ISB (9702) Q4 2023 earnings summary

Executive summary

• FY2023 revenue and operating income reached record highs; revenue rose for an eighth consecutive year and operating income for a seventh. Both exceeded plan, while net income fell short of plan.

• Broad-based growth, led by enterprise solutions and product sales, offset contraction in 5G-related work and unprofitable mobility projects.

Financial highlights

• FY2023 revenue was ¥32,388m, up 12% YoY and 4% above plan; operating income was ¥2,734m, up 18% and 5% above plan.

• Ordinary income was ¥2,810m, up 17% YoY and 6% above plan; net income was ¥1,472m, up 3% but 7% below plan.

• Q4 revenue was ¥8,315m, up 10% YoY; operating income was ¥641m, up 7%, with operating margin down 0.2pt to 7.7%.

• Operating income rose by ¥415m YoY; revenue growth contributed ¥824m, while SG&A increased ¥489m.

Outlook and guidance

• FY2024 guidance: revenue ¥33.5bn, operating income ¥2.32bn, ordinary income ¥2.4bn and net income ¥1.5bn, versus FY2023 actuals of ¥32.38bn, ¥2.73bn, ¥2.81bn and ¥1.47bn, respectively.

• FY2024 dividend forecast is ¥42/share, unchanged from FY2023; forecast payout ratio is 32.0% versus 32.5%.

• FY2024 outlook incorporates investment in human capital and costs related to planned office relocations and consolidation.

• The FY2026 plan targets ¥37.5bn in revenue and ¥2.7bn in operating income, with ¥3.7bn of cumulative growth investment over three years.