| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥642.8B | ¥643.6B | -0.1% |
| Operating Income / Operating Profit | ¥35.0B | ¥39.2B | -10.7% |
| Ordinary Income | ¥38.7B | ¥39.4B | -1.8% |
| Net Income / Net Profit | ¥27.2B | ¥25.9B | +4.8% |
| ROE | 5.6% | 5.2% | - |
For the fiscal year ended March 2026, Revenue was ¥642.8B (YoY -¥0.9B -0.1%), Operating Income was ¥35.0B (YoY -¥4.2B -10.7%), Ordinary Income was ¥38.7B (YoY -¥0.7B -1.8%), and Net Income was ¥27.2B (YoY +¥1.3B +4.8%). While top-line and operating profit declined, Net Income increased. Gross profit margin was 41.5% (YoY -0.6pt), and operating margin was 5.4% (YoY -0.7pt), indicating weakening core profitability. Net Income outperformed the prior year due to a special gain on sale of available-for-sale securities of ¥4.3B and reduced foreign exchange losses (¥0.3B versus ¥2.1B prior). Operating Cash Flow (OCF) decreased to ¥71.1B (YoY -26.2%) but remained 2.6x Net Income, supporting cash backing of profits. Free Cash Flow was limited to ¥5.2B, insufficient to cover dividend payments (¥22.0B). Financially, cash was ¥115.4B against interest-bearing debt of ¥19.4B, implying net cash of approximately ¥96B and an Equity Ratio of 67.9%, reflecting solid balance-sheet resilience. Goodwill increased by ¥6.0B YoY, suggesting consolidation scope expansion. Guidance for the next fiscal year forecasts Revenue ¥660B (+2.7%), Operating Income ¥36B (+2.8%), and Net Income ¥25B (-8.2%), reflecting a conservative outlook that incorporates the reversal of special gains.
[Revenue] Revenue was ¥642.8B, essentially flat YoY (¥-0.9B, -0.1%). As a single-segment company (location information services related business), detailed breakdowns are not disclosed, but topline stagnation suggests core business maturation and intensified market competition. In the maps/location information market, entry by platform players has created price pressure, limiting sales growth drivers. Gross profit was ¥266.6B, with a gross profit margin of 41.5%, worsening by -0.6pt from 42.1% a year earlier. Cost of sales was ¥376.1B, a cost ratio of 58.5% (+0.6pt YoY), making the deterioration in profitability apparent.
[Profitability] SG&A expenses were ¥231.6B, 36.0% of sales, roughly unchanged YoY, but cost rigidity amid flat sales reduced operating leverage. As a result, Operating Income was ¥35.0B (YoY -¥4.2B, -10.7%), and the operating margin fell to 5.4% from 6.1% (-0.7pt). Non-operating income included dividend income of ¥1.2B and equity-method investment income of ¥0.4B, totaling ¥4.4B. Foreign exchange losses narrowed to ¥0.3B (from ¥2.1B prior), and interest expense was minor at ¥0.2B, keeping non-operating expenses to ¥0.8B. Ordinary Income was ¥38.7B (YoY -¥0.7B, -1.8%). Extraordinary income included a ¥4.3B gain on sales of available-for-sale securities, resulting in extraordinary income of ¥4.3B; extraordinary losses totaled ¥2.2B (impairment loss ¥0.5B, loss on disposal of fixed assets ¥0.6B, valuation loss on available-for-sale securities ¥0.3B). Pre-tax income was ¥40.8B, income taxes ¥13.6B (effective tax rate 33.3%). After adjusting for non-controlling interests loss of ¥0.2B, Net Income was ¥27.2B (YoY +¥1.3B, +4.8%). Net profit margin improved to 4.2% from 4.0% (+0.2pt), but given operating-stage decline and one-off gains, sustainable improvement in core profitability is questionable. In conclusion, the pattern was lower sales and operating profit, with Net Income increasing due to special items.
[Profitability] Operating margin was 5.4%, net margin 4.2%, and gross margin 41.5%. ROE was 5.6%, consistent with Net Margin 4.2% × Total Asset Turnover 0.89x × Financial Leverage 1.47x. EBITDA (Operating Income + Depreciation & Amortization) is approximately ¥89.5B, implying an EBITDA margin of 13.9%. [Cash Quality] OCF / Net Income was 2.60x, indicating strong cash backing of profits; the accrual ratio was -6.1%, a healthy level. However, OCF / EBITDA was 0.79x, below the benchmark (≥0.9x), as working capital burden limited cash conversion. Days Sales Outstanding (DSO) was 69 days, showing a tendency to lengthen and highlighting collections efficiency as an issue. [Investment Efficiency] Total asset turnover was 0.89x. Intangible assets were ¥151.7B, 21.1% of total assets, including software ¥107.2B and goodwill ¥9.9B. Capital expenditures were ¥52.8B, roughly in line with Depreciation & Amortization of ¥54.5B, indicating maintenance/renewal-level investment. [Financial Soundness] Equity Ratio was 67.9%, current ratio 125.6%, and quick ratio 121.7%, indicating adequate short-term liquidity. Interest-bearing debt was ¥19.4B (short-term borrowings ¥15.5B, long-term borrowings ¥3.9B) against cash of ¥115.4B, yielding net cash of about ¥96B. Debt/EBITDA was 0.22x and Interest Coverage was 175x, reflecting a very strong financial position. However, the short-term debt ratio was high at 79.9%, indicating most liabilities are concentrated within one year.
OCF was ¥71.1B, down 26.2% YoY, but remained 2.6x Net Income, supported by Depreciation & Amortization of ¥54.5B, sustaining high-quality cash generation. OCF before working capital changes (subtotal) was ¥86.3B; after corporate tax payments of ¥18.1B, operating cash generation was sound. In working capital, a decrease in accounts receivable contributed ¥3.3B, inventory increase was -¥0.4B, and decrease in accounts payable was -¥3.0B, resulting in net working capital burden that suppressed cash conversion. Investing Cash Flow was -¥65.9B, with major outflows including acquisition of tangible and intangible fixed assets ¥52.8B, purchases of available-for-sale securities ¥13.1B, and acquisition of subsidiary shares ¥7.0B. Proceeds included ¥5.6B from sales of available-for-sale securities and ¥1.6B from sales of subsidiary shares. Free Cash Flow was limited to ¥5.2B (OCF ¥71.1B + Investing CF -¥65.9B), insufficient to cover dividend payments of ¥22.0B. Financing Cash Flow was -¥29.0B, primarily due to dividend payments -¥22.0B, net decrease in short-term borrowings -¥16.0B, long-term loan repayments -¥5.1B, and lease liability repayments -¥2.0B. Cash and cash equivalents decreased from ¥138.1B at the beginning of the period to ¥115.4B at the end of the period (-¥23.7B), indicating dividends and investment were funded from existing cash. OCF / EBITDA of 0.79x is slightly below the benchmark, so improving working capital efficiency is key to raising cash conversion.
Operating Income of ¥35.0B was supplemented by non-operating income of ¥4.4B (including dividend income ¥1.2B and equity-method investment income ¥0.4B) and non-operating expenses of ¥0.8B, producing Ordinary Income of ¥38.7B. The incremental amount from non-operating activities was limited to ¥3.7B, indicating high dependence on core earnings. Extraordinary income of ¥4.3B from sale of available-for-sale securities boosted pre-tax income by ¥2.1B and represented a temporary factor accounting for about 16% of Net Income ¥27.2B. Foreign exchange losses of ¥0.3B narrowed significantly from ¥2.1B the prior year, contributing to stability in non-operating income. Comprehensive income was ¥8.0B, diverging from Net Income of ¥27.2B by -¥19.2B, mainly due to valuation differences on available-for-sale securities of -¥20.7B. Market fluctuations reduced unrealized gains on available-for-sale securities and pressured equity, but because these are unrealized, short-term impact on earnings quality is limited. With OCF ¥71.1B versus Net Income ¥27.2B, OCF/NI was 2.60x and the accrual ratio was -6.1%, indicating strong cash backing of accounting profit. However, absent the special gain and FX improvement, the company would have fallen short at the ordinary income stage, so sustained profitability improvement requires margin recovery at the operating level.
Guidance for the next fiscal year (FY ending March 2027) forecasts Revenue ¥660B (+2.7% YoY), Operating Income ¥36B (+2.8%), Ordinary Income ¥39B (+0.9%), Net Income ¥25B (-8.2%), EPS forecast ¥46.83, and Dividend forecast ¥21. Revenue and Operating Income are expected to increase slightly, assuming a rebound from this year’s stagnation. Net Income is forecast to decline -8.2% YoY, reflecting the reversal of this year’s ¥4.3B gain on sale of available-for-sale securities and normalization of tax burden; the outlook is conservative. Progress against the full-year forecast for this period was high: Revenue 97.4%, Operating Income 97.2%, and Ordinary Income 99.2%, indicating a high probability of meeting guidance. The Dividend forecast ¥21 corresponds to the year-end portion of this year’s dividend (this year ¥42 total: interim ¥21 and year-end ¥21), implying a 50% cut on an annual basis. Forecast payout ratio is about 44.8%, down significantly from this year’s 71.7%, interpreted as a return to a sustainable level after one-off gains. Revenue growth forecast +2.7% is well below the industry median +10.1%, and operating margin of 5.5% (¥36B/¥660B) is also below the median 8.1%, suggesting continued relative underperformance in growth and profitability within the industry.
This year’s annual dividend was ¥42 (interim ¥21, year-end ¥21), with a payout ratio of 71.7%, a high level. Weighted average shares outstanding were 53,384 thousand shares. With Net Income ¥27.2B, total dividends are estimated at approximately ¥22.0B, and Free Cash Flow ¥5.2B could not cover dividends, indicating reliance on cash on hand and proceeds from sales of available-for-sale securities for returns. No share buybacks were disclosed; Total Return Ratio equals the payout ratio. Next year’s dividend forecast is ¥21, implying a 50% reduction on an annual basis. Forecast payout ratio is about 44.8% (Dividend ¥21 vs forecast EPS ¥46.83), signaling a return to a sustainable level. Net cash of about ¥96B and an Equity Ratio of 67.9% provide ample financial flexibility and secure medium- to long-term dividend resources, but in the short term, recovery of core profits and stabilization of OCF are prerequisites for sustainable returns. Although no explicit dividend policy was provided, historical dividends and the forecast payout ratio suggest a stance toward stable dividends aligned with profit growth.
Risk of deterioration in core profitability: Gross margin was 41.5% (YoY -0.6pt) and operating margin 5.4% (YoY -0.7pt), making weakening core profitability apparent. SG&A ratio of 36.0% is flat, indicating high cost rigidity; in a sales stagnation scenario, operating leverage is limited. Continued competition and platform entrants in the maps/location information market could sustain price pressure, risking further gross margin and operating margin erosion. Operating margin of 5.4% is 2.7pt below the industry median 8.1%, posing a risk of structural relative profitability weakness.
Risk of deteriorating collections efficiency and working capital burden: DSO of 69 days is lengthening, suggesting deterioration relative to prior estimates. OCF/EBITDA of 0.79x is below the 0.9x benchmark, indicating working capital burdens suppress cash conversion. Despite accounts receivable declining by ¥3.3B, accounts payable also decreased by ¥3.0B, limiting net working capital improvement. Prolonged DSO increases bad debt risk and reduces capital efficiency, potentially undermining OCF stability. Strengthening collections management is urgent.
Short-term debt concentration and dividend sustainability risk: Short-term debt ratio of 79.9% concentrates liabilities within one year, creating a nominal maturity mismatch. Cash / short-term debt of 7.45x demonstrates strong practical liquidity, but Free Cash Flow ¥5.2B versus dividend payments ¥22.0B indicates insufficient internal funding. This period maintained returns through a ¥4.3B gain on sale of securities and drawing down cash, but next year’s forecasts imply Net Income -8.2% and dividends -50%, highlighting limits to a returns structure dependent on one-off items. Without stable OCF and improved collections, maintaining dividend levels may be difficult.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.4% | 8.1% (3.6%–16.0%) | -2.7pt |
| Net Margin | 4.2% | 5.8% (1.2%–11.6%) | -1.6pt |
Both operating margin and net margin are below industry median, placing profitability in the mid-to-lower range within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.1% | 10.1% (1.7%–20.2%) | -10.2pt |
Revenue growth is 10.2pt below the industry median, indicating significant lag in growth.
※ Source: Company compilation based on public financial statements
Reversal of special gains and dividend policy shift: Net Income ¥27.2B this year was supported by a ¥4.3B gain on sale of available-for-sale securities (about 16% of Net Income). Next year’s guidance implies Net Income -8.2% and dividends -50%. Payout ratio is expected to revert from 71.7% to 44.8%, adjusting back to a sustainable level. The gap between Free Cash Flow ¥5.2B and dividends ¥22.0B that required cash drawdown is being addressed, but recovery of operating profitability is key to sustaining returns.
Room to improve working capital efficiency and cash conversion: DSO of 69 days and OCF/EBITDA of 0.79x indicate scope to improve collections and working capital efficiency. While generating OCF ¥71.1B with flat revenue is commendable, simultaneous compression of accounts receivable and accounts payable suggests changing trading terms. Shortening the collection cycle and optimizing payable terms to raise OCF/EBITDA above 0.9x would expand self-funded investment and return capacity.
Monitoring dependence on intangible assets and monetization efficiency: Intangible assets of ¥151.7B (21.1% of total assets), including software ¥107.2B and goodwill ¥9.9B, indicate high reliance on intellectual assets. Goodwill increased ¥6.0B YoY (+150%), suggesting consolidation scope expansion, but goodwill/EBITDA of 0.11x implies light recovery burden. Risks include amortization/impairment of software and technology obsolescence, which could affect medium-to-long-term profitability. CapEx ¥52.8B / D&A ¥54.5B ≒ 0.97x points to maintenance-focused investment, but ongoing monitoring of intangible asset monetization efficiency (intangibles / Operating Income, trend in intangibles / Revenue) is important to confirm contribution to ROE improvement.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement 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 statement data. Investment decisions are your responsibility; consult professionals as necessary before making investment decisions.