| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥167.9B | ¥143.3B | +17.2% |
| Operating Income | ¥23.1B | ¥17.9B | +29.7% |
| Ordinary Income | ¥23.4B | ¥18.3B | +27.9% |
| Net Income | ¥15.9B | ¥12.6B | +26.3% |
| ROE | 3.7% | 3.0% | - |
For FY2027 Q1 (Feb–Apr 2026), revenue was ¥167.9B (YoY +¥24.6B, +17.2%), Operating Income was ¥23.1B (YoY +¥5.3B, +29.7%), Ordinary Income was ¥23.4B (YoY +¥5.1B, +27.9%), and Net Income was ¥15.9B (YoY +¥3.3B, +26.3%), marking a solid start with higher revenue and profit. Operating margin improved to 13.8% (up +1.3pt from 12.5% a year earlier), and Net margin improved to 9.5% (up +0.7pt from 8.8%), indicating higher profitability. The core Integration segment grew to Revenue ¥114.1B (+23.7%), Operating Income ¥26.7B (+26.1%), and maintained a segment margin of 23.4%, driving group performance while scaling. Cash and deposits stood at ¥288.1B (46% of total assets), interest-bearing debt was ¥3.63B, indicating a very strong financial position; Contract liabilities rose to ¥82.4B (YoY +¥40.8B), reflecting a stable revenue base from advance-receipt structures.
[Revenue] Revenue of ¥167.9B represents a YoY increase of +17.2%. By segment, the Integration segment led growth with ¥114.1B (67.9% of total, +23.7% YoY), Connected segment ¥31.4B (18.7%, +4.1%), and Solution segment ¥24.2B (14.4%, +9.9%), all recording increases. External revenue across all segments totaled ¥167.9B; including inter-segment transactions the gross segment revenue was ¥169.7B, with internal transactions limited to ¥1.7B. Gross profit was ¥45.9B (gross margin 27.3%), a 0.5pt decline from 27.8% a year earlier, but gross profit in absolute terms increased by ¥6.0B due to scale expansion. The slight decline in gross margin suggests higher personnel and subcontracting costs, which are being absorbed by scale effects.
[Profitability] Operating Income of ¥23.1B rose +29.7% YoY, outpacing revenue growth. SG&A was ¥22.7B (SG&A ratio 13.5%), increasing only ¥0.7B YoY, and the SG&A ratio improved 1.8pt from 15.3% a year earlier. This efficiency offset the minor decline in gross margin and produced operating leverage. Ordinary Income was ¥23.4B (YoY +27.9%), and Net Income was ¥15.9B (YoY +26.3%), reflecting profit growth tied to operating performance. Non-operating items were immaterial (interest income ¥0.1B, non-operating expenses ¥0.1B), indicating profit growth driven by core operations. Income taxes were ¥7.5B (effective tax rate 32.0%), leading from pre-tax profit of ¥23.4B to Net Income. Extraordinary items were limited to impairment loss on fixed assets of ¥0.03B, so one-off effects were negligible. In conclusion, the company achieved both revenue and profit growth.
The Integration segment recorded Revenue ¥114.1B (YoY +23.7%) and Operating Income ¥26.7B (YoY +26.1%), realizing a segment margin of 23.4% and accounting for the bulk of consolidated operating profit. It expanded scale while maintaining high profitability, driving margin improvements across the group. The Connected segment reported Revenue ¥31.4B (+4.1%) and Operating Income ¥6.3B (+12.2%) for a segment margin of 20.2%, with profit growth outpacing revenue growth and improving profitability. The Solution segment posted Revenue ¥24.2B (+9.9%) and Operating Income ¥4.6B (+7.0%) for a segment margin of 18.9%, securing steady revenue growth though profit growth slightly lagged. Total segment Operating Income of ¥37.7B less corporate expenses of ¥14.5B (prior year ¥13.3B, +¥1.2B) reconciles to consolidated Operating Income of ¥23.1B. Corporate expenses are management costs not allocated to reported segments; their increase is commensurate with revenue scale expansion. All segments maintain margins above 18%, underscoring the depth of the earnings base.
[Profitability] Operating margin of 13.8% improved 1.3pt from 12.5% a year earlier; Net margin of 9.5% improved 0.7pt from 8.8%. Gross margin of 27.3% declined 0.5pt from 27.8%, but SG&A ratio improved to 13.5% from 15.3%, delivering operating leverage. ROE was 3.7%, reflecting Net Income ¥15.9B against equity of ¥426.4B; annualized from the quarter this equates to approximately 14.8% on a yearly basis. [Cash Quality] Cash and deposits of ¥288.1B represent 46.4% of total assets and equate to about 12.5 months of Operating Income ¥23.1B, indicating abundant liquidity. Contract liabilities rose to ¥82.4B (prior year ¥41.7B, +97.8%), showing a substantial increase and reinforcing an advance-receipt business model. Accounts receivable of ¥96.4B declined 29.2% from ¥136.1B a year earlier, indicating improved receivables collection though quarter-end seasonality may have contributed. [Investment Efficiency] Total asset turnover annualized is approximately 0.271 turns (quarter revenue ¥167.9B ×4 ÷ total assets ¥620.3B ≒ 1.08 turns), indicating standard asset efficiency. Inventories of ¥46.3B (prior year ¥51.3B) remain at an appropriate level, implying inventory turnover days of about 138 days. [Financial Soundness] Equity ratio 68.7% (prior year 68.4%), current ratio 249% (prior year 266%), interest-bearing debt ¥3.63B (short-term borrowings ¥3.5B + long-term borrowings ¥0.13B) indicate very high financial safety. Debt/Equity ratio is 0.9%, negligible, and interest coverage is 2,315x (Operating Income ¥23.1B ÷ interest expense ¥0.01B), effectively near a debt-free operation.
The cash flow statement was not disclosed, but balance sheet movements were analyzed for cash trends. Cash and deposits increased to ¥288.1B, up ¥36.1B YoY (+14.3%), further strengthening liquidity. The build-up of contract liabilities by +¥40.8B indicates increased advance receipts and supports short-term cash inflows tied to order progression. Conversely, accounts receivable decreased by ¥39.7B, reflecting collections progress or seasonality in revenue recognition timing. Accounts payable fell by ¥41.1B (-57.7%), indicating payment progress for purchases and subcontracting. Provision for bonuses increased by ¥9.0B, reflecting accrued personnel costs. Asset retirement obligations shifted with current portion rising to ¥11.4B and non-current portion decreasing to ¥9.0B, signaling nearer-term spending. Overall, expanding cash balances and rising contract liabilities create a stable funding base, while material changes in working capital (large declines in receivables and payables) and the shift of asset retirement obligations to current liabilities warrant attention for short-term cash management.
Earnings quality is high and driven by operating profit. Non-operating income ¥0.3B (0.2% of revenue) comprises interest income ¥0.1B, insurance dividends ¥0.1B, etc., and foreign exchange gains ¥0.0B, indicating minimal one-off effects. Non-operating expenses ¥0.1B (including interest expense ¥0.0B) are limited, and Ordinary Income ¥23.4B is nearly equal to Operating Income ¥23.1B. Extraordinary losses are limited to impairment on fixed assets ¥0.03B, with no large one-time items. Comprehensive income of ¥12.8B is ¥3.2B below Net Income ¥15.9B, driven by valuation differences on available-for-sale securities -¥3.0B and actuarial adjustments related to retirement benefits -¥0.2B—valuation items. The difference between Ordinary Income and Net Income is income taxes ¥7.5B (effective tax rate 32.0%), indicating an appropriate tax burden without structural distortions. Operating margin 13.8% and Net margin 9.5% reflect core profitability in the financial statements, and accrual movements in receivables/payables are minor, supporting high quality of revenue recognition.
Full Year guidance is Revenue ¥680.0B (YoY +3.2%), Operating Income ¥77.5B (YoY +5.6%), Ordinary Income ¥78.0B (YoY +4.9%), and Net Income ¥56.0B. Q1 progress rates versus the full year are: Revenue 24.7% (¥167.9B ÷ ¥680.0B), roughly in line with the standard 25% level; Operating Income 29.9% (¥23.1B ÷ ¥77.5B), Ordinary Income 30.0% (¥23.4B ÷ ¥78.0B), and Net Income 28.4% (¥15.9B ÷ ¥56.0B) show profit metrics running about 4–5pt ahead of the standard pace. This profit outperformance is attributable to Q1 Operating margin of 13.8% exceeding the full-year implied margin of 11.4% (¥77.5B ÷ ¥680.0B) by 2.4pt, supported by SG&A ratio improvement and a favorable mix toward high-margin segments. No forecast revisions have been made; the company maintains its full-year plan, but continued Q1-level profitability could create upside to guidance. Note that the company may assume increased costs for investment and hiring in H2, so monitoring progress remains important.
Annual dividend guidance is ¥40.0 per share, implying a payout ratio of 22.3% against full-year EPS guidance of ¥179.43, a conservative level. No interim dividend was announced as of Q1 end, but the annual dividend of ¥40.0 represents an increase of ¥10.0 from the prior year (annual ¥30.0). A payout ratio of 22.3% indicates a policy prioritizing stable dividends while leaving room for earnings growth. With cash of ¥288.1B and effectively debt-free financials, securing dividend funding is straightforward. Assuming Q1 Net Income ¥15.9B and shares outstanding 35,168 thousand (excluding treasury shares 31,210 thousand), the total annual dividend payment would be approximately ¥1.25B (¥40 × 31,210 thousand shares), a light burden relative to full-year Net Income guidance of ¥56.0B. No share buyback was disclosed, but financial capacity is ample and there is room to expand total return policy. Dividend sustainability is high, supported by operating cash generation and advance-receipt structure.
Segment concentration risk: The Integration segment accounts for 67.9% of revenue and the majority of operating profit; demand fluctuations or price competition in this area would have a direct impact on consolidated results. Although the segment margin of 23.4% is high, delays in large projects or deterioration in the order environment could cause a rapid decline in group margins.
Working capital efficiency deterioration risk: Accounts receivable ¥96.4B (about 2.3 months of quarterly sales) and inventories ¥46.3B (about 138 days) indicate long working capital retention. Delays in collections or inventory elongation could worsen the cash conversion cycle. While the rise in contract liabilities reflects an advance-receipt structure, managing cost occurrence and cash flow as revenue recognition advances is important.
Short-term increase in asset retirement obligation burden: The current portion of asset retirement obligations rose substantially to ¥11.4B while the non-current portion decreased to ¥9.0B. This suggests spending is approaching, and approximately ¥11.4B of cash outflows for dismantling/restoration costs may be expected within the next year. Although cash holdings are ample, managing the expenditure schedule and timing of cost recognition could affect short-term results.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 13.8% | 8.0% (2.2%–15.8%) | +5.7pt |
| Net Margin | 9.5% | 5.8% (1.5%–10.7%) | +3.7pt |
Profitability substantially exceeds the industry median; both Operating and Net margins are in the upper range.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 17.2% | 9.3% (0.2%–16.9%) | +7.9pt |
Revenue growth outpaces the industry median by about 8pt, placing the company in the upper ranks within the industry.
※ Source: Company compilation
Q1 showed Operating margin 13.8% (YoY +1.3pt) and a full-year progress rate of 29.9%—about 5pt ahead of the standard 25% pace on the profit side—driven by SG&A ratio improvement and expansion of the high-margin Integration segment. While upside to the full-year forecast is suggested, H2 investment and cost absorption capacity will be key to margin maintenance.
The build-up of Contract liabilities to ¥82.4B (YoY +97.8%) indicates strengthening of the advance-receipt business model and underpins short-term revenue recognition. Together with cash ¥288.1B and interest-bearing debt ¥3.63B, the financial base is very strong, providing ample room for growth investment and shareholder returns. Monitoring receivables and inventory turnover and the schedule of asset retirement obligations will be important.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statement data. Investment decisions are your own responsibility; consult a professional advisor as necessary.