| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥489.3B | ¥461.6B | +6.0% |
| Operating Income | ¥66.8B | ¥62.9B | +6.2% |
| Ordinary Income | ¥68.7B | ¥63.9B | +7.5% |
| Net Income | ¥51.0B | ¥47.1B | +8.4% |
| ROE | 15.3% | 15.9% | - |
The fiscal year ended March 2025 results recorded Revenue of ¥489.3B (YoY +¥27.7B +6.0%), Operating Income of ¥66.8B (YoY +¥3.9B +6.2%), Ordinary Income of ¥68.7B (YoY +¥4.8B +7.5%), and Net income attributable to owners of parent of ¥54.1B (YoY +¥10.2B +23.4%), achieving growth across all stages. Revenue maintained stable top-line growth, and Operating/Ordinary Income reflected the strength of core operations with mid–single-digit year-on-year increases. The substantial rise in final profit (+23.4%) was driven by a special gain on sale of investment securities of ¥4.63B and thus includes a temporary factor. ROE remained at a strong 15.3%, and profitability stayed high and stable with a gross margin of 60.6% (up +0.6pt from 60.0% last year) and an operating margin of 13.6% (flat at 13.6% year-on-year).
[Revenue] Revenue grew steadily to ¥489.3B (YoY +6.0%). The Group operates a single software-related segment, where subscription revenues for core business software and maintenance services form the revenue base. Top-line expansion resulted from both upsell/cross-sell to existing customers and acquisition of new customers; contract liabilities with advance-receipt characteristics increased to ¥31.6B (YoY +¥6.3B +24.9%), which positively supports future revenue recognition. Cost of sales was ¥192.7B yielding gross profit of ¥296.5B and a gross margin of 60.6% (up +0.6pt from 60.0% last year), remaining at a high level and suggesting improvement in product mix and price revision effects.
[Profitability] Operating Income was ¥66.8B (YoY +6.2%), reflecting profit growth aligned with revenue expansion. SG&A was ¥229.7B (YoY +¥13.8B +6.4%), driven by salaries and allowances of ¥93.6B (up from ¥88.7B last year, +¥4.9B), retirement benefit expenses of ¥4.2B (¥4.1B last year), and increases in promotion and other expenses, which limited operating leverage. Operating margin was 13.6%, flat year-on-year, as gross margin improvement and higher SG&A offset each other. Non-operating income was ¥2.6B (up ¥0.7B from ¥1.9B), contributed by interest income received of ¥0.5B (up from ¥0.2B) and equity-method investment gains of ¥0.6B (¥0.2B last year), while non-operating expenses decreased slightly to ¥0.6B (¥0.8B last year), resulting in Ordinary Income of ¥68.7B (YoY +7.5%) which outpaced the core operating-stage growth. Extraordinary gains totaled ¥4.6B, mainly from a gain on sale of investment securities of ¥4.63B (¥4.2B last year), and extraordinary losses totaled ¥1.5B including an impairment loss of ¥1.41B (¥2.4B last year), so net extraordinary items increased pre-tax profit by approximately ¥3.2B. From profit before income taxes of ¥71.9B, income taxes of ¥19.3B (effective tax rate about 26.9%) and non-controlling interests of -¥1.5B were deducted, resulting in Net income attributable to owners of parent of ¥54.1B (YoY +23.4%). In conclusion, the company achieved stable revenue and profit growth, and one-off factors accelerated final profit.
[Profitability] Operating margin was 13.6% (13.6% prior year, flat) and net margin was 11.1% (up +0.9pt from 10.2% prior year), maintaining high levels. ROE was 15.3%, driven by net margin 11.1% × total asset turnover 1.00 × financial leverage 1.46; the main driver of improvement was the increase in net margin. Gross profit margin was high at 60.6% (up +0.6pt from 60.0%), reflecting the strength of a recurring revenue base. EBITDA margin was 17.3%, indicating Operating Cash Flow generation capacity when adding back depreciation of ¥17.7B. [Cash Quality] Operating Cash Flow/Net Income was 1.21x, indicating good cash backing for profits, while OCF/EBITDA was 0.77x, below the optimal threshold (above 0.9x), leaving room to improve cash conversion efficiency due to higher tax payments and working capital movements. Free Cash Flow was limited to ¥9.0B and was below total dividends of ¥16.5B, so dividends were covered by existing cash on hand. [Investment Efficiency] Total asset turnover was stable at 1.00, and intangible fixed assets of ¥155.0B (31.8% of total assets) reflect accumulated product development investment, accompanied by future amortization burden and impairment risk. CAPEX/depreciation was 0.48x and low, indicating restrained tangible investment and a shift in capital allocation towards intangible investments and M&A. [Financial Soundness] Equity Ratio was 68.5% (improved +3.1pt from 65.4% prior year), with conservative leverage: Debt/EBITDA 0.55x and interest coverage 121x. Liquidity is healthy with current ratio 167% and quick ratio 162%, and cash and deposits of ¥143.4B sufficiently cover short-term liabilities of ¥135.9B (cash/short-term debt 4.7x). Short-term debt ratio is high at 65.6%, but ample cash mitigates refinancing risk.
Operating Cash Flow was ¥65.4B (YoY +2.9%), exceeding Net Income of ¥54.1B (OCF/Net Income 1.21x), so cash backing of profits is generally good. Operating cash flow subtotal (before working capital changes) was robust at ¥90.7B, with corporate tax payments of ¥25.2B as a major deduction. In working capital changes, accounts receivable increased by ¥1.2B, inventories decreased by ¥0.8B, and accounts payable decreased by ¥0.1B, remaining minor. Contract liabilities (advance-receipt character) increased by ¥6.3B to ¥31.6B, supporting future revenue recognition. OCF/EBITDA was 0.77x and did not reach the optimal level; timing of tax payments and working capital movements suppressed cash conversion efficiency. Investing Cash Flow was -¥56.4B, with intangible asset acquisitions of ¥36.5B (software development/acquisition) and acquisition of subsidiary shares ¥23.3B as primary cash outflows; CAPEX was ¥8.5B (CAPEX/depreciation 0.48x) and restrained. Free Cash Flow (Operating CF + Investing CF) was ¥9.0B, small and below dividends of ¥16.5B, so dividends were paid from cash on hand rather than mid-period cash flows. Financing Cash Flow was -¥26.3B, mainly repayment of long-term borrowings ¥8.0B and dividend payments ¥16.5B. Short-term borrowings decreased slightly by -¥1.1B. Ending cash and deposits were ¥143.4B (down -¥23.8B from prior year ¥167.2B); while liquidity declined due to heavy investing CF and thin free cash flow, it remains ample.
Net income of ¥54.1B this period was boosted by net extraordinary items of about ¥3.2B (extraordinary gains ¥4.6B mainly from gain on sale of investment securities of ¥4.63B minus extraordinary losses ¥1.5B including impairment loss ¥1.41B) in addition to the strength of Ordinary Income ¥68.7B. Excluding one-off factors, net income growth reflects both core profitability and contribution from one-time gains. Non-operating income of ¥2.6B (0.5% of Revenue) consisted of interest income received ¥0.5B, equity-method gains ¥0.6B, etc., indicating low dependence on non-recurring income and a stable core business base. The accrual ratio was -2.3% (Operating CF ¥65.4B − Net Income ¥54.1B, divided by Net Income), which is healthy, and OCF/Net Income 1.21x also shows high earnings quality; meanwhile, OCF/EBITDA 0.77x indicates room to improve cash conversion efficiency. The gap between Ordinary Income and Net Income is largely explained by extraordinary gain contributions and an effective tax rate of about 26.9%, and the recurring earnings base is solid.
The company plans for Full Year Revenue of ¥538.0B (YoY +10.0%), Operating Income of ¥72.3B (YoY +8.3%), Ordinary Income of ¥73.8B (YoY +7.4%), and Net income attributable to owners of parent of ¥48.1B (YoY -3.8%). The company expects positive expansion at the top-line and operating stages, while final profit is conservatively planned reflecting the absence of this period’s special gains. The +10.0% Revenue growth assumption appears to rely on accumulation of contract liabilities (advance revenue increase), continued upsell/cross-sell to existing customers, and new customer acquisition. Operating Income growth of +8.3% is planned to lag slightly behind revenue growth, reflecting a realistic assumption that SG&A will rise. The -3.8% decline in Net Income reflects the anticipated reversal of approximately ¥4.6B gain on sale of investment securities this term; if core profitability is maintained, achieving the plan is well within sight.
Year-end dividend is ¥60 per share, and the payout ratio is 37.6%, a sustainable level. Prior year dividend data is shown as zero, but the company paid ¥60 per share this period, signaling a clear shareholder return stance. Total dividends were ¥16.5B and exceeded Free Cash Flow of ¥9.0B, so dividends were paid from existing cash on hand (cash and deposits ¥143.4B) rather than mid-period cash flow. There is no mention of share buybacks; dividends are the primary return method. If intangible investments and M&A continue, balancing dividends and growth investment, visualizing investment payback, and improving cash conversion will be key to sustainable shareholder returns.
Impairment risk from concentration in intangible assets: Intangible fixed assets of ¥155.0B (31.8% of total assets) reflect accumulated product development investment but carry future impairment risk from technological obsolescence or market shifts. Goodwill of ¥27.3B (8.2% of net assets) is included, requiring monitoring of asset health.
Dividend burden on Free Cash Flow: With Free Cash Flow of ¥9.0B versus total dividends of ¥16.5B, FCF coverage is 0.46x and low; dividends were supplemented by cash on hand. If capital allocation continues to prioritize investing CF, improving cash conversion and visualizing investment payback are important.
High short-term debt ratio and refinancing risk: Short-term debt ratio of 65.6% is high, but cash and deposits of ¥143.4B produce cash/short-term debt of 4.7x, mitigating refinancing risk. However, sustained investing CF could erode liquidity, necessitating management of borrowing terms and repayment schedules.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 13.6% | 8.1% (3.6%–16.0%) | +5.5pt |
| Net Margin | 10.4% | 5.8% (1.2%–11.6%) | +4.6pt |
The company’s Operating Margin 13.6% and Net Margin 10.4% substantially exceed industry medians, securing top-tier profitability within the IT & Communications sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.0% | 10.1% (1.7%–20.2%) | -4.1pt |
Revenue growth of 6.0% is below the industry median of 10.1%, placing the company around the mid-to-lower range in growth. Given the stable revenue base and high profitability, growth pace is steady.
※ Source: Company compilation
Continued high profitability and strong financial base: Operating Margin 13.6% and ROE 15.3% maintain top-tier profitability in the industry; Equity Ratio 68.5% and Debt/EBITDA 0.55x indicate conservative leverage and high financial resilience. Accumulation of contract liabilities ¥31.6B supports future revenue recognition and sustains the strength of a stock-like revenue base.
Need to visualize investment payback and improve cash conversion: OCF/EBITDA 0.77x leaves room to improve cash conversion efficiency, and Free Cash Flow ¥9.0B fell short of total dividends ¥16.5B so dividends were covered by cash on hand. With continued active investing such as intangible asset acquisitions ¥36.5B and subsidiary acquisitions ¥23.3B, progress on investment payback and improvement in Operating CF efficiency will be key to creating shareholder value.
This report is an earnings analysis document automatically generated by AI from 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 should be made at your own responsibility and, if necessary, in consultation with a professional advisor.