Nextgen,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.89B
• Operating Income: ¥190M
• Net Income: ¥84M
• EPS: ¥50.54

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, 株式会社ネクストジェン delivered solid top-line growth with revenue of ¥1,894 million, up 18.4% year over year, and strong operating leverage that lifted operating income by 78.3% to ¥190 million. Net income increased 85.9% to ¥156 million, translating to EPS of ¥50.54, reflecting both margin expansion and tight cost control. Profitability improved broadly: the reported net profit margin is 8.24%, operating margin approximates 10.0%, and EBITDA margin stands at 16.3% (EBITDA ¥309 million). DuPont decomposition indicates ROE of 6.74%, driven by an 8.24% net margin, 0.499x asset turnover, and 1.64x financial leverage. Cash generation is a notable highlight: operating cash flow reached ¥742 million, yielding an OCF/Net Income multiple of 4.75x, suggesting robust cash conversion and likely favorable working-capital movements. The balance sheet remains conservative with total assets of ¥3,796 million, equity of ¥2,314 million, and liabilities of ¥1,364 million, implying a debt-to-equity ratio of 0.59x and an equity ratio around 61% even though the reported equity ratio field is unpopulated. Liquidity is strong, with current assets of ¥2,754 million against current liabilities of ¥1,050 million, producing a current and quick ratio of 262.3% and working capital of ¥1,704 million. Interest burden is minimal (¥1.98 million), and the interest coverage ratio is a very comfortable 96.0x, underscoring low financial risk. Ordinary income (¥188 million) is close to operating income, indicating limited non-operating noise in the quarter. Tax expense of ¥21 million implies an effective tax rate near low-teens on ordinary income, notwithstanding the 0.0% metric shown in the summary panel. One data inconsistency is visible: the provided gross profit of ¥633 million corresponds to a 33.4% gross margin, whereas the listed cost of sales figure would otherwise imply a different gross profit; we rely on the reported gross profit and margin as the consistent pair. Several items are unreported (e.g., investing cash flows, cash balance, dividend per share, share count, equity ratio field), which limits per-share balance sheet analysis and free cash flow assessment. Despite these limitations, the underlying signals point to improving profitability, strong cash conversion, and a healthy capital structure. Sustaining this trajectory will hinge on revenue quality, maintaining the elevated operating margin, and preserving the working-capital gains that supported cash flow this period. Near-term catalysts include continued order intake, execution on higher-margin projects or software/maintenance mix, and disciplined opex. Conversely, revenue timing, project phasing, or collection cycles could re-introduce volatility into margins and cash. Overall, the company exhibits improving fundamentals with ample liquidity and low leverage, though visibility on capital allocation (capex, dividends) and longer-term growth investments remains limited due to unreported items.

Profitability Analysis

ROE_decomposition: DuPont: Net Profit Margin 8.24% × Asset Turnover 0.499 × Financial Leverage 1.64 = ROE 6.74%. Asset turnover at ~0.50x suggests moderate efficiency for a software/solutions-oriented model, while leverage at 1.64x (Assets/Equity) indicates a largely equity-funded balance sheet. margin_quality: Revenue ¥1,894m, Gross Profit ¥633m (33.4% margin), Operating Income ¥190m (~10.0% margin), Net Income ¥156m (8.24% margin). The close alignment of operating and ordinary income (¥190m vs ¥188m) indicates minimal non-operating drag. Interest expense is low (¥2.0m), contributing to clean net margins. operating_leverage: Operating income +78.3% on revenue +18.4% demonstrates strong operating leverage from fixed-cost absorption and/or richer mix. EBITDA margin at 16.3% vs operating margin ~10% implies D&A of ¥119m; incremental margins appear healthy, suggesting cost discipline and scale benefits.

Growth Assessment

revenue_sustainability: Top-line expanded 18.4% YoY to ¥1,894m, a robust mid-to-high teens pace. Sustainability will depend on backlog, recurring revenue components, and customer concentration, which are not disclosed here. Asset turnover of 0.499 is consistent with solution delivery and suggests capacity to support growth without excessive balance sheet expansion. profit_quality: Net margin 8.24% and the tight gap between operating and ordinary income reflect quality earnings with limited reliance on non-operating items. The implied tax burden (¥21m) is modest. Interest expense is negligible, supporting earnings stability. outlook: Given operating leverage evidenced in the quarter, continued mid-teens revenue growth could drive further margin gains, provided mix and execution remain favorable. Key swing factors are order timing and working-capital dynamics; absent visibility on backlog or recurring subscriptions/maintenance, near-term growth appears positive but not yet de-risked.

Financial Health

liquidity: Current assets ¥2,753.7m vs current liabilities ¥1,049.9m yield a current and quick ratio of 262.3% and working capital of ¥1,703.8m, indicating ample short-term coverage. solvency: Total liabilities ¥1,363.7m vs equity ¥2,314.0m imply debt-to-equity of 0.59x and an equity ratio around 61% (calculated from disclosed assets/equity; the 0.0% reported field is unfilled). Interest coverage is 96.0x, reflecting very low financial risk. capital_structure: Leverage is conservative (Assets/Equity 1.64x). With limited interest expense (¥2.0m) and strong liquidity, balance sheet capacity for investment remains available, subject to undisclosed cash position.

Cash Flow Quality

earnings_quality: Operating cash flow ¥741.8m versus net income ¥156.0m yields OCF/NI of 4.75x, indicating strong cash conversion and likely favorable working-capital inflows or milestone collections. FCF_analysis: Investing cash flow is unreported (0 placeholder), so free cash flow cannot be reliably computed; the displayed FCF of 0 should not be interpreted as actual zero. Nonetheless, high OCF suggests potential FCF strength absent heavy capex or acquisition outflows. working_capital: Current assets materially exceed current liabilities. The large OCF likely reflects collection of receivables and/or advances; without itemized working-capital components (AR, AP, contract liabilities), durability of this cash benefit cannot be fully assessed.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shows 0.0% due to unreported dividends; EPS is ¥50.54 but DPS is unfilled. On fundamentals, modest ROE (6.74%) and strong liquidity would support capacity for some payout, but actual policy cannot be inferred from the data. FCF_coverage: FCF is unreported due to missing investing cash flows; coverage metrics (e.g., DPS/FCF) cannot be calculated reliably. policy_outlook: Given low leverage (D/E 0.59x) and strong OCF, the company appears capable of distributions if aligned with strategy. However, absent disclosure on dividend policy, historical payouts, or capital expenditure plans, visibility on dividend sustainability is limited.

Risk Assessment

Business Risks:

• Revenue timing and project phasing may cause volatility in quarterly margins and cash flows.
• Potential customer concentration or dependency on specific carriers/enterprise clients (not disclosed).
• Execution risk on complex solution deployments affecting gross margin.
• Human capital constraints and wage inflation impacting operating leverage.
• Technology transition risk and need for ongoing R&D/product investment.

Financial Risks:

• Working-capital reversals could normalize OCF after a strong collection quarter.
• Limited disclosure on cash balance and investing cash flows complicates liquidity runway and FCF assessment.
• Tax rate variability; implied tax of ~¥21m contrasts with the displayed 0.0% effective tax metric.
• Exposure to interest rate changes is low currently but could rise if leverage increases.

Key Concerns:

• Data gaps: no reported investing cash flows, cash position, or dividend data constrain FCF and capital allocation analysis.
• Inconsistency between reported gross profit and listed cost of sales; analysis relies on the gross profit/margin provided.
• Sustainability of operating leverage gains if revenue growth moderates.

Investment Implications

Key Takeaways:

• Revenue grew 18.4% YoY to ¥1,894m with outsized operating income growth of 78.3% to ¥190m, demonstrating operating leverage.
• Net margin of 8.24% and EBITDA margin of 16.3% indicate improving profitability with limited non-operating noise.
• ROE at 6.74% reflects healthy margins and conservative leverage (Assets/Equity 1.64x).
• OCF of ¥742m (OCF/NI 4.75x) signals strong cash conversion, likely aided by working-capital inflows.
• Balance sheet strength: current ratio 262.3%, D/E 0.59x, interest coverage 96.0x.
• Several key items are unreported (cash, capex/investing CF, DPS), limiting FCF and payout analysis.

Metrics to Watch:

• Order intake, backlog, and recurring revenue mix to gauge sustainability of growth.
• Gross margin trajectory (currently 33.4%) and operating margin (~10.0%) as indicators of mix and scale benefits.
• Working-capital metrics (DSO, contract liabilities) to assess durability of cash conversion.
• Capex and M&A outflows (investing CF) to refine FCF outlook.
• ROE progression from 6.74% via margin expansion and asset turnover improvements.
• Tax rate normalization given ¥21m tax charge implied versus displayed 0.0% metric.

Relative Positioning: Within TSE small/mid-cap software and solutions peers, the company shows above-peer liquidity, low financial risk, improving margins, and mid-level ROE, with upside potential contingent on sustaining growth and converting elevated OCF into consistent FCF amid limited current disclosure on capital allocation.

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