Ubicom Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.98B
• Operating Income: ¥665M
• Net Income: ¥443M
• EPS: ¥46.77

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

Ubicom Holdings (3937) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite a top-line contraction. Revenue declined 5.2% YoY to ¥2,975 million, yet operating income rose 12.6% to ¥665 million, demonstrating strong cost discipline and operating leverage. Net income increased 27.9% YoY to ¥566 million, lifting the net margin to a robust 19.0%. Gross profit of ¥1,199 million implies a solid gross margin of 40.3%, supporting the view that the company’s service mix and pricing power remain healthy. Operating margin reached 22.4% (operating income/revenue), a material expansion given revenue contraction, indicating effective SG&A control and/or mix shift to higher-margin offerings. EBITDA was ¥766 million with a 25.7% margin, underscoring strong cash-generative earnings capacity. The DuPont breakdown shows ROE of 10.17%, driven by a high net margin (19.03%), modest asset turnover (0.386x), and conservative leverage (assets/equity 1.39x). Liquidity is ample with a current ratio of 373%, supported by current assets of ¥6,604 million versus current liabilities of ¥1,772 million. Solvency is strong: liabilities total ¥2,269 million against equity of ¥5,564 million, implying an equity ratio around 72% by calculation, despite the reported 0% equity ratio being a data limitation. Operating cash flow was ¥651 million, exceeding net income (OCF/NI 1.15x), a positive indicator of earnings quality. Financing cash outflow of ¥57 million suggests limited shareholder returns or debt service in the period; dividends are not disclosed (DPS shown as 0 indicates non-disclosure rather than zero). Interest expense was de minimis at ¥5 million, yielding an interest coverage of 133.5x and underscoring minimal financial risk from leverage. The effective tax rate, recalculated from disclosed tax expense and net income, is approximately 24.7%, not 0% as shown in the derived metrics (another data disclosure limitation). Several items (cash and equivalents, inventories, investing cash flows, equity ratio, share counts) are undisclosed in the feed; however, EPS of ¥46.77 and net income imply roughly 12.1 million average shares. Overall, the company exhibits high-quality earnings, robust margins, and a conservative balance sheet, but the revenue decline and limited disclosure on investment spending and dividends temper visibility. Near-term outlook hinges on sustaining utilization, mix, and pricing while reaccelerating revenue growth, all amid potential FX and wage pressures in offshore delivery.

Profitability Analysis

ROE stands at 10.17% via DuPont: Net Profit Margin 19.03% × Asset Turnover 0.386 × Financial Leverage 1.39. Operating margin is 22.4% (¥665m/¥2,975m), up YoY given operating income rose while revenue fell, evidencing positive operating leverage and strong SG&A discipline. Gross margin is 40.3%, suggesting a favorable service mix and pricing; margin expansion at the operating level indicates fixed-cost dilution and/or lower SG&A intensity. EBITDA margin of 25.7% confirms high cash conversion from earnings before non-cash charges. Interest burden is negligible (interest expense ¥5m), so ordinary income closely tracks operating performance. The net margin at 19.0% comfortably exceeds many domestic IT service peers, pointing to a defensible niche or mix toward higher value-added solutions. Tax rate, recalculated at ~24.7% (¥186m tax on ~¥752m pre-tax), indicates normalizing structural tax load; the reported 0% is a disclosure artifact. Profitability quality appears high given OCF exceeds net income and interest coverage is 133.5x. Sustaining these margins will depend on utilization, staffing efficiency, and continued mix toward higher-margin verticals.

Growth Assessment

Revenue decreased 5.2% YoY to ¥2,975m, but profits expanded, implying strong underlying efficiency gains. Operating income rose 12.6% YoY, and net income increased 27.9% YoY, signaling favorable mix and cost control despite softer top-line. Absent segment disclosure, the sustainability of profit growth will hinge on maintaining utilization rates and higher-margin project mix. Margin resilience suggests recurring or contract-based revenue with limited seasonality, though the YoY revenue dip warrants monitoring for demand softness or project timing shifts. The company’s asset turnover (0.386x) is modest, typical for service businesses with substantial current assets; growth likely depends more on human capital scaling than asset expansion. No backlog/order intake data is provided, limiting visibility on forward growth. Without investing cash flow detail, we cannot assess the pace of capability expansion (e.g., capex, M&A, software development capitalization). Outlook: If revenue stabilizes or reaccelerates, current margin structure implies significant operating leverage to drive EPS growth; conversely, prolonged revenue softness could pressure margins if utilization falls.

Financial Health

Liquidity is very strong: current ratio 372.8% (¥6,604m CA / ¥1,772m CL) and quick ratio mirrors this due to undisclosed inventories. Working capital is ample at ¥4,832m, supporting project execution and buffer against receivable timing. Solvency is robust: total liabilities ¥2,269m vs equity ¥5,564m; calculated equity ratio is ~72.2% (equity/assets), despite the reported 0% being non-disclosure. Leverage is conservative with liabilities-to-equity ~0.41x; actual interest-bearing debt is not disclosed, but interest expense is only ¥5m, implying low debt. Interest coverage is 133.5x, indicating minimal refinancing or rate risk. Asset base totals ¥7,710m, predominantly current assets, suggesting a light capital structure consistent with IT/services. Cash and equivalents are undisclosed (shown as 0), but positive OCF and strong current assets suggest adequate liquidity in practice.

Cash Flow Quality

Operating cash flow of ¥651m exceeds net income of ¥566m (OCF/NI 1.15x), indicating healthy earnings quality with limited accrual build. Depreciation and amortization of ¥101m is modest relative to EBITDA, consistent with an asset-light model. Working capital management appears disciplined given OCF strength amid revenue decline; however, without receivables/payables detail we cannot quantify DSO/DPO trends. Investing cash flow is undisclosed (shown as 0), so we cannot derive capex or investment intensity; free cash flow cannot be reliably computed despite a positive OCF. Financing cash flow of -¥57m likely reflects modest dividend or debt service; lack of detail prevents precise attribution. Overall cash conversion looks strong, but confirmation requires visibility into capex, capitalized development, and changes in receivables.

Dividend Sustainability

Dividend data is not disclosed in this set (DPS shown as 0 indicates non-reporting). Payout ratio is listed as 0%, which cannot be relied upon given EPS is reported; without DPS, the true payout ratio is unknown. Financing CF outflow of ¥57m could include dividends, but this is not confirmed. With OCF at ¥651m and earnings at ¥566m, internal capacity to fund dividends appears solid; however, absent investing CF detail, we cannot assert sustainable FCF coverage. Policy outlook cannot be inferred from the data provided; historical policy, if any, is not included here. If the company maintains a conservative balance sheet and low leverage, it has flexibility to sustain or initiate dividends, but disclosure is currently insufficient for a definitive assessment.

Risk Assessment

Business Risks:

• Revenue contraction (-5.2% YoY) raises demand and execution risk if utilization weakens
• Customer concentration risk typical for specialized IT/services providers
• Wage inflation and talent retention pressures, particularly in offshore delivery centers
• FX risk from offshore operations and foreign cost bases (e.g., PHP/JPY) affecting margins
• Project timing and acceptance risk impacting quarterly revenue recognition
• Regulatory changes in healthcare/medical IT (if applicable) potentially affecting demand and pricing
• Cybersecurity and data privacy risks inherent to software/services offerings
• Competition from domestic SIers and global service providers pressuring pricing

Financial Risks:

• Limited disclosure of cash and investing cash flows obscures free cash flow and liquidity runway
• Potential working capital swings (receivables timing) could impact OCF despite strong headline ratios
• Currency translation impacts on earnings and equity where offshore operations are material
• Impairment risk on intangibles/goodwill if growth underperforms (not disclosed here)

Key Concerns:

• Top-line decline despite profit growth; need evidence of demand recovery
• Insufficient disclosure on capex/investing activity; FCF not observable
• Dividend policy unclear; payout and capital return framework not provided

Investment Implications

Key Takeaways:

• Margin resilience and operating leverage drove double-digit profit growth despite lower revenue
• ROE of 10.17% with conservative leverage indicates quality earnings and prudent balance sheet management
• OCF exceeds net income, supporting earnings quality and liquidity
• Equity ratio is healthy (~72%) by calculation, despite reported 0% due to disclosure limitations
• Interest burden is negligible with 133.5x coverage, minimizing financial risk

Metrics to Watch:

• Revenue trajectory and backlog/order intake to gauge growth reacceleration
• Utilization rates, headcount growth, and SG&A intensity for margin sustainability
• Gross margin and mix shift toward higher-value services
• OCF/NI ratio, DSO/receivables trends, and working capital movements
• Capex and capitalized development (investing CF) to assess FCF and reinvestment
• FX rates (JPY vs offshore currencies) and wage inflation impacts
• Dividend disclosures and capital allocation policy updates

Relative Positioning: Relative to domestic IT/services peers on the TSE Growth market, Ubicom exhibits above-average margins, solid ROE, and low financial leverage, positioning it as a quality operator with strong cash conversion but with near-term growth visibility constrained by a declining top line and limited disclosure on investment and capital return.

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