RAKUS Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.78B
• Operating Income: ¥7.71B
• Net Income: ¥3.63B
• EPS: ¥17.48

Income Statement

Balance Sheet

Cash Flow Statement

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

Rakus (39230) delivered a strong FY2026 Q2 consolidated performance under JGAAP, with clear signs of operating leverage and profitability improvement. Revenue rose 25.1% YoY to ¥28.78bn, while operating income increased 65.4% YoY to ¥7.71bn, indicating meaningful margin expansion. Net income grew 73.8% YoY to ¥6.31bn, lifting the net margin to 21.9% based on the provided figures. Gross profit margin was robust at 59.1%, consistent with a high-value software/service model and improved unit economics. Operating margin stood at 26.8% (operating income/revenue), which is high for growth-stage tech and indicates disciplined cost control alongside growth. DuPont analysis shows ROE of 25.84% driven primarily by a high net margin (21.93%) and decent asset turnover (0.86x), with moderate leverage (assets/equity of 1.37x). The balance sheet appears conservative: total equity of ¥24.43bn against total assets of ¥33.47bn implies an equity-to-asset ratio of roughly 73% (despite the “Equity Ratio” field showing 0.0% due to non-disclosure in that line item). Liquidity is strong with a current ratio of 203.9% and working capital of ¥9.83bn, offering cushion for growth investments. Interest expense is negligible (¥1m) and coverage is extremely high (over 7,700x by operating income), underscoring limited financial risk from debt. Cash conversion, however, lagged earnings this period: operating cash flow of ¥3.39bn equates to 54% of net income, suggesting working-capital absorption or timing effects typical in high-growth phases. Depreciation and amortization of ¥0.35bn is modest, and EBITDA margin of 28.0% supports the view of a scalable model with low capital intensity. No dividend was paid (DPS ¥0; payout 0%), consistent with reinvestment in growth and the company’s stage. Some key data points are unreported in the XBRL (e.g., cash balance, investing cash flows, equity ratio field), which limits precision in free cash flow and capital allocation assessment. Even with these limitations, the available data depict accelerating profitability, strong ROE, ample liquidity, and minimal leverage. Sustainability of margin gains will depend on maintaining sales efficiency, retention, and disciplined spending as scale increases. Overall, the period shows a high-quality growth profile with a temporary drag in cash conversion that merits monitoring.

Profitability Analysis

ROE of 25.84% (DuPont) is decomposed into a net profit margin of 21.93%, asset turnover of 0.86x, and financial leverage (assets/equity) of 1.37x, indicating that profitability is predominantly driven by margin strength rather than leverage. Gross margin of 59.1% implies strong pricing power and a favorable mix, consistent with software/service economics. Operating margin is 26.8% (¥7.71bn/¥28.78bn), which expanded YoY given operating income growth (+65.4%) far outpaced revenue growth (+25.1%), evidencing operating leverage. Ordinary income (¥7.73bn) is nearly identical to operating income, suggesting limited non-operating noise this period. EBITDA of ¥8.06bn and a 28.0% EBITDA margin corroborate scalable operations and modest non-cash charges (D&A ¥0.35bn). Interest burden is negligible (¥1m), reinforcing that margins are not flattered by low financing costs but are fundamentally strong. The implied effective tax rate, based on income tax expense of ¥1.03bn vs ordinary income of ¥7.73bn, is approximately 13–14% (the provided 0.0% effective tax rate appears to reflect a non-disclosed metric rather than reality). Overall margin quality looks high, with evidence of cost discipline and sales efficiency supporting leverage on the fixed-cost base.

Growth Assessment

Top-line growth of 25.1% YoY (to ¥28.78bn) remains robust and likely underpinned by recurring revenue characteristics given the margin structure, though specific subscription/ARR metrics are not disclosed. Profit growth outpaced revenue, with net income up 73.8% YoY and operating income up 65.4% YoY, indicating margin expansion and improved operating efficiency. The strong gross margin suggests that growth is not being bought at the expense of pricing; rather, scale and mix are improving unit economics. Sustainability will depend on maintaining customer retention and acquisition efficiency as the company scales; data on churn, net revenue retention, and deferred revenue are not provided, limiting visibility. The modest D&A relative to EBITDA indicates low capital intensity, supporting scalable growth. While the OCF/NI ratio of 0.54 shows weaker cash conversion this period, such working-capital drag can accompany rapid growth and may normalize with billing seasonality and collections. Outlook-wise, if current sales productivity and retention trends hold, revenue growth could continue at an elevated pace with incremental margin improvement, but this is contingent on continued demand and efficient go-to-market execution. Absence of investing CF data prevents assessing the pace of product investment and inorganic growth, which are relevant to medium-term trajectory.

Financial Health

Liquidity is strong: current assets of ¥19.30bn vs current liabilities of ¥9.46bn yield a current ratio of 203.9% and quick ratio of 203.9% (no inventories disclosed). Working capital stands at ¥9.83bn, providing a healthy buffer for growth and potential seasonality. Solvency appears solid: total liabilities of ¥9.68bn against total equity of ¥24.43bn implies a debt-to-equity of about 0.40x (using total liabilities as a proxy for debt), and an equity-to-asset ratio of roughly 73% (calculated from the balance sheet despite the equity ratio line item being unreported). Interest expense is minimal (¥1m), and interest coverage by operating income is extremely high (~7,708x), indicating negligible financial risk from leverage. The liability structure is skewed toward current liabilities (¥9.46bn current vs ¥9.68bn total), which could reflect deferred revenue or payables typical in software models, though specific breakdowns are not disclosed. Overall capital structure is conservative, with ample equity and liquidity to support ongoing growth.

Cash Flow Quality

Operating cash flow of ¥3.39bn is 54% of net income (¥6.31bn), below 1.0x, indicating weaker cash conversion this period. The gap likely reflects working-capital absorption (e.g., higher receivables or lower deferred revenue recognition relative to billings) typical in periods of strong growth; however, detailed working-capital components are not disclosed. EBITDA of ¥8.06bn versus D&A of ¥0.35bn suggests low non-cash distortion of earnings and low capital intensity. Investing cash flow is undisclosed (recorded as 0 due to non-reporting), preventing calculation of true free cash flow; thus the reported FCF of 0 should be treated as not available rather than zero. On a proxy basis, without capex data or acquisitions information, we cannot determine maintenance vs growth investment levels. Overall, earnings quality appears reasonable given strong operating margins and limited non-operating items, but the below-par OCF/NI ratio warrants monitoring to ensure collections and billing patterns normalize.

Dividend Sustainability

No dividend was paid (DPS ¥0; payout 0%), which aligns with a growth-focused capital allocation stance. With operating cash flow positive but free cash flow unassessable due to missing investing CF, coverage metrics cannot be meaningfully evaluated. Balance sheet strength (implied equity-to-assets ~73% and minimal interest burden) suggests capacity for future shareholder returns if policy shifts, but current reinvestment into growth appears prioritized. Absent guidance on dividend policy, the outlook is for continued retention of earnings to fund scale and product investments. Should the company consider initiating dividends, sustainability would depend on consistent OCF conversion and visibility on maintenance capex, which are not fully observable from the disclosed data.

Risk Assessment

Business Risks:

• Execution risk in sustaining 25%+ revenue growth while preserving sales efficiency and margins
• Customer retention and churn risk affecting recurring revenue and lifetime value
• Competitive intensity potentially pressuring pricing and acquisition costs
• Talent acquisition and wage inflation in engineering and sales impacting operating leverage
• Product and platform reliability/security risks that could affect reputation and churn
• Regulatory or compliance changes affecting back-office software demand and implementation timelines

Financial Risks:

• Cash conversion risk as evidenced by OCF/NI of 0.54 this period
• Working-capital volatility due to billing/collections timing and potential growth-related receivables
• Concentration of liabilities in current maturities (lack of breakdown limits assessment of deferred revenue vs payables)
• Data limitations on investing cash flows and cash balances constrain FCF visibility
• Potential sensitivity to macro slowdown among SME customers affecting invoices and collections

Key Concerns:

• Sustainability of operating margin expansion as growth scales
• Normalization of OCF relative to net income in subsequent quarters
• Lack of disclosure on investing cash flows and cash balance, limiting capital allocation analysis

Investment Implications

Key Takeaways:

• Strong topline growth (+25.1% YoY) with outsized operating income growth (+65.4% YoY) demonstrates operating leverage
• High profitability profile: gross margin 59.1%, operating margin 26.8%, net margin 21.9%
• ROE of 25.84% driven mainly by margins and healthy asset turnover with modest leverage (1.37x)
• Robust liquidity (current ratio 203.9%) and low financial risk (interest coverage >7,700x)
• Cash conversion lag (OCF/NI 0.54) is the main financial watchpoint
• Capital intensity appears low (D&A ¥0.35bn vs EBITDA ¥8.06bn), supportive of scalable growth
• Dividend withheld (payout 0%), consistent with reinvestment priorities

Metrics to Watch:

• OCF/Net income ratio and evolution of accounts receivable and deferred revenue
• Operating margin trajectory and sales efficiency (e.g., S&M as % of revenue if disclosed)
• Revenue growth durability and any disclosure on retention/ARPU/ARR
• Capex and investing cash flows to assess true FCF and reinvestment levels
• Working capital days (DSO/DPO) when available
• Tax rate normalization vs the implied ~13–14% this period

Relative Positioning: Based on available financials, the company exhibits above-average growth and profitability with a conservative balance sheet versus typical TSE-listed software-oriented peers; however, incomplete cash flow disclosures limit definitive benchmarking of free cash flow profile.

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