue.
Operating income by segment was 36.10B for the Financial Instruments Trading Business (revenue 89.03B) and 4.48B for the System Development and System Consulting Business (revenue 0.95B). The operating income composition ratio of the Financial Instruments Trading Business is approximately 89%, positioning it as the core business. In the core FX trading business (Minna no FX and LIGHT FX), assets under custody were 1,288B (YoY +165B), effective margin was 1,359B, and open positions were 53,437 million currency units, all reaching record highs, with cumulative customer profits surpassing +220B. The System Development and System Consulting Business operates a business model providing system development for the company’s own group at cost; while external sales are limited, it still recorded operating income of 4.48B. Amid declining operating revenue in a low-volatility environment, steady accumulation of assets under custody supported a baseline of approximately 30B in operating revenue on a standalone Q3 basis, and expansion of the customer base in the core FX trading business is key to future revenue recovery.
Profitability: ROE 14.96% (reported basis), operating margin 42.7% (53.1% in the same period of the previous year), net margin 30.5% (down -5.7pt from 36.2% in the same period of the previous year) Cash quality: Operating CF undisclosed; Operating CF/Net Income not computable; FCF undisclosed Investment efficiency: Capex data undisclosed; depreciation (recorded within SG&A) 3.15B Financial soundness: Equity ratio 11.7% (13.9% in the same period of the previous year), current ratio 112.1%, quick ratio 112.1%, cash and deposits/short-term liabilities ratio 6.98x, D/E ratio 7.56x, short-term liabilities ratio 80.6%, financial leverage 8.56x Dividend: Q2 12.0円 and year-end 20.0円 for a total of 32.0円 executed; full-year forecast 40.0円 (DOE 5.6%, payout ratio rough estimate 34.4%)
Detailed analysis is not possible as operating CF, investing CF, and financing CF are all undisclosed. However, the balance of cash and deposits was 64.22B, a significant decrease of -56.99B (-47.0%) from 121.21B in the same period of the previous year, presumably due to decreased operating revenue, expenditures for large-scale campaigns, and increased funding needs related to margin deposits and hedging transactions accompanying the increase in assets under custody. There are short-term borrowings of 9.20B (7.12B in the same period of the previous year) and long-term borrowings of 2.21B (0.67B in the same period of the previous year), for a total interest-bearing debt of 11.41B. Cash and deposits are about 7 times short-term borrowings, limiting short-term liquidity risk; however, with a high short-term liabilities ratio of 80.6%, liquidity risk could materialize if the refinancing environment deteriorates. FCF is unknown, but judging from the pace of cash decline after dividend payments, dividend sustainability depends on cash generation capacity, and disclosure of operating CF is awaited. Cash generation assessment: Monitor required (operating CF undisclosed and cash decreased significantly).
The difference of approximately 11.06B between ordinary income of 38.53B and net income attributable to owners of the parent of 27.47B is mainly due to corporate taxes of 11.06B (effective tax rate approximately 28.7%). Non-operating income of 0.15B (dividends received, etc.) and non-operating expenses of 0.03B (interest paid, etc.) almost offset, resulting in only a minor gap between operating income and ordinary income. No extraordinary gains or losses were recorded, so there is no deterioration in earnings quality due to temporary factors. Non-operating income is approximately 0.2% of operating revenue of 89.98B and is extremely small, meaning the revenue structure depends almost entirely on core business revenue. Because operating CF is undisclosed, consistency between net income and operating CF cannot be confirmed, but the significant decrease in cash and deposits and the increase in short-term liabilities suggest that profit may not be sufficiently converted into cash. From an accrual perspective, although net income is 27.47B, cash and deposits decreased by -56.99B, warranting attention to earnings quality. It is inferred that payments for dividends, campaign costs, and margin deposits overlapped; however, detailed evaluation is difficult due to the lack of operating CF disclosure.
Full-year guidance was revised downward to operating revenue of 120B, operating income of 50B, ordinary income of 50B, and net income attributable to owners of the parent of 35B (from the previous forecast of operating revenue 147B, operating income 70B, ordinary income 70B, and net income 48B). Progress versus the cumulative Q3 is 75.0% for operating revenue, 76.8% for operating income, 77.1% for ordinary income, and 78.5% for net income, exceeding the standard progress of 75%. The revision magnitude is a significant downward adjustment: operating revenue -27B (-18.4%), operating income -20B (-28.6%), ordinary income -20B (-28.6%), and net income -13B (-27.1%). The reason for the revision is the assumption that the decline in historical volatility of major currencies will continue into Q4, and the statistically derived expected average return on assets under custody was lowered. Meanwhile, the assets under custody target was revised upward by 50B to 1,350B at fiscal year-end (initially 1,300B), incorporating the achievement of 1,315B in November and the effect of strengthening LIGHT pair swap points. The annual dividend was revised upward to 40円 (initially 24円), and the policy is to continue increasing dividends for five consecutive periods based on DOE of 5.6%.
The annual dividend was revised upward to 40.0円 (breakdown: Q2 12.0円 already paid, year-end 20.0円 planned, additional revision 8.0円), achieving DOE (Dividend on Equity) of 5.6%. Against the full-year net income forecast of 35B, total dividends are approximately 10.7B (roughly assuming 267 million shares outstanding), resulting in a payout ratio of approximately 30.6%, which is conservative. Dividends are regular only and do not include any special dividends. Share repurchase information is not disclosed, so the total return ratio cannot be calculated; however, treasury stock balance increased from -15.09B in the same period of the previous year to -24.54B in the current period, suggesting that some treasury stock acquisition may have been executed. The dividend policy clearly states a focus on stable dividend increases with a DOE benchmark of 4% or higher, emphasizing shareholder returns even amid earnings volatility. However, due to the decrease in cash and deposits and the lack of disclosure of operating CF, the cash backing for dividends is uncertain, and disclosure of operating CF is necessary for a sustainability assessment.
[Short-term] Whether volatility of major currencies recovers in Q4 will determine the accuracy of the full-year outcome. A key point is whether the outflow rebound after the end of the large-scale campaign in December (1,315B in November → 1,288B in December, -27B) can be recovered. Depending on year-end and New Year FX market fluctuations, there is potential for incremental revenue from increased settlement of customer open positions. [Long-term] Pace of further accumulation after achieving the 1,350B assets under custody target (target setting for FY2027/3 and beyond). Building competitive advantage through promotion of an intellectual property strategy, including LIGHT pair (patented), AI charts, and system-trading strategies. Materialization of cost reduction effects from a network of over 20 hedging counterparties. Improving financial literacy via the official YouTube channel and new commercials (Mr. Robert Akiyama) to acquire new customers among FX beginners. Emphasizing No.1 swap points and differentiation via LIGHT pairs to transform the structure toward raising the revenue floor in a low-volatility environment.
[Industry positioning] (Reference information; company’s own research) As the company’s main business is FX trading, the appropriate peer industry is Securities and Financial Instruments Trading, but the provided benchmark is utilities (electric power, gas, etc.), so it should be treated as reference only. Profitability: Operating margin 42.7% (significantly above the industry median of 8.6%), net margin 30.5% (significantly above the industry median of 6.6%). The company’s operating margin and net margin are approximately 5.0x to 4.6x the industry median, reflecting the characteristics of the FX trading business model (low fixed costs and high variable revenue). Soundness: Equity ratio 11.7% (no comparative data) Efficiency: Operating margin 42.7% (industry median 8.6%) Industry: Electric and Gas (utilities), N=3 companies; comparison period: Q3 2025; source: company compilation Note: Consistency with the company’s business is limited; comparison with Securities and Financial Instruments Trading would be preferable.
Risk of prolonged decline in historical volatility of major currencies: If the narrowing of ranges in major currency pairs, primarily USD/JPY, continues, transaction-related revenue may fall short of expectations, making it difficult to achieve the full-year operating income forecast of 50B. If the assumed Q4 range is below historical averages, full-year operating income carries downside risk into the 40B range. Concentration of short-term liabilities and liquidity risk: With a short-term liabilities ratio of 80.6%, D/E ratio of 7.56x, and cash and deposits balance down -47.0% YoY, the company has high leverage and depends on short-term funding. If financial market conditions deteriorate or margin requirements from hedging counterparties increase, short-term funding costs could spike and pressure earnings. Although cash and deposits of 64.22B are about 7 times short-term borrowings of 9.20B, room is limited when considering liquidity requirements related to margin deposits. Risk of recoil decrease in assets under custody: After the large-scale campaign ended at end-November, assets under custody fell from 1,315B to 1,288B in December (-27B, -2.1%). If similar outflows recur when large campaigns end, a slowdown in the pace of asset accumulation and pressure on revenue are concerns.
Expansion of assets under custody and formation of a revenue baseline: Assets under custody reached 1,315B in November, achieving the initial target ahead of schedule, and the target was revised upward to 1,350B, suggesting reinforcement of the medium- to long-term earnings base. A structure is being built to steadily secure a quarterly operating revenue level of 30B even in a low-volatility environment, and in a future volatility recovery phase, incremental revenue from increased settlement of held positions can be expected. Dividend policy and focus on DOE: With DOE of 5.6% and dividend increases for five consecutive periods, and a payout ratio of approximately 30.6% within a conservative range, the company clearly emphasizes shareholder returns even amid earnings fluctuations. However, due to the decrease in cash and deposits and the lack of disclosure of operating CF, the cash backing for dividends is uncertain, and reassessment is needed after disclosure of operating CF. IP strategy and business model differentiation: The company is advancing its IP strategy with LIGHT pair already patented and AI charts and system-trading strategies patent-pending, focusing on differentiation from competitors and building entry barriers, which could contribute to long-term earnings stability.
This report is an earnings analysis document automatically generated by AI integrating XBRL financial statement data and PDF earnings presentation materials. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial data. Investment decisions are your own responsibility; consult a professional as necessary.