ULURU.CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.44B
• Operating Income: ¥348M
• Net Income: ¥118M
• 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

For FY2026 Q2, Ururu (3979) delivered solid top-line growth with revenue of ¥3,441 million, up 13.2% year over year, and notably strong operating leverage, as operating income rose 95.3% to ¥348 million. Gross profit of ¥2,134.6 million implies a high gross margin of 62.0%, pointing to a structurally attractive business model (likely subscription/recurring and/or scalable BPO components). Profitability broadened across the P&L: ordinary income reached ¥355 million and net income rose 176.6% to ¥327 million, with EPS of ¥11.83. DuPont metrics indicate a calculated ROE of 9.95%, driven by a 9.50% net margin, 0.515x asset turnover, and 2.04x financial leverage. EBITDA was ¥429.6 million, yielding a 12.5% EBITDA margin, consistent with improved operating discipline and scale benefits. The balance sheet shows total assets of ¥6,686 million, liabilities of ¥3,212.7 million (debt-to-equity 0.98x based on total liabilities/equity), and equity of ¥3,285 million, reflecting moderate leverage. Liquidity appears adequate with current assets of ¥4,258.7 million and current liabilities of ¥3,044.5 million, supporting a current (and quick) ratio of 139.9% and working capital of about ¥1,214.2 million. Interest burden remains negligible—interest expense was only ¥0.49 million—resulting in an interest coverage of roughly 709x, which substantially reduces financial risk from borrowing costs. Cash generation lagged accounting earnings this half: operating cash flow was ¥238.96 million, translating to an OCF/net income ratio of 0.73, suggesting a working capital drag or timing effects. Free cash flow is not derivable from disclosed data because investing cash flows are shown as zero (likely undisclosed) and should not be treated as true zero; thus, the reported FCF of 0 appears to be a placeholder. The reported equity ratio of 0.0% and cash & equivalents of 0 are clearly non-informative placeholders, not actual values; the solvency and liquidity commentary herein relies on disclosed subtotals that are non-zero. Effective tax rate in the provided metrics is shown as 0.0%, but the income tax expense of ¥83.6 million versus ordinary income of ¥355 million implies a normalized tax rate in the low-to-mid 20% range; therefore, profitability metrics should be interpreted using the non-zero tax expense line. Dividend policy remains conservative with DPS at ¥0.00, consistent with reinvestment amid growth and margin expansion. Overall, the company demonstrated healthy revenue momentum, strong margin expansion, and improving ROE, offset by sub-1.0 cash conversion and limited visibility on capex/investing flows. Balance sheet leverage is moderate and interest risk low, supporting ongoing operating flexibility. Data gaps in equity ratio, cash balances, FCF, and share count limit precision in per-share and capital allocation analysis, but the available figures indicate a favorable operating trend.

Profitability Analysis

ROE decomposition (DuPont): Net margin 9.50% x asset turnover 0.515 x financial leverage 2.04 = ROE 9.95%, which is consistent with the provided calculated and reported ROE. Margins: gross margin is high at 62.0% (¥2,134.6m GP on ¥3,441.0m revenue), reflecting a scalable, service-heavy mix. The operating margin improved materially YoY (OI up 95.3% vs revenue up 13.2%), indicating strong operating leverage from revenue growth and cost discipline. EBITDA margin stands at 12.5% (¥429.6m), and with low interest expense (¥0.49m), the gap between operating and ordinary income is minimal, suggesting limited non-operating drag. Tax expense of ¥83.6m on ordinary income of ¥355m implies a normalized tax rate around the low-20s; the 0.0% effective tax rate shown in the summary metrics is not reflective of the non-zero tax expense disclosed. Overall profitability quality looks solid, with expanding operating margins the key driver of ROE improvement, while asset turnover at 0.515x indicates moderate capital intensity for the business model.

Growth Assessment

Revenue grew 13.2% YoY to ¥3,441m, indicating sustained demand in core services. Operating income grew 95.3% to ¥348m, implying significant operating leverage and potentially improved pricing/mix or utilization. Net income rose 176.6% to ¥327m, benefiting from operating leverage and minimal non-operating headwinds. The broad-based profit improvement suggests quality growth rather than one-off gains; depreciation and amortization of ¥81.6m looks proportionate and non-distortive. With interest expense at only ¥0.49m, financing cost is not a growth constraint. Sustainability hinges on continued topline momentum and retention (not disclosed), as well as disciplined cost control. While the trajectory is positive, the OCF/NI ratio of 0.73 signals working capital investment or timing differences; future periods should be monitored for normalization toward or above 1.0 to confirm quality of earnings. Outlook: if revenue growth remains low-teens and the company preserves current gross margin levels, further incremental operating margin expansion is plausible, though incremental gains may moderate as scale effects normalize.

Financial Health

Liquidity is adequate: current assets ¥4,258.7m vs current liabilities ¥3,044.5m yield a current ratio of 139.9% and a quick ratio of 139.9% (inventories not disclosed). Working capital is approximately ¥1,214.2m, offering a cushion for operations. Solvency and leverage are moderate: total liabilities of ¥3,212.7m against equity of ¥3,285.0m imply debt-to-equity of 0.98x (using total liabilities as a proxy given debt breakdown not disclosed). Interest burden is de minimis with ¥0.49m interest expense and an interest coverage ratio around 709x, suggesting low refinancing risk under current conditions. The reported equity ratio of 0.0% and cash & equivalents of 0 are placeholders and not reflective of actual balances; hence, conclusions draw from other disclosed non-zero balances. Overall capital structure appears balanced with manageable leverage and strong interest coverage.

Cash Flow Quality

Operating cash flow of ¥238.96m represents 0.73x net income (¥327.0m), indicating weaker cash conversion this half, likely due to working capital outflows (receivables growth or timing of payables/advance billings). Depreciation and amortization of ¥81.62m is modest relative to EBITDA, suggesting limited non-cash profit inflation. Free cash flow cannot be reliably calculated because investing cash flow is reported as zero (likely undisclosed rather than nil). As such, the reported FCF of 0 should not be interpreted as true zero FCF. Working capital dynamics should be monitored; the company still holds positive working capital of ~¥1.21bn, providing liquidity support, but sustained sub-1.0 OCF/NI over multiple periods would raise concerns about earnings quality. Overall, earnings appear directionally supported by operations, but cash realization lagged and needs confirmation in subsequent quarters.

Dividend Sustainability

DPS is ¥0.00 with a payout ratio of 0.0%, consistent with reinvestment during a phase of margin expansion and growth. Given OCF of ¥238.96m and undetermined capex/FCF (investing CF undisclosed), FCF coverage of dividends cannot be assessed; the provided 0.00x coverage is a placeholder. Balance sheet leverage is moderate and interest burden very low, which would theoretically support flexibility for future distributions if cash generation strengthens. Policy outlook: likely to remain conservative until cash conversion normalizes and visibility on sustainable FCF improves. No concerns about dividend pressure given no distributions currently, but no basis to infer near-term initiation without clearer FCF.

Risk Assessment

Business Risks:

• Dependence on continued growth in BPO/technology-enabled services; potential slowdown in client demand
• Client concentration and churn risk (not disclosed), which could impact revenue stability
• Competitive pressure from domestic and global platforms, potentially affecting pricing and margins
• Labor cost inflation or contractor availability impacting gross margin in crowd-based operations
• Regulatory and data privacy requirements increasing compliance costs
• Execution risk in scaling operations while maintaining service quality

Financial Risks:

• Sub-1.0 OCF/Net income (0.73) indicating working capital drag and cash conversion risk
• Limited visibility on capex and investing needs due to undisclosed investing cash flows
• Equity ratio and cash balance reported as 0.0%/0, indicating disclosure gaps that hinder solvency and liquidity precision
• Potential receivables risk if growth is driven by extended payment terms
• Moderate leverage (total liabilities/equity 0.98x) could amplify downside in a demand shock despite low interest costs

Key Concerns:

• Cash flow conversion lag versus earnings
• Inability to confirm free cash flow due to undisclosed investing cash flows
• Data limitations on cash, equity ratio, and share count affecting per-share and capital allocation analysis

Investment Implications

Key Takeaways:

• Strong operating leverage: revenue +13.2% YoY versus operating income +95.3%
• High gross margin at 62.0% supports scalable economics
• ROE at 9.95% aided by improved margins and moderate leverage
• OCF/Net income of 0.73 indicates working capital drag; cash conversion needs monitoring
• Balance sheet appears sound with current ratio ~1.40x and very low interest burden
• Dividend remains suspended (DPS ¥0), consistent with reinvestment priority

Metrics to Watch:

• OCF/Net income ratio trending toward or above 1.0
• Working capital movements (receivables, payables, and contract liabilities where applicable)
• Sustained operating margin expansion and EBITDA margin trajectory
• Revenue growth durability (retention, upsell, and new customer acquisition)
• Capex/intangible investment levels once investing cash flows are disclosed
• Asset turnover improvements to lift ROE without added leverage

Relative Positioning: Within Japan-listed tech-enabled services/BPO peers, Ururu shows above-average gross margins and improving mid-teens EBITDA margins with moderate leverage and strong interest coverage; ROE around 10% is competitive but could rise with better cash conversion and incremental asset efficiency.

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