| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥130.7B | ¥132.9B | -1.7% |
| Operating Income | ¥29.0B | ¥26.2B | +10.8% |
| Ordinary Income | ¥30.0B | ¥26.6B | +13.0% |
| Net Income | ¥18.4B | ¥17.6B | +4.7% |
| ROE | 22.5% | 23.9% | - |
For the fiscal year ended March 2026, Revenue was ¥130.7B (¥-2.2B YoY, -1.7%), a decline, while Operating Income rose to ¥29.0B (¥+2.8B, +10.8%), Ordinary Income to ¥30.0B (¥+3.4B, +13.0%), and Net Income to ¥18.4B (¥+0.8B, +4.7%). Improvement in tuition unit prices and cost optimization in the Educational Business led to a gross margin of 38.4% (up +2.7pt from 35.7% a year earlier) and an Operating Margin of 22.2% (up +2.5pt from 19.7%), producing a restructuring-type result of lower revenue but higher profits. ROE remained high at 22.5%, and Net Assets expanded to ¥81.7B (¥+8.3B YoY). Although growth in Operating Cash Flow was restrained by a decline in advance receipts, cash on hand increased to ¥34.2B (¥+7.7B, +29.3%), further strengthening financial stability.
[Revenue] Revenue amounted to ¥130.7B, a slight decrease of -1.7% YoY. By segment, the core Educational Business accounted for ¥124.2B (−1.7% YoY), representing 95.0% of total revenue and was the primary driver of the revenue decline. The Real Estate Business was ¥1.6B (−0.6%), and Other Businesses were ¥6.8B (−19.5%), both declining; particularly the double-digit drop in Other Businesses weighed on consolidated revenue. The Educational Business’s revenue decline appears driven by demographic trends and competitive pressures, but price/mix improvements lifted gross profit margin to 38.4% (up +2.7pt).
[Profit/Loss] Cost of Sales was ¥80.4B, with a cost ratio of 61.6% (improved −2.7pt from 64.3% a year earlier), and Gross Profit was ¥50.2B (¥+2.9B, +6.0%), achieving profit growth despite lower revenue. SG&A was ¥21.2B, a modest increase of ¥0.2B YoY, keeping the SG&A-to-Revenue ratio at 16.2% (up +0.3pt from 15.9%). Operating Income improved substantially to ¥29.0B (＋10.8%), with an Operating Margin of 22.2% (＋2.5pt). Non-operating income totaled ¥1.2B, driven by interest income ¥0.5B and foreign exchange gains ¥0.5B; non-operating expenses were minor at ¥0.2B, resulting in Ordinary Income of ¥30.0B (＋13.0%). Extraordinary items included impairment losses of ¥2.7B within total extraordinary losses of ¥3.1B, bringing Profit Before Tax to ¥27.2B (＋4.1%). After deducting income taxes of ¥8.7B (effective tax rate 32.0%), Net Income was ¥18.4B (＋4.7%). In conclusion, this was a revenue-decline yet profitability-improving result.
The Educational Business drove consolidated profits with Operating Income of ¥27.5B (＋13.4% YoY) and an Operating Margin of 22.1%. The Real Estate Business recorded Operating Income of ¥0.8B (＋3.8%) with an exceptionally high Operating Margin of 48.4%, contributing stable profits. Other Businesses posted Operating Income of ¥0.7B (−39.1%) and an Operating Margin of 10.8%, showing significant profit decline and highlighting profitability issues in non-core areas such as internet-based educational information services. Revenue concentration in the Educational Business is extremely high at 95.0%, indicating low business diversification.
[Profitability] Operating Margin improved to 22.2% from 19.7% a year ago (+2.5pt), and Net Margin remained high at 14.1% (up +0.9pt from 13.2%). ROE was 22.5%, decomposed as Net Margin 14.1% × Total Asset Turnover 1.04× × Financial Leverage 1.54×, with margin improvement being the primary contributor to ROE uplift. Gross Margin of 38.4% improved +2.7pt YoY, reflecting successful price/mix improvements and cost optimization in the Educational Business. [Cash Quality] Operating Cash Flow/Net Income was a healthy 1.33×, but OCF/EBITDA was 0.72×, below the benchmark (0.9×+), with a decline in advance receipts (−¥1.4B) temporarily pressuring cash conversion. The accrual ratio (Net Income − Operating CF)/Total Assets was −0.05, a small negative, indicating that earnings are generally backed by cash. [Investment Efficiency] Total Asset Turnover remained flat at 1.04×; Capital Expenditure/Depreciation was restrained at 0.44×, indicating muted renewal investment in classrooms and facilities. Available-for-sale securities increased to ¥11.0B (¥+6.1B), reflecting more active use of surplus funds, but asset growth restrained turnover. [Financial Soundness] Equity Ratio rose to 65.0% (up +4.7pt from 60.3%), a high level. Current Ratio was 141.7% and Quick Ratio 139.9%, indicating sufficient short-term liquidity. Interest-bearing debt consisted only of long-term borrowings of ¥10.1B, giving a Debt/Equity ratio of 12.4% and Debt/EBITDA of 0.30×, a very conservative capital structure. Interest coverage (Operating CF/interest paid) was 148×, showing very light interest burden and ample capacity for additional investment.
Operating Cash Flow was ¥24.5B, up +9.0% YoY, solid growth, and 1.33× of Net Income ¥18.4B, indicating good cash conversion. Starting from Pre-tax Income of ¥33.1B, operating CF was generated after working capital changes and tax payments, but a ¥1.4B decrease in advance receipts caused working capital to absorb cash. Income tax payments of ¥8.9B equated to 32.7% of pre-tax income, consistent with the effective tax rate, and there was no temporary surge in tax burden. Investing CF was −¥9.1B, mainly reflecting purchases of available-for-sale securities ¥5.6B offset by proceeds from sale of subsidiary shares ¥10.6B, and capital expenditure of ¥2.1B. Capital expenditure was low at 0.44× of depreciation ¥4.8B, showing restrained renewal investment in classrooms and facilities. Free Cash Flow was ¥15.4B (Operating CF minus capital expenditure equivalent), which sufficiently covered dividend payments of ¥10.3B and other financing CF outflows, increasing cash on hand to ¥34.2B (¥+7.7B). Financing CF was −¥13.0B, mainly for dividend payments ¥10.3B, lease liability repayments ¥1.3B, and long-term borrowings repayments ¥1.5B. With operating CF growth and restrained investment, liquidity is ample and liquidity risk is very low.
Most of Ordinary Income ¥30.0B was composed of Operating Income ¥29.0B, with non-operating items contributing a small positive ¥1.0B. Of non-operating income ¥1.2B, breakdown includes interest income ¥0.5B, foreign exchange gains ¥0.5B, and equity-method investment income ¥0.3B, representing 0.9% of Revenue and indicating low structural dependence. Non-operating expenses ¥0.2B were mainly interest expense ¥0.2B, so financial costs are minimal. Extraordinary losses included impairment losses of ¥2.7B within total extraordinary losses of ¥3.1B, reflecting reassessment of the profitability of certain assets. Extraordinary gains were ¥0.2B, including ¥1.2B from sale of subsidiary shares, but extraordinary losses outweighed gains, reducing pre-tax income. While Operating CF ¥24.5B exceeded Net Income ¥18.4B, OCF/EBITDA of 0.72× is relatively low, with decreased advance receipts and higher tax payments temporarily pressuring cash conversion. The gap between Ordinary Income and Net Income is explained by extraordinary losses of ¥3.1B and an effective tax rate of 32.0%, suggesting normal conditions would see closer alignment. The impairment charge temporarily lowers recurring profitability, but operating-stage profit improvement indicates core business health.
Full Year guidance projects Revenue ¥146.6B (＋12.1% YoY), Operating Income ¥32.4B (＋11.4%), and Ordinary Income ¥32.4B (＋7.8%), planning for year-over-year increases in both top and bottom lines. Progress rates against the current-period results (equivalent to first half) are Revenue 89.2%, Operating Income 89.5%, and Ordinary Income 92.6%, implying modest additional gains expected in the second half. Forecast EPS is ¥201.20 vs. realized EPS ¥170.09 (progress 84.5%). The full-year dividend forecast is ¥62 with interim dividend already ¥50 and remaining year-end dividend assumed ¥12. Achieving the full-year plan requires maintaining tuition unit prices and utilization in the Educational Business and continued cost discipline; recovery in advance receipts and improved profitability in non-core businesses are also key. The planned +12.1% revenue growth assumes a reversal from this period’s −1.7% decline and will require both demand recovery and appropriate pricing strategies.
Annual dividend is ¥103 (interim ¥50 + year-end ¥53) with a Total Payout Ratio of 60.5%. Against Net Income ¥18.4B, total dividends paid amount to ¥10.3B (based on dividend payments), yielding a payout ratio of 56.0%; dividend coverage relative to Free Cash Flow ¥15.4B is 1.50×, a sustainable level. Share buybacks were ¥0.0B, effectively zero, so shareholder returns center on dividends. The stated payout ratio of 60.5% is somewhat high compared with industry averages, but ample cash ¥34.2B and stable Operating CF generation ¥24.5B support dividend sustainability. The full-year dividend forecast of ¥62 is a reduction from realized ¥103, but there is upside risk depending on progress toward full-year Net Income forecasts. In the medium term, balancing recovery in capital expenditure with dividend levels will be the focus of shareholder return policy.
Revenue concentration risk in the Educational Business: 95.0% of Revenue is from the Educational Business, so demographic declines and changes in competitive examination environments directly affect performance. Continued population decline poses medium-to-long-term demand contraction risk, requiring price improvements and service diversification as mitigation.
Risk of weakened competitiveness due to investment restraint: Capital Expenditure/Depreciation at 0.44× is low, raising concerns about facility aging. The impairment loss of ¥2.7B suggests reduced profitability of some assets; deferring renewal investment could impair service quality and competitiveness over time.
Cash flow volatility risk from working capital fluctuations: Advance receipts total ¥11.2B, representing 41.9% of current liabilities, and a year-end decrease (−¥1.4B) pressured Operating CF. Advance receipts fluctuate seasonally with educational services and contribute to low OCF/EBITDA of 0.72×. Continued structural declines in advance receipts could lead to a lasting deterioration in cash conversion.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 22.2% | 8.1% (3.6%–16.0%) | +14.1pt |
| Net Margin | 14.1% | 5.8% (1.2%–11.6%) | +8.2pt |
Profitability metrics significantly exceed industry medians, highlighting the high-margin structure of the Educational Business.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.7% | 10.1% (1.7%–20.2%) | -11.8pt |
Revenue growth lags the industry median considerably and is in a declining phase. While profit improvement amid revenue contraction is commendable, restoring top-line growth is a medium-term challenge.
※ Source: Company compilation
Despite lower revenue, Gross Margin improved +2.7pt and Operating Margin +2.5pt, delivering Operating Income +10.8%, demonstrating strong management capability on both price and cost fronts. ROE 22.5% and Operating Margin 22.2% rank highly within the industry, emphasizing the high profitability of the Educational Business. Financial soundness (Equity Ratio 65.0%, Debt/EBITDA 0.30×) is very strong, leaving substantial capacity for additional investment.
Continued investment restraint (Capital Expenditure/Depreciation 0.44×) and the recording of impairment losses ¥2.7B indicate some decline in asset profitability. Restoring renewal investment in classrooms and facilities is key to maintaining medium-term competitiveness. Revenue concentration of 95.0% in the Educational Business means low diversification, necessitating responses to population decline and intensified competition.
A decrease in advance receipts constrained Operating CF growth, but cash on hand of ¥34.2B ensures ample liquidity and keeps financial risk very low. Achieving the full-year growth plan (Revenue +12.1%, Operating Income +11.4%) depends on demand recovery in the Educational Business and maintenance of tuition levels and utilization. With a payout ratio of 60.5% and FCF coverage 1.50×, shareholder returns are sustainable; medium-term focus will be balancing recovery in capital expenditure with dividend levels.
This report is an AI-generated financial analysis document created from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial disclosures. Investment decisions are your own responsibility; consult a professional advisor if necessary.