| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥162.8B | ¥145.4B | +12.0% |
| Operating Income | ¥18.1B | ¥15.0B | +20.9% |
| Ordinary Income | ¥18.4B | ¥15.9B | +16.0% |
| Net Income | ¥9.6B | ¥12.2B | -21.4% |
| ROE | 8.5% | 11.0% | - |
For the fiscal year ended March 2026, Revenue was ¥162.8B (YoY +¥17.4B +12.0%), Operating Income was ¥18.1B (YoY +¥3.1B +20.9%), Ordinary Income was ¥18.4B (YoY +¥2.5B +16.0%), and Net Income attributable to owners of the parent was ¥11.0B (YoY +¥0.8B +8.2%). Solid consulting demand and M&A effects drove revenue expansion, and the Operating Income margin improved to 11.1% (YoY +0.8pt). Non-operating income was ¥0.5B and extraordinary items were almost nil, indicating limited one-off factors and a profit increase driven fundamentally by core operations. Pre-tax income of ¥18.4B was reduced by corporate taxes of ¥5.3B (effective tax rate 28.9%) and non-controlling interests of ¥2.1B, which restrained growth at the Net Income level, leaving Net Income growth at +8.2%. Operating Cash Flow was ¥14.1B (YoY -3.2%), about 1.3x Net Income, and Free Cash Flow was positive at ¥3.2B albeit limited. Total shareholder returns of ¥13.0B (dividends ¥8.5B and share buybacks ¥4.5B) exceeded FCF, causing a ¥11.7B decrease in cash on hand; however, financial soundness was maintained supported by ample liquidity with cash and deposits of ¥64.9B.
[Revenue] Revenue of ¥162.8B (YoY +12.0%) was driven by higher utilization and improved project pricing in the single consulting business and external expansion through M&A. Although segment disclosure is not provided, increases in goodwill ¥15.2B (YoY +¥5.1B +50.9%) and intangible fixed assets ¥19.3B (YoY +¥7.5B +63.9%) reflect active M&A activity as evidenced by subsidiary share acquisitions of ¥2.2B. Gross profit was ¥79.6B against cost of sales ¥83.2B, with a gross margin of 48.9% (from 47.4% last year, +1.5pt), indicating improved profitability. The main drivers of gross margin improvement were a higher mix of higher-value consulting projects and cost suppression via improved utilization.
[Profitability] Deducting Selling, General and Administrative Expenses ¥61.5B from gross profit ¥79.6B resulted in Operating Income ¥18.1B (+20.9%). SG&A ratio rose slightly to 37.8% (from 35.2%, +2.6pt), but the absolute increase of ¥10.4B was relatively contained vs. revenue growth, generating scale benefits. Non-operating income ¥0.5B comprised interest income ¥0.1B and partnership investment gains ¥0.03B; after deducting non-operating expenses ¥0.2B (including interest expense ¥0.1B), Ordinary Income was ¥18.4B (+16.0%). Extraordinary items were negligible (loss on disposal of fixed assets ¥0.02B and gain on reversal of stock acquisition rights ¥0.004B), leaving pre-tax income at ¥18.4B. After corporate taxes ¥5.3B (effective tax rate 28.9%) and non-controlling interests ¥2.1B, Net Income attributable to owners of the parent was ¥11.0B (+8.2%). In conclusion, while revenue and operating profit expanded, tax burden and increased non-controlling interests relatively restrained growth at the Net Income stage.
[Profitability] Operating margin 11.1% (from 10.3% last year, +0.8pt), Net margin 6.8% (from 7.0%, -0.2pt), ROE 8.5% (from 9.4%, -0.9pt). Operating-stage profitability improved, but the expansion of non-controlling interests ¥2.1B depressed parent-company Net margin and slightly reduced ROE. Gross margin 48.9% improved +1.5pt from 47.4%, reflecting a shift toward higher-value projects. [Cash Quality] Operating Cash Flow ¥14.1B is 1.47x Net Income ¥9.6B, indicating good accrual quality. However, from Operating CF subtotal ¥20.1B, corporate tax payments ¥6.0B and working capital movements (bonus reserve +¥0.8B, advance receipts -¥0.4B, trade receivables -¥0.5B) constrained cash conversion; OCF/EBITDA ratio was 0.71x (EBITDA = Operating Income ¥18.1B + Depreciation ¥1.8B ≒ ¥19.9B), leaving room for improvement. [Investment Efficiency] Total asset turnover 1.07x, EPS ¥33.92 (from ¥30.80, +10.1%), BPS ¥328.77 (from ¥326.05, +0.8%). EPS achieved double-digit growth, aided by reduced share count from share repurchases. [Financial Soundness] Equity Ratio 75.0% (from 73.7%, +1.3pt), current ratio 306.8%, cash and deposits ¥64.9B indicating very strong liquidity. Interest-bearing debt consists only of long-term borrowings ¥4.7B, D/E ratio 0.06x, Debt/EBITDA 0.24x, interest coverage 191x (Operating Income ¥18.1B ÷ interest expense ¥0.1B), maintaining conservative leverage. Goodwill ¥15.2B is 13.4% of net assets ¥113.7B and goodwill/EBITDA 0.77x, both within acceptable ranges.
Operating Cash Flow was ¥14.1B (YoY -3.2%), representing the level after deducting corporate tax payments ¥6.0B from the Operating CF subtotal ¥20.1B. On working capital, bonus reserve +¥0.8B, trade receivables -¥0.5B, and advance receipts -¥0.4B were cash outflows, somewhat pressuring cash conversion. Investing Cash Flow was -¥10.9B, primarily due to short-term investment securities acquisitions -¥10.0B, followed by subsidiary share acquisitions -¥2.2B and tangible/intangible fixed asset investments -¥1.6B. Free Cash Flow was positive ¥3.2B but materially insufficient to cover total shareholder returns of ¥13.0B (dividends ¥8.5B and share buybacks ¥4.5B), resulting in financing cash flow of -¥14.9B. Consequently, cash and deposits declined ¥11.7B from ¥76.7B to ¥64.9B, though liquidity remains ample and short-term funding risk is low.
Recurring income accounts for the majority, with non-operating income ¥0.5B (0.3% of Revenue) and extraordinary items nearly nil (gain on reversal of stock acquisition rights ¥0.004B and loss on disposal of fixed assets ¥0.02B), indicating extremely limited one-off influences. The difference between Operating Income ¥18.1B and Ordinary Income ¥18.4B is only ¥0.3B, so financial income/expense contribution is minimal. At the Net Income level, pre-tax income ¥18.4B was reduced by corporate taxes ¥5.3B (effective tax rate 28.9%) and non-controlling interests ¥2.1B, arriving at Net Income attributable to owners of the parent ¥11.0B. Comprehensive income ¥13.9B exceeded Net Income ¥9.6B by ¥4.3B, primarily due to actuarial adjustments for retirement benefits ¥0.9B and valuation differences on securities -¥0.1B, reflecting balance-sheet unrealized gains/losses adjustments. Operating Cash Flow exceeded Net Income, indicating good accrual quality, but OCF/EBITDA 0.71x suggests room to improve cash conversion efficiency.
For the fiscal year ending March 2027, management guidance is Revenue ¥172.0B (YoY +5.6%), Operating Income ¥19.0B (YoY +4.7%), Ordinary Income ¥19.0B (YoY +3.1%), and Net Income attributable to owners of the parent ¥11.6B (YoY +5.0%). Compared with the current period’s results (Revenue +12.0%, Operating Income +20.9%), the guidance is conservatively set, likely incorporating assumptions of higher recruitment/labor costs and increased investment spending. Operating margin is assumed at 11.0% (current period 11.1%, -0.1pt), implying continued SG&A control. EPS forecast ¥35.97 (current period ¥33.92, +6.0%) aligns with Net Income growth, and the dividend forecast of ¥13 per year (post-split) implies a payout ratio around 36.1%; while this is lower than the current period’s ¥27 (post-split), excluding the effect of the stock split the dividend level is effectively unchanged. Achievement of the plan depends on trends in advance receipts, WIP, and maintaining utilization rates.
Annual dividend is ¥27 (post-split basis as of April 2025; pre-split ¥54) with a payout ratio of 77.9%, a high level. Dividend total ¥8.5B is covered by Net Income attributable to owners of the parent ¥11.0B, but including share buybacks ¥4.5B total shareholder returns ¥13.0B represent a total return ratio of 118.2%, far exceeding FCF ¥3.2B. FCF coverage is only 0.25x, so current returns are not fully financed by internally generated cash. Given cash and deposits ¥64.9B, there is short-term sustainability, but medium-term improvements in cash conversion or moderation of return pace would be desirable. The dividend forecast for FY2027 of ¥13 (post-split) equals ¥58 pre-split, with a payout ratio of approximately 36.1% as noted, indicating a potential reassessment of total returns. Treasury stock at fiscal year-end was 1,890 thousand shares (YoY +0.3 million shares) with total acquisition cost ¥4.5B, aiming to improve capital efficiency, but a total return ratio >100% increases reliance on liquidity.
Project Concentration Risk: WIP ¥0.4B is unchanged from ¥0.4B last year, but work-in-process ¥38.1M represents the bulk of inventories ¥37.2M, leaving dependency on project-type business acceptance timing. Revenue recognition timing discrepancies and decline in advance receipts (-¥0.4B) suggest uncertainty in project progress and can cause quarterly performance volatility.
M&A Integration Risk: Increases in goodwill ¥15.2B (YoY +¥5.1B +50.9%) and intangible assets ¥19.3B (YoY +¥7.5B +63.9%) reflect external growth supported by subsidiary share acquisitions ¥2.2B. While goodwill/net assets 13.4% and goodwill/EBITDA 0.77x are currently healthy, impairment risk may materialize if integration synergies are delayed or projects are lost. Goodwill amortization under JGAAP ¥1.6B is about a 9% burden relative to Operating Income and structurally suppresses Net Income compared with IFRS peers.
Sustainability of Cash Allocation: Total return ratio 118.2% (dividends + share buybacks ¥13.0B ÷ Net Income attributable to owners of the parent ¥11.0B) far exceeds FCF ¥3.2B and has been supplemented by drawing down liquidity. If OCF/EBITDA 0.71x and weak cash conversion persist, a need to adjust return levels or constrain growth investments could arise. While cash and deposits ¥64.9B currently provide a cushion, medium- to long-term improvements in Operating CF or rebalancing of allocation are required.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.1% | 8.1% (3.6%–16.0%) | +3.0pt |
| Net Margin | 5.9% | 5.8% (1.2%–11.6%) | +0.1pt |
Operating margin exceeds the industry median by +3.0pt, placing the company among the upper group and reflecting strong cost control and a high share of value-added projects. Net margin is in line with the median, with tax burden and non-controlling interests relatively suppressing net profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 12.0% | 10.1% (1.7%–20.2%) | +1.9pt |
Revenue growth outperforms the median by +1.9pt, placing the company on an upper-mid growth trajectory driven by M&A and rising utilization.
※ Source: Company compilation
The company delivered double-digit revenue growth alongside an improvement to an 11.1% Operating Margin, demonstrating resilient consulting demand and realization of scale effects. The increase in goodwill and intangible assets (YoY +¥12.7B) underlines an aggressive external growth strategy through M&A; however, goodwill/net assets 13.4% and goodwill/EBITDA 0.77x remain within healthy ranges, preserving impairment resilience. Next-year guidance (Revenue +5.6%, Operating Income +4.7%) is conservative relative to current momentum, leaving room for execution.
The mismatch between total return ratio 118.2% (dividends + buybacks) and FCF coverage 0.25x is a key point. While cash and deposits ¥64.9B provide a short-term cushion, OCF/EBITDA 0.71x indicates room to improve cash conversion. Stabilizing working capital (advance receipts, bonus reserves) and optimizing tax payments will be important to enhance Operating CF quality and sustain medium-term capital allocation.
While the company maintains high shareholder returns with a payout ratio of 77.9%, the next-year forecast payout ratio of ~36.1% (post-split ¥13, EPS ¥35.97) amounts to only a modest adjustment excluding the split effect. If stock-split-driven liquidity improvements and balanced shareholder returns progress, dividend sustainability and growth investment can be maintained. ROE 8.5% declined YoY, but a strong Equity Ratio 75.0% and improving Operating Margin should support future capital efficiency recovery.
This report was automatically generated by AI analyzing XBRL earnings data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.