Akatsuki Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.91B
• Operating Income: ¥1.72B
• Net Income: ¥1.41B
• EPS: ¥128.56

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Akatsuki (3932) reported FY2026 Q2 consolidated results under JGAAP showing top-line pressure and margin compression at the operating level, offset by below-the-line effects that lifted net income. Revenue was ¥9.915bn, down 20.6% YoY, while operating income fell 42.4% YoY to ¥1.724bn, indicating negative operating leverage as fixed costs were not fully flexed with the contraction in sales. Ordinary income of ¥1.676bn was slightly below operating income, implying small net non-operating expense overall despite low interest costs. Net income rose 31.4% YoY to ¥1.853bn, suggesting the presence of non-recurring gains and/or tax effects that are not fully visible in the disclosed lines. The reported gross profit margin is a high 76.9% and EBITDA margin is 18.0%, consistent with a relatively asset-light, high-margin content/IP model; however, the gross profit value provided does not reconcile arithmetically with revenue and cost of sales, so we rely on the provided margin metric rather than recomputing. ROE (DuPont) is 4.31%, driven by an 18.69% net margin, very low asset turnover of 0.167x, and modest financial leverage of 1.38x. Liquidity is strong with a current ratio of 559% and working capital of ¥33.874bn, supported by large current assets; cash and equivalents and several other items are undisclosed in XBRL and shown as zero, so point-in-time cash cannot be verified. Balance sheet strength is solid: total equity is ¥42.995bn vs. assets of ¥59.4bn, implying an equity ratio of roughly 72% despite the reported 0.0% (undisclosed) metric. Cash flow quality is reasonable with OCF/Net income at 0.87x, indicating mostly cash-backed earnings in the period. Free cash flow is shown as zero due to missing investing cash flow disclosure; thus, FCF coverage cannot be meaningfully assessed. Interest expense is only ¥19m and coverage is 90.7x, pointing to minimal financial risk from debt. The effective tax rate metric is flagged as 0.0% despite reported income tax of ¥1.262bn; this is likely a calculation artifact or classification timing difference and should not be taken at face value. Dividend per share and share data are undisclosed; EPS is reported at ¥128.56, but payout metrics cannot be corroborated beyond a reported 0% payout. Overall, the quarter reflects cyclical or title-driven revenue softness and operating margin pressure, counterbalanced by strong liquidity and a robust equity base. The outlook hinges on revenue stabilization, operating cost discipline, and the sustainability of non-operating gains that supported bottom-line growth. Data limitations (notably zeros indicating undisclosed items) constrain deeper granularity on cash and investment activity.

Profitability Analysis

ROE_decomposition: ROE 4.31% = Net margin 18.69% × Asset turnover 0.167 × Financial leverage 1.38. Profitability relies more on margin than efficiency; very low asset turnover depresses ROE despite a respectable net margin and low leverage. margin_quality: Gross margin is reported at 76.9% (very high), EBITDA margin at 18.0%, and operating margin at ~17.4% (¥1.724bn / ¥9.915bn). The provided gross profit figure does not reconcile with revenue and cost of sales, suggesting classification differences; we rely on the provided margin metric. Net margin at 18.69% exceeds operating margin, indicating meaningful non-operating/extraordinary factors and/or tax effects supporting bottom-line results. operating_leverage: Revenue fell 20.6% YoY while operating income declined 42.4% YoY, evidencing negative operating leverage and fixed-cost rigidity. Further revenue pressure could disproportionately impact operating profit unless costs are flexed.

Growth Assessment

revenue_sustainability: Top line declined 20.6% YoY to ¥9.915bn, indicating demand softness and/or unfavorable title or project timing. The low asset turnover (0.167x) underscores limited throughput on a sizable asset base. profit_quality: Operating profit decreased sharply (−42.4% YoY), diverging from net profit growth (+31.4% YoY). This suggests non-recurring gains or tax effects boosted net income; ordinary income is slightly below operating income, so extraordinary items likely contributed. OCF/NI of 0.87x supports reasonable earnings quality at the cash level this period. outlook: Recovery depends on stabilizing revenue and improving cost flex. Without a rebound in sales, operating margin may remain under pressure. Sustainability of below-the-line support is uncertain; normalized earnings are likely closer to operating performance than net income.

Financial Health

liquidity: Current assets ¥41.252bn vs. current liabilities ¥7.378bn imply a current ratio of 559% and quick ratio of 559% (inventories undisclosed). Working capital is ¥33.874bn, providing ample short-term cushion. Cash and equivalents are undisclosed (shown as zero). solvency: Total equity ¥42.995bn vs. total assets ¥59.4bn implies an equity ratio of ~72% (despite the reported 0.0% metric being undisclosed). Debt-to-equity is 0.31x and interest coverage is 90.7x, indicating low leverage and strong debt service capacity. capital_structure: Leverage is modest (financial leverage in DuPont 1.38x). The balance sheet is equity-heavy, affording flexibility for investment or shareholder returns, subject to cash availability (undisclosed).

Cash Flow Quality

earnings_quality: OCF/Net income at 0.87x suggests most earnings converted to cash this period, though not fully 1:1. Interest burden is minimal (¥19m). FCF_analysis: Investing cash flow is undisclosed (shown as zero), leading to a mechanically reported FCF of zero. True FCF cannot be assessed; use OCF (¥1.612bn) as a proxy pending capex/M&A detail. working_capital: High working capital (¥33.874bn) supports resilience. Without line-item detail, we cannot diagnose drivers (receivables, payables, other current assets), but the liquidity buffer appears strong.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.0%, which likely reflects non-disclosure rather than an actual zero. EPS is ¥128.56, but share count and BVPS are undisclosed, limiting precision. FCF_coverage: FCF is shown as 0.00x due to missing investing cash flow. With OCF at ¥1.612bn and robust balance sheet equity, capacity exists in principle, but true FCF coverage cannot be evaluated. policy_outlook: Given the equity-heavy structure and low leverage, the company has theoretical capacity for distributions; however, with operating earnings under pressure and data gaps on cash and capex, a conservative stance on sustainability and cadence is prudent until clarity improves.

Risk Assessment

Business Risks:

• Revenue volatility tied to project/title cycles and content performance
• Negative operating leverage when sales decline
• Dependence on non-operating or extraordinary gains to support net income
• Potential customer/platform concentration (not disclosed)
• Competitive intensity and hit-driven dynamics in content/IP markets

Financial Risks:

• Low asset turnover (0.167x) dampening ROE
• Data gaps on cash and investing flows hindering FCF visibility
• Potential margin compression if revenue softness persists
• Tax and below-the-line volatility (effective tax rate metric inconsistent)

Key Concerns:

• Top-line decline of 20.6% YoY
• Operating income down 42.4% YoY indicating fixed-cost rigidity
• Net income growth driven by non-operating/tax effects rather than core operations
• Undisclosed cash and investing cash flows limiting capital allocation assessment

Investment Implications

Key Takeaways:

• Core operations softened: revenue −20.6% YoY and operating profit −42.4% YoY
• Bottom line bolstered by non-operating/tax effects; sustainability uncertain
• Strong balance sheet and liquidity with implied ~72% equity ratio and 559% current ratio
• Low leverage and high interest coverage mitigate financial risk
• Cash flow quality acceptable (OCF/NI 0.87x) but true FCF unclear

Metrics to Watch:

• Revenue trajectory and pipeline conversion over the next 1–2 quarters
• Operating margin recovery and cost flexibility
• OCF/NI ratio and working capital movements
• Asset turnover improvement
• Nature and recurrence of non-operating/extraordinary gains and effective tax rate normalization
• Disclosure of cash balance, capex/investing outflows, and dividend policy

Relative Positioning: Relative to peers with similar content/IP-heavy models, Akatsuki shows strong liquidity and low leverage but weaker recent growth and operating momentum; ROE is constrained by low asset turnover and margin pressure at the operating level.

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