Startia Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥11.51B
• Operating Income: ¥1.41B
• Net Income: ¥957M
• EPS: ¥99.91

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: A solid top-line and operating performance in FY2026 Q2 with resilient margins and strong cash generation, but net profit declined on a higher tax burden, and the indicated payout ratio looks stretched. Revenue grew 6.9% YoY to 115.1, with operating income up 6.6% YoY to 14.1, demonstrating steady execution despite cost inflation. Gross profit reached 52.1 for a gross margin of 45.3%, underscoring healthy unit economics. Operating margin was 12.2% (14.09/115.12), essentially flat YoY with only about 3 bps compression by our estimate. Net income declined 7.6% YoY to 9.36 as the effective tax rate rose to 33.3%, more than offsetting operating gains. Ordinary income increased 6.4% YoY to 14.24, highlighting minimal below-the-line volatility and limited non-operating drag (+0.33 income vs -0.18 expenses). Cash flow quality was strong: operating cash flow of 12.08 exceeded net income by 29% (OCF/NI = 1.29x). Liquidity remains robust with a current ratio of 216% and cash of 59.0, providing ample buffer against 50.7 of current liabilities. Leverage is conservative (D/E 0.77x per provided metric), and interest coverage is exceptionally strong at 110.7x. Working capital is well supported with receivables of 34.9 and payables of 14.3, and inventories are modest at 5.74, appropriate for the business mix. ROE prints at 12.3% (DuPont: 8.1% margin × 0.853 turnover × 1.77x leverage), comfortably above typical cost of equity. That said, net margin compressed by an estimated 128 bps YoY (from ~9.4% to 8.1%), mainly on tax rate normalization rather than core operations. Financing cash outflow of -17.46 includes share repurchases of -3.61, signaling shareholder returns but also reducing equity cushion modestly. Dividend details are unreported, but the calculated payout ratio of 124.7% appears elevated relative to earnings capacity absent corroborating FCF data. Forward-looking, stable operating trends and strong liquidity support continued investment and select shareholder returns, but sustaining dividends above earnings would be a concern unless supported by consistent OCF and limited capex needs.

Profitability Analysis

ROE decomposition: 12.3% = Net Profit Margin (8.1%) × Asset Turnover (0.853) × Financial Leverage (1.77x). The component with the most apparent change YoY is the net profit margin, which compressed by an estimated ~128 bps (from 9.4% to 8.1%), while operating margin was essentially flat (-3 bps), implying tax-driven pressure below operating income. Business reason: the effective tax rate rose to 33.3%, reducing net income despite growth in revenue and operating profit; non-operating items were small and relatively stable. Asset turnover at 0.853 remains consistent with a service/solutions-heavy model supported by modest inventories; no evidence of material deterioration in asset utilization. Financial leverage at 1.77x is moderate and appears stable; debt levels (short-term loans 4.0 and long-term loans 8.14) are manageable relative to cash (59.0) and equity (76.0). Sustainability: operating margin stability and strong OCF suggest core profitability is sustainable; the higher tax rate may normalize around current levels, limiting near-term net margin upside unless operating leverage improves. Watch for cost discipline: SG&A was 38.0, and while the ratio is reasonable given growth, any acceleration of SG&A ahead of revenue would pressure operating leverage; flag if SG&A growth outpaces revenue growth in coming quarters.

Growth Assessment

Revenue growth of 6.9% YoY shows healthy momentum, likely driven by continued demand across core IT/document/cloud solutions, though segment detail is not disclosed. Operating income rose 6.6% YoY, tracking revenue growth and indicating stable unit economics. Net income declined 7.6% YoY primarily due to a higher effective tax rate, not because of weaker core operations. Gross margin at 45.3% and EBITDA margin at 14.1% evidence a scalable model with service mix benefits. Given OCF/NI of 1.29x, earnings are backed by cash, supporting reinvestment and selective shareholder returns. Outlook: absent a tax rate tailwind, earnings growth will depend on revenue expansion and SG&A efficiency; continued digitalization trends and recurring revenue elements (not disclosed but likely present) can underpin mid-single to high-single-digit growth. Risks to the growth path include potential client budget tightening and competitive pricing in IT services; upside could come from higher-margin solutions mix and cross-sell.

Financial Health

Liquidity is strong: current ratio 216.1% and quick ratio 204.7% signal ample short-term coverage; cash and deposits of 59.0 exceed short-term loans of 4.0 by a wide margin. No warning triggers: Current Ratio is well above 1.0 and D/E at 0.77x remains within conservative bounds. Maturity mismatch risk appears low: current assets (109.5) comfortably cover current liabilities (50.7); receivables (34.9) plus cash (59.0) alone exceed total current liabilities. Solvency is sound with total equity of 76.0 against total liabilities of 58.9; interest coverage of 110.7x underscores negligible near-term refinancing risk. Off-balance sheet obligations are not reported; none can be assessed from the provided data.

Cash Flow Quality

OCF/Net Income is 1.29x, indicating high-quality earnings with cash backing. Operating cash flow of 12.08 is robust relative to net income of 9.36, suggesting limited accrual build and reasonable working capital management. Free cash flow cannot be assessed due to unreported investing cash flow and capex; therefore, coverage of dividends and buybacks by FCF is indeterminable. Financing cash flow of -17.46 reflects active shareholder returns and/or debt repayment; at least -3.61 came from share repurchases. No clear signs of working capital manipulation: receivables and inventories levels look consistent with the revenue base, but lack of period-on-period turnover data limits precision. Overall, cash generation supports ongoing operations and selective distributions.

Dividend Sustainability

Dividend data are largely unreported; however, the calculated payout ratio of 124.7% is above the sustainability benchmark (<60%) and above 100%, implying distributions in excess of earnings if that ratio is accurate. With OCF/NI at 1.29x, cash generation is solid, but without investing cash flow and capex disclosure, we cannot confirm FCF sufficiency to cover dividends plus buybacks. Share repurchases totaled -3.61, adding to cash outlays. Policy outlook: if management targets shareholder returns alongside growth investments, a recalibration toward earnings-aligned payouts or reliance on OCF rather than net income alone may be necessary; clarity on DPS and capex would improve visibility.

Risk Assessment

Business Risks:

• Margin compression risk from SG&A growth outpacing revenue, pressuring operating leverage
• Demand cyclicality among SME clients in IT/document/cloud solutions, potentially impacting revenue growth
• Pricing pressure in competitive IT services and solutions markets
• Intangible assets (12.43) and goodwill (3.55) carry impairment risk if growth slows

Financial Risks:

• Potential overdistribution if the 124.7% payout ratio reflects actual cash dividends, straining future FCF
• Tax rate volatility (current effective rate 33.3%) can drive net income swings
• Equity reduction via buybacks (-3.61) modestly lowers capital buffer though leverage is currently conservative
• Refinancing and interest rate risk limited but present given outstanding loans (12.14 total)

Key Concerns:

• Net margin compressed by ~128 bps YoY despite stable operating margin, largely due to higher taxes
• Limited disclosure on capex and investing cash flows constrains FCF visibility
• Dividend details unreported; sustainability assessment relies on an indicative payout ratio

Investment Implications

Key Takeaways:

• Top-line growth of 6.9% with operating income up 6.6% confirms stable core execution
• Operating margin essentially flat (~-3 bps), indicating resilient cost control
• Net income -7.6% YoY due to higher effective tax rate, not operational weakness
• OCF/NI at 1.29x signals healthy earnings quality
• Balance sheet is liquid (current ratio 216%) with strong interest coverage (110.7x)
• ROE at 12.3% is solid for the business model
• Shareholder returns include buybacks (-3.61), but dividend sustainability is unclear with a 124.7% payout ratio indicated

Metrics to Watch:

• SG&A-to-sales ratio and operating margin trajectory
• Effective tax rate and its drivers
• Receivables and inventory turnover (working capital efficiency)
• OCF/NI and FCF once investing cash flows/capex are disclosed
• Payout policy: DPS, buybacks, and total shareholder return versus OCF
• Leverage metrics and interest coverage amid rate environment

Relative Positioning: Within Japan small/mid-cap IT solutions and services peers, the company presents above-average liquidity, strong cash conversion, and solid ROE with stable operating margins; near-term net earnings optics are weighed by tax effects and an elevated indicated payout, making cash discipline and disclosure on FCF key differentiators.

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