Ai ROBOTICS INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥10.54B
• Operating Income: ¥701M
• Net Income: ¥468M
• EPS: ¥7.95

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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: Strong top-line growth but severe margin compression and profit decline in FY2026 Q2; cash generation remained decent relative to earnings. Revenue surged 66.4% YoY to 105.42, while operating income fell 41.7% YoY to 7.01 and net income declined 42.7% YoY to 4.68. Operating margin contracted to 6.6% (7.01/105.42) from an implied ~19.0% a year ago, a sharp compression of roughly 1,231 bps. Net margin compressed from an implied ~12.9% to 4.4%, a contraction of about 850 bps. Gross profit was 50.13, implying a gross margin of 47.6%; the reported cost of sales figure appears inconsistent with this margin, so we rely on the gross profit and margin provided. Ordinary income was 6.86, but profit before tax reached 11.61, indicating sizable extraordinary/one-time items boosting pre-tax profit relative to ordinary income. Despite weaker earnings, operating cash flow was 6.09, exceeding net income (OCF/NI = 1.30x), signaling acceptable earnings quality for the quarter. Liquidity is strong with current ratio of 239% and quick ratio of 239%, backed by cash and deposits of 39.32. Balance sheet leverage is moderate with D/E of 0.96x and long-term loans of 6.33; interest burden is light (interest expense 0.06, coverage ~111x). DuPont shows ROE at 12.2%, driven by relatively high asset turnover (1.094) and financial leverage (2.52x) despite a compressed net margin of 4.4%. SG&A at 38.09 consumed much of the gross profit, indicating negative operating leverage as growth scaled. Cash generation likely covers maintenance capex (capex 2.35), suggesting estimated FCF around 3.74 before working-capital/investing details. Dividend data are unreported, so payout capacity cannot be confirmed, though near-term liquidity appears sufficient. Forward-looking, management must demonstrate cost discipline and mix/pricing improvements to restore double-digit operating margins; absent that, ROE sustainability at 12% could be challenged as leverage alone cannot offset margin pressure.

Profitability Analysis

ROE decomposition: Net Profit Margin (NPM) 4.4% × Asset Turnover (ATO) 1.094 × Financial Leverage 2.52x = ROE ~12.2%. The most significant adverse change versus last year is the NPM decline (net margin compressed ~850 bps to 4.4%), far outweighing any change implied in ATO or leverage. Business drivers likely include elevated SG&A to support rapid growth (sales, delivery, implementation, customer success for AI/robotics projects), project timing effects, and a possible unfavorable mix (more low-margin projects or earlier-stage deployments). The margin compression appears partly cyclical or transitional (scale-up costs ahead of revenue), but the magnitude suggests it will not fully reverse in the near term without targeted cost control and pricing discipline. Operating margin is 6.6% (vs implied ~19.0% last year), indicating negative operating leverage: SG&A of 38.09 absorbed 76% of gross profit. Watch for SG&A growth to normalize below revenue growth; current data imply SG&A intensity rose materially. Ordinary income 6.86 vs PBT 11.61 also suggests non-recurring items; core profitability is weaker than headline PBT implies.

Growth Assessment

Revenue growth was robust at +66.4% YoY to 105.42, indicating strong demand or expanded deployments in AI/robotics. However, profit growth lagged substantially: operating income -41.7% and net income -42.7% YoY, reflecting cost escalation and/or lower pricing/mix. Operating margin compressed to 6.6% and net margin to 4.4%, signaling that current growth is not translating into proportional earnings. The implied prior operating margin (~19.0%) vs current 6.6% underscores a sharp deterioration in operating leverage. Ordinary income trails PBT, implying one-time gains/losses influenced quarterly optics; core run-rate earnings look weaker than PBT suggests. EBITDA was 7.16 (EBITDA margin 6.8%), closely tracking operating margin, indicating limited D&A burden (0.15) and that profitability issues are operational rather than depreciation-driven. With asset turnover at 1.094, growth is utilizing assets efficiently, but the benefit is offset by thin margins. Near-term outlook hinges on SG&A normalization, pricing power, and mix shift to higher-margin offerings/services. If management reins in cost growth and improves project economics, revenue momentum could translate into margin recovery; absent that, growth may remain volume-led with subdued profitability.

Financial Health

Liquidity is strong: current ratio 239% and quick ratio 239%, supported by cash and deposits of 39.32 versus current liabilities of 27.41. No warning on current ratio (<1.0) or leverage thresholds; D/E is 0.96x, within conservative bounds. Interest coverage is very comfortable at ~111x (EBIT/interest), indicating low interest burden. Maturity mismatch risk appears low given ample current assets relative to current liabilities; short-term borrowing details are unreported, but long-term loans are 6.33 and total liabilities 36.57. Equity totals 38.21, implying financial leverage of 2.52x (assets/equity), which supports ROE but raises sensitivity to further margin deterioration. Off-balance sheet obligations are not disclosed in the data provided; no explicit guarantees/commitments noted. Working capital stands at 38.16, giving operational flexibility.

Cash Flow Quality

OCF of 6.09 exceeds net income of 4.68 (OCF/NI = 1.30x), indicating acceptable earnings quality this quarter. With capex of 2.35, an OCF–capex proxy FCF is approximately 3.74, suggesting internal funding capacity for ongoing investments. Investing CF detail is unreported, so broader acquisition or investment outflows cannot be assessed. Financing CF of 2.92 implies some reliance on external capital (debt or equity), but leverage remains moderate. No clear signs of working capital manipulation are visible given limited disclosures; accounts receivable (12.05) look manageable relative to revenue scale, but inventory data are unreported. Sustained OCF > NI would support healthier quality; monitor if OCF/NI drops below 0.8 in subsequent quarters.

Dividend Sustainability

Dividend information (DPS, payout, total dividends) is unreported, preventing a direct payout assessment. Based on current-quarter cash generation, proxy FCF (~3.74) appears positive, suggesting capacity for modest shareholder returns if policy permits. However, profit decline (NI 4.68, -42.7% YoY) and margin compression reduce headroom for aggressive distributions. With liquidity strong and leverage moderate, a conservative dividend could be sustainable if OCF remains above capex. Policy outlook is uncertain without management guidance; investors should watch for updates on dividend policy and any shift toward cash conservation amid margin recovery efforts.

Risk Assessment

Business Risks:

• Margin pressure from elevated SG&A and negative operating leverage
• Project timing and mix risk in AI/robotics deployments impacting utilization and pricing
• Execution risk in scaling services and support functions rapidly
• Potential reliance on extraordinary items affecting PBT visibility

Financial Risks:

• Profit sensitivity to further margin compression given leverage of 2.52x
• Limited disclosure on short-term borrowing and investing CF may mask funding needs
• Customer receivables concentration risk not disclosed; potential cash collection timing risk

Key Concerns:

• Sharp YoY decline in operating and net income despite strong revenue growth
• Ordinary income materially below PBT, indicating non-recurring items driving pre-tax results
• Data inconsistencies (e.g., cost of sales vs gross margin) complicate cost-structure analysis
• Unreported dividend policy and investing CF limit visibility on capital allocation

Investment Implications

Key Takeaways:

• Top-line growth is strong (+66% YoY), but profitability has deteriorated sharply
• Core earnings (ordinary income 6.86) appear weaker than PBT (11.61) due to one-offs
• Cash generation is acceptable (OCF/NI 1.30x) and liquidity is robust (current ratio 239%)
• ROE at 12.2% is maintained by leverage and asset turnover, not by healthy margins
• Near-term priority is cost discipline and mix/pricing actions to restore margins

Metrics to Watch:

• Operating margin and SG&A intensity (% of revenue)
• OCF/NI and working capital trends (especially receivables days)
• Ordinary income vs PBT gap (to gauge one-off dependence)
• Revenue mix by product/service and project gross margins (when disclosed)
• Leverage (D/E) and interest coverage as profits fluctuate

Relative Positioning: Within AI/robotics peers, the company demonstrates superior revenue momentum and strong liquidity but lags on margin resilience; maintaining ROE near low-teens hinges on restoring operating margins while keeping leverage contained.

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