Appier Group,Inc. FY2026 Q2 Earnings Report

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Executive Summary

The key highlight of these results is the substantial increase in operating income, driven by double-digit revenue growth, an improved gross margin, and economies of scale. Revenue was ¥24.95B (+26.9% YoY), operating income was ¥1.66B (+88.6%), and net income was ¥1.39B (+135.6%). In addition to revenue growth, the gross margin improved to 57.1%, resulting in profit growth that exceeded the rate of revenue growth.

Factors Affecting Performance

【Revenue】Revenue was ¥24.95B, representing a 26.9% YoY increase. Cost of revenue remained at ¥10.70B, while gross profit improved from the previous year to ¥14.25B (gross margin: 57.1%), indicating an improvement in the quality of the top line. Research and development expenses were ¥3.39B (13.6% of revenue), demonstrating revenue growth while continuing investment.

【Profit and Loss】Operating income was ¥1.66B (+88.6% YoY), and the operating margin improved from the previous year to 6.6%. Although net non-operating expenses arose, with financial expenses of ¥0.26B versus financial income of ¥0.05B, profit before tax reached ¥1.45B and net income reached ¥1.39B (+135.6% YoY). The effective tax rate was low at 3.6%, resulting in only a small gap between profit before tax and net income. These results reflect revenue and profit growth supported by operating leverage from the improved gross margin.

Key Financial Indicators

【Profitability】The operating margin improved from the previous year to 6.6%, while the net profit margin reached 5.6% (net income of ¥1.39B / revenue of ¥24.95B). The gross margin remained high at 57.1%, confirming that profit growth has kept pace with revenue growth.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥2.49B, approximately 1.8 times net income of ¥1.39B, indicating good accrual quality. However, trade receivables increased by ¥1.23B and trade payables decreased by ¥0.77B, with the resulting increase in working capital slowing cash conversion.【Investment Efficiency】ROE was 3.5%, reflecting net income of ¥1.39B relative to net assets of ¥39.94B. Investing Cash Flow was -¥2.38B, primarily reflecting investment in the acquisition of intangible assets and subsidiaries, while capital expenditures themselves were small at ¥0.01B.【Financial Soundness】The equity ratio improved to 63.5% from 61.4% in the previous year. Of total assets of ¥62.90B, current assets accounted for ¥37.41B, providing a solid asset base. Cash and deposits were ¥13.08B, providing sufficient liquidity to cover interest-bearing debt, including short-term borrowings of ¥5.12B.

Cash Flow Analysis

OCF was ¥2.49B, a substantial increase from ¥0.72B in the previous year, and exceeded net income of ¥1.39B. However, the increase in trade receivables (-¥1.23B) and decrease in trade payables (-¥0.77B) placed pressure on working capital and were factors weighing on OCF from the subtotal of ¥2.54B. Investing Cash Flow was -¥2.38B, primarily comprising ¥3.11B for the acquisition of intangible assets and ¥0.98B for the acquisition of subsidiaries, while capital expenditures themselves remained limited. Financing Cash Flow was +¥1.00B, as funding raised through short- and long-term borrowings exceeded dividend payments of ¥0.23B. As a result, free cash flow remained only slightly positive at ¥0.11B, and cash and cash equivalents at period-end were ¥13.08B.

Earnings Quality

Non-operating results included financial income of ¥0.05B versus financial expenses of ¥0.26B, resulting in a net excess of expenses. However, other income of ¥0.27B and other expenses of ¥0.01B were immaterial relative to revenue, and the impact of temporary factors was limited. Corporate income taxes and other taxes were ¥0.05B against profit before tax of ¥1.45B, resulting in a low effective tax rate of 3.6%. The small gap between profit before tax and net income suggests that accounting distortions were limited. OCF of ¥2.49B exceeded net income of ¥1.39B, indicating good earnings quality from an accrual perspective. At the same time, trade receivables continue to increase, making future collection trends an important factor affecting earnings quality.

Earnings Forecast and Guidance

Progress against the full-year plan was approximately 45.9% for revenue (¥24.95B / ¥54.38B), approximately 32.9% for operating income (¥1.66B / ¥5.03B), and approximately 33.9% for net income (¥1.39B / ¥4.12B). Revenue progress was close to the standard first-half level of 50%, but operating income and net income were approximately 16–17 percentage points lower, indicating that profit progress is lagging revenue progress. The full-year plan calls for increases of +69.1% in operating income and +61.1% in net income. Accordingly, achievement of the plan depends on margin improvement and the realization of scale benefits in the second half.

Shareholder Returns

No dividend was paid in the first half, while a full-year dividend of ¥2.30 per share is forecast. The implied payout ratio against forecast full-year EPS of ¥40.39 is low at approximately 5.7%, indicating a limited dividend burden relative to earnings. Dividend payments in the first half were ¥0.23B, and no share repurchases were conducted. The dividend plan allows the company to continue investing in research and development, reflecting a focus on balancing growth investment and shareholder returns.

Risk Factors

1. Deterioration in working capital: Trade receivables increased from the end of the previous fiscal year, while trade payables decreased. As a result, actual OCF was ¥2.49B versus an OCF subtotal of ¥2.54B. The resulting slowdown in the speed of cash conversion requires monitoring.

2. High proportion of intangible assets: Goodwill and intangible assets totaled ¥22.52B, accounting for approximately 35.8% of total assets of ¥62.90B. The high proportion of assets derived from M&A suggests relatively high sensitivity to potential impairment risk going forward.

3. Dependence on short-term borrowings: Short-term borrowings totaled ¥5.12B among interest-bearing debt, representing a certain proportion of total borrowings when combined with long-term borrowings of ¥6.05B. Although cash and deposits of ¥13.08B ensure near-term liquidity, refinancing trends require monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

The company’s profit margins are below the industry median, positioning it relatively low within the industry in terms of profitability.

Growth and Capital Efficiency

The revenue growth rate exceeded the industry median, achieving high growth close to the upper bound of the IQR.

※Source: Compiled by the Company

Key Takeaways from the Results

1. Quality of revenue and profit growth: Operating income increased by +88.6% against revenue growth of +26.9%, with the profit growth rate substantially exceeding the revenue growth rate. The effect of operating leverage from the improved gross margin is clearly evident.

2. Headwinds in the cash cycle: OCF remained at a favorable level above net income, but the increase in trade receivables and decrease in trade payables created a working capital burden. This will be an area of focus when assessing future collection trends.

3. Back-loaded progress against the plan: First-half progress against the full-year plan was approximately 45.9% for revenue, compared with approximately 33% for operating income and net income. The extent to which profit growth is realized in the second half will be the key to achieving the plan.

Theoretical Share Price (Reference Value)

Sensitivity: ¥404–¥429 at ±1% for the cost of equity, and ¥415–¥417 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end were used (there is a timing difference from the full-year forecast).

(Calculation model: Residual income model (Ohlson-type, with an explicit 5-year fade) / Interest rate reference month: 2026-07 / These are mechanically calculated values based solely on publicly disclosed data and do not constitute a forecast of the market share price or a recommendation of any specific investment action, nor do they predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

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