Summary
FY3/27 1Q delivered sharp profit growth. Operating revenue reached JPY 17,299M (+51.6% YoY) and recurring profit JPY 8,856M (+95.2% YoY), as equity brokerage trading value hit a quarterly record. The first focus for 2Q is how retail trading activity translates into brokerage commissions after the Nikkei 225 set an all-time intraday high in June. The second is whether net financial income of JPY 5,748M (+55.0% YoY) can keep growing. That depends on two opposing forces: the volume benefit from margin loans, which reached JPY 552,532M (+30.4% vs. prior fiscal year-end), and higher funding costs from short-term borrowings of JPY 457,900M (+44.5%). We will also check whether operating leverage holds. In 1Q, SG&A (including trading-value-linked transaction expenses) grew +17.8% YoY against +48.3% growth in net operating revenue. Treatment of the dividend forecast, currently undetermined, is another checkpoint. As is typical for securities firms, the company does not issue guidance, so monthly operating data remain the key basis for assessment.
Key Points for Next Quarter
| Key Points & Focus | Implications |
|---|---|
Brokerage CommissionsYoY and QoQ changes in equity brokerage trading value and brokerage commissions | 1Q brokerage commissions were JPY 8,440M (+68.9% YoY), and equity brokerage trading value rose 112% YoY to a quarterly record. Whether standalone 2Q can match 1Q will indicate revenue momentum. |
Net Financial IncomeMargin loan balance and the spread between financial revenue and financial expenses | 1Q net financial income was JPY 5,748M (+55.0% YoY). The key is whether margin loans of JPY 552,532M (+30.4% vs. prior fiscal year-end) are sustained, and how fast financial expenses of JPY 1,414M (JPY 694M a year earlier) keep rising. |
Trading GainsYoY change in trading gains, driven mainly by FX | 1Q trading gains fell to JPY 1,366M (-22.3% YoY). We will watch whether better trading conditions, such as tighter spreads, lift volumes enough to reverse the decline. |
Cost StructureSG&A growth YoY and ratio to net operating revenue | 1Q SG&A was JPY 7,123M (+17.8% YoY), equal to 44.8% of net operating revenue (56.4% a year earlier, our estimate). Whether leverage holds as trading-value-linked costs rise is key to margins. |
Balance Sheet & Shareholder ReturnsCapital adequacy ratio and interim dividend | Capital adequacy ratio was 304.2% at 1Q-end. The focus is how the company reconciles balance sheet growth from margin lending with its shareholder return policy. |
Key Issues from Previous Results (FY3/27 1Q Results)
In 1Q, the Nikkei 225 rose from the JPY 51,000 range at the start of the period to the JPY 72,000 range in June, an all-time intraday high. Against this backdrop, retail equity trading value on the two major exchanges rose +113% YoY, and the company's equity brokerage trading value rose +112% YoY to a quarterly record. Both earnings pillars, brokerage commissions and net financial income, grew at the same time. Operating income reached JPY 8,763M (+87.7% YoY), outpacing growth in net operating revenue. For 2Q, the key issues are whether this strong trading environment persists, and how net financial income balances against funding costs as balances expand.
1. Brokerage Commission Growth and Sustainability of Trading Value Momentum
- Prior Period: 1Q commissions received were JPY 8,765M (+67.1% YoY), of which brokerage commissions were JPY 8,440M (+68.9% YoY). By product, equities and beneficiary certificates contributed JPY 8,194M and futures and options JPY 245M.
- This Quarter's Checkpoint: The company disclosed that the market turned volatile after the June record high, driven by profit-taking and moves in AI and semiconductor stocks. We will check whether retail trading value in July–September can hold at 1Q levels.
- Key Metrics: YoY change in standalone 2Q brokerage commissions and equity brokerage trading value, plus monthly trading value and account numbers. 1Q operating revenue of JPY 17,299M exceeded the preceding quarter's JPY 15,367M (our estimate).
2. Margin Loan Growth and Net Financial Income Spread
- Prior Period: Financial revenue was JPY 7,162M (JPY 4,402M a year earlier) and financial expenses JPY 1,414M (JPY 694M), giving net financial income of JPY 5,748M (+55.0% YoY). Margin loans stood at JPY 552,532M (+30.4% vs. prior fiscal year-end) and segregated deposits at JPY 766,512M (+2.3%).
- This Quarter's Checkpoint: The company cited higher margin trading revenue and larger distributions on segregated deposits, driven by higher interest rates, as profit drivers. We will gauge how far higher funding rates after the BOJ's additional rate hike push up financial expenses.
- Key Metrics: Margin loan and short-term borrowing balances at 2Q-end (short-term borrowings were JPY 457,900M at 1Q-end, +44.5% vs. prior fiscal year-end), plus YoY changes in financial revenue and financial expenses.
3. Potential Turnaround in Trading Gains (FX)
- Prior Period: Trading gains fell to JPY 1,366M (-22.3% YoY), in contrast to strong growth in equity-related revenue.
- This Quarter's Checkpoint: The focus is whether better trading conditions, such as tighter spreads on popular currency pairs, lift volumes and earnings. Disclosures do not allow firm conclusions on the trade-off between revenue per unit and volume, so we will monitor the trend.
- Key Metrics: YoY change in 1H cumulative trading gains and their share of net operating revenue (8.6% in 1Q, our estimate).
4. Cost Control and Operating Leverage
- Prior Period: SG&A was JPY 7,123M (+17.8% YoY). This included transaction-related expenses of JPY 2,443M (+26.9%), administrative expenses of JPY 1,743M (+19.0%), personnel expenses of JPY 1,289M and depreciation of JPY 941M.
- This Quarter's Checkpoint: Exchange fees linked to trading value and advertising costs are rising. We will check whether cost growth can stay below net operating revenue growth (+48.3% YoY in 1Q). We will also track extraordinary losses of JPY 681M (a JPY 640M provision to the reserve for financial instruments transaction liabilities and a JPY 41M impairment on investment securities) and the breakdown of income taxes.
- Key Metrics: 1H cumulative SG&A as a share of net operating revenue (44.8% in 1Q vs. 56.4% a year earlier, both our estimates) and operating income margin.
5. Financial Base and Shareholder Return Policy amid Balance Sheet Expansion
- Prior Period: Total assets were JPY 1,525,023M (+12.6% vs. prior fiscal year-end), while net assets were JPY 81,691M (-0.8%) and the capital adequacy ratio was 304.2%. In 1Q, the company paid the FY3/26 year-end dividend of JPY 6,440M (JPY 25.00 per share).
- This Quarter's Checkpoint: The company has set its FY3/27 dividend forecast at JPY 28. We will confirm that it continues to fund margin loans mainly through short-term borrowings.
- Key Metrics: Capital adequacy ratio and BPS at 2Q-end (JPY 315.68 at 1Q-end vs. JPY 318.39 at prior fiscal year-end), and the interim dividend per share (JPY 25.00 in the prior-year interim period).
Key Timely Disclosures This Quarter
- 2026/09/01Notice of Monthly Trading Results and Number of Accounts for August 2026 (Preliminary): This is the only intra-period KPI disclosure for a company that does not issue guidance. It provides the base data for estimating 2Q brokerage commissions and net financial income.
- 2026/08/26Notice Regarding FY3/27 Interim Dividend (Planned): This updates the shareholder return policy, as the dividend forecast was undetermined at the time of the earnings release. We will check consistency with the figure confirmed in the 2Q earnings release.
- 2026/08/21Notice Regarding Settlement of Patent Infringement Litigation, etc.: The company booked JPY 274M in compensation paid as an extraordinary loss in the prior-year period. We will check for any impact on 2Q extraordinary gains/losses.
Previous Quarter Results (FY3/27 1Q Actual)
The company operates a single segment providing online brokerage services to retail investors. Its two earnings pillars are brokerage commissions and net financial income, driven mainly by margin trading. In 1Q, the market rally that took the Nikkei 225 to an all-time high lifted equity brokerage trading value to a quarterly record. Operating revenue and all profit lines rose sharply YoY. The company is also growing its customer base through its official YouTube channel (940K subscribers, 190M total views) and investment information media, while improving trading conditions in FX and US equities. Because results depend heavily on market conditions, the company does not issue guidance, so comparisons against a company plan are not applicable.
| Item | Amount | YoY | vs. Company Plan | Remarks |
|---|---|---|---|---|
| Operating Revenue | JPY 17,299M | +51.6% | - | Driven by brokerage commissions of JPY 8,440M (+68.9%) and financial revenue of JPY 7,162M |
| Net Operating Revenue | JPY 15,885M | +48.3% | - | After deducting financial expenses of JPY 1,414M (JPY 694M a year earlier) |
| Operating Income | JPY 8,763M | +87.7% | - | Operating leverage as SG&A rose +17.8% against net operating revenue growth of +48.3% |
| Recurring Profit | JPY 8,856M | +95.2% | - | Non-operating items improved, including JPY 95M in gains on investment partnerships |
| Quarterly Net Income | JPY 5,609M | +95.3% | - | Extraordinary losses of JPY 681M (incl. JPY 640M provision to the reserve for financial instruments transaction liabilities) |
| EPS | JPY 21.77 | +95.1% | - | Average shares outstanding during the period: 257,622,693 |
(YoY for EPS is our estimate; all other figures are as reported in the earnings release.)
Progress vs. Full-Year Plan (Recurring Profit Basis): Not calculable, as the company does not issue guidance (for reference: prior-year 1Q recurring profit was JPY 4,536M and prior-year full-year recurring profit was JPY 23,813M).
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