Laxus Technologies Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.09B
• Operating Income: ¥51M
• Net Income: ¥46M
• EPS: ¥1.81

Income Statement

Balance Sheet

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

Laxus Technologies (288A0) reported FY2026 Q2 standalone results under JGAAP showing a sharp deterioration in profitability amid a mid-teens top-line decline. Revenue was ¥1,093m, down 14.9% YoY, indicating demand softness and/or deliberate business mix shifts. Operating income fell to ¥51m (-84.9% YoY), compressing the operating margin to roughly 4.7%, reflecting substantial operating deleverage and/or elevated SG&A. Net income was ¥46m (-83.6% YoY), with EPS of ¥1.81 (shares outstanding not disclosed in XBRL). Despite the earnings pressure, balance sheet strength appears sound: total assets were ¥4,467m, total equity ¥3,026m, and total liabilities ¥1,699m, implying low leverage (D/E 0.56x). The current ratio of 245.5% and quick ratio of 245.5% signal ample near-term liquidity, supported by current assets of ¥1,896m versus current liabilities of ¥772m. ROE based on the provided DuPont set is 1.52%, driven by a modest net margin (4.21%), low asset turnover (0.245x), and moderate leverage (1.48x). Gross margin is disclosed at a very high 90.6%, which, combined with weak operating income, points to elevated fixed costs or marketing/G&A pressure rather than pricing or direct cost stress. Interest expense of ¥10.6m is manageable with an interest coverage of 4.8x at the current run-rate. Reported tax expense (¥43.5m) relative to ordinary income (¥57m) suggests a high implied tax burden, though the net profit figure indicates possible non-operating or extraordinary effects; hence caution is warranted when interpreting tax metrics. Cash flow statements are unreported (zeros reflect nondisclosure in XBRL), limiting assessment of earnings-to-cash conversion and free cash flow robustness. The reported equity ratio of 0.0% is clearly a placeholder; based on disclosed assets and equity, an inferred equity ratio is approximately 67.7%. Dividend payments are absent (DPS ¥0), consistent with the profit compression and the company likely prioritizing reinvestment and balance sheet resilience. Overall, the quarter reflects top-line pressure and significant margin contraction, but balance sheet metrics provide a buffer. Key uncertainties relate to cash flow quality and the sustainability of cost structure adjustments in the second half. Given the single-entity (non-consolidated) scope, group-wide dynamics and intercompany effects, if any, are not captured. The outlook hinges on a recovery in revenue trajectory and evidence of operating cost normalization to restore margins.

Profitability Analysis

ROE_decomposition: ROE 1.52% = Net Margin 4.21% × Asset Turnover 0.245 × Financial Leverage 1.48. The low asset turnover and compressed margin are the main drags; leverage is moderate and not the driver. margin_quality: Gross margin is reported at 90.6%, implying a high value-add/asset-light or subscription-like model; however, operating margin is only ~4.7% as SG&A and fixed costs consumed most of the gross profit. The divergence between strong gross margin and weak operating margin points to overhead intensity (marketing, logistics, platform, or personnel costs). Cost of sales and gross profit disclosure appears internally inconsistent; we rely on the provided gross profit and calculated margin for analysis. operating_leverage: With revenue down 14.9% YoY but operating income down 84.9% YoY, negative operating leverage is pronounced. This suggests a high fixed-cost base and/or discretionary spending that did not scale down proportionally with revenue.

Growth Assessment

revenue_sustainability: Revenue of ¥1,093m fell 14.9% YoY, indicating demand headwinds or deliberate pruning of lower-quality sales. Without segment disclosure, the persistence of this decline is uncertain. profit_quality: Operating income of ¥51m and net income of ¥46m indicate profitability remains positive but fragile. The high reported gross margin suggests pricing power or low direct costs, but OPEX discipline is currently insufficient to protect earnings during a downturn. outlook: Recovery depends on stabilizing top-line trends and executing cost controls to rebuild operating margin. If management can right-size expenses, even modest sales stabilization could materially lift profits due to leverage on fixed costs; conversely, further revenue pressure would risk breakeven outcomes.

Financial Health

liquidity: Current assets ¥1,896m vs current liabilities ¥772m yield a current ratio of 245.5% and quick ratio of 245.5% (inventories unreported). Working capital is ¥1,124m, providing a solid liquidity cushion. solvency: Total liabilities ¥1,699m vs equity ¥3,026m implies D/E of 0.56x and assets/equity of 1.48x. Interest coverage is 4.8x, indicating manageable debt service at current earnings levels. capital_structure: Equity ratio is reported as 0.0% in XBRL but inferred at ~67.7% (equity/total assets), consistent with a conservative balance sheet. Absence of cash disclosure limits insight on net debt and liquidity composition.

Cash Flow Quality

earnings_quality: Operating, investing, and financing cash flows are unreported (zeros), preventing OCF/NI validation and accruals analysis. Given the large swing in operating income, corroborating cash conversion would be critical but is currently unavailable. FCF_analysis: Free cash flow cannot be computed due to missing OCF and capex. Depreciation/amortization is unreported; if true underlying D&A is low, EBITDA would be close to EBIT, but confirmation is lacking. working_capital: Current assets/liabilities indicate ample cushion, but the mix (cash, receivables, other current assets) is undisclosed. Potential swings in receivables or payables could materially affect near-term OCF.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is 0.0%, consistent with conserving cash given profit compression and uncertain OCF. FCF_coverage: Not assessable due to unreported OCF/FCF. On current earnings, coverage would be limited if dividends were reinstated without margin recovery. policy_outlook: With ROE at 1.52% and operating margin under pressure, a conservative capital return stance appears likely until profitability and cash generation improve.

Risk Assessment

Business Risks:

• Revenue contraction of 14.9% YoY signaling potential demand softness or competitive pressures
• High operating leverage leading to earnings volatility on small revenue changes
• Customer acquisition/marketing cost inflation if the model is platform/subscription driven
• Potential pricing pressure or mix shifts despite reported high gross margin
• Execution risk in cost optimization to restore operating margin

Financial Risks:

• Limited visibility on cash generation due to unreported cash flow statements
• Tax burden uncertainty with apparent discrepancies between ordinary income, tax expense, and net income
• Interest rate or refinancing risk if a portion of liabilities is interest-bearing (interest expense ¥10.6m)
• Working capital swings affecting short-term liquidity despite high current ratio

Key Concerns:

• Sustainability of top-line after a double-digit decline
• Magnitude and timing of SG&A normalization to recover margins
• Cash flow conversion and FCF trajectory, currently unobservable in filings

Investment Implications

Key Takeaways:

• Top-line down 14.9% YoY with disproportionate profit decline (OP -84.9% YoY) indicates significant operating deleverage
• ROE is low at 1.52% driven by weak margin and low asset turnover, not by leverage
• Balance sheet appears conservative (inferred equity ratio ~67.7%, D/E 0.56x) providing resilience
• Interest coverage at 4.8x suggests manageable debt service despite compressed EBIT
• Cash flow disclosure is missing, leaving earnings quality and FCF unverified

Metrics to Watch:

• Revenue trajectory and order trends into H2 FY2026
• Operating margin recovery and SG&A-to-sales ratio
• OCF/Net income and working capital movements once cash flows are disclosed
• Interest expense trend and any changes in borrowing structure
• Effective tax rate normalization and reconciliation of bottom-line drivers

Relative Positioning: Within Japanese small/mid-cap, asset-light or platform-like models typically feature high gross margins but can suffer from elevated customer acquisition and fixed platform costs; Laxus currently appears on the weaker end of profitability and ROE, but with a comparatively strong balance sheet versus peers under earnings stress.

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