Voltage Incorporation FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥592M
• Operating Income: ¥-59M
• Net Income: ¥-68M
• EPS: ¥-7.91

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Voltage Inc. (TSE: 3639) reported FY2026 Q1 consolidated results under JGAAP with revenue of ¥592 million, declining 18.1% year over year. The company posted an operating loss of ¥59 million, essentially flat YoY despite the revenue contraction, indicating meaningful cost containment and/or a leaner cost base. Ordinary loss was ¥50 million and net loss was ¥51 million, translating to a net margin of -8.61%. The reported gross profit margin is high at 60.9%, suggesting resilient unit economics or a favorable mix despite top-line pressure. Note there is an internal inconsistency between the disclosed cost of sales (¥364 million) and gross profit (¥361 million); we rely on the provided gross profit and margin figures as they are internally consistent with revenue. Leverage remains modest with liabilities of ¥598 million against equity of ¥2,218 million, implying a debt-to-equity ratio of 0.27x and an equity ratio of roughly 78.6% (computed from balance sheet, as the reported equity ratio of 0.0% appears undisclosed). Liquidity is strong with current assets of ¥2,042 million far exceeding current liabilities of ¥473 million, yielding a current ratio of 4.32x and working capital of ¥1,569 million. Asset turnover is low at 0.210x (on the reported base), which is typical for IP/content-heavy businesses and will weigh on ROE while the company is loss-making. DuPont decomposition yields a calculated ROE of -2.30% driven by negative margins, low asset turnover, and modest leverage. Interest expense is minimal at ¥0.284 million and interest coverage is negative given operating losses, but the absolute interest burden is not a near-term concern. Cash flow statement items, cash and equivalents, depreciation/amortization, and per-share base are not disclosed in this quarter’s dataset, limiting assessment of earnings quality and cash conversion; zeros should be read as undisclosed rather than actual zero. Dividend remains suspended (DPS ¥0), which is appropriate given losses and the priority to preserve liquidity. Overall, the quarter shows resilient gross margin, disciplined opex management, and a strong balance sheet offset by declining revenue and continued operating losses. Outlook hinges on stabilizing the top line through pipeline execution and monetization while maintaining cost discipline. Data limitations (notably cash flow and D&A) temper confidence in the depth of our cash-based analysis.

Profitability Analysis

DuPont ROE (-2.30%) = Net margin (-8.61%) × Asset turnover (0.210x) × Financial leverage (1.27x). Profitability is primarily constrained by negative net margins, as leverage is modest and asset turnover is low for a content/IP model. Reported gross margin of 60.9% implies solid contribution margins; however, there is an inconsistency between the cost of sales line (¥363.6m) and gross profit (¥360.6m). We rely on the gross margin figure as it reconciles with revenue. Operating loss of ¥59m on ¥592m revenue suggests negative operating margin near -10% and indicates that fixed costs (R&D/content creation and SG&A) exceed contribution even with healthy gross margin. Ordinary loss (-¥50m) is slightly better than operating loss, implying small positive non-operating items net of ¥0.284m interest expense. Effective tax impact appears negligible in the quarter due to losses. Operating leverage: with revenue down 18.1% YoY and operating loss flat YoY, management seems to have adjusted operating costs, partially offsetting top-line pressure; this implies improved cost flexibility but also underutilization of fixed cost base persists. Margin quality: high gross margin is consistent with digital content monetization; sustainability depends on user engagement, title mix, and platform fees. Interest burden is immaterial; profitability inflection hinges on restoring revenue scale rather than financing costs.

Growth Assessment

Revenue declined 18.1% YoY to ¥592m, indicating weak demand/engagement or title pipeline timing issues. Given the high gross margin, the revenue shortfall flows disproportionately to operating losses due to fixed cost absorption. No segment or geographic detail is provided, limiting diagnosis of drivers (domestic vs. overseas, new title launches, or lifecycle effects). Profit quality remains weak as the company is loss-making; ordinary losses are slightly narrower than operating losses, but not enough to offset the core trend. Without disclosed D&A, we cannot separate economic profitability from accounting charges; however, the low interest expense and strong equity base support continued investment in titles. Outlook: stabilization requires new hit titles, stronger live-ops, and improved monetization KPIs (ARPPU, payer conversion). Near-term growth visibility is limited from the dataset; focus should be on sequential revenue trajectory, pipeline cadence, and marketing ROI. If management can maintain the 60%+ gross margin while modestly lifting revenue, operating leverage could drive a quick swing toward breakeven. Absent that, continued top-line erosion will sustain losses.

Financial Health

Liquidity is strong: current assets ¥2,042m vs. current liabilities ¥473m yields a current ratio of 4.32x and working capital of ¥1,569m. Quick ratio is shown as equal to current ratio due to undisclosed inventories; we assume low inventory typical of digital content. Solvency is solid: total liabilities ¥598m against equity ¥2,218m implies D/E of 0.27x. Equity ratio computed from the balance sheet is ~78.6% (equity ¥2,218m / assets ¥2,821m), despite the reported 0.0% being an undisclosed metric. Financial leverage (assets/equity) is 1.27x, modest for the industry. Interest expense is minimal (¥0.284m), reducing refinancing risk. The strong balance sheet provides runway to navigate revenue volatility; however, persistent operating losses would gradually erode equity if not reversed.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed this quarter (reported as 0, indicating not provided). Accordingly, OCF/net income, FCF, and cash and equivalents cannot be assessed from this dataset. Given the operating loss and high working capital buffer, near-term liquidity appears adequate, but the absence of cash flow data limits evaluation of earnings quality and cash conversion. Working capital is positive at ¥1,569m, and current assets are sizable relative to liabilities, suggesting potential cash reserves; however, the exact cash position is not disclosed. We cannot comment on capitalized development or amortization patterns due to undisclosed D&A, which is material for a content/IP company. Once available, we recommend reviewing OCF relative to EBITDA (or operating loss), changes in deferred revenue and receivables, and capex/intangible additions to assess true FCF.

Dividend Sustainability

Dividend per share is ¥0 with a payout ratio of 0%, consistent with loss-making status and the need to preserve cash. FCF coverage cannot be evaluated due to undisclosed cash flows; however, given negative earnings, any dividend would likely be uncovered in the absence of substantial positive OCF. Policy outlook likely remains conservative until the company restores sustained profitability and positive free cash flow. The strong balance sheet affords optionality, but prudent capital allocation should prioritize content investment and balance-sheet strength over distributions.

Risk Assessment

Business Risks:

• Title pipeline and hit-dependence risk affecting revenue volatility
• User engagement and monetization risk (ARPPU, payer conversion, churn)
• Platform dependency and fee structure changes (app stores)
• Competitive intensity in mobile/interactive entertainment
• Execution risk in live-ops and marketing ROI
• IP lifecycle and cannibalization among titles
• Regulatory and privacy changes impacting user acquisition and tracking
• Overseas expansion and localization performance, if applicable

Financial Risks:

• Sustained operating losses eroding equity over time
• Negative operating leverage if revenue declines persist
• Potential impairment risk of capitalized content/intangibles (D&A undisclosed)
• Cash flow visibility limitations due to undisclosed OCF/FCF
• Concentration risk if revenue depends on a small number of titles

Key Concerns:

• Revenue down 18.1% YoY with continued operating losses
• Internal inconsistency between cost of sales and gross profit; relying on margin metric
• Undisclosed cash flow data and cash balance limit assessment of runway and cash conversion

Investment Implications

Key Takeaways:

• Top line contracted 18.1% YoY to ¥592m; operating loss remained at ¥59m YoY, indicating tighter cost control but continued negative leverage.
• Gross margin is high at 60.9%, suggesting unit economics remain sound if scale can be restored.
• Balance sheet is conservative with D/E of 0.27x and an implied equity ratio of ~78.6%; liquidity is strong (current ratio 4.32x).
• Cash flow statements and D&A are undisclosed, constraining earnings quality analysis.
• Path to breakeven hinges on stabilizing revenue via pipeline execution and improved monetization while maintaining cost discipline.

Metrics to Watch:

• Sequential revenue growth and title pipeline cadence
• User metrics (DAU/MAU, ARPPU, payer ratio) and marketing efficiency (LTV/CAC)
• Operating expense run-rate and break-even revenue level
• OCF and FCF once disclosed, including working capital movements
• Intangible investment and amortization trends (content capitalization vs. expense)
• Cash and equivalents and burn rate when reported

Relative Positioning: Within Japan’s mobile/interactive content peers, Voltage exhibits strong gross margin and conservative leverage but weaker recent revenue momentum and continued operating losses. Its financial resilience (high equity ratio and liquidity) compares favorably on solvency, while growth execution and cash conversion visibility lag due to limited disclosures this quarter.

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