Dynamic Map Platform Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.45B
• Operating Income: ¥-1.14B
• Net Income: ¥-1.17B
• EPS: ¥-49.26

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: FY2026 Q2 shows modest top-line growth but deeply loss-making operations, with cash burn and very weak returns indicating the business is still far from economic break-even. Revenue rose 9.0% YoY to 24.51, but gross profit was only 2.09, implying an 8.5% gross margin and limited pricing power/scale benefits to date. Operating loss widened to -11.42 (operating margin -46.6%), as SG&A of 13.51 far exceeded gross profit. Non-operating income of 1.33 (mainly interest income 0.01) only partially offset non-operating expenses of 0.65, leaving ordinary loss at -10.73. Net loss was -11.63 (EPS -49.26 yen), and total comprehensive loss was -14.75, suggesting additional OCI headwinds (e.g., valuation effects). EBITDA was -7.03 (margin -28.7%), highlighting that even before depreciation/amortization (4.39), the core earnings power is negative. ROE calculated at -15.5% (Net Margin -47.5% × Asset Turnover 0.202 × Leverage 1.62x) underscores value erosion, while ROIC of -34.6% points to significant inefficiency of invested capital. Liquidity is adequate with a current ratio of 197% and cash/deposits of 49.36 versus current liabilities of 43.20, but interest coverage is highly negative (-21.15x) due to operating losses. Cash flow quality is weak: OCF of -5.92 versus net loss of -11.63 yields an OCF/NI ratio of 0.51x, below the 0.8 threshold, indicating earnings are not converting to cash. Financing CF was a sizable outflow (-19.42), likely debt repayment or other financing uses, contributing to the reduction in financial flexibility. Balance sheet shows large intangible assets (29.70) consistent with a platform/IP-heavy model, but raises impairment risk if growth milestones slip. Margin comparisons in basis points versus prior periods are not available due to unreported historical margin detail; current period margin levels are materially below sustainable thresholds. Forward-looking, revenue growth must accelerate and/or gross margin expand meaningfully while SG&A scales down as a percentage of sales to reach breakeven; otherwise, continued losses may necessitate additional capital. Near-term priorities are improving gross margin above 20–30%, moderating SG&A growth, and achieving positive OCF. Overall, the quarter evidences incremental revenue traction but insufficient operating leverage, with cash on hand providing runway but not eliminating the need for clear progress toward profitability.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (-47.5%) × Asset Turnover (0.202) × Financial Leverage (1.62x) = ROE (-15.5%). The largest drag is Net Profit Margin at -47.5%, driven by an 8.5% gross margin and SG&A of 13.51 far above gross profit (2.09), resulting in an operating margin of -46.6%. Asset turnover (0.202) is low, reflecting a capitalized platform (intangible assets 29.70) and cash holdings (49.36) relative to small revenue (24.51). Leverage at 1.62x is moderate and not the primary driver of ROE volatility. Business reason: revenue scale remains insufficient against a fixed-cost base (personnel, platform costs, go-to-market) and amortization tied to intangibles; the model has not yet reached critical mass to generate contribution margins that cover SG&A. Sustainability: current negative margin profile is unlikely to self-correct without either materially higher revenue scale, price/mix improvement, or cost rationalization; one-time non-operating items are too small to change the trajectory. Concerning trends: SG&A growth vs revenue growth cannot be compared YoY due to data gaps, but absolute SG&A (13.51) is 646% of gross profit, signaling limited operating leverage and potential structural cost mismatch.

Growth Assessment

Revenue grew 9.0% YoY to 24.51, indicating demand progress but at a pace unlikely to close the profitability gap near term. Gross margin sits at 8.5%, too thin for a software/platform-like business; mix, pricing, or scale effects need to improve to 20–30%+ to support breakeven. Operating margin at -46.6% reflects high fixed costs relative to revenue; EBITDA margin of -28.7% further confirms limited near-term operating leverage. Non-operating income (1.33) is not a growth driver and cannot offset core weakness. With intangible assets of 29.70 and D&A 4.39 in the half, depreciation/amortization will continue to weigh on reported profit unless revenue accelerates. Outlook hinges on contract wins with OEMs/AV ecosystem players and conversion of projects into recurring revenue; however, backlog, pipeline, and R&D detail are unreported, limiting visibility. Near-term, expect continued losses unless 2H seasonality or milestone-based deliveries drive step-up in revenue and gross margin. Key swing factors: customer adoption curve, pricing for high-definition mapping layers, maintenance/updates revenue, and potential government/industry initiatives that could catalyze demand.

Financial Health

Liquidity is adequate: Current Ratio 197% and Quick Ratio 197% (no inventories reported), with Current Assets 85.10 against Current Liabilities 43.20, implying positive working capital of 41.90. Solvency is acceptable by leverage metrics: Debt-to-Equity 0.62x, and Long-Term Loans of 7.50 versus Cash/Deposits of 49.36 suggest a net cash position on an interest-bearing basis. No explicit warning triggers: Current Ratio is well above 1.0 and D/E below 2.0. Maturity mismatch risk appears limited given cash exceeds current liabilities; short-term loans are unreported, but the cash cushion provides coverage. Interest coverage is highly negative due to operating losses, not because of high interest burden (interest expense 0.54). Off-balance sheet obligations are not disclosed; any long-term data/content licensing commitments or purchase obligations could exist but are not visible in the data. Equity base remains sizable at 74.83, supported by capital surplus (110.54), although retained earnings are negative (-36.37), reflecting accumulated losses.

Cash Flow Quality

OCF is -5.92 versus Net Income -11.63, yielding OCF/NI of 0.51x, below the 0.8 threshold and signaling weak cash conversion. Free cash flow cannot be fully calculated due to missing investing CF, but reported capital expenditures are modest at -0.26, implying that most cash burn is operating. Financing CF was -19.42, likely repayments or other financing uses, contributing to reduced cash reserves. Working capital dynamics are not disclosed in detail; with accounts receivable of 31.74, collection timing is a potential swing factor for OCF. No explicit signs of working capital manipulation are observable from the limited data, but the magnitude of operating loss suggests underlying cash burn regardless of working capital timing. Given the net cash position and current burn rate (OCF -5.92 for the half), liquidity runway appears available over the near term, but sustained negative OCF would erode flexibility over several periods.

Dividend Sustainability

Dividends are unreported; given negative earnings and OCF, a distribution appears unlikely in the period. Payout ratios are not calculable, and FCF coverage cannot be assessed due to incomplete investing CF disclosure. Policy-wise, the company likely prioritizes investment and cash preservation over shareholder returns until profitability and positive OCF are achieved. With retained earnings negative (-36.37) and ROE at -15.5%, any potential dividend initiation would require a clear shift to sustained profitability and free cash flow.

Risk Assessment

Business Risks:

• Commercial adoption risk for high-definition mapping and related platform services; slower-than-expected OEM/AV ecosystem integration could delay revenue scaling.
• Pricing and gross margin pressure evidenced by an 8.5% gross margin, limiting contribution to cover fixed costs.
• Execution risk on large projects and milestone recognition leading to revenue lumpiness and visibility constraints.
• Technology obsolescence risk and the need for continuous updates to mapping datasets and software.
• Competition from global map providers and in-house OEM solutions.

Financial Risks:

• Sustained operating losses (operating margin -46.6%) driving negative OCF (-5.92) and eroding capital over time.
• Potential impairment risk of intangible assets (29.70) if revenue scaling underperforms expectations.
• Equity dilution risk in future if external capital is needed despite current net cash.
• Interest coverage is deeply negative (-21.15x), leaving little cushion if rates rise or losses persist.
• Dependence on non-operating items is limited; thus the core business must improve to avoid further capital strain.

Key Concerns:

• OCF/Net Income at 0.51x indicates weak cash earnings quality.
• ROIC at -34.6% highlights poor capital efficiency and value erosion.
• Negative retained earnings (-36.37) despite large capital surplus suggests extended loss history.
• Financing cash outflow (-19.42) reduces financial flexibility absent offsetting inflows.
• Lack of detailed segment/R&D/SG&A breakdown constrains assessment of cost structure and scalability.

Investment Implications

Key Takeaways:

• Top-line up 9.0% YoY, but profitability remains deeply negative across EBITDA, operating, and net levels.
• Gross margin at 8.5% is the core bottleneck; SG&A at 13.51 dwarfs gross profit (2.09).
• ROE -15.5% and ROIC -34.6% underscore urgent need for operating leverage.
• Liquidity is adequate (current ratio 197%, cash 49.36) with net cash after long-term loans, providing runway.
• Cash earnings quality is weak (OCF/NI 0.51x), implying continued cash burn absent improvement.
• Intangible-heavy balance sheet heightens impairment sensitivity if growth underdelivers.

Metrics to Watch:

• Order backlog/pipeline conversion and quarterly revenue cadence.
• Gross margin trajectory (targeting sustained expansion by 1,000+ bps over time).
• SG&A as a percentage of revenue and headcount productivity.
• OCF/Net Income ratio and working capital turns (DSO on accounts receivable 31.74).
• Cash balance versus quarterly burn; financing activities and covenant headroom.
• D&A run-rate versus capitalized development spend; any impairment signals.

Relative Positioning: Within Japan's digital mapping and autonomous-driving data ecosystem, the company exhibits early-stage scale with strong liquidity but materially weaker profitability and ROIC than would be typical for a mature platform business; sustained margin expansion and revenue scaling are required to converge toward peers with double-digit gross margins and positive OCF.

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
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