| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥60719.2B | ¥58355.2B | +4.1% |
| Operating Income / Operating Profit | ¥10991.2B | ¥10874.7B | +1.1% |
| Profit Before Tax | ¥11179.0B | ¥10734.2B | +4.1% |
| Net Income | ¥7806.6B | ¥7358.5B | +6.1% |
| ROE | 14.0% | 13.2% | - |
For the fiscal year ended March 2026, KDDI achieved revenue of ¥60719.2B (YoY +¥2,364B +4.1%), Operating Income of ¥10991.2B (YoY +¥117B +1.1%), Ordinary Income of ¥10937.0B (YoY +¥105B +1.0%), and Net Income Attributable to Parent Company Shareholders of ¥7071.0B (YoY +¥516B +7.9%), delivering both revenue and profit growth. Revenue growth marked the third consecutive year, driven by a turnaround to revenue growth in mobile and double-digit growth in Financial and Business segments. Operating Income rose only modestly due to SG&A increases (+¥1,000B +7.0%), but on an adjusted basis excluding fictitious circular transaction impacts (¥171B) and contract cost impairment (¥482B on an operating-income basis), Operating Income reached ¥11643.0B (+6.0%), achieving medium-term targets. Net income outperformed operating profit growth, rising +7.9% reflecting equity-method gains of +¥124B and other non-operating improvements, and EPS increased to ¥183.59 (prior ¥161.86, +13.4%), effectively realizing the medium-term EPS target of 1.5x (equivalent to ¥194.38) through business growth.
[Revenue] Revenue of ¥60719.2B (+4.1%) was driven by the turnaround in mobile revenue growth and expansion in Financial and Business domains. The Personal segment held firm at ¥47556.0B (+2.3%), with an LTV-focused and value-creation strategy supporting maintenance and expansion of mobile ARPU and active subs, largely offsetting price reduction impacts. The Business segment continued double-digit growth at ¥12923.0B (+10.8%), led by corporate DX solutions, security, and data centers. The Financial business (au Financial Holdings) expanded its customer base through linkage with telecommunications, maintaining a high-margin growth path with an approximately 30% average annual growth over the past three years. Gross profit was ¥25906.0B (+¥987B +4.0%), and gross margin remained flat at 42.7% (prior 42.7%), sustaining profitability through price control and enhanced value-added services.
[Profitability] Operating Income of ¥10991.2B (+1.1%) reflected that SG&A increases (+¥1,000B +7.0%) largely offset the gross profit increase, pushing Operating Margin down slightly to 18.1% (−50bp from 18.6% prior). SG&A ratio rose to 25.2% (prior 24.5% +70bp), primarily due to labor cost inflation, promotional expenses, and tech investment for growth. Impairment losses increased sharply to ¥535B (prior ¥89B), mainly due to contract cost impairment of ¥482B (on an operating-income basis), which is a one-off factor. Ordinary Income was ¥10937.0B (+1.0%), similar to Operating Income, while equity-method gains increased to ¥399B (prior ¥275B, +¥124B +45.1%), contributing to non-operating improvement. Financial net cost narrowed to ¥5.49B expense (prior ¥19.5B expense), aided by an increase of ¥283B in financial income and containment of financial expenses to ¥338B (prior ¥296B). Profit Before Tax was ¥11179.0B (+4.1%); after deducting income taxes of ¥3372.0B, Net Income Attributable to Parent Company Shareholders was ¥7071.0B (+7.9%), outpacing operating profit growth. On an adjusted basis excluding fictitious circular transaction impact of ¥171B and contract cost impairment of ¥325B (on current-period net-income basis), adjusted Net Income was ¥7567.0B (+13.6%), achieving medium-term management targets. Extraordinary items were limited, and the gap between Net Income and Ordinary Income was about 2.2%, indicating sound earnings quality. In conclusion, revenue and profit increased, with sales growth and sustained high gross margins underpinning the earnings base; SG&A control and working capital efficiency will be focal points next period.
The core business is the Personal segment, with revenue of ¥47556.0B (+2.3%) and Operating Income of ¥8283.0B (−2.1%), accounting for 78.3% of consolidated revenue and 75.4% of operating income. Although revenue grew steadily, promotional and competitive costs led to an operating profit decline; however, LTV-focused and value-creation strategies have restored ARPU and active subs, supporting sustainability. Operating margin remained high at 17.4% (−60bp from 18.0% prior).
The Business segment reported revenue of ¥12923.0B (+10.8%) and Operating Income of ¥2639.0B (+12.2%), accounting for 21.3% of consolidated revenue and 24.0% of operating income, achieving double-digit revenue and profit growth. Growth was driven by expansion of corporate DX solutions, security, and high-value data center facilities (e.g., Sakai AI Data Center). Operating margin improved to 20.4% (+50bp from 19.9%), the highest among segments. The primary driver of consolidated profit increase was the high growth of the Business segment, which more than offset the Personal segment’s profit decline.
The Other segment, though small, showed high profitability: revenue ¥24.1B (+8.0%) and Operating Income ¥9.5B (+27.0%), with an operating margin of 39.3%, supported by infrastructure construction/maintenance and R&D professional services.
The Financial business (au Financial Holdings) recorded consolidated Operating Income (adjusted) of ¥2639.0B, continuing high growth with a 3-year CAGR of +30.4%, recording the same operating income as the Business segment and achieving both customer base expansion and profitability improvement through stronger links with telecommunications.
Profitability: ROE 14.0% (improved +1.2pt from prior 12.8%), Operating Margin 18.1% (−0.5pt from prior 18.6%), Net Income Margin 11.7% (+0.5pt from prior 11.2%). ROE improvement was driven by higher net income margin and increased effective leverage (debt-to-equity multiple 2.41x). Although Operating Margin dipped slightly due to higher SG&A ratio, EBITDA margin remained high at 29.4% (3-year average ~29%), indicating stable earnings structure as an infrastructure business.
Cash quality: Operating Cash Flow / Net Income was 2.29x (Operating CF ¥17889.0B / Net Income ¥7807.0B), well above 1.0x, indicating strong cash backing of profits. Operating CF / EBITDA (EBITDA = Operating Income + Depreciation) was 1.00x (¥17889.0B/¥17853.0B), healthy, and the accrual ratio was −5.7% (working capital changes etc. −¥1,804B ÷ subtotal ¥2,692B), confirming strong cash generation. FCF was ¥7084.0B (Operating CF ¥17889.0B + Investing CF −¥10805.0B), ample, covering dividends of ¥3015.0B and share buybacks of ¥4000.0B comfortably.
Investment efficiency: Capex ¥4048.0B / Depreciation ¥6863.0B = 0.59x, below 1.0x, indicating a capex-suppression phase. This favors short-term FCF generation but raises balance considerations with medium-term growth investments such as 5G upgrades and data center expansion.
Financial soundness: Equity Ratio 26.6% (down −3.5pt from 30.1%) declined mainly due to asset/liability expansion in the Financial business, reflecting structural factors. Net interest-bearing debt (total borrowings & bonds ¥48681.0B − cash ¥10788.0B = ¥37893.0B) / EBITDA ratio is about 2.1x, conservative, and Interest Coverage is 32.6x (Operating Income ¥10991.2B / Financial Expenses ¥338.0B), extremely strong. Current Ratio is 0.56x (Current Assets ¥55784.0B / Current Liabilities ¥99380.0B), below 1.0x, but this stems from deposit-heavy Financial business structure (deposits ¥55464.0B) and short-term liabilities; maturity mismatch is managed within the business’s treasury and funding operations.
Working capital indicators: DSO (Days Sales Outstanding) is 194 days (Accounts Receivable ¥32271.0B ÷ Revenue ¥60719.2B × 365), showing elongation reflecting sales growth and increased installment terminal sales. DPO (Days Payable Outstanding) is 102 days (Accounts Payable ¥9731.0B ÷ Cost of Sales ¥34813.0B × 365), and CCC (Cash Conversion Cycle) is 101 days (DSO + DIO − DPO, DIO = 9 days), on the long side; improving receivables efficiency is key to working capital improvement.
Operating CF was ¥17889.0B (YoY +43.2%), demonstrating very strong cash generation at 2.29x of Net Income ¥7807.0B. Operating CF subtotal (before working capital changes) was ¥20692.0B, with large non-cash charges including Depreciation ¥6863.0B and Impairment Losses ¥535.0B lifting profits. Working capital changes saw significant positive contributions from Financial business deposit net increase +¥11036.0B and Financial business borrowing net increase +¥4853.0B, while increases in accounts receivable −¥2621.0B, Financial business loan increases −¥12507.0B, and other changes −¥869.0B were headwinds. After corporate tax payments −¥3269.0B, interest payments −¥254.0B, and lease payments −¥1389.0B, Operating CF totaled ¥17889.0B. Operating CF / Net Income 2.29x and Operating CF / EBITDA 1.00x underline strong cash backing of earnings; accrual ratio −5.7% indicates good earnings quality.
Investing CF was −¥10805.0B, with major outlays including Capex −¥4048.0B (base stations, networks, etc.) and intangible asset investments −¥2742.0B (software, licenses, etc.). Net acquisition of securities by the Financial business was approximately −¥3238.0B (acquisitions −¥3710.0B and sales/redemptions +¥472.0B), plus other financial asset acquisitions −¥724.0B, M&A-related spending −¥27.0B, and equity investments in affiliates −¥22.0B. Capex/Depreciation 0.59x suggests capex restraint, aiding short-term CF but raising balance considerations for medium-term growth investments.
Financing CF was −¥5531.0B, with dividends paid −¥3015.0B (parent company −¥3015.0B) and share buybacks −¥4000.0B as the main shareholder returns. There was net long-term borrowing/bond issuance +¥6400.0B and repayments −¥2580.0B (net +¥3820.0B), short-term borrowings net decrease −¥1320.0B, commercial paper net increase +¥979.0B, lease liability repayments −¥1389.0B, etc. Total shareholder returns (dividends + buybacks) were ¥7015.0B, largely matched by FCF ¥7084.0B, indicating high sustainability.
FCF was ¥7084.0B (Operating CF ¥17889.0B + Investing CF −¥10805.0B), ample, covering dividends ¥3015.0B and buybacks ¥4000.0B and resulting in net cash increase of +¥69.0B. Cash and Cash Equivalents increased to ¥10788.0B (prior ¥9212.0B, +¥1576.0B +17.1%), indicating solid financial flexibility.
Cash generation assessment: Strong. Operating CF / EBITDA 1.00x, FCF Coverage (FCF / Total Returns) 1.01x, and Interest Coverage 32.6x—all very healthy—confirming high cash generation and the sustainability of shareholder returns.
The gap between Ordinary Income ¥10937.0B and Net Income ¥7807.0B is approximately ¥3,130.0B (40.1%), primarily due to income taxes of ¥3372.0B. The effective tax rate on Profit Before Tax ¥11179.0B is 30.2% (Income Taxes ¥3372.0B / Profit Before Tax ¥11179.0B), reasonable. The difference between Operating Income ¥10991.2B and Ordinary Income ¥10937.0B is −¥54.0B (−0.5% of Operating Income), minimal; equity-method gains +¥399.0B and financial income +¥283.0B were partly offset by financial expenses −¥338.0B and net other non-operating items +¥242.0B.
One-off factors include Impairment Losses ¥535.0B (of which contract cost impairment ¥482.0B on an operating-income basis, ¥325.0B on current-period net-income basis) and fictitious circular transaction impact ¥171.0B (on an operating-income basis). On an adjusted basis, Operating Income is ¥11643.0B (+6.0%) and Net Income is ¥7567.0B (+13.6%). Non-operating income was ¥283.0B, 0.5% of revenue, limited, and no special gains/losses were recorded; the recurring earnings structure is healthy.
Accruals: Operating CF ¥17889.0B is 2.29x Net Income ¥7807.0B, giving an accrual ratio of −5.7%, indicating high quality of earnings with strong cash backing. Working capital headwinds included accounts receivable increase −¥2621.0B and Financial business loan increases −¥12507.0B, but deposit increases +¥11036.0B and borrowing increases +¥4853.0B in the Financial business were linked contributors, reflecting structural balance-sheet expansion of the Financial business. Earnings quality is high; adjusted (underlying) figures excluding one-offs are appropriate for evaluation.
Full-year forecast (FY2027) revenue is ¥64100.0B (+5.6%), and progress vs. forecast stands at 94.7% (actual ¥60719.2B / forecast ¥64100.0B), indicating a high completion ratio with current results slightly below the pace implied by the forecast. The company’s guidance for Operating Income and Net Income is undisclosed, but assuming adjusted Operating Income of ¥11643.0B, sustaining the past 3-year average growth rate of +6.0% will require SG&A efficiency improvements and continued revenue growth. Dividend guidance is ¥42.0 per annum (post-split basis, prior conventional ¥80), and the payout ratio is expected to be around 46% (FY2026 result ¥80 dividend / EPS ¥183.59 ×2 = approximately ¥40 on post-split basis converted) maintaining a healthy level.
No explicit forecast revisions were disclosed, but since FY2026 results achieved the medium-term target (1.5x EPS vs FY2019.3, equivalent to ¥194.38) on an adjusted basis through business growth, the next period is expected to focus on further profitability improvement and acceleration of growth. From a standard progress benchmark (Q2 = 50%), revenue is on track, but Operating Income progress for H1 was not disclosed, making second-half execution key.
Order backlog data is not disclosed, but the telecom contract customer base is stable and order growth in Financial and Business segments (corporate DX and data center projects) provides visibility for future revenue. Contract liabilities total ¥10.29B (current) + ¥9.86B (non-current) = approx. ¥20.15B, representing deferred revenue that will contribute to future sales. Financial business loan balance ¥63985.0B and deposit balance ¥56669.0B accumulation indicate customer base expansion in financial services, expected to function as a mid-term revenue source.
Dividends were ¥80.0 per annum (interim ¥40.0, year-end ¥40.0), with a payout ratio of approximately 47% (total dividends ¥3552.0B ÷ Net Income Attributable to Parent Company Shareholders ¥7071.0B ×100, pre-split basis), staying within a healthy range. Share buybacks of ¥4000.0B were executed, and Total Return Ratio was approximately 99% ((dividends ¥3552.0B + share buybacks ¥4000.0B) ÷ Net Income Attributable to Parent Company Shareholders ¥7071.0B ×100), indicating very active returns. FCF ¥7084.0B sufficiently covered actual total returns ¥7552.0B (dividends ¥3015.0B + buybacks ¥4000.0B on cash-out basis), with FCF Coverage about 1.0x, supporting high sustainability. Treasury stock cancellation of ¥3967.0B (approx. 4,257B shares) was conducted, contributing to dilution control and per-share value enhancement.
Next-period dividend guidance is ¥42.0 per annum (post-split basis, equivalent to half of prior ¥80), indicating intent to continue effectively increased payouts. The payout ratio is expected to remain in the high-40% range, with stable dividends and opportunistic buybacks anchored by FCF generation and stable effective tax rate. Net interest-bearing debt / EBITDA of about 2.1x, low interest burden (Interest Coverage 32.6x), and high ROE 14.0% underpin the capacity for shareholder returns.
[Short-term]
[Long-term]
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 14.0% | 10.1% (2.2%–17.8%) | +3.9pt |
| Operating Margin | 18.1% | 8.1% (3.6%–16.0%) | +10.0pt |
| Net Income Margin | 12.9% | 5.8% (1.2%–11.6%) | +7.0pt |
Profitability significantly exceeds industry medians, outperforming by +10.0pt in Operating Margin and +7.0pt in Net Income Margin, reflecting scale advantages in telecom infrastructure and a revenue structure with high value-added services.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.1% | 10.1% (1.7%–20.2%) | -6.0pt |
Growth lags the industry median by −6.0pt, reflecting a strategy that emphasizes stable growth in a mature market and strong cash generation. Double-digit growth in Financial and Business segments underpins overall company growth.
※ Source: Company aggregation
Working capital efficiency risk: DSO of 194 days shows elongation with receivables exceeding six months in some cases. Continued working-capital-driven Operating CF pressure (accounts receivable increase −¥2621.0B) could impair FCF generation. Given the structural impact of installment terminal sales, the effectiveness of credit management and DSO-reduction measures (AI/system alert functionalities) will be critical.
SG&A control risk: SG&A ratio rose to 25.2% (+70bp), and SG&A growth (+7.0%) outpaced revenue growth (+4.1%). Labor cost inflation, promotional expenses, and increased tech investment are pressuring profitability. Failure to restore operating leverage (SG&A growth < revenue growth) next period could further depress Operating Margin.
Financial business & liquidity risk: Current Ratio 0.56x reflects structural maturity mismatch due to Financial business deposits ¥55464.0B and thick short-term liabilities. In market volatility or deposit outflow scenarios, increased short-term funding costs or liquidity stress could materialize. However, cash holdings ¥10788.0B and funding capacity (commercial paper and bond issuance programs) provide buffers; continuous monitoring of DSIR and ALM management is required.
Achievement of medium-term EPS target and sustainability of adjusted double-digit profit growth: FY2026 achieved, on an adjusted basis excluding fictitious circular transactions and contract cost impairments, Operating Income +6.0% and Net Income +13.6%, realizing the medium-term EPS target (1.5x vs FY2019.3, approx. ¥194.38) through business growth. If SG&A efficiency improvements and high Business-segment growth continue, maintaining ROE in the 14% range and sustaining EPS growth (CAGR >10%) is feasible. Shareholder returns combine payout ratios in the high-40% range with buybacks, with total returns around 99%, and FCF Coverage of 1.0x supports execution without strain; the structural profitability and return capacity in this earnings report are notable.
Double-digit growth and margin improvement in the Business segment: The Business segment (Revenue +10.8%, Operating Income +12.2%) improved the consolidated mix with Operating Margin 20.4% (+50bp), acting as a high-margin growth driver. Continued accumulation of corporate DX, security, and data center (e.g., Sakai AI Data Center) projects has increased its scale to represent 24.0% of consolidated operating income. If double-digit growth persists, it can compensate for delayed profitability recovery in the Personal segment and support consolidated Operating Margin and medium-term growth acceleration. Key disclosure points are quarterly trends in Business-segment operating income and margins, with backlog and contract liabilities accumulation enhancing future revenue visibility.
Strong cash generation and scope for working-capital efficiency improvement: Operating CF / Net Income 2.29x, Operating CF / EBITDA 1.00x, and accrual ratio −5.7% indicate excellent cash generation, with FCF ¥7084.0B covering total returns ¥7552.0B while still securing net cash increase. However, DSO of 194 days and accounts receivable increase −¥2621.0B are working-capital headwinds. If DSO reduction initiatives (AI/system alert functions, strengthened credit management) materialize next period, working-capital improvements could convert to positive effects on FCF, strengthening both shareholder returns and growth investment capacity. Key items to watch in the earnings report include growth in the Operating CF subtotal (before working-capital changes) and improvements in working-capital change amounts; CCC shortening and accelerated FCF growth could trigger mid-term valuation re-rating.
This report is an earnings analysis document automatically generated by AI that integrates 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 aggregated by the Company based on publicly available financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed before making any investment decisions.