SAYLOR ADVERTISING INC. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥-133M
• Net Income: ¥-99M
• EPS: ¥-21.92

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: FY2026 Q2 was weak, with continued operating losses and negative operating cash flow, partially cushioned by non-operating income and external financing. Operating income was -1.33, and ordinary income improved to -1.18 (+102.4% YoY), indicating narrower losses versus the prior year. Net income came in at -0.98, translating to EPS of -21.92 JPY. Gross profit was 6.97 against cost of sales of 1.99, but revenue was unreported, preventing margin calculations. SG&A was 8.30, exceeding gross profit and driving the operating loss. Non-operating income of 0.39 (including dividends of 0.03) offset part of non-operating expenses of 0.25, limiting the ordinary loss. The effective tax rate appears 17.0%, with a tax benefit (-0.20) reflecting the pre-tax loss. Cash and deposits were 8.39, and accounts receivable were also 8.39, while accounts payable stood at 8.08, supporting liquidity but indicating working capital intensity. Current assets were 20.06 versus current liabilities of 15.31, yielding a current ratio of 131.0%, adequate but below the 150% comfort benchmark. Debt-to-equity was 0.92x, reflecting moderate leverage, while interest coverage was severely negative (-67.82x), highlighting earnings pressure against even small interest costs. Operating cash flow was -1.40, worse than net income, indicating cash outflow from operations despite narrowing accounting losses. Financing cash flow of +2.57 funded the operating shortfall and small capex (-0.09), suggesting reliance on debt or equity funding in the period. Total assets were 41.05 and equity 21.37, implying financial leverage of 1.92x; ROIC was reported at -6.9%, signaling sub-par capital efficiency. With revenue unreported, margin trends (bps expansion/compression) cannot be quantified; however, the improvement in ordinary income suggests some expense discipline or mix benefits. Forward-looking, the company must close the gap between gross profit and SG&A to return to operating profitability and reduce reliance on non-operating items and financing cash flows. Maintaining liquidity (cash 8.39; working capital 4.74) provides near-term flexibility, but sustained losses and negative OCF pose risks to medium-term solvency if not reversed.

Profitability Analysis

ROE decomposition is constrained by missing revenue and average equity; however, directionally ROE is negative given net income of -0.98 against equity of 21.37. Components: Net profit margin is not calculable (revenue unreported) but clearly negative given the net loss. Asset turnover is not calculable due to missing revenue. Financial leverage stands at 1.92x (assets/equity), providing some amplification of results, but currently magnifying losses. The largest driver of ROE deterioration remains profitability (operating loss -1.33) rather than leverage or turnover. Business drivers: SG&A (8.30) exceeded gross profit (6.97), indicating insufficient scale and/or pricing/mix challenges; modest non-operating income (0.39) partially mitigated but is not a core earnings lever. Sustainability: Cost structure pressure appears ongoing until revenue scale or GP uplift closes the GP–SG&A gap; non-operating gains are unlikely to sustainably offset operating losses. Watchouts: If SG&A growth continues to outpace gross profit growth, operating leverage will remain negative; interest expense (0.02 reported) is small, but poor coverage (-67.82x) underscores vulnerability to any rate or debt increases.

Growth Assessment

Top-line trends cannot be assessed due to unreported revenue; however, ordinary income improved +102.4% YoY to -1.18, indicating narrowing losses. Gross profit of 6.97 versus cost of sales of 1.99 suggests value-added activity, but without revenue we cannot judge mix or pricing dynamics. EBITDA was -1.17, signaling still-negative core earnings capacity. Non-operating income (0.39) contributed meaningfully to narrowing the ordinary loss, but reliance on non-core items is not a sustainable growth driver. With capex at only -0.09, growth investments appear limited in the period. Outlook hinges on rebuilding operating margin by raising gross profit (volume/mix/pricing) and/or controlling SG&A. Absent visible revenue momentum, earnings recovery likely depends on cost optimization and working capital discipline.

Financial Health

Liquidity: Current ratio at 131.0% and quick ratio at 131.0% indicate adequate short-term coverage, though below the >150% healthy benchmark; no warning trigger (<1.0) applies. Cash and deposits (8.39) plus receivables (8.39) cover a majority of current liabilities (15.31), while payables are 8.08, implying manageable near-term maturity mismatches. Solvency: Debt-to-equity is 0.92x, within acceptable but not conservative territory; financial leverage is 1.92x. Interest coverage is deeply negative (-67.82x), a red flag despite small reported interest expense (0.02), because operating losses drive coverage shortfalls. Balance sheet: Equity totals 21.37 with retained earnings of 14.67, providing some buffer. No off-balance sheet obligations were reported in the data; absence of disclosure does not rule them out. Funding: Positive financing CF (+2.57) suggests incremental borrowing or other financing to cover negative OCF and minimal capex.

Cash Flow Quality

OCF/Net income is 1.43x, which does not trigger the <0.8 warning; however, both OCF (-1.40) and net income (-0.98) are negative, indicating weak cash conversion in absolute terms. Free cash flow cannot be computed due to unreported investing CF; capex was small at -0.09, implying that cash burn is mainly from operations rather than investment. Working capital: Receivables (8.39) and payables (8.08) are sizable versus cash, suggesting that timing of collections and payments could materially swing OCF; no explicit signs of manipulation are evident from the limited data. Sustainability: Continued negative OCF financed by positive financing CF (+2.57) is not sustainable long term without a turn to positive operating cash generation.

Dividend Sustainability

Dividend data are unreported; a calculated payout ratio of -37.2% is not economically meaningful given negative earnings. With operating losses and negative OCF, capacity to pay or increase dividends is constrained absent external funding or a rapid earnings turnaround. FCF coverage cannot be assessed due to missing investing CF, but small capex (-0.09) suggests the binding constraint is operating cash generation, not investment outlays. Policy outlook cannot be inferred from the data; prudence would suggest conserving cash until operating profitability and positive OCF are restored.

Risk Assessment

Business Risks:

• Operating loss persists (OP -1.33) as SG&A (8.30) exceeds gross profit (6.97)
• Profitability dependence on non-operating income (0.39) to narrow losses
• Limited visibility on revenue trajectory due to unreported sales
• Execution risk in cost reduction and margin rebuild

Financial Risks:

• Negative operating cash flow (-1.40) funded by financing CF (+2.57)
• Interest coverage severely negative (-67.82x), vulnerable to rate or debt increases
• Moderate leverage (D/E 0.92x) with losses could pressure covenants/liquidity if performance weakens
• Current ratio 131% below the 150% comfort benchmark

Key Concerns:

• ROIC of -6.9% indicates sub-par capital efficiency
• Potential working capital strain given large receivables (8.39) vs payables (8.08)
• Data gaps (revenue, investing CF, dividend actuals) limit full assessment of trends and sustainability

Investment Implications

Key Takeaways:

• Loss-narrowing at the ordinary income level (+102.4% YoY) but still negative (-1.18)
• Operating structure remains challenged: OP -1.33 as SG&A exceeds gross profit
• Cash burn from operations (-1.40) covered by financing (+2.57), not by internal generation
• Liquidity adequate near term (current ratio 131%) but below preferred levels
• Capital efficiency weak (ROIC -6.9%); improvement requires margin recovery

Metrics to Watch:

• Gross profit versus SG&A gap and any SG&A reduction
• Operating income and EBITDA trajectory back toward breakeven
• Operating cash flow and working capital movements (receivables/payables)
• Debt levels, financing cash flows, and interest coverage
• Any disclosure of revenue and segment trends to assess growth

Relative Positioning: Within small-cap advertising peers, the company appears weaker on operating profitability and cash generation, with adequate but not strong liquidity and moderate leverage; visibility is hampered by missing revenue disclosure, making the recovery path less clear compared to peers with transparent top-line momentum.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis