ULURU.CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.44B
• Operating Income: ¥348M
• Net Income: ¥328M
• EPS: ¥11.83

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

Verdict: A strong quarter with clear operating leverage—revenue growth translated into outsized profit expansion and robust cash generation. Revenue grew 13.2% YoY to 34.41, while operating income surged 95.3% YoY to 3.48 and net income rose 176.6% to 3.27, signaling meaningful improvement in execution and cost discipline. Gross margin printed at 73.2%, and operating margin reached 10.1%, indicating improved efficiency versus the prior year. Based on reported growth rates, we estimate operating margin expanded by roughly 425 bps YoY (from ~5.9% to ~10.1%), reflecting strong operating leverage. EBITDA was 4.78 with a 13.9% margin, further evidencing profitability improvement. Cash flow quality was excellent: operating cash flow of 9.22 was 2.82x net income, comfortably covering working capital needs and capex. Liquidity remains adequate with a current ratio of 135.3% and substantial cash and deposits of 37.35 against current liabilities of 32.07. Financial risk appears modest: interest coverage is extremely high at ~482x and long-term loans are only 0.98. Equity stood at 32.85, implying an equity ratio of about 49.1% (calculated), a balanced capital structure for a service/BPO operator. The effective tax rate was low at 8.0%, which likely boosted net margin and may not be sustainable at this level. Intangible assets (9.90) plus goodwill (3.26) total 13.16, a non-trivial 19.7% of assets, implying some impairment sensitivity if growth stalls. Reported ROE of 9.9% was underpinned by higher margins, moderate asset turnover (0.515), and leverage of 2.04x. Non-operating items were small and clean (income 0.12; expense 0.05), with negligible interest expense (0.01), supporting the quality of earnings. While the headline ROIC metric provided (-91.1%) appears inconsistent with the rest of the data and is likely a calculation artifact, underlying returns on equity improved meaningfully. Forward-looking, sustained operating margin above 10%, continued OCF strength, and disciplined SG&A are the key levers to maintain ROE near double digits. Overall, the quarter strengthens the company’s financial flexibility and sets a constructive base for the second half, though normalization of the tax rate and potential investment for growth could temper net margin.

Profitability Analysis

DuPont decomposition indicates ROE ≈ Net Profit Margin (9.5%) × Asset Turnover (0.515) × Financial Leverage (2.04x) = ~9.9%. The dominant driver of the YoY improvement appears to be net margin expansion, as operating income (+95.3%) far outpaced revenue (+13.2%), implying sizable operating leverage. Business-wise, fixed cost absorption and better gross-to-operating expense conversion likely lifted operating margin to 10.1% from an estimated ~5.9% a year ago, while non-operating items and a low tax rate (8.0%) further supported net margin. Asset turnover at 0.515 suggests moderate efficiency for a service model with high cash balances; we do not see evidence that turnover materially improved YoY from available data. Leverage at 2.04x is moderate and relatively stable, so it likely contributed less to the ROE change than margin. Sustainability: margin gains from scale and cost control can persist if revenue growth holds, but the unusually low tax rate is less durable and could compress net margin going forward. We note SG&A intensity at 63.1% of revenue; without YoY SG&A disclosure, we cannot confirm whether SG&A growth exceeded revenue growth, but the operating leverage implies SG&A grew slower than gross profit.

Growth Assessment

Top-line growth of 13.2% YoY to 34.41 is healthy and consistent with expansion in the company’s service lines. Profit growth significantly outpaced revenue (OI +95.3%, NI +176.6%), evidencing strong operating leverage and better cost absorption. Gross margin at 73.2% supports a scalable model; current operating margin of 10.1% is a constructive step-up versus last year’s implied ~5.9%. Non-operating items were small, so growth quality is predominantly operating-driven rather than one-time gains. The low 8.0% effective tax rate boosted bottom-line growth; normalization would temper net growth but should not derail the improving trend. With cash and deposits of 37.35 and minimal interest burden, the company can invest to sustain growth while maintaining flexibility. Outlook depends on maintaining double-digit revenue growth, controlling SG&A, and selective capex; current cash generation supports these. Overall, revenue growth appears sustainable near term, with improving profit quality as scale builds.

Financial Health

Liquidity: Current ratio 135.3% and quick ratio 135.3% are above 1.0 but below the 1.5 comfort benchmark; cash of 37.35 exceeds current liabilities of 32.07, mitigating near-term liquidity risk. Solvency: Calculated equity ratio ~49.1% (32.85/66.86), indicating a balanced structure; debt-to-equity 1.04x is moderate and well within the <1.5 benchmark. Interest coverage at ~482x is exceptionally strong given minimal interest expense. Maturity profile: Noncurrent liabilities are only 1.94 with long-term loans of 0.98; near-term obligations dominate, but are matched by ample cash, limiting maturity mismatch risk. No off-balance sheet obligations are reported in the provided data.

Cash Flow Quality

OCF of 9.22 is 2.82x net income, indicating high earnings quality with strong cash conversion. Using reported capex of 1.36, indicative free cash flow is ~7.86 (OCF–Capex), comfortably positive even without full investing CF disclosure. Working capital dynamics appear favorable given high cash and modest receivables (2.75) and payables (1.28), though detailed WC components are limited; no specific manipulation signs are evident from the data provided. Financing CF was -0.89, likely reflecting dividends and/or modest debt service, which are well covered by OCF. Overall, cash generation is strong and supports both investment and shareholder returns.

Dividend Sustainability

The reported payout ratio is 84.7%, which is high versus the <60% benchmark, implying a generous shareholder return stance or temporary elevation due to low tax rate/net profit dynamics. Based on indicative FCF of ~7.86 and implied dividend outflow of ~2.77 (84.7% of NI 3.27), FCF covers dividends by roughly 2.8x, suggesting near-term sustainability. However, if the effective tax rate normalizes upward, net income could decline relative to pre-tax cash, improving the payout ratio optics but not necessarily cash coverage. With ample cash on the balance sheet and strong OCF, the company has capacity to maintain dividends, but a policy aiming toward a lower steady-state payout would enhance resilience. Formal DPS and total dividends paid are unreported; conclusions are therefore indicative.

Risk Assessment

Business Risks:

• Execution risk in scaling services while maintaining a 10%+ operating margin
• Potential customer concentration and churn risk typical of BPO/crowdsourcing models
• Talent acquisition and wage inflation pressures that could lift SG&A
• Data security and privacy compliance risks inherent to digital operations

Financial Risks:

• Current ratio of 1.35x is adequate but below the 1.5x comfort benchmark
• High proportion of intangibles and goodwill (13.16; ~19.7% of assets) poses impairment risk if growth slows
• Low effective tax rate (8.0%) may normalize, reducing net margin and ROE
• Interest-bearing debt details are unreported, limiting full leverage assessment

Key Concerns:

• Sustainability of margin expansion without under-investing in growth or personnel
• Dependence on OCF strength; any working capital reversal could compress FCF
• The provided ROIC figure (-91.1%) conflicts with other metrics and likely reflects data/methodology issues, but highlights the need to track returns on new investments

Investment Implications

Key Takeaways:

• Clear operating leverage: OI +95% on +13% revenue; operating margin ~10.1%
• High-quality earnings: OCF/NI 2.82x and strong cash position (37.35)
• Moderate leverage with excellent interest coverage (~482x)
• Tax rate unusually low at 8%, likely to normalize and trim net margin
• Intangibles/goodwill ~20% of assets—monitor impairment risk

Metrics to Watch:

• Operating margin (bps trajectory) and SG&A ratio
• OCF/NI and working capital movements (AR and payables)
• Effective tax rate normalization path
• Capex-to-sales and ROI on growth investments
• Equity ratio and any changes in interest-bearing debt

Relative Positioning: Within Japan’s listed small-cap digital services/BPO peer set, the company is exhibiting improving profitability with solid cash generation and conservative financing, positioning it favorably versus peers still trading off growth for margin; however, the elevated payout ratio and low tax rate introduce uncertainty around the sustainability of net margins.

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