| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥4.33B | ¥3.97B | +9.1% |
| Operating Income | ¥0.39B | ¥0.59B | -33.6% |
| Ordinary Income | ¥0.41B | ¥0.60B | -31.1% |
| Net Income | ¥0.21B | ¥0.36B | -41.2% |
| ROE | 1.2% | 1.9% | - |
Despite higher revenue, the Company posted a substantial decline in profit due to a sharp increase in SG&A expenses and a higher tax burden, with deteriorating profitability being the defining feature of the current period. Revenue expanded to ¥4.332B (¥3.972B in the previous year, YoY+9.1%), while Operating Income was ¥0.391B (¥0.589B in the previous year, YoY-33.6%), Ordinary Income was ¥0.414B (¥0.600B in the previous year, YoY-31.1%), and Net Income (net income attributable to owners of the parent, hereinafter with the same meaning) was ¥0.207B (¥0.348B in the previous year, YoY-40.6%). The primary causes of the decline in profit were the increase in SG&A expenses to ¥2.217B (YoY+20.2%), at a pace exceeding revenue growth, and the rise in the effective tax rate to 49.0% (40.5% in the previous year).
【Revenue】The Company operates as a single segment, the Information Services Business, and does not disclose a breakdown by business. Revenue was ¥4.332B, representing YoY+9.1% growth. Contract liabilities (deferred revenue) were ¥11.148B, remaining almost flat compared with ¥11.163B in the previous year, with no significant change observed in the recurring revenue base.
【Profit and Loss】Operating Income was ¥0.391B (YoY-33.6%), and the Operating Margin declined to 9.0% from 14.8% in the previous year, a decrease of 5.8pt. Cost of sales increased to ¥1.723B (YoY+12.0%), exceeding revenue growth, and the gross margin deteriorated slightly to 60.2% (from 61.3% in the previous year, -1.1pt). In addition, SG&A expenses expanded to ¥2.217B (YoY+20.2%), outpacing revenue growth (+9.1%), and became the primary cause of the contraction in the Operating Margin. Ordinary Income was ¥0.414B (YoY-31.1%), while the impact of non-operating gains and losses was limited, consisting of ¥0.023B in non-operating income and almost zero non-operating expenses. Against Profit Before Tax of ¥0.414B, corporate income taxes and other taxes of ¥0.203B were recorded, causing the effective tax rate to rise to 49.0% (40.5% in the previous year), and compressing Net Income to ¥0.207B (YoY-40.6%). In conclusion, the Company experienced higher revenue but lower profit, with the deterioration in profitability primarily driven by core business factors involving the cost structure and tax burden.
【Profitability】The Operating Margin was 9.0%, down 5.8pt from 14.8% in the previous year, while the Net Profit Margin (based on income attributable to owners of the parent) was 4.8%, down 4.0pt from 8.8% in the previous year. Taken together with the changes in the gross margin of 60.2% (61.3% in the previous year) and the SG&A ratio of 51.2% (46.4% in the previous year), the data indicate that rising costs were the central factor behind the deterioration in profitability.【Cash Flow Quality】Comprehensive Income was ¥0.203B, almost in line with Net Income of ¥0.207B. Excluding the slight reduction attributable to a valuation difference on other securities of -¥0.006B, the divergence between the two was limited, and no significant distortion in earnings quality was observed.【Investment Efficiency】ROE was 1.2%. Intangible assets increased to ¥0.597B from ¥0.428B in the previous year, representing an increase of +39.5%, suggesting that upfront investments may be weighing on short-term asset efficiency. Basic EPS was ¥10.33, down -40.6% from ¥17.38 in the previous year, while BPS was ¥855.48, down -9.0% from ¥940.50 in the previous year.【Financial Soundness】The Equity Ratio was 52.7% (53.3% in the previous year). The current ratio remained high at 168.4%, based on current assets of ¥23.180B against current liabilities of ¥13.763B, with no concerns regarding short-term liquidity.
Cash and deposits were ¥18.474B, down -11.7% from ¥20.917B in the previous year, and the cash ratio relative to total assets also declined slightly to 56.1% (59.1% in the previous year). Nevertheless, the Company maintained substantial liquidity, significantly exceeding current liabilities of ¥13.763B. Accounts receivable were ¥2.472B, down -20.9% from ¥3.126B in the previous year, suggesting that progress in collections contributed to cash flow trends. Contract liabilities (deferred revenue) were ¥11.148B, remaining almost flat from ¥11.163B in the previous year, confirming the stability of the funding base supported by the recurring revenue model. Meanwhile, intangible assets increased to ¥0.597B (¥0.428B in the previous year, +39.5%), suggesting more active investment activity. Retained earnings were ¥14.971B, down -10.2% from ¥16.669B in the previous year, while total net assets also contracted to ¥17.352B (¥19.052B in the previous year), indicating that the decline in profit for the current period has been reflected in the capital base.
Non-operating income was ¥0.023B (including interest income of ¥0.014B and dividend income of ¥0.002B), a relatively small amount, and the majority of Ordinary Income of ¥0.414B consisted of Operating Income generated by the core business. Non-operating expenses were almost zero, and no extraordinary gains or losses were reported, indicating no impact on earnings from temporary factors. Comprehensive Income was ¥0.203B, almost in line with Net Income of ¥0.207B. Excluding the slight reduction attributable to the valuation difference on other securities of -¥0.006B, the divergence was limited, and earnings distortion from accrual-related factors was minimal. The decline in profit for the current period resulted from structural cost and tax burden factors, namely the increase in SG&A expenses and the rise in the effective tax rate (49.0%, compared with 40.5% in the previous year), rather than one-time accounting factors. This point should be noted when evaluating earnings quality.
Progress against the full-year plan was 22.8% for Revenue at ¥4.332B/¥18.971B, 30.9% for Operating Income at ¥0.391B/¥1.267B, 31.5% for Ordinary Income at ¥0.414B/¥1.314B, and 25.9% for Net Income at ¥0.207B/¥0.799B. Compared with a simple one-quarter benchmark of 25%, revenue progress was slightly below the benchmark, while progress for all profit measures exceeded it. This is because the full-year plan itself assumes substantial declines in profit, with Operating Income at YoY-48.6% and Ordinary Income at YoY-47.3%; the Q1 decline in Operating Income of YoY-33.6% therefore indicates a smaller deterioration than assumed in the full-year plan. Conversely, the full-year plan may incorporate further cost increases and front-loaded investments from the second half onward, making expense trends over the remaining three quarters the key determinant of whether the plan is achieved.
The annual dividend forecast is ¥0 (also ¥0 in the previous year), resulting in a Payout Ratio of 0%. Although the capital base is substantial, with net assets of ¥17.352B and an Equity Ratio of 52.7%, providing sufficient distribution capacity, the Company appears to be prioritizing retained earnings and investment at this time. No revision to the dividend forecast was made during the quarter.
Deterioration in operating leverage due to higher SG&A expenses: SG&A expenses increased to ¥2.217B (YoY+20.2%), outpacing the 9.1% revenue growth rate, and the Operating Margin declined by 5.8pt to 9.0% (14.8% in the previous year). If this cost increase continues, there is a risk that the decline in profitability will become structural.
Pressure on the bottom line from the higher effective tax rate: The effective tax rate increased to 49.0% (40.5% in the previous year), with corporate income taxes and other taxes of ¥0.203B recorded against Profit Before Tax of ¥0.414B. The high tax burden reduced the Net Profit Margin to 4.8%, and future trends in tax effects may become a factor affecting business performance.
Expense and investment trends from the second half onward under the full-year plan: Against the full-year Operating Income plan of ¥1.267B (YoY-48.6%), the Q1 progress rate of 30.9% exceeds the simple progress benchmark of 25%. However, this is because the full-year plan itself assumes a substantial decline in profit. The impact of front-loaded investments, as indicated by the increase in intangible assets (+39.5%), on the cost structure from the second half onward remains an uncertain factor.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.0% | 8.0% (2.2%–15.8%) | +1.0pt |
| Net Profit Margin | 4.8% | 5.8% (1.5%–10.7%) | -0.9pt |
The Operating Margin exceeds the industry median, while the Net Profit Margin is below the industry median, reflecting the high tax burden.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 9.1% | 9.3% (0.2%–16.9%) | -0.2pt |
The Revenue Growth Rate is almost in line with the industry median, indicating that the increase in revenue itself is at a standard pace within the industry.
※Source: Compiled by the Company
Despite higher revenue, the Operating Margin declined by 5.8pt to 9.0%, while the increase in SG&A expenses (+20.2%) outpaced revenue growth (+9.1%). This is noteworthy as an inflection point indicating deterioration in operating leverage.
The effective tax rate increased to 49.0% (40.5% in the previous year), putting pressure on Net Income. The impact of fluctuations in the tax burden on future EPS trends will be an important area to monitor.
Contract liabilities (deferred revenue) of ¥11.148B remained almost flat from the previous year, indicating the stability of the recurring revenue base. Meanwhile, the full-year Operating Income plan assumes a year-on-year decline of -48.6%, creating a structure in which expense and investment trends in the second half will determine whether the plan is achieved.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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 discretion and responsibility, after consulting with a professional adviser as necessary.
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