Riskmonster.com FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.89B
• Operating Income: ¥176M
• Net Income: ¥129M
• EPS: ¥17.00

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Verdict: A solid margin-led beat in FY2026 Q2, driven by operating leverage on modest topline growth, but capital efficiency remains weak and dividend payout looks stretched. Revenue rose 2.1% YoY to 18.90, while operating income surged 49.1% YoY to 1.76, and ordinary income climbed 51.1% YoY to 1.85. Net income reached 1.27 with an effective tax rate of 31.9%, and EPS was 17.00 JPY (diluted 16.99 JPY). Operating margin expanded to roughly 9.3% (1.76/18.90) from about 6.4% a year ago, implying ~293 bps of expansion on modest revenue growth. Gross margin stands at 46.5%, reflecting a favorable mix and/or cost control against cost of sales of 10.13. Non-operating items netted a small positive (0.18 income vs 0.09 expense), with dividend income of 0.12 and interest income of 0.02 supporting ordinary profit. Liquidity is very strong with a current ratio of 361.7% and cash and deposits of 18.10, comfortably exceeding short-term loans of 2.33. Leverage is conservative (D/E 0.17x), and interest coverage is excellent at 98.21x. However, capital efficiency is a clear weak point: ROE is only 2.1% and ROIC is 2.6%, well below a 5% warning threshold. Asset turnover is low at 0.263, weighed down by sizeable noncurrent and intangible assets (noncurrent 47.33, intangibles 21.52). Earnings quality cannot be fully assessed due to unreported cash flow data; OCF/NI and FCF are unavailable. The calculated payout ratio is high at 90.2%, suggesting constrained reinvestment capacity and potential sensitivity of dividends to earnings volatility. Balance sheet strength and cash provide near-term dividend cover, but sustainability will depend on stable cash generation. Forward-looking, continued cost discipline and monetization of intangibles will be needed to lift ROIC; absent this, growth could be limited by high payout and low asset turnover. Overall, a healthy quarter operationally with margin gains, but strategic focus should shift to improving capital efficiency and validating cash flow support for dividends.

Profitability Analysis

ROE decomposition (DuPont): ROE 2.1% = Net Profit Margin 6.7% × Asset Turnover 0.263 × Financial Leverage 1.17x. The largest driver of improvement this quarter appears to be net profit margin, as operating income rose 49.1% YoY on just 2.1% revenue growth, indicating stronger operating leverage and cost control. Operating margin expanded from approximately 6.37% (1.18/18.51) last year to about 9.30% (1.76/18.90) this year, a roughly 293 bps uplift; gross margin sits at 46.5%, and SG&A ratio is about 37.1% (7.01/18.90). Asset turnover remains low at 0.263, reflecting a balance sheet heavy in noncurrent and intangible assets (47.33 and 21.52 respectively), which dampens efficiency. Financial leverage is modest at 1.17x, limiting ROE amplification but also reducing risk. Business drivers behind margin expansion likely include disciplined SG&A, mix improvements in higher-margin services, and modest tailwind from non-operating income (dividends/interest). The sustainability of these gains hinges on maintaining SG&A efficiency and recurring service revenue; the non-operating contribution is small and potentially variable. With cash flow data unreported, we cannot confirm whether margin gains translated into cash. Concerning trends: none visible in cost escalation, but the structurally low asset turnover and ROIC (2.6%) are red flags for medium-term value creation.

Growth Assessment

Revenue grew 2.1% YoY to 18.90, modest but positive, while operating profit surged 49.1% YoY to 1.76, indicating strong operating leverage. Ordinary income rose 51.1% YoY to 1.85, partly aided by 0.12 dividend income and 0.02 interest income. The profit mix is primarily operating, with a small boost from financial income; no one-time investment gains were disclosed. Gross margin is healthy at 46.5%, and the operating margin at ~9.3% indicates improved efficiency versus last year (~6.4%). With asset turnover at 0.263 and ROIC at 2.6%, capital intensity and/or underutilized assets are constraining growth efficiency. Given the high payout ratio (90.2%), internally funded reinvestment capacity appears limited unless operating cash flow is robust; cash on hand provides a buffer but is not a substitute for sustainable FCF. Outlook hinges on continued cost discipline, monetization of intangibles/software assets, and stable client demand; absent acceleration in topline or efficiency, profit growth may normalize from this quarter’s favorable compare.

Financial Health

Liquidity is strong: current ratio 361.7% and quick ratio 361.7%, with current assets of 24.55 far exceeding current liabilities of 6.79. No warning thresholds breached (Current Ratio well above 1.0; D/E at 0.17x far below 2.0). Cash and deposits (18.10) comfortably cover short-term loans (2.33), limiting maturity mismatch risk; current assets also cover all current liabilities 3.6x. Total liabilities are low at 10.36 versus total equity 61.52, implying an equity ratio of roughly 85.6% (calculated from provided totals). Interest coverage is robust at 98.21x, reflecting low interest burden and healthy operating profits. Off-balance sheet obligations are not disclosed; leasing commitments or purchase obligations cannot be assessed from available data. Intangible assets are sizable (21.52) and goodwill is small (0.58), suggesting limited goodwill impairment risk but potential amortization drag.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow are unreported, so OCF/Net Income and FCF coverage cannot be calculated. As such, we cannot confirm whether earnings quality is supported by cash conversion; this is a key limitation. Working capital indicators from the balance sheet look reasonable: accounts receivable of 5.33 against half-year revenue of 18.90 implies roughly ~51 days of receivables, not indicative of aggressive revenue recognition. No clear signs of working capital manipulation are visible, but absence of cash flow statements prevents deeper validation. Dividend income (0.12) and interest income (0.02) slightly support ordinary income but are not core operating cash sources. Given the high payout ratio (90.2%), confirmation of positive OCF and manageable capex will be crucial for assessing sustainability.

Dividend Sustainability

The calculated payout ratio is high at 90.2%, implying limited retained earnings generation for growth if maintained. With OCF and FCF unreported, we cannot confirm cash coverage; near-term cover appears adequate given cash of 18.10 and low debt, but long-term sustainability depends on consistent operating cash flow and modest capex needs. Equity is strong (61.52) and leverage low, enabling flexibility, yet ROE (2.1%) and ROIC (2.6%) are low, raising questions about the opportunity cost of high distributions versus reinvestment to improve efficiency. Policy details and DPS by quarter are unreported; if policy targets stable or progressive dividends, risk of payout strain would rise should earnings normalize downward. Overall, current balance sheet can support dividends near term, but a ~90% payout is above typical sustainability benchmarks (<60%) and sensitive to profit volatility.

Risk Assessment

Business Risks:

• Low asset turnover (0.263) and ROIC (2.6%) indicating poor capital efficiency and potential value-creation constraints
• Dependence on maintaining SG&A discipline to sustain expanded operating margin (~9.3%)
• Execution risk in monetizing intangible assets (21.52) to drive revenue growth
• Potential demand cyclicality for credit risk/analytics services amid macro shifts

Financial Risks:

• High payout ratio (90.2%) limiting retained earnings and reinvestment capacity
• Earnings quality uncertainty due to unreported OCF/FCF
• Intangible asset amortization could pressure operating profit if growth slows
• Non-operating income (dividends/interest) variability, albeit currently small

Key Concerns:

• Capital efficiency flagged: ROIC below 5% benchmark (2.6%)
• Sustainability of margin gains without clear topline acceleration
• Cash flow disclosure gap limits assessment of dividend and investment capacity

Investment Implications

Key Takeaways:

• Margin-led profit beat with operating margin up ~293 bps YoY on 2.1% revenue growth
• Balance sheet strength (equity ratio ~86%, D/E 0.17x) and liquidity (current ratio ~3.6x)
• Capital efficiency weak: ROE 2.1%, ROIC 2.6%, asset turnover 0.263
• High payout ratio (~90%) constrains reinvestment unless cash conversion is strong
• Earnings quality cannot be validated due to missing cash flow data

Metrics to Watch:

• Operating cash flow and free cash flow trends (OCF/NI target >1.0)
• Capex and R&D spending to understand reinvestment needs
• SaaS/recurring revenue mix and churn/retention (if disclosed) to sustain margins
• SG&A growth vs revenue growth to monitor operating leverage
• ROIC trajectory and asset turnover improvements
• Dividend policy disclosures and DPS guidance versus payout capacity

Relative Positioning: Versus small-cap Japanese information services peers, the company exhibits superior balance sheet strength and interest coverage but lags on capital efficiency (ROIC/ROE) and provides weaker cash flow disclosure; near-term profitability momentum is favorable, yet medium-term value creation depends on improving asset utilization and confirming cash-backed earnings.

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