Business Coach (9562) FY2026 Q1 Earnings Report

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Executive Summary

The financial results for Q1 of the fiscal year ending September 2026 reflected a shift from operating profitability in the same period of the previous year to an operating loss, as selling, general and administrative expenses increased amid declining revenue. Revenue was ¥4.2B, down 20.7% year on year; Operating Income deteriorated from ¥0.7B in the same period of the previous year to ¥-0.2B, while Ordinary Income declined from ¥0.8B to ¥-0.2B. Net Income declined from ¥0.6B in the same period of the previous year to a loss of ¥-0.2B, representing YoY -127.9%. Although the gross profit margin improved to 66.3% year on year, the SG&A expense ratio increased to 70.3%, putting pressure on earnings.

Factors Affecting Performance

【Revenue】Revenue was ¥4.2B, down 20.7% year on year. Although segment-level revenue composition data was not disclosed, progress against the full-year forecast of ¥21.0B was 20.1%, below the standard quarterly progress rate of 25%. As the full-year forecast assumes a 4.8% increase in revenue year on year, recovery from Q2 onward is a prerequisite.

【Profit and Loss】Cost of sales was contained at ¥1.4B, resulting in a gross profit margin of 66.3%, an improvement from the same period of the previous year. Meanwhile, SG&A expenses increased 14.3% year on year to ¥3.0B, and the SG&A expense ratio rose significantly to 70.3%. As a result, Operating Income was ¥-0.2B and Ordinary Income was also ¥-0.2B. With no significant impact from non-operating income and expenses, the deterioration in the core business was reflected directly in earnings. Net Income was also a loss of ¥-0.2B, resulting in lower revenue and lower profit.

Key Financial Indicators

【Profitability】The Operating Income margin was -4.0% and the Net Income margin was -3.8%, both significantly deteriorating from 13.7% and 10.7%, respectively, in the same period of the previous year. The gross profit margin improved to 66.3% from 62.7% in the same period of the previous year, indicating progress in cost management itself.【Cash Flow Quality】Contract liabilities were ¥0.2B, equivalent to approximately 4.7% of revenue. Work in process of ¥0.04B accounted for the majority of inventory items, although its monetary significance was small.【Investment Efficiency】Annualized ROE was -4.8%. While net assets expanded due to capital strengthening, monetization has been delayed.【Financial Soundness】The Equity Ratio was 89.6%, and the current ratio was equivalent to 801.5%, both extremely high. Cash and deposits of ¥9.8B accounted for 64.1% of total assets. The debt-to-equity ratio was low at 0.12x, indicating a conservative financial base.

Cash Flow Analysis

Although cash flow statement data was not provided, funding trends can be confirmed from changes in the balance sheet. Cash and deposits were ¥9.8B, an increase of approximately ¥5.0B from ¥4.8B in the same period of the previous year. This increase is consistent with capital stock and capital surplus each increasing by ¥3.4B, suggesting that funding expansion through capital raising was the primary factor. Meanwhile, retained earnings were ¥3.1B, a decrease of ¥0.7B year on year, as the quarterly net loss put pressure on retained earnings. On-hand liquidity is ample, with cash and deposits at approximately 6.2x current liabilities of ¥1.6B, indicating limited concern regarding short-term funding.

Earnings Quality

The deterioration in earnings this time was not attributable to extraordinary gains or losses but to a structural increase in SG&A expenses in the core business. Non-operating income and non-operating expenses were both immaterial, and the divergence between Ordinary Income and Net Income (net loss for the period of ¥-0.2B) was also small. Accordingly, the deterioration in operating results was reflected almost directly in final earnings. The improvement in the gross profit margin to 66.3% can be viewed favorably from the perspective of earnings quality; however, the increase in the SG&A expense ratio to 70.3% caused operating leverage to work in the unfavorable direction. Comprehensive Income was ¥-0.2B, nearly matching Net Income, with no significant divergence attributable to other comprehensive income.

Earnings Forecast and Guidance

The full-year forecasts are revenue of ¥21.0B (+4.8% year on year), Operating Income of ¥3.0B (+83.1%), and Ordinary Income of ¥3.0B (+68.1%). Q1 revenue progress was 20.1%, while both Operating Income and Ordinary Income were losses for the quarter, below the standard progress rate of 25%. Achieving the full-year plan will require not only a recovery in revenue from Q2 onward but also a significant normalization of the SG&A expense ratio. No revisions have been made to the earnings forecast, although the dividend forecast has been revised to reflect the stock split.

Shareholder Returns

The projected annual dividend for the fiscal year ending September 2026 is ¥17 after reflecting the 3-for-1 stock split effective April 1, 2026. Without reflecting the split, the annual dividend would be ¥51. Based on projected EPS of ¥48.71, the projected Payout Ratio is approximately 34.9%, below the sustainability guideline of 60% if dividends alone are considered. However, Q1 resulted in a loss of EPS -¥13.48, and the capacity to pay dividends depends on earnings recovery for the full year. Cash and deposits of ¥9.8B and the low debt-to-equity ratio of 0.12x support financial capacity for dividend payments. No disclosure regarding share repurchases has been made.

Risk Factors

1. Revenue recovery risk: Revenue decreased 20.7% year on year, and progress against the full-year forecast was 20.1%, below the standard progress rate. Recovery in orders and operating activity from Q2 onward is a prerequisite for achieving the full-year plan.

2. SG&A front-loading risk: SG&A expenses increased 14.3% year on year, and the SG&A expense ratio rose to 70.3%. Fixed costs are increasing ahead of revenue during a period of declining sales, creating the possibility that losses may persist.

3. Capital efficiency risk: Annualized ROE was -4.8% and the Operating Income margin was -4.0%. While net assets expanded through capital raising, monetization of invested capital has been delayed. The pace of improvement needs to be monitored.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The company’s profitability is significantly below the industry median, placing it in the lower tier of the industry due to its loss-making level.

Growth and Capital Efficiency

While the industry as a whole is trending toward revenue growth, the company’s revenue declined, placing it in the lower tier of the industry in terms of growth as well.

※Source: Compiled by the Company

Key Points from the Financial Results

1. Although the gross profit margin improved year on year, the sharp increase in the SG&A expense ratio caused the Operating Income margin to decline to -4.0%. Cost management is progressing, but the decline in fixed-cost absorption capacity is the primary cause of the deterioration in performance.

2. The conservative financial base—cash and deposits of ¥9.8B, an Equity Ratio of 89.6%, and a debt-to-equity ratio of 0.12x—supports resilience during a period of deteriorating earnings.

3. Q1 progress against the full-year forecast was 20.1% for revenue, while both Operating Income and Net Income were losses, below the standard progress rate. Achieving the full-year plan will require a significant improvement in profitability over the remaining 3 quarters.

Theoretical Share Price (Reference Value)

Sensitivity: ¥806–¥852 at ±1% for the cost of equity, and ¥824–¥832 at ±0.1 for ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a time difference relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model used: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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