ChatPlus Lifts Operating Profit 43% on Flat Costs, Then Guides for 5% Growth in Its First Listed Year

Costs stood still while revenue rose 19.5%

ChatPlus Co., Ltd. (TSE: 598A), a Tokyo-based software company that sells chatbot and FAQ systems to Japanese businesses on a subscription basis, published results for the year to June 30, 2026 on August 13, 2026 under Japanese GAAP on a non-consolidated basis. It is the company's first annual report as a listed issuer, and it covers a year that ended two weeks before the listing itself. Revenue rose 19.5% to ¥1,221 million, operating profit 43.4% to ¥529 million, ordinary profit 42.2% to ¥524 million and net profit 40.9% to ¥346 million, for earnings per share of ¥86.67 against ¥61.51. The company reports a single segment, its SaaS solutions business, so there is no segment breakdown to read.

The operating leverage sits entirely in the cost lines. Cost of sales rose 15.2% to ¥303 million — the company attributes that to higher system usage fees as volumes grew and to outsourcing for feature work — so gross profit rose 21.0% to ¥917 million, faster than revenue. Selling, general and administrative expenses then fell 0.3% to ¥387 million: research and development spending increased, but the company says the end of its goodwill amortisation more than offset that. The operating margin therefore moved from 36.2% to 43.4%. Below the operating line the direction reverses. Non-operating expenses rose 262.7% to ¥7 million on foreign-exchange losses and listing-related costs, against non-operating income of ¥2 million, which is why ordinary profit grew 42.2% rather than 43.4%. Income taxes of ¥178 million left net profit at ¥346 million.

ARR grew 12.7%, and it is the number the guidance follows

Recognised revenue and the subscription base did not grow at the same rate. Annual recurring revenue at June 30, 2026 was ¥1,214 million, up 12.7% from ¥1,077 million a year earlier — well short of the 19.5% revenue growth the income statement shows. The company's FY6/2027 revenue guidance of +12.1% sits almost exactly on that ARR growth rate rather than on the reported revenue growth rate, which is the most direct explanation the filing offers for why the coming year is guided so much more slowly.

The composition is a product transition in progress. ARR from the original ChatPlus service fell over the four quarters from ¥707 million to ¥637 million and its account count from 2,182 to 1,991, which the company attributes mainly to the loss of lower-tier plans. AI AgentPlus — the generative-AI product renewed during the year so that several AI agents can be configured, each given a role and a specialism, supporting setup, response and improvement — grew from ¥346 million to ¥534 million of ARR on 136 to 211 accounts. FAQPlus, also renewed during the year to automate the creation and updating of FAQ articles and to share a single knowledge base with AI AgentPlus, went from ¥24 million to ¥42 million on 10 to 18 accounts. Total accounts therefore fell from 2,328 to 2,220 while average revenue per account rose from ¥463 thousand to ¥547 thousand: the company is trading volume for value, and says the shared knowledge base is meant to support cross-selling and to improve the churn rate. On the company's own measure churn moved the wrong way, from 1.8% to 2.1%.

A balance sheet remade by retained profit, not by the IPO

None of the listing money is in these figures. Total assets rose 38.2% to ¥1,318 million, of which the increase in current assets was ¥354 million and almost all of that — ¥341 million — was cash. Net assets rose 79.9% to ¥753 million entirely through retained earnings, which grew ¥334 million after the ¥12 million dividend, and the equity ratio moved from 43.9% to 57.2%. Operating cash flow was ¥415 million against pre-tax profit of ¥524 million, helped by a ¥56 million increase in contract liabilities — customer prepayments, which for a subscription business is cash collected ahead of revenue. Investing outflows were ¥35 million, mostly ¥33 million of intangible assets, and financing outflows ¥38 million: ¥26 million of long-term debt repayment, the ¥12 million dividend, and a ¥20 million short-term facility drawn and repaid within the year. Year-end cash and equivalents stood at ¥1,030 million. Return on equity fell from 81.6% to 59.2%, but the filing's own numbers show why — equity nearly doubled while profit rose 40.9% — so that is a denominator effect, not a deterioration in profitability.

The stock split makes the dividend look cut when it was flat

ChatPlus split its shares 200 for 1 on December 8, 2025, ahead of the listing. Per-share figures in the filing are restated as though the split had occurred at the start of the prior year — earnings per share of ¥86.67 against ¥61.51, net assets per share of ¥188.35 against ¥104.68 — but the dividend table shows amounts actually paid, which are not restated. It therefore reads ¥600.00 for FY6/2025 and ¥3.00 for FY6/2026. Those are the same dividend: ¥600.00 divided by 200 is ¥3.00, and the total paid was ¥12 million in both years. The FY6/2027 forecast of ¥9.00 is a genuine tripling, lifting the payout ratio from 3.5% to 12.1%, and the company links it directly to the July 2026 listing and to the two share issues described below.

The filing does not disclose diluted earnings per share. Its stated reason is that although dilutive instruments exist — six series of share acquisition rights, 2,802 units outstanding at year-end against 2,807 a year earlier — the shares were unlisted and no average market price could be determined during the period. That is an artefact of the listing timing rather than a governance signal, and it will not recur next year.

Guidance slows sharply, and EPS falls while profit rises

For FY6/2027 the company guides revenue of ¥1,369 million (+12.1%), operating profit of ¥556 million (+5.0%), ordinary profit of ¥556 million (+5.9%) and net profit of ¥359 million (+3.6%). Guided operating profit on guided revenue implies an operating margin near 40.6%, below the 43.4% just delivered, so the company is telling shareholders that the cost line which stood still this year will not stand still again. Its stated plans are consistent with that: expanding AI AgentPlus with a new plan that automates business processes through integration with external systems — updating a CRM or sending mail rather than only answering questions — pushing cross-sell of FAQPlus, consolidating bespoke development work onto the ChatPlus and AI AgentPlus platforms so that project revenue is followed by recurring maintenance revenue, and spending on exhibitions, review sites and web advertising. Against that it says it will work to contain infrastructure costs and generative-AI API fees. Guided earnings per share of ¥75.12 is 13.3% below the ¥86.67 just reported even though net profit is guided higher, because the share count rises on the new issues; the filing states explicitly that the EPS forecast takes them into account.

Three subsequent events sit behind that. The listing on the TSE Growth market on July 15, 2026 was accompanied by a public offering of 650,000 new shares at ¥1,080, paid in on July 14, raising ¥702 million at the offer price and ¥645 million net of the underwriting spread, of which ¥322.92 million went to stated capital; the company earmarks the proceeds for feature development and research into new technology, for hiring, and for sales promotion. A third-party allotment of 172,500 shares at ¥993.6 to Marusan Securities, connected with that firm's over-allotment secondary offering, was paid in on August 13 for ¥171 million, of which ¥85.70 million went to stated capital. On the same day the board resolved to put a reduction of stated capital of ¥408.62 million to the annual general meeting on September 29, effective September 30 — a reduction with no repayment to shareholders and no change in the number of shares, the whole amount being transferred to other capital surplus. The two amounts the share issues added to stated capital, ¥322.92 million and ¥85.70 million, sum to exactly the figure being reduced: the resolution reverses the capital-account effect of the listing in full. The company gives flexibility and speed in capital policy, including growth investment, and appropriate treatment under the tax code as its reasons.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.