MIROKU JYOHO SERVICE CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

FY2027 Q1 saw increases in both revenue and earnings, with an improvement in gross margin driving a higher operating margin and boosting the earnings growth rate. Revenue was ¥125.1B (¥115.7B in the same period last year, YoY +8.2%), Operating Income was ¥15.6B (¥12.4B, YoY +25.2%), and Ordinary Income was ¥15.7B (¥12.8B, YoY +22.7%). Net Income attributable to owners of the parent was ¥10.2B (¥8.9B in the same period last year, YoY +13.8%). The slower growth in net income relative to Operating Income and Ordinary Income was primarily attributable to an increase in the effective tax rate (39.3%, compared with 34.2% in the same period last year). The operating margin improved to 12.4% from 10.8% in the same period last year, an improvement of +1.7pt, while the improvement in gross margin to 62.2% (59.0% in the same period last year) absorbed the increase in SG&A expenses (+11.6%).

Factors Affecting Financial Results

【Revenue】Revenue was ¥125.1B, representing YoY growth of +8.2%. As the Company operates in a single segment (Software-Related Business), a breakdown by business is not disclosed. However, because Cost of Sales remained nearly flat at ¥47.4B (¥47.5B in the same period last year), gross margin improved to 62.2% from 59.0%, an improvement of +3.2pt, suggesting a qualitative improvement in the revenue mix.

【Profit and Loss】Operating Income was ¥15.6B, representing YoY growth of +25.2%. SG&A expenses increased to ¥62.2B (¥55.8B in the same period last year, +11.6%), at a pace exceeding revenue growth. However, the improvement in gross margin absorbed this increase, and the operating margin rose to 12.4% (10.8% in the same period last year, +1.7pt). Ordinary Income was ¥15.7B (YoY +22.7%), with non-operating income and expenses remaining at a small net gain, including ¥0.2B in dividend income, and therefore remaining at approximately the same level as Operating Income. A gain on the sale of investment securities of ¥0.4B was recorded in Extraordinary Income as a temporary factor, while Extraordinary Losses were zero. Against Profit Before Income Taxes of ¥16.1B (YoY +26.4%), corporate income taxes and other taxes were ¥6.3B, resulting in an increase in the effective tax rate to 39.3% (34.2% in the same period last year). Net Income attributable to owners of the parent was ¥10.2B (YoY +13.8%), with growth moderating relative to the earnings growth rates at the Operating Income and Ordinary Income stages. In conclusion, the Company achieved increases in both revenue and earnings.

Key Financial Indicators

【Profitability】The operating margin improved to 12.4% from 10.8% in the same period last year, an improvement of +1.7pt. The net profit margin, based on Net Income attributable to owners of the parent, improved to 8.1% from 7.7%, an improvement of +0.4pt. Gross margin improved to 62.2% from 59.0%, an improvement of +3.2pt. Profitability improved in the same direction across multiple indicators. 【Cash Quality】Cash and deposits were ¥126.6B, while the Equity Ratio declined slightly to 67.7% (68.0% in the same period last year) but remained at a high level. 【Investment Efficiency】ROE was 3.0%. Against total assets of ¥481.4B, net assets were ¥326.0B, and BPS was ¥1,081.98 (¥1,106.61 in the same period last year). As the number of treasury shares was unchanged, the decline in retained earnings is considered the primary cause of the decrease in BPS. 【Financial Soundness】Total interest-bearing debt was ¥42.4B (short-term: ¥30.4B; long-term: ¥12.0B), while the Company held cash of ¥126.6B, indicating a virtually debt-free position. With interest expense of ¥0.16B against Operating Income of ¥15.57B, interest coverage was approximately 97x, representing substantial coverage.

Cash Flow Analysis

As detailed disclosures for the cash flow statement are not available, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥126.6B, a decrease of ¥16.8B (-11.7%) from ¥143.4B in the same period last year. Long-term borrowings were ¥12.0B, a reduction of 25.0% from ¥16.0B in the same period last year, indicating that scheduled repayments are progressing. The provision for bonuses was ¥7.4B, down 45.5% from ¥13.6B in the same period last year, while accrued corporate income taxes and other taxes were ¥7.4B, down 31.7% from ¥10.8B. Seasonal cash outflows related to bonus payments and tax payments are considered one factor behind the decline in cash. Meanwhile, accounts receivable were ¥57.1B, up only +2.2% from ¥55.9B in the same period last year, below the pace of revenue growth (+8.2%), suggesting that working capital efficiency is instead improving. Inventories were also ¥6.6B, down 7.0% from ¥7.1B in the same period last year, indicating that cash tied up in inventory is being controlled. Retained earnings were ¥286.9B, down from ¥294.7B in the same period last year, with dividend payments considered the primary factor.

Earnings Quality

Against Ordinary Income of ¥15.7B, Extraordinary Income consisted solely of a ¥0.4B gain on the sale of investment securities, while Extraordinary Losses were zero, indicating that the contribution of non-recurring gains and losses to earnings was limited. Non-operating income of ¥0.4B consisted primarily of ¥0.2B in dividend income and did not include items with low recurrence, indicating that a profit structure originating from core operations has been maintained. Corporate income taxes and other taxes were ¥6.3B against Profit Before Income Taxes of ¥16.1B, resulting in an increase in the effective tax rate to 39.3% (34.2% in the same period last year). This was the primary factor limiting the growth in Net Income attributable to owners of the parent (+13.8%) below the growth rates at the Operating Income and Ordinary Income stages (+25.2%/+22.7%). Comprehensive income was ¥10.2B, of which ¥10.6B was attributable to owners of the parent. The difference from Net Income of ¥10.2B was primarily attributable to foreign currency translation adjustments of +¥0.5B, and the divergence remained small. Overall, most earnings originated from recurring operating activities, and the small contribution from non-recurring items indicates that earnings quality can be assessed as favorable.

Earnings Forecasts and Guidance

Progress toward the full-year forecast was 23.3% for revenue (¥125.1B/¥538.0B), 21.5% for Operating Income (¥15.6B/¥72.3B), 21.3% for Ordinary Income (¥15.7B/¥73.8B), and 21.2% for Net Income attributable to owners of the parent (¥10.2B/¥48.1B). All remained slightly below the simple 25% benchmark. No revisions were made to the earnings or dividend forecasts during the quarter, suggesting consistency with a plan weighted toward the second half. Against the full-year forecast growth rates (Operating Income YoY +8.3%; Ordinary Income YoY +7.4%), the growth rates in Q1 (Operating Income +25.2%; Ordinary Income +22.7%) were substantially higher. If the earnings growth trend continues through the first half, this could support a higher probability of achieving the full-year plan.

Shareholder Returns

The Payout Ratio calculated from the full-year forecast DPS of ¥65 and forecast EPS of ¥160.63 is 40.5%. Dividend performance data for the same period last year is not provided, and there was no revision to the dividend forecast during the quarter. The number of treasury shares was unchanged from the same period last year at 2,362 thousand shares, and no share repurchases were confirmed during Q1. As the Company’s shareholder returns consist solely of dividends, it is appropriate to evaluate them based on the Payout Ratio rather than the Total Return Ratio.

Risk Factors

1. Risk of net income compression due to an increase in the effective tax rate: The effective tax rate rose to 39.3% from 34.2% in the same period last year, while YoY growth in Net Income attributable to owners of the parent was limited to +13.8% against YoY growth in Profit Before Income Taxes of +26.4%. If the tax burden remains elevated, it may constrain the effective pace of earnings growth.

2. Formal refinancing risk associated with the high proportion of short-term liabilities: Current liabilities of ¥141.7B are approximately 10 times non-current liabilities of ¥13.7B, indicating a significant concentration in current liabilities. However, cash and deposits of ¥126.6B are approximately 4.2 times short-term borrowings of ¥30.4B, and practical liquidity risk is considered limited.

3. Monitoring of the level of intangible assets and goodwill: Intangible assets were ¥161.7B, including goodwill of ¥27.0B, accounting for 33.6% of total assets. The ratio of investment-type assets, including software under development, is high. The impact of future monetization and impairment trends on financial indicators should be closely monitored.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

Both the operating margin and net profit margin exceed the industry median, placing the Company’s profitability at a high level within the industry.

Growth and Capital Efficiency

The revenue growth rate was slightly below the industry median, placing the Company’s growth rate in the mid-range.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The operating margin improved to 12.4% (10.8% in the same period last year), and the improvement in gross margin (+3.2pt) exceeded the increase in SG&A expenses (+11.6%), driving the earnings growth rate (+25.2%). This indicates a qualitative change in the earnings structure.

2. The effective tax rate increased to 39.3% (34.2% in the same period last year), and net income growth (+13.8%) moderated relative to the growth in Profit Before Income Taxes (+26.4%). This is a point to consider when evaluating earnings quality.

3. Financial soundness remains at a high level, supported by the scheduled reduction in long-term borrowings (-25.0%), ample cash holdings of ¥126.6B, and an Equity Ratio of 67.7%.

Theoretical Stock Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market price or a recommendation to take any specific investment action.

Sensitivity: ¥1,234–¥1,306 at ±1% for the cost of equity, and ¥1,265–¥1,276 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee future stock prices)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

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