SecuAvail Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥636M
• Operating Income: ¥47M
• Net Income: ¥-54M
• EPS: ¥6.31

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

Secure Veil Co., Ltd. (30420) posted strong topline expansion in FY2026 Q2, with revenue of ¥636.0m, up 36.9% YoY, underscoring robust demand for its security services. Profitability improved markedly: operating income rose 210.8% YoY to ¥47.0m and ordinary income reached ¥48.0m, indicating limited non-operating drag. Net income was ¥48.0m, up 76.9% YoY, with EPS of ¥6.31, reflecting operational momentum and a light tax burden in the period. Gross profit margin was reported at 25.1%, and the operating margin was roughly 7.4%, pointing to improving cost efficiency and operating leverage. There is a data inconsistency between reported cost of sales (¥305.9m) and gross profit; the reported gross margin (25.1%) and gross profit amount appear internally consistent and are used for analysis. DuPont metrics show a net margin of 7.55%, asset turnover of 0.406x, and financial leverage of 1.28x, producing a calculated ROE of 3.93%, consistent with the reported figure. The improvement in ROE is primarily driven by margin expansion rather than leverage, given a conservative balance sheet. Liquidity appears very strong with a current ratio of 404% and working capital of ¥1.075bn, supporting operational resilience. Solvency is also conservative: total liabilities of ¥366.2m against equity of ¥1.222bn (D/E 0.30x) and minimal interest expense (¥0.076m) yield an exceptional interest coverage of 618x. Cash flow quality is a watchpoint: operating cash flow was negative at -¥153.3m, resulting in an OCF/NI ratio of -3.19x, implying significant working capital outflows or timing effects. Investing and cash balances are not disclosed in this snapshot (zeros likely represent non-disclosure), limiting free cash flow analysis. No dividends were declared (DPS ¥0.00), consistent with reinvestment at this growth phase and the current cash flow pattern. The company’s financial position can support continued growth investments, but conversion of earnings to cash will be critical to sustain momentum. Given the mid-year period and partial disclosures, conclusions rely on the available non-zero metrics; more detail on cash, capex, and revenue mix would enhance precision. Overall, Secure Veil exhibits strong revenue growth, expanding margins, and a healthy balance sheet, offset by weak operating cash generation in the period and limited disclosure on cash and investing flows.

Profitability Analysis

ROE decomposition: DuPont indicates ROE of 3.93% = Net margin 7.55% × Asset turnover 0.406 × Financial leverage 1.28. The uplift in ROE versus prior period is primarily from higher operating margin (operating income +210.8% YoY on +36.9% revenue), with leverage contribution modest (1.28x). margin_quality: Gross margin 25.1% (based on reported gross profit) suggests improved pricing or mix, but the cost of sales figure provided is inconsistent with this margin; we rely on the reported gross margin for assessment. Operating margin is approximately 7.4% (¥47.0m/¥636.0m). Ordinary and net margins are near operating levels, reflecting minimal non-operating costs and a light tax charge in the period. operating_leverage: Revenue growth of +36.9% coupled with operating income growth of +210.8% demonstrates strong operating leverage, likely from fixed cost absorption and scale benefits in service delivery. Low D&A (¥1.77m) indicates limited depreciation drag on EBITDA margin (7.7%), with upside as utilization improves.

Growth Assessment

revenue_sustainability: YoY revenue growth of 36.9% is robust for a security services provider, implying healthy demand for managed security/monitoring and consulting. Sustainability will depend on retention, upsell, and pipeline conversion in recurring services. profit_quality: Net margin of 7.55% and operating margin expansion suggest improving unit economics. The light tax burden (effective tax rate shown as 0.0%) may not persist; normalized taxation could trim net margins. Ordinary income aligns with operating income, indicating limited reliance on non-operating gains. outlook: With strong liquidity, the company can support growth initiatives. Near-term risks revolve around cash conversion (negative OCF), potential seasonality, and revenue mix shifts. If working capital normalizes, earnings quality could improve; if not, growth may require additional working capital support.

Financial Health

liquidity: Current ratio 404.2% and quick ratio 404.2% reflect substantial current assets (¥1,428.3m) relative to current liabilities (¥353.4m). Working capital stands at ¥1,074.9m, providing a sizable buffer for operations. solvency: Total liabilities of ¥366.2m vs equity of ¥1,222.0m results in D/E of 0.30x, indicating a conservative capital structure. Interest expense is negligible (¥0.076m), and interest coverage is extremely strong at 618x. capital_structure: Financial leverage is low (1.28x in DuPont), supporting stability. The reported equity ratio of 0.0% appears undisclosed rather than truly zero; based on liabilities and equity provided, the implied equity ratio would be strong.

Cash Flow Quality

earnings_quality: OCF/Net Income at -3.19x indicates poor cash conversion this period, likely driven by working capital outflows (e.g., receivables growth or contract assets). Earnings improvements have not translated into cash yet. FCF_analysis: Free cash flow cannot be determined due to lack of investing cash flow and capex disclosure (reported zeros likely undisclosed). EBITDA of ¥48.8m and low D&A suggest limited maintenance capex needs, but actual growth capex is unknown. working_capital: Given negative OCF alongside strong current asset growth, the company likely experienced a build in receivables or other current assets. Monitoring DSO, unbilled receivables/contract assets, and deferred revenue will be key to assess cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 and payout ratio shows 0.0%, consistent with reinvestment during a growth phase. With NI of ¥48.0m but negative OCF, initiating distributions would be premature until cash conversion improves. FCF_coverage: FCF coverage cannot be assessed due to undisclosed capex and investing flows. Using OCF alone, coverage would be insufficient in this period. policy_outlook: Given growth priorities and current cash flow dynamics, a conservative dividend stance is likely to persist until operating cash flows consistently cover reinvestment needs.

Risk Assessment

Business Risks:

• Revenue concentration in specific service lines or key customers typical of smaller cybersecurity vendors
• Project and seasonality risk causing volatility in quarterly revenue and margins
• Talent acquisition and retention constraints in cybersecurity affecting delivery capacity and cost structure
• Competitive pressure from larger MSSPs and IT integrators potentially pressuring pricing and margins
• Technology obsolescence and need for continuous investment in capabilities and certifications

Financial Risks:

• Weak cash conversion in the period (OCF/NI -3.19x) requiring working capital support
• Potential normalization of tax rate reducing net margins
• Limited disclosure on cash balances and investing cash flows impeding visibility on liquidity runway
• Customer credit risk embedded in elevated receivables during growth phases

Key Concerns:

• Inconsistency between reported cost of sales and gross profit; reliance on reported gross margin for analysis
• Negative operating cash flow despite higher earnings
• Equity ratio, cash, capex, and share-related disclosures not provided in detail (zeros indicate non-disclosure)

Investment Implications

Key Takeaways:

• Strong topline growth (+36.9% YoY) with significant operating leverage (OP +210.8% YoY)
• Improving profitability: operating margin ~7.4%, net margin 7.55%, ROE 3.93% driven by margin gains
• Conservative balance sheet: D/E 0.30x, interest coverage 618x
• Cash conversion is the principal weak spot: OCF -¥153.3m vs NI ¥48.0m
• Disclosure gaps (cash, capex, equity ratio) limit precision of FCF and capital allocation analysis

Metrics to Watch:

• Operating cash flow and OCF/NI ratio by quarter
• Receivables, unbilled revenue/contract assets, and DSO
• Deferred revenue and renewal rates for managed services
• Gross margin trajectory and utilization rates
• Tax rate normalization and its impact on net margin
• Capex and R&D spend to sustain service capability
• Customer concentration metrics and churn

Relative Positioning: Within Japan’s cybersecurity and MSSP landscape, Secure Veil appears to be a smaller but fast-growing player exhibiting improving operating leverage and conservative leverage; however, compared to larger peers, cash flow volatility and disclosure depth are weaker, warranting closer monitoring of cash conversion and backlog quality.

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