| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥51.6B | ¥52.5B | -1.8% |
| Operating Income | ¥6.0B | ¥5.9B | +1.8% |
| Ordinary Income | ¥4.4B | ¥5.6B | -20.8% |
| Net Income | ¥3.9B | ¥3.7B | +6.4% |
| ROE | 3.6% | 4.1% | - |
In FY2026 Q3 consolidated results, Revenue was ¥51.6B (YoY -¥0.9B -1.8%), Operating Income was ¥6.0B (YoY +¥0.1B +1.8%), Ordinary Income was ¥4.4B (YoY -¥1.2B -20.8%), and Net Income was ¥3.9B (YoY +¥0.2B +6.4%). Although revenue declined slightly, the company maintained a Gross Profit Margin of 47.2% and secured operating profit growth through SG&A control. Operating Margin remained high at 11.6% (YoY +0.4pt improvement). Ordinary Income declined due to higher non-operating expenses, but EPS rose to 24.43円 (previous year 20.88円), achieving growth in profit attributable to shareholders. Comprehensive Income expanded significantly to ¥22.07B, with unrealized gains such as valuation differences on available-for-sale securities boosting Net Assets to ¥108.8B (YoY +¥18.3B).
[Profitability] ROE 3.6% (Net Profit Margin 7.6% × Total Asset Turnover 0.282 × Financial Leverage 1.68x), Operating Margin 11.6% (YoY +0.4pt), and Gross Profit Margin 47.2% remain at high levels. ROIC of approximately 3.7% indicates room for improvement in invested capital efficiency. [Cash Quality] Cash and Deposits ¥31.1B, with cash coverage of short-term liabilities at 1.27x. Interest Coverage is 22.96x, indicating ample debt-servicing capacity. [Investment Efficiency] Total Asset Turnover 0.282x, EPS 24.43円 (YoY +17.0%). [Financial Soundness] Equity Ratio 59.5% (previous year 58.3%), Current Ratio 444.2%, and Quick Ratio 427.9%, indicating abundant short-term liquidity. The Debt-to-Equity Ratio is 0.68x and the Debt/Capital ratio is 23.8%, reflecting a conservative capital structure; however, note that the Short-term Liabilities Ratio is 72.1%, indicating high dependence on Short-term Loans Payable of ¥24.5B.
Cash and Deposits increased by +¥2.4B from ¥28.7B to ¥31.1B, with the accumulation of Net Income strengthening the funding base. In working capital, Accounts Payable decreased by -¥1.0B (-25.8%) from ¥3.9B to ¥2.9B, suggesting changes in payment terms or tighter management of trade payables. Intangible Assets also decreased by -¥0.1B (-29.2%) from ¥0.5B to ¥0.3B, confirming amortization of intangibles. Short-term Loans Payable were ¥24.5B, nearly flat YoY, indicating continued reliance on short-term debt. Current Assets were ¥75.2B, accounting for 41.1% of Total Assets; against Short-term Liabilities of ¥16.9B, current asset coverage is 4.4x, indicating sufficient short-term payment capacity. Interest burden is light at ¥0.3B, and Interest Coverage is about 23x against Operating Income of ¥6.0B, indicating ample headroom. Of the ¥22.1B in Comprehensive Income, valuation differences contributed significantly; the sustainability of capital enhancement through operating cash generation will be a key focus going forward.
Against Ordinary Income of ¥4.4B and Operating Income of ¥6.0B, net non-operating income/expenses represent a burden of approximately -¥1.6B. The decline in Ordinary Income (YoY -20.8%) is mainly due to increased non-operating expenses, presumably including foreign exchange losses in addition to interest expenses of ¥0.3B. At the Operating Income level, the company secured growth of +1.8% YoY, indicating stable core earnings power. Net Income of ¥3.9B is after deducting extraordinary gains/losses and taxes from Ordinary Income of ¥4.4B, and the Net Profit Margin of 7.6% (previous year approximately 7.0%) is on an improving trend. Comprehensive Income of ¥22.1B significantly exceeds Net Income of ¥3.9B, characterized by the recording of approximately ¥18B in unrealized gains on available-for-sale securities and other valuation gains. As valuation gains are non-recurring factors, operating cash flow generated by core operations will be an important indicator for assessing future earnings quality. While the stability of Operating Income and margin improvement are favorable, given that the majority of Comprehensive Income is valuation differences, it is necessary to monitor the balance with recurring profit-generating capacity.
Revenue growth stagnation risk: Revenue was -1.8% YoY and moved in a flat range, and changes in the external environment and intensifying competition could put downward pressure on sales. Valuation gains dependency risk: Of the ¥22.1B in Comprehensive Income, approximately ¥18B are valuation gains, creating a risk of capital volatility due to fluctuations in the securities market. If not backed by cash generation from core operations, capital stability may become an issue. Refinancing risk: With a Short-term Liabilities Ratio of 72.1% and Short-term Loans Payable of ¥24.5B, dependence on short-term debt is high, and there is a possibility that refinancing will become difficult in the event of a sudden change in financial conditions. Capital efficiency risk: With ROIC approximately 3.7% and ROE 3.6%, profitability relative to invested capital is low; if the Total Asset Turnover of 0.282x does not improve, medium- to long-term shareholder value creation may be constrained. Non-operating expense volatility risk: Ordinary Income has decreased by -26.6% versus Operating Income, and fluctuations in foreign exchange losses and financial costs may pressure profits.
[Industry Positioning] (Reference information, Our Research) Compared with the IT & Telecommunications sector (Q3 2025, 68 companies), the following characteristics are observed. Profitability: Operating Margin of 11.6% significantly exceeds the sector median of 6.4% (IQR: 2.0%–13.5%), indicating top-tier profitability within the sector. The Net Profit Margin of 7.6% also exceeds the sector median of 4.8% (IQR: 0.6%–9.4%), reflecting a favorable margin level. ROE of 3.6% is below the sector median of 7.3% (IQR: 0.9%–12.1%), placing it below average in capital efficiency. Soundness: The Equity Ratio of 59.5% slightly exceeds the sector median of 55.2% (IQR: 42.5%–67.3%), indicating financial safety above industry standard. The Current Ratio of 444.2% significantly exceeds the sector median of 208% (IQR: 156%–301%), indicating extremely high short-term liquidity. Growth: Revenue growth of -1.8% is below the sector median of +12.0% (IQR: +2.0%–+24.5%), indicating lagging top-line expansion within the sector. Return on assets is broadly consistent with the sector median of 3.8% (IQR: 0.5%–6.0%). Overall, while profitability and financial soundness remain top-tier within the industry, growth and capital efficiency are positioned below the sector average. (Source: Our aggregation, comparison universe: IT & Telecommunications sector, 68 companies, Q3 2025)
Sustained high operating margin and ample short-term liquidity: The Operating Margin of 11.6% far exceeds the sector median of 6.4%, and combined with a Gross Profit Margin of 47.2%, core earnings power remains advantageous within the sector. With a Current Ratio of 444.2% and Cash and Deposits of ¥31.1B, short-term liquidity is abundant, and short-term funding risk in business operations is low. Room to improve capital efficiency and growth: With ROE 3.6%, ROIC 3.7%, and Total Asset Turnover 0.282x, capital efficiency is below the sector average, and Revenue growth of -1.8% lags the sector median of +12.0%. Key watch points going forward are: (1) accelerating growth through revenue recovery or securing new revenue streams, and (2) improving capital turnover through better working capital efficiency and effective asset utilization. Dependence on short-term debt and impact of valuation differences: With a Short-term Liabilities Ratio of 72.1% and high dependence on short-term borrowings, attention is needed to refinancing risk amid changing financial conditions. As the majority of Comprehensive Income comprises valuation gains, a medium-term monitoring point will be whether operating cash flow generation from core operations supports sustained capital enhancement.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information aggregated by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any investment decisions.