Visional,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥23.34B
• Operating Income: ¥7.07B
• Net Income: ¥4.06B
• EPS: ¥136.55

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

Visional Co., Ltd. (TSE: 41940) delivered a strong FY2026 Q1, with revenue of 233.38 billion yen-equivalent in 100M units (233.38) growing 24.8% year over year, indicating robust demand in its core HR-tech and digital recruiting businesses. Gross profit was 170.44, implying a high gross margin of 73.0%, consistent with an asset-light marketplace/platform model. Operating income rose to 70.69 (+29.6% YoY), outpacing revenue growth and suggesting positive operating leverage. Ordinary income was reported at 81.65 (+45.5% YoY), which is higher than operating income and points to additional recurring non-operating contributions not itemized in the disclosed breakdown. Net income came in at 54.78 (+35.3% YoY), translating to a net margin of 23.5%, underscoring solid profitability. The effective tax rate was 27.7% (15.55 tax on 56.13 pre-tax profit), within a typical domestic range for JGAAP reporters. Balance sheet quality is very strong: total assets were 1,008.58 with cash and deposits of 727.79, total liabilities of 276.46, and total equity of 733.28, resulting in a sizable net cash position. Liquidity is ample with a current ratio of 321.9% and quick ratio of 321.9%, and interest-bearing debt is de minimis (long-term loans 0.80). DuPont decomposition yields ROE of 7.5% based on a 23.5% net margin, 0.231x asset turnover, and 1.38x financial leverage; this is healthy for a cash-rich platform business but likely understates full-year ROE given seasonality. Working capital is abundant at 572.69, providing a cushion to fund growth and absorb macro volatility. Although non-operating income is disclosed at 1.62 and non-operating expenses at 0.02, the reported ordinary income of 81.65 suggests other recurring items not broken out in the dataset; likewise, profit before tax of 56.13 is below ordinary income, implying special items or measurement differences between sections. Cash flow statements and capex were not disclosed, limiting direct assessment of free cash flow and earnings-to-cash conversion. Dividend information was not reported; payout ratio, DPS, and FCF coverage are therefore not calculable. Despite these disclosure gaps, the combination of high margins, accelerating profit growth, and a net cash balance underpins a resilient financial profile. Near-term performance will depend on hiring appetite and enterprise spending cycles; Q1 momentum indicates a supportive demand backdrop. Key focuses ahead include sustainability of growth, SG&A discipline as the company invests for scale, and cash conversion once full cash flow data are available.

Profitability Analysis

ROE decomposition (DuPont): Net margin 23.5% (54.78/233.38), asset turnover 0.231x (233.38/1,008.58), financial leverage 1.38x (1,008.58/733.28), implying ROE ≈ 7.5%, consistent with the provided calculation. Operating margin is approximately 30.3% (70.69/233.38), indicating strong operating efficiency for a marketplace/HR-tech model. The ordinary income margin is about 35.0% (81.65/233.38), suggesting incremental recurring gains outside core operations that are not itemized in the non-operating breakdown provided. Net margin at 23.5% remains robust after taxes and below-ordinary adjustments, reflecting resilient earnings quality. Gross margin at 73.0% indicates strong value capture and limited cost of sales intensity. Operating leverage appears positive: revenue grew +24.8% vs operating income +29.6% YoY; estimated incremental margin ≈ 34.9% based on growth-derived approximations. Margin quality is supported by low interest burden (negligible debt) and an effective tax rate of 27.7%. Some line-item tensions exist (ordinary income vs non-operating details; profit before tax below ordinary income), which may reflect classification differences or unreported items; conclusions on recurring vs non-recurring contributions should be made cautiously.

Growth Assessment

Revenue growth of +24.8% YoY to 233.38 demonstrates strong demand in the quarter, likely driven by high engagement in recruitment solutions and related platform services. Operating income growth of +29.6% YoY outpaced top-line growth, consistent with scale efficiencies and marketing/productivity gains. Ordinary income grew +45.5% YoY, implying additional recurring income effects; however, the lack of itemized non-operating details limits attribution. Net income growth of +35.3% YoY confirms earnings momentum and conversion of growth into bottom-line results. With asset turnover at 0.231x and cash-heavy assets, growth is not capital intensive. Sustainability hinges on recruitment cycles, enterprise hiring budgets, and competitive dynamics; current trends suggest resilient demand. Given the company’s high cash balance (727.79) and low leverage, it has ample capacity to invest in product, sales, and M&A to support medium-term growth. Outlook considerations include normalization of hiring demand, potential seasonality, and the elasticity of client spending to macro conditions. In the absence of segment/ARPU metrics, we assume the growth is broad-based within core businesses. We will watch whether growth decelerates from the high-20% range as comps toughen and whether incremental margins remain above 30%.

Financial Health

Liquidity is very strong: current assets 830.83 vs current liabilities 258.14 yield a current ratio of 321.9% and quick ratio of 321.9%, reflecting a cash-heavy balance sheet. Cash and deposits total 727.79, vastly exceeding long-term loans of 0.80, implying a large net cash position (~726.99). Total assets are 1,008.58 against total liabilities of 276.46, resulting in a conservative capital structure (liabilities-to-equity ≈ 0.38x). Noncurrent assets are modest at 123.22 with intangibles 53.24 and goodwill 37.41, manageable relative to equity, limiting impairment risk to the capital base. Equity stands at 733.28, including retained earnings of 511.64, indicating strong internal capital generation. Solvency risk is low given minimal interest-bearing debt and substantial liquidity. The reported equity ratio is not provided, but assets/equity implies ~72.7% equity-to-asset ratio. Interest coverage cannot be computed due to unreported interest expense, but given negligible debt, coverage is effectively very high. No red flags on near-term refinancing or covenant risk are apparent.

Cash Flow Quality

Operating cash flow, investing cash flow, and financing cash flow are not reported, preventing direct assessment of earnings-to-cash conversion and free cash flow. Given the business model and high gross/operating margins, we would typically expect positive operating cash flow and low capex intensity, but this cannot be confirmed here. The large cash balance (727.79) and strong working capital (572.69) provide a buffer even if quarterly cash conversion is volatile. Without AR/AP and deferred revenue disclosures, working capital dynamics (collections, prepayments, and accruals) cannot be parsed. OCF/Net Income and FCF metrics are not calculable. We will look for subsequent filings to reconcile profit growth with cash generation, particularly deferred revenue moves and any cash tax timing.

Dividend Sustainability

Dividend data is unreported for the period, so DPS, payout ratio, and FCF coverage cannot be calculated. Retained earnings are sizable at 511.64 and cash is abundant, implying capacity to consider shareholder returns if aligned with policy, but the company’s growth profile may prioritize reinvestment. In the absence of stated policy or historical DPS, we assume a conservative stance on distributions and focus on reinvestment optionality. Future assessment will require disclosed DPS, total dividend paid, and operating/free cash flow to judge sustainability.

Risk Assessment

Business Risks:

• Exposure to domestic hiring cycles and macroeconomic slowdowns that can dampen recruitment demand.
• Competitive intensity in HR-tech and online matching, potentially pressuring pricing and customer acquisition costs.
• Client concentration risk if large enterprise customers account for disproportionate revenue (not disclosed).
• Regulatory or platform policy changes affecting data usage, job postings, or labor-market practices.
• Execution risk in scaling sales/marketing while maintaining unit economics and low churn.
• Dependence on continued digital adoption by enterprises and professionals.

Financial Risks:

• Potential volatility in non-operating items affecting ordinary income and pre-tax profit.
• Intangible asset and goodwill impairment risk if growth slows (goodwill 37.41; intangibles 53.24).
• Limited visibility on cash flow and capex due to unreported CF statements, complicating FCF assessment.
• Foreign exchange or securities valuation impacts if the company holds financial assets (investment securities not disclosed).

Key Concerns:

• Inconsistencies between ordinary income, non-operating breakdown, and profit before tax suggest classification items not fully disclosed.
• Lack of cash flow data prevents confirmation of earnings quality and FCF sustainability.
• Dividend policy and capital return stance are not disclosed, limiting visibility on shareholder return trajectory.

Investment Implications

Key Takeaways:

• Top-line growth of +24.8% YoY with operating income up +29.6% indicates positive operating leverage.
• High gross margin (73.0%) and operating margin (~30.3%) underscore an asset-light, high-return model.
• Strong balance sheet with substantial net cash (~726.99) and current ratio of 3.2x provides resilience and strategic flexibility.
• ROE of 7.5% is supported by high margins and modest leverage; potential to improve with sustained growth and asset efficiency.
• Disclosure gaps (cash flow, dividend data) limit assessment of cash conversion and payout capacity.
• Ordinary income dynamics suggest recurring non-operating contributions not itemized; monitor quality of earnings.

Metrics to Watch:

• Revenue growth rate and quarterly seasonality versus hiring cycle indicators.
• Operating margin trajectory and SG&A ratio as the company invests for growth.
• Cash flow from operations and free cash flow once disclosed; OCF/Net income ratio.
• Deferred revenue, receivables, and any changes in billing/collection cycles.
• ARPU/client metrics and churn (if disclosed) to gauge sustainability of platform monetization.
• Any increases in interest-bearing debt or changes to net cash position.

Relative Positioning: Within Japan’s HR-tech and online recruitment ecosystem, Visional appears positioned as a high-margin, asset-light player with stronger liquidity and lower leverage than many peers, though it is smaller scale than conglomerates with staffing operations; profitability metrics compare favorably, while disclosure depth (particularly cash flow) is currently thinner than best-in-class.

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