Key Positives From The Results
Operating revenue of JPY 52,660M (+34.3% YoY) and operating income of JPY 23,462M (+50.1% YoY), with all profit line items hitting record highs. Dual tailwinds from expanding equity trading value and rising interest rates lifted the entire earnings structure, with ROE reaching 19.6%—well above the 8% cost of equity.
- Brokerage Commissions: JPY 24.805B (+31.3% YoY). Proprietary equity trading value reached JPY 73.7T (+35% YoY), with market share rising to 9% in Q4 standalone
- Net Financial Income: JPY 17.306B (+29.0% YoY). The policy rate hike to 0.75% expanded customer deposit investment income, reaching JPY 1.71B in Q4 standalone
- FX Trading Income: JPY 5.819B (+55.1% YoY). FX accounts grew to 261K and open interest expanded to JPY 293.2B, sustaining growth momentum
- Recurring Profit Margin On Operating Revenue: 45% (vs. 39% prior year). Revenue growth of +34.3% outpaced the +19.2% increase in SG&A, delivering clear operating leverage
- IPO Underwriting Participation: 68.5%, ranking second in the industry. YouTube subscribers reached 806K with 180M total views, contributing to customer base expansion through enhanced brand awareness
Key Concerns From The Results
The earnings structure remains heavily dependent on market conditions, warranting caution around earnings volatility risk in the event of a market dislocation. SG&A rose to JPY 25,625M (+19.2% YoY) with an accelerating growth pace, led by advertising expenses surging +41% YoY.
- Advertising Expenses: JPY 3.84B (+41% YoY). While brand awareness is improving, sustainability of ROI on these expenditures needs to be assessed
- Futures & Options Commissions: JPY 1.024B (−5.6% YoY). Expected to be a revenue diversification pillar post-equity commission elimination, yet declined
- Short-Selling Credit Balance Share: Fell to 2% as of Q4 (vs. 6% at prior FYE). Risk of short-side client attrition in margin trading warrants attention
- Unauthorized Access-Related Extraordinary Losses: Compensation payments of JPY 375M and securities transaction liability reserve provisions of JPY 1.474B were booked. Ongoing cybersecurity investment burden
- Financial Expenses: JPY 3.573B (+72.7% YoY). Rising rates also directly increase borrowing costs, with margin trading borrowings ballooning to JPY 53.901B—approximately 5x the prior year
Focus Areas / Items To Monitor Going Forward
- Internal reserves accumulation pace following the payout ratio floor increase to 70%, and trajectory of the 307% capital adequacy ratio amid margin balance expansion. The balance between credit balance growth and capital policy is the key focus
- Timing of concrete revenue contribution from CFD service launch and 23-hour US equity market access planned for FY2026. Revenue diversification post-commission elimination will determine the structural transformation
- Net impact on financial income from additional BOJ rate hikes. The company estimates +JPY 650M in annual revenue per +25bp in the policy rate, but the degree to which this is offset by the cost of raising MATSUI Bank deposit rates (up to 0.65% p.a.) needs to be monitored
- Trends in customer acquisition cost (CAC) relative to the +41% increase in advertising expenses, and payback criteria
- Drivers behind the decline in short-selling credit balance share (6% → 2%) and remediation measures
- Target products, launch timeline, and first-year revenue targets for the CFD service
- Revenue contribution outlook for the insurance business from the capital and business alliance with agent IG Holdings
- Measures to prevent recurrence of unauthorized access incidents and scope of cyber insurance coverage
- Growth targets for MATSUI Bank balance of JPY 68.3B and impact on deposit investment income
- Room for incremental share gains given that online trading already accounts for over 90% of individual equity trading value
- Potential for share buybacks following the shift to a 70% payout ratio floor
- Scale of stock-type revenue (trust fee rebates) from investment trust AUM of JPY 562.6B
- Plans for quantitative disclosure of revenue contribution from the US equities business (approximately 5,000 stocks)
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Operating Revenue | JPY 52,660M | +34.3% |
| Net Operating Revenue | JPY 49,087M | +32.2% |
| Operating Income | JPY 23,462M | +50.1% |
| Recurring Profit | JPY 23,813M | +55.7% |
| Net Income | JPY 15,480M | +47.4% |
| EPS | JPY 60.11 | +47.3% |
| Diluted EPS | JPY 59.96 | +47.3% |
| OPM (on Operating Revenue) | 44.6% | +4.7pt |
| Recurring Profit Margin (on Operating Revenue) | 45.2% | +6.2pt |
| ROE | 19.6% | +5.8pt |
| ROA (Recurring Profit Basis) | 1.9% | +0.6pt |
| BPS | JPY 318.39 | +7.4% |
| Annual Dividend | JPY 50.00 | +JPY 10.00 |
| Payout Ratio | 83.2% | −14.8pt |
| DOE (Dividend on Equity) | 16.3% | +2.8pt |
Performance By Business Segment
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Online Securities Trading Services (Consolidated) | JPY 52,660M | +34.3% | JPY 23,462M | +50.1% | 44.6% |
- Equity & ETF Brokerage Commissions: JPY 23.782B (+33.6% YoY). Market share expanded to 9% in Q4, driven by a +37% increase in TSE individual trading value
- FX Trading: JPY 5.819B (+55.1% YoY). Spread narrowing and expanded currency pairs (32 pairs) lifted trading value to JPY 558.6T
- Net Financial Income: JPY 17.306B (+29.0% YoY). Dual effect of customer deposits reaching JPY 749.012B (+20.6% YoY) and rising interest rates
- Investment Trusts: AUM of JPY 562.6B (+66.7% vs. JPY 337.5B at prior FYE). Regular investment amounts hit a record JPY 19.7B in Q4 standalone
- Futures & Options Commissions: JPY 1.024B (−5.6% YoY). Despite maintaining a 21% market share, growth in trading value did not translate into commission revenue
Progress Versus Full-Year Guidance
The company does not issue earnings guidance given that securities business performance is inherently driven by market conditions; therefore, progress rates against a full-year plan cannot be calculated. Key operating metrics such as equity brokerage trading value and commission revenue are disclosed on a monthly basis.
| Item | Value (Full-Year Actual) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Operating Revenue | JPY 52.66B | Not disclosed | - |
| Operating Income | JPY 23.462B | Not disclosed | - |
| Net Income | JPY 15.48B | Not disclosed | - |
- Trading value tends to spike during periods of elevated equity market volatility (fiscal year-end rights dates, political events, etc.). This fiscal year, Q4 trading value surged to JPY 22.7T, driven by the Nikkei hitting an all-time high of JPY 58,583 in February followed by a sharp correction in March
Changes To Guidance
No guidance is disclosed; therefore, no revisions apply.
Commentary On Shareholder Returns
Annual dividend of JPY 50 (interim JPY 25 + year-end JPY 25 planned), payout ratio of 83.2%, DOE of 16.3%. Starting next fiscal year (FY ending March 2027), the payout ratio floor will be raised from 60%+ to 70%+, with the DOE-based criterion abolished and consolidated into the payout ratio metric. This clearly signals a commitment to prioritizing shareholder returns.
Financial Position
Given the nature of the securities business, the majority of total assets comprise customer deposits and margin trading assets; the 6.1% equity ratio reflects an industry-specific structure. Net assets grew to JPY 82.347B (+7.5% YoY) through profit accumulation, and the capital adequacy ratio of 307% exceeds the 292% average among the five major online brokers.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Cash Equivalents | JPY 81,748M | +0.0% YoY |
| Cash and Deposits | JPY 76,149M | +13.0% YoY |
| Customer Deposits | JPY 749,012M | +20.6% YoY |
| Margin Trading Loans | JPY 423,617M | +27.1% YoY |
| Net Assets | JPY 82,347M | +7.5% YoY |
| └ Shareholders' Equity | JPY 82,016M | +7.5% YoY |
| Short-Term Borrowings | JPY 316,900M | +4.6% YoY |
| Margin Trading Borrowings | JPY 53.901B | +390.6% YoY |
| Investment Securities | JPY 11,044M | +43.5% YoY |
News Released Alongside The Earnings Announcement
None
Major Announcements During The Quarter
- 2026/02/27Announced year-end dividend forecast of JPY 25 per share (JPY 50 annual) for FY ending March 2026, and raised the payout ratio floor to 70%+ starting next fiscal year while abolishing the DOE-based criterion Regarding Planned Dividend for FY Ending March 2026 and Changes to Shareholder Return Policy
- 2026/02/03Disclosed Q3 FY ending March 2026 earnings summary (interim review completed) Q3 FY Ending March 2026 Earnings Summary [J-GAAP] (Non-Consolidated)
- 2026/01/28Enhanced the trading analysis screen utilizing TSE trading breakdown data, enabling more detailed analysis of credit balance and credit ratio trends Enhancement of Trading Analysis Screen Using TSE Trading Breakdown Data
Large-Shareholding Filings / Material Proposals Over The Past Year
- Michio Matsui: Ownership ratio 46.99% (−2.88pt) — Filed an amendment report indicating a decrease in holdings. Details of holding purpose should be confirmed via the original EDINET filing
Envalith, Inc. ("Envalith") provides exclusive research coverage services to domestic and international institutional investors, as well as domestic individual investors, with the objective of contributing to the development of global and Japanese capital markets by providing information necessary for considering investments in Japanese listed companies.
- Purpose and Disclaimer Regarding Investment Decisions
This report has been prepared solely for informational purposes and does not constitute a solicitation to acquire, sell, or hold securities or any other financial products. Furthermore, this report does not constitute specific investment, financial, or tax advice. Any opinions, judgments, or recommendations contained herein are not intended to induce investment activities. Please be advised that all investment decisions must be made based on the investor's own responsibility and judgment, and Envalith and subject company shall not be involved in any such investment decisions.
- Information Sources, Accuracy, and Disclaimer of Warranty
This report has been prepared based on a formal request from the subject company, utilizing information provided by and interviews conducted with said company. By using this report, you are deemed to have agreed to the following: 1. Information Sources: This report is prepared on the assumption that the publicly available information and information disclosed by the subject company and provided during interviews is true and reliable. Envalith has not independently verified or validated the veracity of such information. 2. Accuracy: The interpretations, analyses, and hypotheses or conclusions based thereon contained in this report are independently derived by Envalith using its own perspectives and analytical methods based on the information mentioned in the preceding paragraph. 3. Disclaimer of Warranty: In the event that there are errors or omissions in the information disclosed by the subject company, Envalith and subject company shall not be held liable for any inaccuracies in this report resulting therefrom. Envalith and subject company make no warranties, whether express or implied, regarding the accuracy, safety, validity, completeness, or any other aspect of this report, nor regarding the past or future performance of the subject company.
- Limitation of Liability
Envalith and subject company shall not be liable for any costs, damages, or losses (including direct, indirect, incidental, consequential, or punitive damages) arising from the use of this report or the information obtained therefrom. Users of this report acknowledge and agree that such use is at their own risk.
- Potential Conflicts of Interest
Envalith may have, or may have in the future, business relationships with the subject company. Accordingly, investors should be aware that conflicts of interest may exist that could affect the objectivity of this report.
- No Obligation to Change or Update Content
The contents and opinions in this report, as well as the information upon which it is based, are current as of the date of preparation and are subject to change without notice. Please be advised that Envalith is under no obligation to update the contents of this report, and investors must verify the timeliness of the information on their own.
- Governing Language
This report is prepared in Japanese, English, and Chinese. In the event of any discrepancy or difference in interpretation between the language versions, the Japanese version shall be treated as the original and shall prevail.
- Copyright
All rights (including copyrights) relating to this report belong to Envalith. Any reproduction, redistribution, or other use of all or part of this report without the prior written permission of Envalith is strictly prohibited.
- Use for Other Investment Products
Except where Envalith has provided prior written approval, the use of this report and the trademarks or trade names of Envalith or the subject company in connection with the information distribution, transaction, sales promotion, or advertising of any investment products (including derivatives, structured products, investment trusts, or investment assets whose price, return, or performance is based on or linked to this report) is strictly prohibited.