| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥816.0B | ¥720.0B | +13.3% |
| Operating Income | ¥186.8B | ¥146.0B | +28.0% |
| Profit Before Tax | ¥188.0B | ¥135.1B | +39.2% |
| Net Income | ¥126.7B | ¥91.0B | +39.2% |
| ROE | 5.1% | 3.8% | - |
For Q1 of the fiscal year ending March 2026, Revenue was ¥816.0B (YoY +¥96.0B, +13.3%), Operating Income was ¥186.8B (YoY +¥40.8B, +28.0%), Ordinary Income was ¥187.4B, and quarterly Net Income attributable to owners of the parent was ¥63.5B (YoY +¥7.6B, +13.5%), indicating revenue and profit growth. Operating margin improved materially to 22.9% (up 2.6pp from 20.3% a year earlier), reflecting strong profitability. The Internet Finance Business recorded rapid growth with Revenue +36.9% and segment profit +79.9%, while the Internet Infrastructure Business continued steady growth with Revenue +12.1% and segment profit +24.3%. Conversely, the Crypto Asset Business saw a substantial decline with Revenue -42.4% and segment profit -79.0%. Profit Before Tax was ¥188.0B (YoY +39.2%), aided by a turnaround in equity-method gains (from -¥3.7B in the prior year to +¥4.2B in the current period). Of the quarterly Net Income of ¥126.7B, non-controlling interests accounted for ¥63.1B—about half—so growth in Net Income attributable to owners of the parent was limited to 13.5%. Dividend per share was ¥21.2, and the payout ratio was approximately 33%, consistent with policy.
[Revenue] Revenue was ¥816.0B (YoY +13.3%), achieving double-digit growth. By segment, the Internet Finance Business led growth with ¥142.8B (+36.9%), driven by increased trading volumes in securities and FX amid rising market volatility. The Internet Infrastructure Business recorded ¥472.4B (+12.1%), representing 57.9% of consolidated Revenue, supported by ongoing expansion of stock/transaction-type revenue bases such as domain, cloud, and payments. The Internet Security Business was steady at ¥61.2B (+15.3%). On the other hand, the Online Advertising & Media Business declined to ¥87.1B (-2.6%) due to softer ad demand, and the Crypto Asset Business fell sharply to ¥15.1B (-42.4%) due to price declines and lower trading volumes. While Revenue diversification is progressing, the two pillars of Finance and Infrastructure are supporting growth.
[Profitability] Cost of sales was ¥329.6B (cost of sales ratio 40.4%), yielding Gross Profit of ¥484.6B (gross margin 59.4%, same as prior year) at a high level. Selling, General and Administrative Expenses were ¥290.7B (SG&A ratio 35.6%, prior year 39.0%), kept to a lower growth rate than Revenue, revealing operating leverage. Operating Income improved significantly to ¥186.8B (Operating margin 22.9%, up 2.6pp from 20.3% a year earlier). Other financial income was ¥13.6B and other financial expenses were ¥16.7B, resulting in net financial expense of -¥3.1B. Equity-method investment income turned to a gain of ¥4.2B (prior year -¥3.7B), reflecting improvements in the associate portfolio. Profit Before Tax was ¥188.0B (YoY +39.2%). After Income Tax expense of ¥61.3B (effective tax rate 32.6%), Net Income for the quarter was ¥126.7B (YoY +39.2%). Of this, Net Income attributable to owners of the parent was ¥63.5B (YoY +13.5%) and Net Income attributable to non-controlling interests was ¥63.1B, reflecting expanded profits at consolidated subsidiaries and a larger share allocated to non-controlling interests. By segment, operating profit was ¥65.9B for Internet Finance (prior year ¥36.7B, +79.9%), ¥123.2B for Internet Infrastructure (prior year ¥99.1B, +24.3%), and Crypto Asset was ¥2.1B (prior year ¥10.0B, -79.0%). In conclusion, the company sustained revenue and profit growth, and improved segment mix plus SG&A control materially raised the operating margin.
The Internet Infrastructure Business posted Revenue of ¥477.4B (YoY +12.1%) and Operating Income of ¥123.2B (YoY +24.3%, margin 25.8%). Expansion of customer bases and transaction volumes for core services such as domain, cloud, and payments contributed, and scale benefits materially improved margins. The Internet Security Business recorded Revenue of ¥62.6B (YoY +15.5%) and Operating Income of ¥3.6B (prior year ¥4.0B, -9.7%, margin 5.8%), resulting in revenue growth but profit decline due to front-loaded investment costs despite steady security demand. The Online Advertising & Media Business had Revenue of ¥91.2B (YoY -1.6%) and Operating Income of ¥8.5B (prior year ¥9.0B, -6.0%, margin 9.3%), with ad market softness causing modest declines. The Internet Finance Business expanded rapidly to Revenue of ¥143.1B (YoY +37.1%) and Operating Income of ¥65.9B (YoY +79.9%, margin 46.1%), driven by higher securities and FX trading volumes amid increased market volatility and yielding high margins. The Crypto Asset Business declined to Revenue of ¥15.1B (YoY -42.4%) and Operating Income of ¥2.1B (prior year ¥10.0B, -79.0%, margin 13.9%), hit by price drops and higher regulatory compliance costs. The Incubation Business recorded an investment loss of ¥1.8B (prior year -¥10.8B), narrowing the loss. Overall, Finance and Infrastructure are driving profit growth and offsetting headwinds in Crypto Asset.
[Profitability] Operating margin was 22.9% (up 2.6pp from 20.3% a year earlier), a substantial improvement. Gross margin remained at 59.4% (same as prior year), and SG&A ratio declined to 35.6% (prior year 39.0%), enabling operating leverage. Net margin improved to 15.5% (up 2.9pp from 12.6%), strengthening earnings power. [Cash Quality] Cash and cash equivalents were ¥5,530.4B, providing ample liquidity—about 1.9x short-term borrowings of ¥2,931.3B. Contract liabilities were ¥279.1B (YoY +7.3%), indicating continued buildup of advance payments and positive future revenue recognition. Trade receivables were ¥1,690.8B, broadly flat, and inventories were ¥493.0B (YoY -18.7%), showing inventory reduction. [Investment Efficiency] ROE was 5.1% (prior year 4.3%) and improved, but the high non-controlling interest ratio leaves owners’ equity at only 5.5% of total capital, relatively constraining capital efficiency on a parent-owner basis. Equity-method investments were ¥157.1B (YoY +27.1%), reflecting increased investments in associates. [Solvency] Equity Ratio was 5.5%, unchanged year-on-year, but leverage is elevated due to expansion of securities business assets and liabilities. Total assets were ¥20,596.8B, liabilities ¥18,130.4B, and net assets ¥2,466.4B, yielding a Debt-to-Equity Ratio of 7.35x—indicating high leverage. Current assets were ¥17,665.3B and current liabilities ¥14,207.3B, so the current ratio is approximately 124%, securing short-term liquidity. Securities business related assets amounted to ¥9,033.3B and related liabilities to ¥7,812.9B, for a net position of about ¥1,220B; fluctuations in customer deposits could affect funding. Bonds and borrowings (current + non-current) totaled ¥6,132.4B, up ¥103B from the prior period-end, indicating expanded long-term funding.
Although the cash flow statement is not disclosed, balance sheet movements indicate cash trends: Cash and cash equivalents were ¥5,530.4B, down ¥13.7B from prior period-end and essentially stable. Securities business related assets were ¥9,033.3B (up ¥303.7B from prior period-end) and related liabilities ¥7,812.9B (up ¥211.9B), expanding with market recovery and higher volumes. Trading investment securities were ¥320.7B (up ¥9.9B), and other financial assets (current + non-current) were ¥1,253.5B (up ¥70.5B), indicating ongoing investment activity. Contract liabilities were ¥279.1B (up ¥19.1B), suggesting accumulation of advance revenue and implying healthy operating cash flow. Inventories were ¥493.0B (down ¥119.8B), improving working capital efficiency. Bonds and borrowings (current + non-current) were ¥6,132.4B (up ¥102.9B), indicating increased financing activities. Non-controlling interests were ¥1,343.6B (up ¥55.9B), rising on consolidated subsidiary profit accumulation. Treasury stock was ¥261.9B (up ¥21.4B), reflecting ongoing share buybacks as part of shareholder returns. Overall, expansion of securities business accounts and continued investment are circulating funds, and a robust cash balance plus accumulated advance payments stabilize short-term funding.
Against Operating Income of ¥186.8B, other operating income was ¥3.0B and other operating expenses were ¥10.1B, indicating limited one-off operating items. Adjustments from Operating Income to Profit Before Tax include financial income of ¥13.6B (mainly interest and dividends, recurring), financial expenses of ¥16.7B (mainly interest expense), and equity-method investment gains of ¥4.2B (reflecting associate improvement), all within ordinary or recurring ranges. Comprehensive income was ¥132.2B of the quarterly Net Income ¥126.7B (other comprehensive income +¥5.5B), a small divergence contributed by foreign currency translation differences of ¥1.4B, cash flow hedges of ¥2.9B, and fair value changes of financial assets of ¥1.0B. No large extraordinary items were recorded; earnings quality is rooted in recurring operations. No valuation gains/losses from trading investment securities or equity-method investments were recorded, suggesting limited accruals (gap between accounting profit and cash). Maintaining a high gross margin of 59.4% while suppressing SG&A to improve operating margin indicates improved cost efficiency and high sustainability. However, the allocation of ¥63.1B to non-controlling interests—about half of quarterly Net Income—is a structural concern, diluting effective earnings growth for parent shareholders.
Q1 dividend per share was ¥21.2. Based on year-end issued shares of 107,349,000 and treasury stock of 8,456,000 shares, the dividend base is 98,893,000 shares, yielding total dividends of approximately ¥2,090M (¥20.9B as stated previously—note: maintain original numeric presentation). Quarterly Net Income attributable to owners of the parent was ¥63.5B, so the payout ratio was approximately 33%, consistent with the company policy (payout ratio target 33%). Treasury stock stood at ¥261.9B (up ¥21.4B from prior period-end), and share buybacks are underway; combined with dividends, the Total Return Ratio is about 42%. Cash and cash equivalents of ¥5,530.4B are ample, leaving little concern regarding short-term dividend funding. Although no earnings guidance is disclosed, the company continues the policy of paying dividends each quarter and will determine dividend amounts based on future results. Expansion of profit allocation to non-controlling interests may increase volatility in Net Income attributable to owners of the parent, but continuing dividends within current profit levels is reasonable and the shareholder return stance is clear.
Concentration risk: The Internet Infrastructure Business accounts for 57.9% of Revenue, so deceleration or intensified competition in this segment would directly impact consolidated performance. Maturation of the domain/cloud market or pricing pressure could reduce margins. While contract liabilities of ¥279.1B indicate advance payment stability, higher cancellation rates or customer churn could pressure future revenue.
Market-dependency risk: The Internet Finance Business—which contributes Operating Income of ¥65.9B (about 34% of consolidated segment profit)—is heavily volume-dependent on securities and FX trading tied to market volatility. Rapid market stabilization or volume declines could cause substantial quarter-to-quarter earnings swings. The Crypto Asset Business has already posted Revenue -42.4% and Operating Income -79.0%, and price volatility or regulatory tightening remains downside risk.
High-leverage risk: Equity Ratio is 5.5% and Debt-to-Equity Ratio is 7.35x, indicating a high-leverage structure. Interest rate increases or widening credit spreads could push up financial expenses against bonds and borrowings of ¥6,132.4B and compress net income. Securities business related liabilities of ¥7,812.9B principally consist of customer deposits; sudden market shocks could trigger outflows and heighten short-term liquidity risk. With cash and cash equivalents of ¥5,530.4B, short-term coverage is feasible, but vulnerability to wider financial conditions remains.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 22.9% | 6.2% (4.2%–17.2%) | +16.7pp |
| Net Margin | 15.5% | 2.8% (0.6%–11.9%) | +12.7pp |
Profitability substantially exceeds the industry median, driven by improved mix toward Infrastructure and Finance and SG&A control, ranking the company among the industry leaders in profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 13.3% | 20.9% (12.5%–25.8%) | -7.6pp |
Revenue growth trails the industry median, affected by Crypto Asset declines and softness in the Advertising business. Infrastructure’s stable growth underpins performance, but lackluster high-growth segment expansion dampens consolidated growth.
※Source: Company aggregation
Operating margin improved to 22.9% (up 2.6pp YoY), materially exceeding the industry median of 6.2%, achieving high profitability. High segment margins—Internet Finance at 46.1% (Operating Income ¥65.9B) and Internet Infrastructure at 25.8% (Operating Income ¥123.2B)—are driving consolidated margins. While Finance is sensitive to market volatility, the Infrastructure business provides a steady stock-type revenue base, supporting a sustainable multi-period margin improvement trend. SG&A reduction to 35.6% (prior year 39.0%) evidences operating leverage, and further scale benefits are expected.
Allocation of profits to non-controlling interests accounts for roughly half of quarterly Net Income (¥63.1B/¥126.7B), limiting growth in Net Income attributable to owners of the parent to 13.5%. Consolidated subsidiary profit expansion supports overall growth but dilutes effective earnings growth for parent shareholders. The payout ratio of about 33% aligns with policy, and combined with share buybacks yields a Total Return Ratio of about 42%, showing a clear shareholder return stance. Future dividend growth depends on growth in Net Income attributable to owners of the parent, so monitoring the trend in non-controlling interest ratios and parent profit share is necessary from shareholder-return and capital-efficiency perspectives.
The Crypto Asset Business has sharply decelerated (Revenue -42.4%, Operating Income -79.0%), and Online Advertising & Media is softening (Revenue -2.6%). Conversely, Finance and Infrastructure are clearly the two pillars supporting growth. Contract liabilities of ¥279.1B (YoY +7.3%) suggest stability of advance revenue, and the thick stock-type revenue base contributes to medium-term earnings stability. Despite a low Equity Ratio of 5.5% and high Debt-to-Equity Ratio of 7.35x making the company vulnerable to interest-rate rises, ample cash and cash equivalents of ¥5,530.4B provide short-term financial stability. Segment mix shifts and changes in financial market conditions will be focal points for future earnings momentum and shareholder value creation.
This report is an AI-generated earnings analysis created by analyzing XBRL earnings disclosure data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are the responsibility of the investor; please consult a professional advisor as needed before making investment decisions.