YUKE'S Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥2.92B
• Operating Income: ¥-9M
• Net Income: ¥2M
• EPS: ¥-5.15

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

YUKE'S (4334) FY2026 Q3 consolidated (JGAAP) shows solid top-line momentum but a sharp deterioration in profitability. Revenue rose 19.9% YoY to 29.24, while gross profit reached 5.59, implying a gross margin of 19.1%, which is relatively light for the sector and points to pricing pressure or an unfavorable mix. SG&A of 5.44 absorbed nearly the entire gross profit, resulting in operating income of -0.09 (operating margin -0.3%), down 93.9% YoY. Non-operating income of 0.30 (mainly interest income of 0.05 and dividends of 0.02) partially offset non-operating expenses of 0.09, but ordinary income remained slightly negative at -0.06. Profit before tax was reported at 0.45, implying positive extraordinary items not detailed in the disclosure, but a high tax expense of 0.43 (effective tax rate ~95.6%) and additional bottom-line charges led to a net loss of -0.43. The DuPont decomposition indicates ROE of -1.8%, driven by a slim negative net margin (-1.5%), modest asset turnover (0.743x), and moderate leverage (1.64x). Liquidity is strong: current assets of 28.00 vs current liabilities of 4.97 imply a current ratio of 563% and working capital of 23.03. The balance sheet is conservative with total liabilities of 6.27 and total equity of 24.01, translating to leverage of 0.26x (debt/equity), and ample net cash of approximately 10.63 (cash 16.90 minus total loans 6.27). Cash flow statements were not disclosed, limiting assessment of earnings quality and FCF coverage. The presence of goodwill at 5.37 and investment securities at 1.20 highlights potential non-operating valuation risks and suggests some M&A history or acquired projects. Revenue growth appears healthy, but weak conversion into operating profit suggests operating leverage is not yet favorable and cost discipline or mix improvement is needed. The heavy tax burden on a small positive pre-tax income distorts bottom-line comparability in the quarter and could normalize, but it underscores volatility. Dividend information was not disclosed; a calculated negative payout ratio suggests either historical distributions despite losses or calculation artifacts given partial data. Overall, the company displays strong liquidity and low financial risk, but near-term profitability pressure, a high effective tax rate, and reliance on non-operating/extraordinary items weigh on earnings quality. Data gaps (notably cash flows and detailed SG&A breakdown) and category inconsistencies in the balance sheet presentation constrain precision; conclusions focus on the disclosed non-zero data.

Profitability Analysis

ROE decomposition: ROE -1.8% = Net margin (-1.5%) x Asset turnover (0.743x) x Financial leverage (1.64x). The negative net margin is the primary drag; asset turnover is moderate; leverage is not a meaningful driver. margin_quality: Gross margin is 19.1% (5.59/29.24), indicating tight unit economics for a content/development business. Operating margin is -0.3% (-0.09/29.24) as SG&A nearly equals gross profit. Ordinary margin is -0.2% (-0.06/29.24), suggesting limited recurring non-operating support. The positive pre-tax income (0.45) suggests undisclosed extraordinary gains; however, the net loss (-0.43) and a 95.6% effective tax rate indicate poor translation of pre-tax to net income this period. operating_leverage: Revenue grew 19.9% YoY, but operating income fell to -0.09, showing unfavorable operating leverage due to insufficient gross margin expansion and SG&A rigidity. To restore positive leverage, either pricing/mix needs to improve or fixed costs must be better absorbed through higher utilization and project volumes.

Growth Assessment

revenue_sustainability: Top-line growth of 19.9% YoY to 29.24 is encouraging and implies a healthy pipeline or delivery schedule. However, low gross margin (19.1%) signals potential discounting, a higher share of subcontracted work, or phase of project milestones with lower profitability. profit_quality: Profit generation is weak: operating loss (-0.09) contrasts with positive non-operating income (0.30), and pre-tax profit (0.45) likely relies on extraordinary items. High tax expense (0.43) nearly eliminates pre-tax gains, and net margin is negative (-1.5%). Absent cash flow data, the persistence and cash-conversion of profits cannot be verified. outlook: Short-term earnings hinge on mix/royalty upside, milestone timing, and SG&A control. If revenue momentum persists and gross margin normalizes, operating leverage could swing positive. Near-term risks include tax charge volatility and potential one-off gains reversing. Visibility is limited due to lack of order backlog and cash flow disclosures.

Financial Health

liquidity: Current assets 28.00 vs current liabilities 4.97; current ratio 563% and quick ratio 563% (inventories unreported). Cash and deposits of 16.90 and accounts receivable of 7.80 underpin strong near-term liquidity. Working capital stands at 23.03. solvency: Total liabilities 6.27 and total equity 24.01 imply conservative capitalization. Estimated equity ratio ≈ 61.0% (24.01/39.36). Interest expense is minimal (0.00), and loans total 6.27 (short-term 6.00; long-term 0.27). Net cash is about 10.63. capital_structure: Debt-to-equity is 0.26x, with a predominance of short-term borrowings. Investment securities of 1.20 and goodwill of 5.37 introduce valuation and impairment considerations but do not strain solvency given equity of 24.01.

Cash Flow Quality

earnings_quality: OCF not disclosed; therefore, the OCF/net income conversion cannot be evaluated. The reliance on non-operating and extraordinary items this period (pre-tax positive despite operating loss) lowers earnings quality. FCF_analysis: Investing and financing cash flows, capex, and dividends are unreported, preventing FCF computation. The sizeable cash balance (16.90) provides a buffer, but sustainability of cash generation is unassessed. working_capital: Accounts receivable of 7.80 is meaningful relative to sales; accounts payable is very low (0.05), consistent with a project/service model. Without inventories and OCF, we cannot quantify the cash conversion cycle; however, the positive working capital (23.03) supports liquidity.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is unreported; a calculated payout ratio of -258.0% suggests distributions despite losses or a calculation artifact. With net income at -0.43, earnings-based coverage is not demonstrated for this period. FCF_coverage: FCF is unreported; thus, dividend coverage by FCF cannot be evaluated. Cash on hand (16.90) is ample relative to size, implying near-term capacity, but sustainability requires recurring OCF. policy_outlook: Given negative earnings and absent cash flow disclosure, dividend policy visibility is low. Management may prioritize stability if historically committed, but prudent policy would consider restoring operating profitability first.

Risk Assessment

Business Risks:

• Project and milestone timing risk causing revenue and margin volatility
• Dependence on hit titles/royalty streams and client concentration
• Pricing pressure and low-margin subcontracting mix reducing gross margin
• Platform transition and technology obsolescence risk in gaming/content
• Talent retention and wage inflation impacting SG&A
• Goodwill impairment risk if expected cash flows underperform
• FX exposure on overseas contracts or royalties (if applicable)

Financial Risks:

• High effective tax rate volatility compressing net profit
• Short-term debt concentration (6.00) increases refinancing/maturity management needs
• Earnings reliance on non-operating/extraordinary items in the period
• Limited disclosure of cash flows constrains assessment of cash generation and FCF

Key Concerns:

• Negative operating income despite nearly 20% revenue growth
• Gross margin at 19.1% insufficient to cover SG&A, pointing to mix/pricing challenges
• Net loss (-0.43) driven by high tax burden and below-the-line items
• Data gaps and category inconsistencies reduce transparency (notably CF and SG&A details)

Investment Implications

Key Takeaways:

• Top-line growth is strong (+19.9% YoY), but profitability is weak (operating margin -0.3%)
• ROE is negative at -1.8%, mainly due to a negative net margin
• Liquidity is robust with a current ratio of 563% and net cash of ~10.63
• Leverage is low (debt/equity 0.26x), reducing solvency risk
• Earnings quality is mixed, with positive pre-tax income reliant on non-operating/extraordinary items and a high effective tax rate
• Dividend capacity cannot be confirmed without FCF; earnings-based coverage is absent this period

Metrics to Watch:

• Gross margin trajectory and project mix (royalty-bearing vs. work-for-hire)
• SG&A as a percentage of sales and headcount/productivity trends
• Order backlog/bookings and milestone schedules for revenue visibility
• Normalization of effective tax rate and any extraordinary gains/losses
• Cash flow from operations and capex once disclosed
• Net cash trend versus short-term borrowings (6.00) and refinancing profile

Relative Positioning: Within Japanese mid/small-cap game/content developers, YUKE'S exhibits stronger liquidity and lower leverage than peers but lags on operating profitability and earnings stability this quarter; near-term upside hinges on margin recovery and cost absorption.

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