BlueMeme Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.70B
• Operating Income: ¥111M
• Net Income: ¥-70M
• EPS: ¥19.94

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

BlueMeme (40690) delivered strong top-line and operating profit momentum in FY2026 Q2 on a consolidated JGAAP basis, with revenue up 56.2% YoY to ¥1.70bn. Operating income surged 379.9% YoY to ¥111m, evidencing operating leverage as scale benefits and cost discipline flowed through. Ordinary income was ¥109m, close to operating levels, reflecting minimal financial non-operating drag. Net income was ¥66m, flat YoY (+0.0%), indicating that below-the-line factors and/or tax normalization limited bottom-line growth despite much stronger operating performance. The DuPont bridge shows ROE of 2.54% driven by a modest net margin of 3.88%, asset turnover of 0.422x, and low financial leverage of 1.55x. Gross margin printed 31.8%, and the operating margin reached 6.5%, suggesting healthy project economics for a services/solution-led model. Interest expense was de minimis at ¥0.133m with EBIT interest coverage of ~835x, affirming a conservative balance sheet stance. Liquidity looks ample with a current ratio of 274.5% and working capital of ¥2.20bn, mitigating near-term refinancing risk. Total assets were ¥4.03bn and total equity ¥2.60bn, implying an equity ratio of roughly 64% (though the reported equity ratio field is unpopulated). Operating cash flow was negative at -¥274m despite positive earnings, pointing to a significant working capital build consistent with rapid growth. Free cash flow cannot be assessed precisely due to unreported investing cash flows, but OCF alone suggests cash conversion lagged earnings this period. The company paid no dividend (DPS ¥0; payout ratio 0%), consistent with a reinvestment stance and/or a focus on funding growth. Overall, the quarter shows clear operating inflection, but cash flow quality lags and net income growth trails operating growth. Key watchpoints include collections and receivables discipline, sustainability of gross margin, and the trajectory of recurring vs. project-based revenues. Data limitations exist (several items are unreported, and the disclosed cost of sales line appears inconsistent with the stated gross profit), so conclusions rely on provided calculated metrics and core non-zero disclosures.

Profitability Analysis

roe_decomposition: ROE 2.54% = Net margin 3.88% × Asset turnover 0.422× × Leverage 1.55×. The main constraint is a modest net margin despite strong operating momentum; leverage is intentionally low, keeping ROE subdued versus growth rates. margin_quality: Gross margin 31.8% and operating margin 6.5% (¥111m/¥1.70bn) show improving operating efficiency. Ordinary margin is 6.4% (¥109m/¥1.70bn), with little non-operating noise. Effective tax rate reads 0.0% due to a small negative tax line (¥-0.77m), which may not be sustainable. Margin resilience will hinge on project mix, utilization, and pricing in low-code/system integration engagements. operating_leverage: Revenue +56.2% YoY and operating income +379.9% YoY indicate significant operating leverage, likely from fixed-cost absorption and SG&A discipline. EBITDA of ¥121.97m (7.2% margin) vs. EBIT of ¥111m suggests low D&A intensity, consistent with a human-capital-heavy model.

Growth Assessment

revenue_sustainability: Top-line growth of 56.2% YoY is robust, likely driven by expansion in low-code projects and solution adoption. Sustainability will depend on backlog visibility, client additions, and conversion of POCs into scaled deployments. profit_quality: Operating profit growth materially outpaced revenue, reflecting mix and utilization gains; however, net income was flat YoY, implying non-operating and tax effects muted the translation to the bottom line. The absence of large interest expense supports the view that net profit softness is not leverage-related. outlook: If gross margin holds near ~32% and operating margin sustains mid-single digits with improving scale, operating income growth can remain solid. Key to sustaining growth will be hiring pace vs. utilization, pricing power on complex implementations, and potential introduction of higher-margin recurring services.

Financial Health

liquidity: Current assets ¥3.47bn vs. current liabilities ¥1.26bn yield a current ratio of 274.5% and working capital of ¥2.20bn, indicating strong liquidity. Quick ratio equals current ratio due to unreported inventories. solvency: Total liabilities ¥1.36bn versus equity ¥2.60bn imply an equity ratio near ~64% (calculated), and debt-to-equity is 0.52x. Interest burden is minimal (¥0.133m), with EBIT coverage ~835x, pointing to low solvency risk. capital_structure: Leverage is modest (assets/equity 1.55x). The company appears to prioritize balance sheet flexibility over debt-funded expansion, which supports resilience but caps ROE until margins and asset turnover improve.

Cash Flow Quality

earnings_quality: OCF/Net income is -4.15×, indicating earnings did not convert to cash this period, likely due to a receivables build and other working capital outflows amid rapid growth. fcf_analysis: Free cash flow cannot be precisely measured as investing cash flows were unreported. Given OCF of -¥274m and financing CF of -¥86m, internal cash generation was negative before any potential capitalized development or equipment spending. working_capital: The scale-up likely extended DSO and increased unbilled receivables. Monitoring AR aging, unbilled balances, and billing milestones will be critical to normalize cash conversion as growth matures.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS ¥0; payout ratio 0%). With ROE at 2.54% and negative OCF, retention is appropriate to fund working capital and growth. fcf_coverage: FCF coverage cannot be determined due to unreported investing cash flows; OCF alone would not cover dividends. policy_outlook: A reinvestment-oriented policy seems likely near term. Future distributions would require sustained positive OCF, stable margins, and clearer visibility on cash conversion.

Risk Assessment

Business Risks:

• Execution risk on large-scale low-code/system integration projects (timeline slippage, acceptance delays).
• Client concentration risk typical of project-based revenues.
• Competitive intensity from global and domestic low-code platforms and SIers pressuring pricing and margins.
• Talent acquisition and retention amid wage inflation for engineers and consultants.
• Potential variability in gross margin due to project mix and subcontracting ratios.

Financial Risks:

• Negative OCF driven by working capital expansion, stressing cash if growth persists without improved collections.
• Possible timing mismatches between revenue recognition and billing/cash
• Sensitivity to any increase in interest rates is low currently but could rise with higher borrowings if growth is funded externally.
• Tax normalization could lift the effective tax rate from a currently low base, pressuring net margins.

Key Concerns:

• Cash conversion lag (OCF/NI -4.15×).
• Sustainability of operating margin gains as headcount scales.
• Visibility on backlog and recurring revenue mix to support 50%+ growth rates.

Investment Implications

Key Takeaways:

• Strong revenue growth (+56.2% YoY) with pronounced operating leverage (OP +379.9% YoY).
• ROE modest at 2.54% due to conservative leverage and a 3.88% net margin.
• Excellent liquidity (current ratio 274.5%) and minimal interest burden (coverage ~835×).
• Cash conversion is a weakness near term (OCF -¥274m), likely tied to receivables growth.
• No dividend, consistent with reinvestment and working capital needs.

Metrics to Watch:

• Operating cash flow and OCF/NI ratio trajectory.
• Accounts receivable days and unbilled receivables levels.
• Gross margin stability around ~32% and operating margin trend vs. hiring/subcontracting costs.
• Backlog/book-to-bill and share of recurring/maintenance revenues.
• Asset turnover and ROE progression as scale builds.

Relative Positioning: Positioned as a growth-oriented solutions provider in low-code/system integration with improving operating efficiency and conservative leverage; compares favorably on growth and balance sheet strength but trails on cash conversion and ROE versus more mature peers.

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