istyle Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥18.44B
• Operating Income: ¥1.04B
• Net Income: ¥609M
• EPS: ¥7.01

Income Statement

Balance Sheet

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

For FY2026 Q1, istyle Inc. delivered solid top-line expansion with revenue of ¥18.44bn, up 22.6% YoY, translating into operating income of ¥1.04bn (+36.4% YoY) and net income of ¥0.65bn (+7.6% YoY). Gross margin stood at 36.8%, and the operating margin improved to 5.6% (¥1,039m/¥18,442m), indicating operating leverage as costs grew slower than revenue. Ordinary income of ¥1,050m was modestly above operating income, suggesting limited but positive non-operating contributions net of ¥12m in interest expense. The effective tax expense reported is ¥231m; inferring pre-tax income at ~¥879m (net + tax) implies an effective tax rate near 26%, though formal tax metrics beyond this are not disclosed. DuPont decomposition points to a 3.51% net margin, 0.486x asset turnover, and 1.80x financial leverage, yielding an ROE of 3.08%—consistent with the provided calculation. Liquidity appears sound with a current ratio of 165.8% and working capital of ¥8.35bn, supported by a conservative capital structure (D/E 0.84x). Based on total equity of ¥21.04bn and total assets of ¥37.92bn, the implied equity ratio is approximately 55%, although the reported equity ratio field is not populated. Interest coverage is robust at 86.6x, reflecting ample headroom versus modest financing costs. SG&A intensity, inferred at roughly 31.1% of revenue (¥5.74bn), remains a key lever for further operating margin expansion as scale builds. EPS was ¥7.01 for the quarter, though per-share balance sheet figures are not available due to unreported share counts. Cash flow statements and depreciation/amortization were not disclosed in this dataset; as such, EBITDA, OCF-based quality checks, and FCF coverage cannot be validated and should not be interpreted as zero. Inventory data were also not disclosed, so quick ratio equals the current ratio by construction in this dataset. Dividend remains nil (DPS ¥0), consistent with prioritizing reinvestment or balance sheet fortification. Overall, the quarter shows healthy revenue momentum, improving operating leverage, and strong financial resilience, with the main analytical limitations stemming from unreported cash flow and certain balance sheet detail.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.51%
• asset_turnover: 0.486
• financial_leverage: 1.8
• calculated_ROE: 3.08%
• commentary: ROE is driven primarily by modest net margin and moderate asset turnover; leverage is conservative at 1.80x assets/equity. margin_quality:
• gross_margin: 36.8%
• operating_margin: 5.6%
• net_margin: 3.5%
• sg_and_a_ratio: 31.1%
• observations: Operating margin expansion outpaced revenue growth, indicating operating leverage. Ordinary income closely tracks operating income, suggesting limited reliance on non-operating gains. operating_leverage:
• evidence: Revenue +22.6% YoY vs. operating income +36.4% YoY.
• implication: Fixed cost dilution appears to be contributing to margin gains; further top-line growth should support incremental margin improvement if cost discipline is maintained.

Growth Assessment

revenue_sustainability: Top-line growth of 22.6% YoY reflects solid demand and/or improved platform monetization. Sustainability will depend on retention, advertiser/client spend durability, and potential normalization post-reopening recovery (if applicable to the business mix). profit_quality: Ordinary income is only ¥11m higher than operating income with ¥12m interest expense, indicating limited non-operating distortion. Net income growth (+7.6% YoY) lagged operating income growth, likely due to tax normalization or below-the-line items. outlook: Continued margin progression is plausible given scale benefits and a healthy cost base; however, visibility on capex intensity, D&A, and OCF is limited in this dataset, tempering confidence in medium-term profit conversion.

Financial Health

liquidity:

• current_ratio: 165.8%
• quick_ratio: ≈165.8% (inventory not disclosed)
• working_capital: ¥8,349m
• commentary: Near-term liquidity is comfortable, supported by sizable current assets relative to current liabilities. solvency:
• debt_to_equity: 0.84x (liabilities/equity)
• interest_coverage: 86.6x (operating income/interest expense)
• equity_ratio_implied: ≈55.5% (equity/assets)
• commentary: Balance sheet strength is solid with moderate leverage and strong coverage; refinancing risk appears low given earnings capacity relative to interest burden. capital_structure: Leverage is moderate; growth is primarily equity-funded with disciplined use of liabilities.

Cash Flow Quality

earnings_quality: With ordinary income closely aligned to operating income and low interest expense, earnings appear operationally driven. However, absence of D&A and cash flow disclosures prevents cross-checking accrual intensity. free_cash_flow_analysis: OCF and investing cash flows were not disclosed; FCF cannot be assessed from this dataset. working_capital: Current assets of ¥21,041m vs. current liabilities of ¥12,692m indicate headroom. Component detail (receivables, payables, inventory) is not provided, limiting analysis of cash conversion dynamics.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 with a reported payout ratio of 0%. Given ROE of 3.08% and ongoing growth initiatives, capital retention aligns with reinvestment. FCF_coverage: Not assessable due to unreported OCF and capex; no dividend commitment currently reduces pressure on cash generation. policy_outlook: Continuation of a conservative dividend stance is likely until visibility on stable cash generation and capex needs improves; any shift would depend on sustained profitability and disclosed cash conversion.

Risk Assessment

Business Risks:

• Dependence on advertising, e-commerce, or platform-related demand cycles affecting revenue visibility.
• Competitive intensity in beauty/media/e-commerce ecosystems potentially pressuring margins and customer acquisition costs.
• Changes in partner algorithms, traffic sources, or marketing channels that could impact user acquisition and monetization.
• Client budget sensitivity to macro conditions, FX volatility affecting imported cosmetics pricing, and consumer sentiment.
• Execution risk in new services, data/AI monetization, or overseas initiatives.

Financial Risks:

• Limited visibility on cash flow generation and capex due to unreported OCF/ICF, creating uncertainty around FCF.
• Potential working capital swings (receivables/payables) that could depress OCF despite reported profits.
• Exposure to interest rate changes is currently low given strong coverage, but rising rates could incrementally impact financing costs.
• Tax rate variability (inferred effective tax ~26%) that may fluctuate with mix and deferred tax movements.

Key Concerns:

• Data limitations on cash flow and D&A impede assessment of earnings quality and reinvestment needs.
• Sustainability of 22.6% revenue growth amid competitive dynamics.
• Need to further improve ROE from a modest 3.08% despite healthy balance sheet.

Investment Implications

Key Takeaways:

• Strong revenue growth (+22.6% YoY) with operating leverage (OP +36.4% YoY).
• Healthy margin structure: GM 36.8%, OP margin 5.6%, net margin 3.5%.
• Robust financial footing: current ratio 166%, implied equity ratio ~55%, D/E 0.84x, interest coverage 86.6x.
• ROE of 3.08% is modest; improving asset efficiency and margins are key to uplift.
• Cash flow and D&A not disclosed; FCF conversion remains a blind spot.
• Dividend remains suspended (DPS ¥0), consistent with reinvestment.

Metrics to Watch:

• Sequential operating margin and SG&A ratio trajectory as scale builds.
• User/traffic KPIs, advertiser retention, and take-rate trends underpinning revenue durability.
• Working capital movements (DSO/DPO) once disclosed, to gauge cash conversion.
• Capex and D&A disclosure to evaluate maintenance vs. growth investment needs.
• OCF/NI ratio and FCF once available to validate earnings quality.
• ROE progression via margin expansion and asset turnover improvements.

Relative Positioning: Within domestic digital-platform and e-commerce peers, istyle shows solid growth and conservative leverage with improving operating leverage, but currently trails best-in-class ROE and lacks disclosed cash flow depth to fully validate earnings 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