About Quarterly Earnings Report Disclosures
| Item | Current | Prior | YoY % |
|---|---|---|---|
| Net Sales | ¥5.24B | ¥3.42B | +53.3% |
| Operating Income | ¥541M | ¥253M | +113.8% |
| Ordinary Income | ¥576M | ¥286M | +101.4% |
| Net Income | ¥394M | ¥195M | +102.1% |
| Basic EPS | ¥16.44 | ¥8.15 | +101.7% |
| Dividend Per Share | ¥0.00 | ¥0.00 | - |
| Item | Current End | Prior End | Change |
|---|---|---|---|
| Total Assets | ¥8.46B | ¥7.54B | +¥929M |
| Total Equity | ¥3.74B | ¥3.52B | +¥227M |
| Owners' Equity | ¥3.74B | ¥3.52B | +¥227M |
| Item | Value |
|---|---|
| Net Profit Margin | 7.5% |
| Item | YoY Change |
|---|---|
| Net Sales YoY Change | +53.3% |
| Operating Income YoY Change | +113.2% |
| Ordinary Income YoY Change | +101.0% |
| Net Income YoY Change | +101.8% |
| Item | Value |
|---|---|
| Shares Outstanding (incl. Treasury) | 24.05M shares |
| Treasury Stock | 2K shares |
| Average Shares Outstanding | 24.02M shares |
| Book Value Per Share | ¥155.68 |
| Item | Amount |
|---|---|
| Q2 Dividend | ¥0.00 |
| Year-End Dividend | ¥30.00 |
| Item | Forecast |
|---|---|
| Net Sales Forecast | ¥6.20B |
| Operating Income Forecast | ¥670M |
| Ordinary Income Forecast | ¥717M |
| Net Income Forecast | ¥480M |
| Basic EPS Forecast | ¥20.02 |
| Dividend Per Share Forecast | ¥7.50 |
This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.
Verdict: Strong quarter with accelerating top-line growth translating into outsized profit expansion and improved returns. Revenue reached 52.38 (+53.3% YoY), while operating income rose to 5.41 (+113.2% YoY) and ordinary income to 5.76 (+101.0% YoY), culminating in net income of 3.94 (+101.8% YoY). Operating margin improved to 10.3%, expanding by roughly 290 bps from an estimated 7.4% a year earlier. Net margin rose to 7.5%, up about 180 bps YoY, reflecting both operating leverage and disciplined costs. Ordinary margin reached about 11.0%, up ~260 bps YoY, indicating a modest tailwind from non-operating items versus operating profit. ROE is calculated at 10.5% (Net margin 7.5% × Asset turnover 0.619 × Leverage 2.26x), confirming meaningful improvement in capital efficiency. ROIC of 10.1% is solid and above the common 7–8% target threshold, indicating efficient deployment of invested capital. Earnings quality cannot be validated due to unreported cash flows; OCF/NI and FCF are N/A, so the persistence of earnings needs future confirmation. Balance sheet shows total assets of 84.64 and equity of 37.44, implying liabilities of ~47.20 and a conservative implied D/E of ~1.26x, though current ratio and liquidity buffers are unreported. EPS was 16.44 JPY on an average share count of 24.02 million, with BVPS at 155.68 JPY. The reported payout ratio (calculated) is high at 183.1%, which appears inconsistent with profit scale and suggests either timing effects or special distributions; sustainability requires cash flow evidence. With operating leverage evident and margins expanding, near-term earnings momentum looks favorable if demand conditions persist. However, the lack of cash flow disclosure and high reported payout ratio introduce uncertainty regarding cash conversion and capital return policy durability. Forward focus should be on confirming margin durability (especially gross margin, unreported), converting profits into cash, and validating continued demand through backlog and order trends. Overall, the quarter signals healthy growth with improving profitability, tempered by visibility gaps in cash flow and dividend sustainability.
ROE decomposition (DuPont): Net Profit Margin 7.5% × Asset Turnover 0.619 × Financial Leverage 2.26x = ROE 10.5%. The largest contributor to YoY improvement appears to be margin expansion: operating margin rose from ~7.4% to 10.3% (+290 bps), and net margin rose from ~5.7% to 7.5% (+180 bps). Business drivers likely include scale benefits from strong revenue growth (+53.3% YoY) and fixed-cost dilution in SG&A (though SG&A detail is unreported), plus a small positive gap between ordinary and operating income. The improvement seems partly sustainable if demand strength persists and cost discipline is maintained; however, absent gross margin and SG&A breakdowns, we cannot confirm mix or pricing durability. Watch for any red flags of operating deleverage: none visible this quarter, but the high revenue growth rate sets a tough base for comps, and any slowdown could compress margins. No evidence of SG&A growth outpacing revenue is available due to unreported SG&A; monitoring is needed.
Top-line growth of +53.3% YoY is robust, indicating strong demand or pipeline conversion. Profit grew faster than sales (operating income +113.2%, net income +101.8%), evidencing operating leverage and improved efficiency. Ordinary income exceeding operating income suggests a modest non-operating tailwind, but the magnitude is small relative to operating gains and likely not the main driver. Sustainability hinges on order trends, customer retention, and project execution; absent segment and backlog data, we assume growth durability is moderate but sensitive to macro and client budgets. Near-term outlook is constructive given margin momentum, but normalization of growth rates could narrow operating leverage. Key watchpoints: gross margin trends (unreported), pricing and utilization, headcount and subcontracting costs, and any signs of elongating sales cycles.
Total assets are 84.64 and total equity is 37.44, implying total liabilities of ~47.20 and an implied D/E of ~1.26x—moderate and not excessive for a software/services profile. Current ratio and liquidity buffers are unreported, preventing a definitive short-term liquidity assessment; no explicit warning on Current Ratio <1.0 can be made. Financial leverage in DuPont (2.26x) aligns with the implied balance sheet structure. Maturity mismatch risk cannot be assessed due to missing breakdown of current assets/liabilities and debt tenor. No off-balance-sheet obligations are disclosed in the provided data.
OCF/Net Income is N/A, so earnings quality cannot be validated; this is a key gap. Free cash flow is unreported; thus we cannot assess coverage of capex and dividends. Without working capital details (AR, AP, inventories), we cannot detect timing effects or potential working capital-driven earnings management. Given the high calculated payout ratio (183.1%), confirmation of OCF sufficiency will be critical to judge whether dividends are funded by cash generation or balance sheet.
The calculated payout ratio is 183.1%, which is above typical sustainable thresholds (<60%) and suggests potential unsustainability absent strong free cash flow or one-off factors. DPS is unreported, and OCF/FCF coverage cannot be computed, limiting certainty. If the payout reflects timing (e.g., interim dividends vs year-to-date earnings) or policy changes, sustainability could normalize; otherwise, maintaining such a payout would likely require drawing on cash or increasing leverage. Policy outlook is unclear from the data; investors should watch guidance on full-year DPS and the linkage to FCF.
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Relative Positioning: Within Japan small-cap software/services, the company shows above-average growth with improving profitability and returns (ROE ~10.5%, ROIC ~10.1%), but trails best-in-class visibility due to absent cash flow and cost structure disclosures; thus, operational momentum is strong while transparency on cash conversion and capital returns lags peers with fuller reporting.
This analysis was auto-generated by AI. Please note the following: