Japan PropTech Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.22B
• Operating Income: ¥92M
• Net Income: ¥75M
• EPS: ¥5.40

Income Statement

Balance Sheet

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

FY2026 Q1 was a modest beat with solid top-line growth and slightly improved profitability. Revenue rose 14.3% YoY to 12.19, while operating income increased 19.5% YoY to 0.92 and ordinary income climbed 20.6% YoY to 1.08. Net income was 0.75, up 16.2% YoY, translating to a net profit margin of 6.2%. Gross margin remained high at 66.6%, underpinning a software-like model with sizeable intangible assets. Operating margin improved to 7.5%, supported by controlled SG&A relative to revenue, despite SG&A of 7.20 being heavy in absolute terms. Ordinary income benefitted from non-operating income of 0.21 (roughly 28% of operating income), though detailed breakdowns are limited beyond minor interest income (0.01). Based on back-solving last year’s figures, operating margin expanded approximately 34 bps YoY, and net margin expanded roughly 9 bps YoY. Asset efficiency remains soft: asset turnover is 0.220, yielding a DuPont-based ROE of 1.9% given low leverage (1.44x). Capital efficiency is a concern with ROIC at 2.1%, well below a 5% warning threshold, likely reflecting a large intangible base (intangibles 28.35; goodwill 5.43). Liquidity is adequate but tight relative to best-practice benchmarks: current ratio at 1.12x and quick ratio at 1.12x cover short-term needs but offer limited buffer; cash (7.52) plus receivables (6.46) remain slightly below current liabilities (15.44). Earnings quality cannot be verified due to unreported operating cash flow; consequently, OCF/NI and FCF are not assessable. The calculated payout ratio of 95.7% looks elevated against typical sustainability thresholds, raising potential medium-term dividend tension absent stronger cash generation data. Leverage appears conservative (equity ratio estimated ~69.6%), and interest burden appears negligible, although interest expense is unreported and coverage metrics are not meaningful. Forward-looking, sustaining double-digit growth with incremental margin expansion is plausible if SG&A discipline holds and non-operating gains are recurring, but low ROIC and tight liquidity warrant monitoring. Absent cash flow disclosure, we maintain a cautious stance on earnings quality and dividend coverage. Overall, Q1 demonstrates steady growth and slight margin gains, but capital efficiency and cash flow opacity are key watch points.

Profitability Analysis

ROE decomposition (DuPont): ROE ≈ Net Profit Margin × Asset Turnover × Financial Leverage = 6.2% × 0.220 × 1.44 ≈ 1.9%. The weakest component is asset turnover (0.220), which most constrains ROE, while financial leverage is modest at 1.44x. YoY, operating margin improved from 7.21% (back-calculated) to 7.55% (+34 bps), and net margin from 6.06% to 6.15% (+9 bps), indicating slight operating leverage. The business driver of improvement appears to be revenue scale benefits outpacing SG&A growth, supplemented by higher non-operating income (0.21) feeding into ordinary income. Given the company’s software/intangible-heavy model (intangibles 28.35; goodwill 5.43), low asset turnover is structural, as capitalized development and acquired intangibles depress turnover. The recent margin gains seem sustainable near-term if cost discipline persists; however, reliance on non-operating income introduces variability. There are no disclosed signs of SG&A growth outpacing revenue in this quarter (revenue +14.3% YoY vs operating income +19.5%), but lack of SG&A breakdown limits deeper diagnostics.

Growth Assessment

Revenue growth of +14.3% YoY to 12.19 indicates healthy demand, consistent with a subscription/solution business profile. Operating income growth (+19.5%) outpaced sales, implying incremental operating leverage. Ordinary income (+20.6%) benefitted from non-operating income (0.21), whose recurrence is not confirmed. Net income grew +16.2%, slightly trailing ordinary income growth likely due to taxes/other items (not disclosed). Gross margin at 66.6% remains strong, supporting scalability if churn is contained and customer acquisition efficiency holds. Given the low ROIC (2.1%), the company must continue improving margin and/or asset turns to generate value above its cost of capital. Outlook hinges on sustaining double-digit topline growth, stabilizing SG&A intensity, and converting earnings to cash; absent OCF data, durability of growth is the key uncertainty.

Financial Health

Liquidity: Current ratio 1.12x and quick ratio 1.12x are above the 1.0 threshold but below the >1.5x healthy benchmark, indicating a modest buffer. Cash (7.52) + AR (6.46) = 13.98 vs current liabilities 15.44 suggests some reliance on ongoing collections and revenue inflow to meet near-term obligations. Solvency: Total equity 38.63 vs total assets 55.48 implies an equity ratio of ~69.6% (calculated), indicating a conservative capital structure. Reported D/E of 0.47x likely reflects total liabilities/equity; interest-bearing debt is unreported, so true financial leverage may be lower than implied. Maturity mismatch risk: manageable but present given tight current liquidity; monitoring of payables and deferred revenue (unreported) is warranted. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

Operating cash flow is unreported, so OCF/Net Income and FCF cannot be assessed; earnings quality cannot be validated. With net income at 0.75 and elevated payout ratio (95.7%), sustainability depends on cash conversion that we cannot verify. Working capital: AR of 6.46 (~53% of quarterly revenue) appears reasonable for a software/services model but needs monitoring for collection efficiency; inventory is unreported. No clear signs of working capital manipulation are observable from the limited data. Given large intangible assets, capitalization of development costs could influence earnings quality and ROIC; without D&A and capex disclosure, we cannot adjust for this.

Dividend Sustainability

The calculated payout ratio of 95.7% is above the <60% benchmark for comfort and suggests limited room for reinvestment or buffering volatility. FCF coverage is not calculable due to missing OCF and capex. With current ratio at 1.12x and cash + AR slightly below current liabilities, a near-full earnings payout introduces risk if cash conversion weakens. Policy outlook cannot be inferred from disclosures; unless OCF materially exceeds NI, sustaining such a payout could constrain flexibility.

Risk Assessment

Business Risks:

• Execution risk in sustaining double-digit revenue growth while managing SG&A intensity
• Dependence on non-operating income (0.21 this quarter) whose recurrence is uncertain
• Low ROIC (2.1%) indicating weak capital efficiency amid large intangibles
• Potential customer concentration and churn risk typical for vertical SaaS/solutions
• Industry demand cyclicality tied to real estate-related activity (assumed vertical focus)

Financial Risks:

• Tight liquidity buffer (current ratio 1.12x; cash + AR < current liabilities)
• Dividend payout ratio ~95.7% reducing financial flexibility
• Interest coverage metric not reliable due to unreported interest expense; true debt service capacity unclear
• Asset turnover 0.220 constraining ROE; requires sustained growth to offset

Key Concerns:

• Cash flow opacity: OCF and capex unreported, preventing FCF assessment
• Earnings quality uncertainty due to possible capitalization of development costs (D&A unreported)
• Non-operating income contribution elevates earnings volatility risk
• Large intangible base (28.35) and goodwill (5.43) expose to impairment risk if growth slows

Investment Implications

Key Takeaways:

• Solid Q1: revenue +14.3% YoY, OP +19.5% YoY; slight margin expansion
• High gross margin (66.6%) supports scalability; operating margin ~7.5%
• ROE 1.9% constrained by low asset turnover (0.220) and modest leverage (1.44x)
• ROIC 2.1% flags capital efficiency headroom; improvement needed to exceed cost of capital
• Liquidity adequate but tight; cash + AR below current liabilities
• Dividend payout (~95.7%) looks aggressive given unreported OCF/FCF

Metrics to Watch:

• Operating cash flow and OCF/NI ratio (target >1.0)
• Free cash flow after capex vs dividends
• SG&A as % of sales and hiring pace
• Non-operating income composition and recurrence
• AR days and collection trends
• ROIC trajectory and D&A/capitalization policy disclosures

Relative Positioning: Within Japan small-cap software/vertical SaaS peers, the company exhibits healthy growth and gross margins but lags on capital efficiency (low ROIC) and provides weaker cash flow disclosure; liquidity is serviceable yet below best-in-class buffers, and the high payout ratio is less conservative than peers prioritizing reinvestment.

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