DLE Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥691M
• Operating Income: ¥-337M
• Net Income: ¥-327M
• EPS: ¥-0.96

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 Q2 (JGAAP, consolidated), 株式会社ディー・エル・イー reported revenue of ¥691 million, down 22.4% YoY, indicating continued top-line pressure in its content/IP businesses. Gross profit is stated at ¥267 million, implying a gross margin of 38.7%, which is relatively solid for content production if accurate; however, the disclosed cost of sales figure appears inconsistent with the gross profit, so we rely on the calculated margin provided. Operating income was a loss of ¥337 million, highlighting a significant operating shortfall despite the positive gross margin, likely reflecting heavy fixed SG&A burden. Ordinary income was a loss of ¥371 million, indicating modest net non-operating losses (interest expense was only ¥5 thousand, so financial costs are not the driver). Net income was a loss of ¥41 million, much smaller than the operating loss, suggesting the presence of material below-operating-line items (e.g., extraordinary gains under JGAAP) not detailed in the disclosure. Calculated DuPont metrics show an ROE of -2.77%, driven by a net margin of -5.93%, asset turnover of 0.269x, and financial leverage of 1.73x. Liquidity appears strong with a current ratio of 247% and quick ratio of 241.1%, backed by ¥1,133 million in current assets against ¥459 million in current liabilities and working capital of ¥674 million. The balance sheet is conservative with total liabilities of ¥770 million versus equity of ¥1,481 million (debt-to-equity 0.52x), implying solvency headroom. Asset turnover of 0.269x is low for a media/IP company and underscores underutilization of the asset base amid revenue contraction. The combination of a healthy gross margin and large operating loss implies SG&A of roughly ¥600 million in the half, pointing to operating leverage and cost structure rigidity. Dividend remains suspended (DPS ¥0), appropriate given losses and the need to preserve liquidity. Cash flow statements are not disclosed in this dataset (zeros indicate unreported), limiting assessment of earnings-to-cash conversion and FCF coverage. Overall, near-term profitability is weak and dependent on cost discipline and the monetization cadence of IP/production pipelines, while liquidity and solvency provide time to execute a turnaround. Key watchpoints are revenue stabilization, SG&A control, and the nature and repeatability of the below-operating-line items that narrowed the net loss. Data limitations (notably cash flows and share data) constrain the depth of cash-based and per-share analyses.

Profitability Analysis

ROE decomposition (DuPont): Net margin -5.93% × asset turnover 0.269 × financial leverage 1.73 = ROE -2.77%. The negative net margin reflects a sizable operating loss (-¥337 million) despite a reported gross margin of 38.7% (gross profit ¥267 million on revenue ¥691 million). The implied SG&A burden is approximately ¥604 million (gross profit ¥267 million minus operating loss -¥337 million), signaling high fixed costs and meaningful operating leverage. Asset turnover at 0.269x indicates low revenue productivity relative to the balance sheet, a headwind for ROE. Financial leverage is moderate (assets/equity ~1.73x), so ROE pressure stems mainly from weak margins and low turnover rather than leverage. Margin quality is mixed: the gross margin appears healthy for content/IP businesses, but the gap to operating loss suggests content amortization, personnel, and marketing/overheads are absorbing value. Ordinary loss (-¥371 million) versus operating loss indicates slightly negative non-operating results, while the much smaller net loss (-¥41 million) implies material extraordinary gains or tax/non-controlling effects—sustainability of these is uncertain. Interest burden is negligible (¥5 thousand), so financing costs are not constraining profitability.

Growth Assessment

Revenue declined 22.4% YoY to ¥691 million, signaling weak demand or delivery timing issues in the period. Given low asset turnover (0.269x), revenue shortfalls significantly depress overall returns. The gross margin of 38.7% suggests that core project/unit economics may be viable, but scale and utilization are currently insufficient to cover the fixed cost base. Operating income remained negative at -¥337 million; YoY delta is not meaningfully disclosed (listed as +0.0% YoY), limiting comparability. Profit quality is questionable: the narrowing from ordinary loss (-¥371 million) to net loss (-¥41 million) likely relies on below-operating-line items that may not be recurring. Outlook near term hinges on the content/IP release slate, licensing pipeline, and the timing of deliveries; without clear backlog or order visibility, revenue sustainability is uncertain. Stabilization would require either a volume recovery (higher throughput of titles/licensing) or structural SG&A reductions to reset break-even. Any improvement in asset turnover through better utilization of IP and production capacity would meaningfully aid ROE.

Financial Health

Liquidity is strong with a current ratio of 247% and quick ratio of 241.1%, supported by ¥1,133 million in current assets and ¥459 million in current liabilities; working capital is ¥674 million. Total assets are ¥2,565 million against total liabilities of ¥770 million and total equity of ¥1,481 million, implying a conservative capital structure (debt-to-equity 0.52x). Effective equity ratio (equity/assets) is approximately 57.7% (the reported 0.0% equity ratio appears undisclosed rather than actual). Interest expense is minimal (¥5 thousand), indicating low reliance on interest-bearing debt. Solvency is comfortable, providing runway to pursue restructuring or growth initiatives. However, persistent operating losses, if continued, would erode equity over time; thus, solvency headroom depends on curbing losses or achieving revenue recovery.

Cash Flow Quality

Cash flow statement items are unreported in this dataset (Operating CF, Investing CF, Financing CF all shown as zero, which in this context indicates not disclosed). As a result, OCF/Net Income and Free Cash Flow figures derived as zero should not be interpreted as actual cash outcomes. Earnings quality cannot be validated via cash conversion this period. Working capital appears ample (¥674 million), but we cannot confirm whether working capital absorbed or released cash. Given the large divergence between operating loss and net loss, below-operating-line items may be non-cash; without CF details, we cannot assess their cash impact. Key unknowns include cash balance, receivables collection, production advances, and content investment cash outflows.

Dividend Sustainability

Annual DPS is ¥0, and payout ratio is 0%, consistent with reported losses (EPS -¥0.96). With FCF unreported, we cannot assess FCF coverage, but given negative operating earnings, a conservative no-dividend stance is prudent to preserve liquidity. Balance sheet capacity is adequate, but resumption of dividends would depend on restoring positive, recurring operating cash flow and evidence of sustainable profitability. Policy outlook likely remains capital preservation until operating break-even is achieved and cash conversion is demonstrably positive.

Risk Assessment

Business Risks:

• Hit-driven IP/content performance risk and title slate timing
• Revenue volatility from project-based deliveries and licensing cycles
• Customer concentration risk common in media production ecosystems
• Production delays and cost overruns affecting margins
• Content amortization and impairment risk on underperforming IP
• Competitive intensity in animation/media and platform algorithm shifts
• Dependence on non-operating or extraordinary items to narrow net losses

Financial Risks:

• Sustained operating losses eroding equity over time
• Low asset turnover (0.269x) indicating underutilized assets
• Limited visibility on cash flows due to undisclosed CF statements
• Potential working capital swings (receivables, advances) impacting liquidity
• Sensitivity to revenue shortfalls given high fixed SG&A (operating leverage)

Key Concerns:

• Revenue down 22.4% YoY to ¥691 million with low asset turnover
• Operating loss of ¥337 million despite a 38.7% gross margin
• Net loss (-¥41 million) aided by non-recurring or below-operating-line items
• Cash and FCF not disclosed, constraining assessment of runway
• Need for structural SG&A actions or volume recovery to reach break-even

Investment Implications

Key Takeaways:

• Top line contracted materially (-22.4% YoY), pressuring utilization and ROE
• Gross margin appears solid at 38.7%, but SG&A intensity drove an operating loss
• Low leverage and strong liquidity provide time to execute restructuring
• Net loss much smaller than operating loss, likely due to non-recurring gains
• Cash flow disclosure absent; earnings-to-cash conversion is a key unknown

Metrics to Watch:

• Revenue trajectory and backlog/order visibility by segment/title
• SG&A run-rate and cost-reduction progress versus implied ~¥600 million half-year level
• Operating margin inflection and break-even revenue thresholds
• Asset turnover (revenue/assets) as a proxy for utilization
• Nature and recurrence of below-operating-line items (extraordinary gains/losses)
• Cash and equivalents, OCF, and FCF once disclosed
• Receivables days and production advances to gauge working capital dynamics

Relative Positioning: Within Japan’s listed content/animation peers, the company currently exhibits weaker operating profitability and utilization (low asset turnover) but retains a stronger-than-average liquidity and solvency profile due to modest leverage; near-term positioning depends on slate execution and cost discipline rather than balance-sheet capacity.

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