oRo (3983) Q2 2024 earnings summary

Executive summary

• Q2 FY2024/12 revenue reached ¥3,815 million, up 16.3% year-over-year, with operating profit at ¥1,309 million, up 11.4% year-over-year, and net profit attributable to owners up 16.1% to ¥990 million.

• Comprehensive income increased to ¥1,016 million from ¥877 million year-over-year, reflecting profit growth and positive foreign exchange effects.

• Cloud Solutions segment revenue grew 10.6% year-over-year to ¥2,335 million, with operating profit at ¥971 million, down 0.4% year-over-year. Marketing Solutions revenue rose 26.6% year-over-year to ¥1,480 million, with operating profit up 41.1% to ¥337 million.

• Recurring revenue in Cloud Solutions grew steadily, with a 35.3% year-over-year increase in maintenance, SaaS, and monthly service fees. New customer acquisition improved, and churn rate remained low at around 0.3%.

• Segment reporting was revised: the Digital Transformation business was discontinued, and the new Marketing Solutions segment was established.

Financial highlights

• Gross profit increased by ¥358 million year-over-year to ¥2,561 million, with gross margin stable at 67.1%.

• Operating profit margin was 34.3% in Q2 FY2024/12.

• Profit attributable to owners of the parent was ¥995 million, up ¥138 million year-over-year.

• Cash and cash equivalents increased by ¥742 million from the end of the previous fiscal year, reaching ¥9,450 million.

• Basic earnings per share increased to ¥61.73 from ¥53.18 year-over-year.

Outlook and guidance

• Full-year FY2024/12 revenue forecast is ¥8,229 million (+17.0% year-over-year), with operating profit forecast at ¥2,782 million (+9.2%) and net profit at ¥1,963 million (+6.9%).

• Dividend forecast for the year is unchanged at ¥30 per share.

• Cloud Solutions segment aims to recover customization revenue in H2 by addressing client business challenges and strengthening proposal activities.

• Marketing Solutions targets an operating margin of around 20% and continued growth in both domestic and overseas markets.

• ARPA and NRR in Cloud Solutions are expected to improve over the medium term, with churn rate projected to remain stable.