I'LL (3854) Q1 2026 earnings summary

Executive summary

• Net sales rose 11.3% year-over-year to ¥5,064.6 million for Q1 FY7/26, driven by robust project execution, recurring revenue build-up, and strong demand for digital transformation and IT solutions among mid-tier and SME clients.

• Operating profit increased 23.4% year-over-year to ¥1,325.6 million, with an operating margin of 26.2%.

• Gross profit margin reached a record 56.9%, supported by favorable project phase mix and productivity improvements.

• Both System Solutions and Online Solutions segments contributed to sales and profit growth, with System Solutions as the main profit driver.

• Continued investments in AI, R&D, and internal systems, including microservices architecture, to enhance competitiveness.

Financial highlights

• Net sales: ¥5,064.6M (+11.3% YoY); Gross profit: ¥2,882.4M (+16% YoY); Operating profit: ¥1,325.6M (+23.4% YoY); Net profit: ¥914.9M (+22.7% YoY).

• Gross profit margin improved to 56.9% from 54.6% YoY.

• Recurring gross profit grew 19% YoY, outpacing SG&A growth (+10% YoY).

• Personnel expenses rose 9.6% YoY due to headcount growth and revised allowances.

• R&D expenses for the quarter were ¥28.2 million.

Outlook and guidance

• FY7/26 plan targets net sales of ¥20,700M, gross profit of ¥11,645M (56.3% margin), operating profit of ¥5,250M (25.4% margin), and profit attributable to owners of parent ¥3,725M (+6.8% YoY), with EPS of ¥148.82.

• Dividend forecast for FY7/26 is ¥60 per share, aiming for a payout ratio of 35%+ and DOE of 10%+.

• Growth investments in R&D, AI, and talent development to accelerate, with a long-term vision to become an industrial platform provider.

• No revisions to previously announced forecasts.