Ekitan & Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.44B
• Operating Income: ¥-76M
• Net Income: ¥-15M
• EPS: ¥-18.21

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Disclaimer

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

AI Financial Analysis

Executive Summary

Ekitan (36460) reported FY2026 Q2 consolidated results under JGAAP showing a top-line contraction and sustained operating losses, offset by positive operating cash flow. Revenue declined 18.2% YoY to ¥1,444m, indicating meaningful demand or contract volume weakness versus the prior year. Gross profit was stated at ¥540m, implying a gross margin of 37.4%, but this contrasts with the reported cost of sales figure; margin-based inference suggests effective cost of sales closer to ~¥904m, indicating a potential taxonomy or presentation difference in the provided cost line. Operating income was a loss of ¥76m, essentially flat YoY, suggesting cost actions partially mitigated the revenue decline. Ordinary loss of ¥73m was close to operating loss, implying limited non-operating drag (interest expense was modest at ¥2.1m). Net loss was ¥85m (EPS -¥18.21), and tax effects were limited, aligning with the reported effective tax rate of 0.0%. DuPont decomposition indicates ROE of -5.67% driven by a -5.89% net margin, asset turnover of 0.659x, and moderate leverage of 1.46x. The company generated positive operating cash flow of ¥102m despite a net loss, implying working capital release and other non-cash adjustments more than offset negative EBITDA. EBITDA was -¥52.3m (margin -3.6%), pointing to ongoing operating pressure even before depreciation. The balance sheet appears conservative: total assets ¥2,190m, liabilities ¥811m, equity ¥1,498m, implying an equity ratio around 68% despite a disclosed 0.0% (likely an unavailable data field). Liquidity is strong with a current ratio of 338% and significant working capital of ¥1,291m, providing a buffer to navigate near-term volatility. Financing cash flow was a net outflow of ¥162m, likely reflecting debt repayment and/or equity-related transactions; details are not disclosed. Investing cash flow and cash balance figures were not disclosed (zeros in the dataset represent non-disclosure), limiting visibility on capex and liquidity headroom. Dividend per share is shown as ¥0.00; in the context of current losses, a conservative capital return stance is plausible, though disclosure is limited. Overall, results reflect revenue-driven operating deleverage but solid liquidity and manageable leverage, with cash generation supported by working capital in the quarter. Key uncertainties include the sustainability of the positive OCF absent further working capital release, the trajectory of top-line stabilization, and visibility into capex and cash balances due to unreported items.

Profitability Analysis

ROE_decomposition: ROE -5.67% = Net margin -5.89% × Asset turnover 0.659 × Financial leverage 1.46. Profitability drag is margin-driven; asset efficiency is modest, leverage moderate. margin_quality: - Gross margin 37.4% (based on stated gross profit ¥540m on revenue ¥1,444m). Note: stated cost of sales (¥1,224.6m) does not reconcile to the reported gross profit; margin-based inference suggests effective COGS closer to ~¥904m, indicating mapping differences. - Operating margin approximately -5.3% (¥-76m/¥1,444m). - Net margin -5.9%. Limited non-operating and tax effects. operating_leverage: Revenue declined 18.2% YoY while operating loss remained roughly flat, implying cost containment partly offset deleveraging. However, negative EBITDA (-¥52.3m) indicates fixed-cost intensity still weighs on earnings.

Growth Assessment

revenue_sustainability: Top line fell 18.2% YoY to ¥1,444m, pointing to weaker demand, contract churn/downsizing, or pricing pressure. Without segment disclosure, sustainability is uncertain. profit_quality: Ordinary loss is close to operating loss, suggesting limited reliance on non-operating items. Tax effects minimal. EBITDA negative shows underlying earnings pressure despite positive OCF. outlook: Near-term profit recovery requires stabilizing revenue and continued SG&A discipline. With moderate leverage and strong liquidity, the company has runway to execute, but visibility is constrained by missing disclosures (capex, cash balance, segment dynamics).

Financial Health

liquidity: Current assets ¥1,833.9m vs current liabilities ¥542.8m yields a current ratio of 337.9% and quick ratio of 337.9%, indicating ample short-term liquidity. Working capital stands at ¥1,291.1m. solvency: Total liabilities ¥811.4m versus equity ¥1,498m implies a debt-to-equity (liabilities/equity) of ~0.54x and an equity ratio around 68% (computed), indicating conservative solvency. capital_structure: Financial leverage of 1.46x from DuPont is moderate. Interest expense is low at ¥2.1m, but negative EBITDA yields an adverse coverage metric; cash resources (undisclosed) are the key buffer.

Cash Flow Quality

earnings_quality: Operating cash flow ¥102.1m versus net income -¥85.0m gives OCF/NI of -1.20, indicating cash generation despite accounting losses (driven by working capital movements and non-cash items). FCF_analysis: Investing cash flow is undisclosed (reported as zero), so FCF cannot be reliably derived from the dataset (the displayed FCF of zero reflects missing data, not economic reality). working_capital: With EBITDA -¥52.3m and D&A ¥23.7m, pre-working-capital operating cash would be negative (~¥-28m), implying that working capital release and other non-cash adjustments contributed roughly +¥130m to OCF.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0% alongside net loss suggests no dividend distributed during the period; however, this may reflect non-disclosure. With negative earnings and negative EBITDA, capacity for distributions from current income is limited. FCF_coverage: FCF is not ascertainable due to missing investing cash flow data; therefore, coverage of any potential dividends by FCF cannot be evaluated from the provided data. policy_outlook: Given current losses and a focus on preserving liquidity, a conservative dividend stance appears prudent until operating profitability normalizes. Explicit policy guidance is not available in the dataset.

Risk Assessment

Business Risks:

• Revenue contraction (-18.2% YoY) indicating potential demand softness, customer churn, or pricing pressure
• Negative operating leverage given fixed cost base, evidenced by negative EBITDA
• Limited visibility into segment mix and drivers due to lack of disclosure
• Potential competitive intensity in core services impacting margins

Financial Risks:

• Negative EBITDA leading to weak interest coverage (reported -36.3x) despite low absolute interest expense
• Reliance on working capital release to support OCF in the quarter, which may not be repeatable
• Undisclosed cash and capex levels constrain assessment of liquidity runway and reinvestment needs
• Financing cash outflow of ¥161.8m without detail (e.g., debt repayment or buybacks) adds uncertainty to capital allocation

Key Concerns:

• Sustained operating losses and negative EBITDA
• Top-line decline and uncertain inflection timing
• Data inconsistencies in cost of sales versus gross profit and missing key cash metrics

Investment Implications

Key Takeaways:

• ROE -5.67% driven primarily by negative net margin; leverage is moderate and not the core issue
• Liquidity is robust (current ratio ~338%) and balance sheet conservative (equity ratio ~68%)
• Positive OCF of ¥102m is supported by working capital release; sustainability is uncertain
• EBITDA remains negative, indicating ongoing operating pressure despite cost control
• Top-line decline of 18.2% YoY is the main headwind; stabilization is essential for margin recovery

Metrics to Watch:

• Revenue trajectory and order/contract renewal indicators
• EBITDA and operating margin progression
• Working capital movements (receivables and payables) and OCF sustainability
• Capex and investing cash outflows once disclosed (to assess true FCF)
• Cash and equivalents balance and any changes in financing outflows

Relative Positioning: Within small-cap information service peers, Ekitan exhibits weaker current profitability and EBITDA but stronger liquidity and a conservative balance sheet; execution on revenue stabilization and cost discipline will determine whether cash generation can persist without further balance sheet strain.

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