KDDI (9433) Q3 2026 earnings summary

Executive summary

• Preliminary Q3 results for FY26-03 were presented, adjusted for inappropriate transactions at subsidiaries BIGLOBE and G-PLAN, with final numbers pending the Special Investigation Committee's report by end of March 2026.

• Management apologized for the incident, emphasizing no effect on core communication services and a commitment to governance reforms.

• Core business areas, especially mobile, finance, and DX, showed steady growth and operational progress year-over-year.

• AI-driven initiatives, including the launch of the Osaka Sakai Data Center and the AI Digital Belt, are advancing as part of long-term growth strategy.

Significant events and developments

• Fictitious transactions were discovered at BIGLOBE and G-PLAN, involving two employees, leading to overstated sales and profits over multiple years.

• Approx. ¥246.0B in revenue and ¥50.0B in operating income identified for reversal over multiple years due to fictitious transactions.

• The scheme involved recording fictitious sales and external outflows of commissions, with the total impact estimated at JPY 246 billion in revenue and JPY 33 billion in external outflows.

• The business started in 2017 (G-PLAN) and 2022 (BIGLOBE), with the fictitious transactions likely from inception.

• The company is considering legal action depending on the investigation's outcome.

Financial highlights

• Q1-3 FY26-03 operating revenue: ¥4,471.8B (+3.8% YoY); operating income: ¥871.3B (+2.0% YoY); profit for the period: ¥554.0B (+5.3% YoY), all figures adjusted for fictitious transactions.

• Segment contributions: Personal Services +JPY 27.2B, Finance/Energy/Lawson +JPY 18.2B, DX Business Services +JPY 8.5B, Technological Structure Reform +JPY 12.9B.

• Negative impact from prior years' promotional expenses: -JPY 28.9B.

• Q3 alone saw positive operating income growth as negative impacts subsided.

• Reversal of fictitious revenue and income for FY26-03 Q1-3: approx. ¥68.0B and ¥25.0B, respectively.