| Metric | Current | Prior-year period | YoY |
|---|---|---|---|
| Revenue | ¥190.6B | ¥172.8B | +10.3% |
| Operating Income | ¥21.7B | ¥16.4B | +31.7% |
| Ordinary Income | ¥22.7B | ¥17.1B | +32.9% |
| Net Income | ¥17.1B | ¥12.3B | +38.9% |
| ROE | 9.5% | 7.4% | - |
FY2026 Q3 results delivered Revenue of ¥190.6B (YoY +¥17.8B, +10.3%), Operating Income of ¥21.7B (YoY +¥5.3B, +31.7%), Ordinary Income of ¥22.7B (YoY +¥5.6B, +32.9%), and Net Income of ¥17.1B (YoY +¥4.8B, +38.9%), achieving both top-line and bottom-line growth. Operating Income growth of 31.7% outpaced Revenue growth of 10.3%, indicating improved operating efficiency. By segment, Network Service was the core with Revenue of ¥111.9B (Operating Income ¥24.4B), IT Solution recorded Revenue of ¥44.5B (Operating Income ¥12.1B), and System Core posted Revenue of ¥34.2B (Operating Income ¥8.0B). Full-year guidance is Revenue ¥254.0B, Operating Income ¥26.2B, and Net Income ¥19.7B, with progress as of Q3 at 75.0% for Revenue and 82.8% for Operating Income, tracking well.
[Profitability] ROE 9.5% (DuPont breakdown: Net Profit Margin 9.0% × Asset Turnover 0.792 × Financial Leverage 1.34), Operating Margin 11.4% (Operating Income ¥21.7B on Revenue ¥190.6B), Gross Margin 23.3% (Gross Profit ¥44.5B). Net Profit Margin improved from the prior-year period, and the increase in Operating Margin contributed to higher profitability. [Cash Quality] Cash and deposits of ¥57.7B accounted for 24.0% of total assets, covering current liabilities of ¥40.6B by 1.42x. Non-operating income of ¥1.00B was recorded, comprised of Interest Income ¥0.69B and Dividend Income ¥0.27B, reflecting income contribution from financial assets. [Investment Efficiency] Asset Turnover 0.792x; Investment Securities ¥71.5B accounted for 29.7% of total assets, indicating a high weighting of financial assets. [Financial Soundness] Equity Ratio 74.7% (Net Assets ¥179.6B, Total Assets ¥240.5B), Current Ratio 360.4% (Current Assets ¥146.3B, Current Liabilities ¥40.6B), and Debt-to-equity ratio 0.34x, indicating a conservative capital structure. Payout Ratio 55.3% (Year-end dividend ¥124.0, no dividend in Q2, based on EPS ¥282.75).
Cash and deposits increased from ¥53.2B in the prior-year period to ¥57.7B, up +¥4.4B (+8.2%), likely supported by the increase in Net Income of ¥17.1B. Total assets rose from ¥229.4B to ¥240.5B, up +¥11.1B, mainly due to Investment Securities expanding from ¥60.0B to ¥71.5B (+¥11.5B, +19.1%). Investments and other assets increased from ¥73.8B to ¥84.5B, up +¥10.7B, indicating progress in medium- to long-term financial asset allocation. Current assets grew from ¥134.0B to ¥146.3B, up +¥12.3B, reflecting accumulation of cash and accounts receivable (¥49.9B). On the liabilities side, current liabilities were roughly flat at ¥40.6B, and Notes and accounts payable were ¥13.1B with no major change from the prior-year period. Cash coverage of short-term liabilities was 1.42x, indicating ample liquidity. Net assets increased from ¥167.2B to ¥179.6B, up +¥12.4B, with retained earnings from Net Income net of dividend payments contributing to capital accumulation.
Against Ordinary Income of ¥22.7B, Operating Income was ¥21.7B, implying net non-operating gains of approximately ¥1.0B. This consists of Non-operating income of ¥1.00B (mainly Interest Income ¥0.69B and Dividend Income ¥0.27B) less Non-operating expenses of ¥0.01B. Non-operating income accounted for 0.5% of Revenue, with interest and dividends as the core, providing a stable recurring income source. The holdings of Cash and deposits ¥57.7B and Investment Securities ¥71.5B generate financial income, and the management of financial assets contributes to the quality of earnings to some extent. With Operating Margin at 11.4% and Net Profit Margin at 9.0%, post-tax profitability is primarily driven by operating activities. As this is a quarterly result, detailed cash flow statement data have not been disclosed, but the increase in cash and deposits and accumulation of Net Income suggest healthy cash conversion.
Valuation fluctuation risk on Investment Securities of ¥71.5B (29.7% of total assets). Mark-to-market valuation and gains/losses on sale of financial assets can significantly impact results; in adverse market conditions, recognition of unrealized losses and valuation losses may occur. The detailed breakdown of SG&A expenses of ¥22.8B is not disclosed; if fixed costs such as personnel expenses and bonuses rise at a pace exceeding sales growth, this could pressure the Operating Margin. With a Payout Ratio of 55.3%, maintaining the dividend requires continuous earnings growth; if profitability weakens, there is a risk of revising the dividend level.
[Position within the industry] (Reference information, our research) Profitability: ROE 9.5% exceeds the industry median of 7.3% (IQR: 0.9%–12.1%, n=68), indicating a favorable level within the industry. Operating Margin 11.4% significantly exceeds the industry median of 6.4% (IQR: 2.0%–13.5%, n=68), placing profitability in the upper tier of the industry. Net Profit Margin 9.0% is above the industry median of 4.8% (IQR: 0.6%–9.4%, n=68), indicating profit efficiency above the industry average. Growth: Revenue growth of 10.3% is slightly below the industry median of 12.0% (IQR: 2.0%–24.5%, n=68) but remains near the median, indicating stable growth. Soundness: Equity Ratio 74.7% significantly exceeds the industry median of 55.2% (IQR: 42.5%–67.3%, n=68), placing financial soundness in the top group within the industry. Current Ratio 360.4% greatly exceeds the industry median of 208.0% (IQR: 156.0%–301.0%, n=68), with short-term liquidity among the best in the industry. Note: Industry: IT & Telecommunications (68 companies); Comparison period: 2025 Q3; Source: our compilation
A highly profitable structure is confirmed, with an 11.4% Operating Margin far above the industry median of 6.4%, and profit growth of 31.7% driven by SG&A control outpacing sales growth of 10.3%, suggesting stability in performance over the short to medium term. While holdings of Investment Securities of ¥71.5B (29.7% of total assets) generate financial income, valuation fluctuation risk can have a significant impact on finances, necessitating monitoring of performance sensitivity to market conditions. Given the Payout Ratio of 55.3% and Cash and deposits of ¥57.7B, the current dividend level appears maintainable; however, continuation of the full-year forecast dividend of ¥163 assumes sustained earnings growth.
This report is an automatically generated earnings analysis produced by AI based on XBRL earnings report data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company based on publicly available financial results data. Investment decisions are your own responsibility; please consult a professional as needed before investing.