ASTERIA Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.61B
• Operating Income: ¥523M
• Net Income: ¥430M
• EPS: ¥25.23

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

Asteria Co., Ltd. (3853) reported FY2026 Q2 consolidated results under IFRS showing solid top-line expansion and a sharp recovery in profitability. Revenue grew 4.0% year over year to 16.08, while gross profit reached 13.78, reflecting an exceptionally high gross margin of 85.7%, typical of high-value software and license-based models. Operating income surged to 5.23 (+622.8% YoY), implying a prior-year operating profit of roughly 0.72 and underscoring strong operating leverage as SG&A growth lagged gross profit. The operating margin expanded to 32.5%, with EBITDA of 6.38 and an EBITDA margin of 39.7%, indicating healthy earnings capacity before non-cash charges. Net income was 4.18, yielding a net margin of 26.0% and an effective tax rate of about 14.2%, modest under IFRS. DuPont analysis shows ROE at 6.4%, decomposed into a 26.0% net margin, 0.196x asset turnover, and 1.26x financial leverage, implying profitability—rather than leverage—is the primary ROE driver. The balance sheet is conservative with an equity ratio of 77.7% and total liabilities of 16.18 against equity of 65.15; the reported debt-to-equity ratio is 0.25x. Liquidity looks comfortable with current assets of 31.24 and cash and equivalents at 28.14, although current liabilities were not disclosed, limiting precision on liquidity ratios. Cash generation is solid: operating cash flow of 5.58 exceeded net income (OCF/NI 1.33x), signaling reasonable earnings quality. Investing cash flow was a positive 7.97, likely from asset sales or investment redemptions, and capital expenditures were minimal at 0.05, supporting a reported Free Cash Flow of 13.54. Financing cash flow was negative at -1.84, reflecting dividends of -0.75 and share repurchases of -3.01, partially offset by other financing sources. The calculated payout ratio is 33.5%, suggesting room for distributions while preserving reinvestment capacity, and FCF coverage is reported at 9.68x, indicating ample coverage of dividends based on the period’s FCF metric. Working capital appears ample, but with current liabilities unreported, true coverage cannot be precisely gauged. Notably, interest expense and total interest-bearing debt are unreported; however, short-term loans of 1.00 are disclosed, and interest coverage cannot be calculated. Overall, the quarter demonstrates a robust profit rebound, high-margin profile, strong equity base, and solid cash generation, but some data gaps (non-operating items, current liabilities, detailed intangibles) constrain a full risk and sustainability assessment.

Profitability Analysis

ROE_decomposition: ROE 6.4% = Net margin 26.0% × Asset turnover 0.196 × Financial leverage 1.26x. Profitability is the key contributor, while low asset turnover typical of software firms tempers ROE. margin_quality: Gross margin of 85.7% underscores a software/maintenance-heavy mix with low cost of sales. Operating margin of 32.5% benefited from tight SG&A control (SG&A/revenue 64.6%) and scale benefits. Net margin at 26.0% reflects limited below-EBIT drag and a moderate effective tax rate (~14%). operating_leverage: YoY operating income +622.8% on +4.0% revenue indicates strong operating leverage. D&A (1.15) is modest relative to EBITDA (6.38), implying incremental margins largely flow-through from gross profit gains and SG&A discipline.

Growth Assessment

revenue_sustainability: Revenue growth of 4.0% appears modest but steady; the high gross margin suggests recurring or license revenues underpinning stability. With limited information on segment mix or ARR, sustainability is inferred from margin resilience rather than disclosed backlog/subscription metrics. profit_quality: Operating profit rebounded strongly to 5.23, with EBITDA margin 39.7% and OCF/NI at 1.33x, indicating cash-backed earnings. The effective tax rate is low-to-mid teens, supportive of after-tax profitability. outlook: Absent guidance and segment disclosures, continuation of high-margin revenue and SG&A control would support mid- to high-20s net margins. Watch for normalization of non-operating items and any reversion in investing cash inflows that boosted reported FCF.

Financial Health

liquidity: Current assets are 31.24 and cash & equivalents 28.14; current liabilities are unreported, preventing current/quick ratio calculation. Nonetheless, the sizable cash position suggests comfortable near-term liquidity. solvency: Equity ratio is 77.7%; total liabilities are 16.18 vs equity 65.15. Debt-to-equity at 0.25x (liabilities basis) indicates low leverage. Short-term loans are 1.00; long-term loans and interest-bearing debt totals are unreported. capital_structure: Assets 81.92 funded primarily by equity (1.26x leverage). With limited debt disclosed and strong cash, the company maintains a conservative structure with capacity for investment or shareholder returns.

Cash Flow Quality

earnings_quality: OCF of 5.58 exceeds NI of 4.18 (1.33x), indicating accruals are moderate and earnings are cash-generative. No interest expense disclosed; tax cash impact appears manageable given the effective rate. FCF_analysis: Reported FCF is 13.54; this exceeds OCF minus capex (≈5.53), implying investing inflows (7.97) from asset disposals or investment redemptions inflating FCF under the provided definition. Capex is minimal at 0.05, consistent with an asset-light model. working_capital: Accounts receivable of 2.44 and inventories of 0.04 are modest versus revenue, consistent with software profiles. Current liabilities are unreported, limiting analysis of collection/payables dynamics.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 33.5%, implying dividends consume about one-third of earnings and are covered by current profitability. FCF_coverage: FCF coverage is reported at 9.68x, indicating ample headroom to fund dividends from reported FCF. Given investing inflows this period, sustained coverage should be assessed on OCF-based FCF excluding non-recurring investing gains. policy_outlook: With a strong equity base and cash, current dividends appear maintainable absent a sharp profit downturn. Share repurchases (-3.01) signal willingness to return cash; future policy likely balances buybacks with growth investments, subject to cash generation and visibility.

Risk Assessment

Business Risks:

• Revenue concentration in high-margin software/subscription could face churn or renewal risk if customer budgets tighten.
• Modest top-line growth (+4.0% YoY) heightens dependence on cost discipline to sustain margins.
• Potential currency exposure on overseas sales/costs not disclosed under IFRS segment data.
• Competitive pressures in integration/middleware or related software niches could compress pricing and margins.
• Reliance on intangible assets and R&D (unreported this period) may create execution risk for product roadmap.

Financial Risks:

• Incomplete disclosure of current liabilities and interest-bearing debt obscures short-term refinancing and liquidity metrics.
• Positive investing cash flow (7.97) may be non-recurring; a reversal would reduce FCF versus this period’s level.
• Equity-method loss (-0.06) indicates some exposure to affiliates’ performance.
• Short-term loans (1.00) introduce some refinancing risk, albeit small relative to cash (28.14).

Key Concerns:

• Sustainability of the sharp profitability rebound given only modest revenue growth.
• Limited visibility on non-operating items and financing costs due to unreported line items.
• FCF elevated by investing inflows; underlying OCF-based FCF is lower.

Investment Implications

Key Takeaways:

• High-margin profile (gross margin 85.7%, operating margin 32.5%) with strong operating leverage evidenced by +622.8% YoY operating income.
• Solid cash generation (OCF/NI 1.33x) and substantial cash balance (28.14) support financial flexibility.
• Conservative balance sheet with 77.7% equity ratio and low leverage (D/E ~0.25x).
• ROE at 6.4% is constrained by low asset turnover (0.196x), typical for asset-light software companies.
• Reported FCF (13.54) boosted by investing inflows; capex needs are minimal (0.05).
• Shareholder returns include dividends (payout ~33.5%) and sizeable buybacks (-3.01).

Metrics to Watch:

• Revenue growth rate and backlog/ARR indicators (not disclosed).
• SG&A-to-revenue ratio and operating margin sustainability.
• OCF/NI and OCF-based FCF excluding non-recurring investing inflows.
• Composition of investing cash flows and any disposal gains.
• Disclosure of current liabilities to refine liquidity ratios (current/quick).
• Non-operating items, interest expense, and effective tax rate trends.

Relative Positioning: Versus TSE Information & Communication peers, Asteria exhibits superior gross margins, conservative leverage, and strong cash conversion, but delivers only moderate ROE due to low asset turnover and modest revenue growth.

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