e-Seikatsu Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.56B
• Operating Income: ¥66M
• Net Income: ¥-26M
• EPS: ¥5.78

Income Statement

Balance Sheet

Cash Flow Statement

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, 株式会社いい生活 reported revenue of ¥1,562 million (+7.9% YoY), with gross profit of ¥794.9 million and a gross margin of 50.9%, indicating a stable and attractive unit economics profile. Operating income was ¥66 million, essentially flat YoY, implying operating margin compression despite topline growth. Ordinary income was ¥65 million, close to operating income, suggesting minimal non-operating drag and very low financial costs. Net income was ¥39 million, flat YoY, translating to a modest net margin of 2.5% and an annualized ROE based on DuPont of 2.08%, which is low for a software/services model. EBITDA was ¥326.4 million (20.9% margin), and depreciation and amortization of ¥260.4 million represented a large non-cash burden relative to operating profit, highlighting either significant past investment amortization or accounting-driven expense recognition under JGAAP. Operating cash flow was ¥75.3 million, exceeding net income (OCF/NI 1.93x), indicating reasonable earnings quality and positive cash conversion in the period. Liquidity remains adequate with a current ratio of 125.4% and working capital of ¥120.4 million; inventories are not applicable to the model as reported (0 indicates not disclosed). Leverage appears low, with an interest coverage of 155.3x and a reported debt-to-equity ratio of 0.25x, implying a conservative capital structure. Reported total assets were ¥2,537 million and total liabilities ¥476.9 million; total equity was disclosed at ¥1,878 million, which implies a high equity buffer even though the stated equity ratio is shown as 0.0% (likely not disclosed rather than truly zero). Revenue growth did not translate into operating profit growth, suggesting cost pressure, higher SG&A, or investment in growth offsetting scale benefits. Effective tax expense was negative (¥-6.6 million), producing an effective tax rate near 0%, likely due to tax credits or timing differences. Dividend data show DPS of ¥0.00 and a payout ratio of 0.0%, but this likely reflects non-disclosure in the interim period rather than a definitive policy change. Cash and equivalents, investing cash flow, and share counts are listed as zero, which should be interpreted as unreported in this dataset; thus, several capital allocation and per-share metrics cannot be validated. Overall, the company demonstrates decent gross margins and healthy cash conversion for the quarter, but subdued operating leverage and low ROE indicate profitability headwinds and a need for margin improvement to enhance returns.

Profitability Analysis

ROE decomposition (DuPont) indicates Net Profit Margin 2.50% x Asset Turnover 0.616 x Financial Leverage 1.35 = ROE 2.08%, underscoring that low net margin is the primary constraint on returns rather than balance sheet leverage. Gross margin is strong at 50.9%, consistent with software/service economics; however, the operating margin compressed to roughly 4.2% (¥66m/¥1,562m), as operating income was flat despite 7.9% revenue growth, implying limited operating leverage this quarter. EBITDA margin of 20.9% versus operating margin of ~4.2% highlights a sizable D&A load (¥260.4m), which materially suppresses operating profitability under JGAAP. Ordinary income of ¥65m is close to operating income, indicating minimal non-operating costs; interest expense was only ¥0.4m with coverage of 155.3x, so financing is not a drag. The gap between gross and operating margins suggests SG&A intensity remains elevated—likely reflecting sales effort, product development, or amortization of capitalized software and intangibles. The negative tax expense (¥-6.6m) temporarily boosts net income, but this is not indicative of core profitability improvement. Overall, profitability is quality at the gross level, but operating leverage did not materialize in the quarter, and ROE remains weak given low net margins and modest asset turnover.

Growth Assessment

Revenue grew 7.9% YoY to ¥1,562m, a healthy pace for the interim period. However, operating income was flat at ¥66m, signaling cost growth roughly in line with or exceeding gross profit growth. The divergence between EBITDA (+implied growth with higher revenue and steady margins) and operating income reflects heavier D&A, limiting reported profit growth. With ordinary income nearly equal to operating income, core operations drive results, but the low net margin (2.5%) caps earnings expansion. Sustainability of revenue growth appears reasonable given high gross margins, but conversion to profit will depend on SG&A efficiency and D&A trajectory. Assuming continued revenue expansion at mid-to-high single digits, operating leverage could re-emerge if fixed cost growth moderates; however, current-quarter evidence points to cautious near-term margin outlook. Profit quality is supported by OCF/NI of 1.93x, suggesting earnings are underpinned by cash inflows rather than accruals. Looking ahead, monitoring expense discipline, customer acquisition costs, and churn (not disclosed) will be key to validating durable growth translating to improved operating profit. The negative tax line this quarter is a one-off tailwind rather than a structural driver of earnings growth.

Financial Health

Liquidity is adequate: current assets ¥594.5m vs current liabilities ¥474.1m yield a current and quick ratio of 125.4% (inventories not disclosed). Working capital stands at ¥120.4m, offering a buffer for operations. Solvency is strong, evidenced by interest expense of only ¥0.4m and coverage at 155.3x; the reported debt-to-equity ratio of 0.25x indicates conservative leverage. Balance sheet strength is implied with total assets ¥2,537m and total liabilities ¥476.9m. Reported total equity is ¥1,878m; while the disclosed equity ratio is shown as 0.0% (likely not reported), the implied equity ratio using reported figures would be high (approximately 74% using ¥1,878m/¥2,537m). There is a numerical inconsistency between assets minus liabilities (which would suggest equity of ~¥2,060m) and the reported equity figure; this could reflect classification differences, minority interests, or interim disclosure nuances. Overall, the company appears well-capitalized with low financial risk and ample solvency capacity.

Cash Flow Quality

Operating cash flow of ¥75.3m exceeds net income of ¥39.0m (OCF/NI 1.93x), indicating solid near-term earnings quality and limited accrual risk. Free cash flow could not be calculated from disclosures (investing cash flow reported as 0 indicates non-disclosure rather than absence), so we cannot assess capex intensity or capitalized development trends in this period. The sizable D&A (¥260.4m) vs operating income suggests historical investment amortization; without investing cash flow detail, the persistence of this burden is unclear. Working capital appears manageable given positive OCF, but line-item changes (receivables/payables/deferred revenue) are not disclosed, limiting granularity. Financing cash flow was an outflow of ¥32.9m, potentially reflecting dividends, debt service, or share-related outlays; details are not provided. Cash and equivalents are shown as 0 (non-disclosure), so cash runway and net cash position cannot be verified from this dataset. Overall, cash conversion is favorable in the quarter, but lack of capex visibility constrains a full FCF assessment.

Dividend Sustainability

Dividends per share are shown as ¥0.00 and payout ratio at 0.0%, which likely reflects a lack of interim disclosure rather than a definitive suspension. With net income at ¥39.0m and positive OCF of ¥75.3m, nominal coverage capacity exists for a modest dividend, but absent FCF data and share count, quantitative coverage cannot be confirmed. Financing cash outflow of ¥32.9m could include dividend-related payments, but the breakdown is not available. Capital structure is conservative and interest burden is de minimis, which supports potential dividend capacity subject to board policy. Given low ROE (2.08%) and margin pressures, management may prioritize reinvestment or balance-sheet flexibility over distributions. Conclusion: Dividend sustainability cannot be robustly assessed due to missing FCF and share data; policy outlook is unclear in this interim period.

Risk Assessment

Business Risks:

• Operating leverage risk: expenses growing in line with or faster than gross profit, compressing operating margin despite revenue growth
• High D&A burden diluting operating income and ROE, tied to past investments or capitalized development
• Revenue concentration or churn risk typical for software/service models (customer metrics not disclosed)
• Pricing pressure and competitive intensity could erode gross-to-operating margin conversion
• Execution risk in scaling sales while maintaining SG&A efficiency

Financial Risks:

• Limited visibility on cash and equivalents and investing cash flows due to non-disclosure
• Potential balance sheet disclosure inconsistencies (assets, liabilities, equity) complicate ratio analysis
• Dependence on negative or low tax expense this quarter not repeatable, risking volatility in net income
• Low ROE (2.08%) may persist if margin improvement stalls

Key Concerns:

• Flat operating income despite 7.9% revenue growth
• Large D&A (¥260.4m) relative to operating income (¥66m)
• Inability to verify free cash flow and capex due to missing investing CF
• Equity ratio shown as 0.0% and cash balance at 0, indicating disclosure gaps

Investment Implications

Key Takeaways:

• Topline growth of 7.9% did not translate into operating profit growth, pointing to cost pressure or investment phase
• Gross margin remains strong at 50.9%, validating product-level economics
• Cash conversion is solid (OCF/NI 1.93x), supporting earnings quality
• Leverage is low with very high interest coverage, reducing financial risk
• ROE at 2.08% is subdued; margin improvement is required to enhance returns

Metrics to Watch:

• Operating margin trajectory and SG&A as a percentage of sales
• D&A trend and disclosures on capitalized development/capex
• OCF and FCF once investing cash flows are available
• Asset turnover and customer-related KPIs (retention, ARPU) if disclosed
• Clarity on equity ratio and reconciliation of balance sheet totals

Relative Positioning: The company exhibits attractive gross margins and low leverage compared to many domestic small-cap software/service peers, but its current operating margins and ROE are below desirable levels; near-term investment case hinges on demonstrating operating leverage as revenue scales.

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