ZUU Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.28B
• Operating Income: ¥-180M
• Net Income: ¥-225M
• EPS: ¥-48.12

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

ZUU (4387) reported FY2026 Q2 consolidated results under JGAAP showing a contraction in topline and a significant deterioration in operating profitability. Revenue was ¥1,283m, down 9.7% YoY, indicating soft demand or strategic pruning of lower-margin businesses. Gross profit of ¥951m implies a very high gross margin of 74.1%, suggesting the core service/content mix remains structurally high-margin. Despite this, operating income fell to a loss of ¥-180m (a YoY deterioration of +614.3% in losses), signaling cost absorption issues and negative operating leverage at current scale. Ordinary loss narrowed versus operating loss (ordinary income ¥-71m vs operating income ¥-180m), implying positive non-operating contributions offsetting a portion of operating weakness. Net loss widened to ¥-228m (YoY change of -97.4%), with EPS at ¥-48.12, reflecting weaker profitability and absent tax burden due to losses. DuPont metrics indicate ROE at -2.68%, driven by a -17.77% net margin and low asset turnover of 0.112, partially cushioned by moderate financial leverage of 1.34x. Liquidity appears adequate with a current ratio of 172% and working capital of ¥2,253m, although cash and equivalents were not disclosed. Leverage is moderate with a debt-to-equity ratio of 0.39x and total liabilities of ¥3,348m against equity of ¥8,520m. Operating cash flow was a negative ¥-531m, pointing to weak earnings-to-cash conversion and likely working capital outflows; investing cash flow was not disclosed, and financing inflow of ¥1,056m supported liquidity. EBITDA was ¥-173m (margin -13.5%), and interest coverage was deeply negative at -137.5x, underscoring reliance on equity and financing inflows while earnings remain loss-making. The company paid no dividends (DPS ¥0), consistent with preserving liquidity during a loss phase. While the high gross margin demonstrates underlying unit economics potential, the drop in revenue and heavier fixed cost burden are pressuring operating results. The balance sheet shows sizable equity relative to liabilities, providing some solvency buffer even as cash generation is currently weak. Overall, the quarter highlights execution risk on scaling revenues and controlling SG&A to turn strong gross margin into sustainable operating profits, with visibility constrained by several undisclosed line items.

Profitability Analysis

ROE_decomposition: ROE -2.68% = Net margin (-17.77%) × Asset turnover (0.112) × Financial leverage (1.34x). The primary drag is the sharply negative net margin, with low turnover reflecting a small revenue base relative to assets; leverage is modest and not amplifying returns materially. margin_quality: Gross margin is 74.1% (¥951m/¥1,283m), indicating high-value, content/solution-heavy revenue mix. Operating margin is -14.0% (¥-180m/¥1,283m), implying SG&A intensity outweighs gross profit at current scale. Ordinary margin is -5.5% (¥-71m/¥1,283m), suggesting some non-operating gains/other income partially offset operating losses; interest expense is small at ¥1.3m, so the gap likely reflects other non-operating items. operating_leverage: Revenue declined 9.7% YoY while operating loss worsened significantly (+614% deterioration), indicating negative operating leverage. With EBITDA at ¥-173m and D&A only ¥6.8m, the pressure stems primarily from cash operating expenses. To restore leverage, either revenue growth must resume or fixed cost intensity must be reduced.

Growth Assessment

revenue_sustainability: YoY revenue contraction of 9.7% signals softer demand or portfolio reshaping; sustainability hinges on stabilizing core monetization in financial media/platform services and improving client acquisition/retention efficiency. profit_quality: The spread between gross margin (74.1%) and operating margin (-14.0%) reflects limited scale and elevated SG&A. Ordinary loss being smaller than operating loss hints at transitory non-operating supports, which are lower quality earnings drivers than recurring operating profit. outlook: In the near term, recovery depends on reaccelerating topline while controlling fixed costs. High gross margin provides headroom for profit restoration if revenue normalizes; however, current negative OCF and weak coverage metrics imply execution urgency. Non-operating tailwinds are unlikely to sustainably bridge the operating gap.

Financial Health

liquidity: Current assets ¥5,380m vs current liabilities ¥3,128m implies a current ratio of 172% and working capital of ¥2,253m. Quick ratio equals current ratio due to undisclosed inventories. Cash and equivalents were not disclosed, so near-term cash runway cannot be precisely assessed. solvency: Total liabilities ¥3,348m vs equity ¥8,520m (D/E 0.39x) indicate moderate leverage and a solid equity buffer. Interest expense is low (¥1.3m), but interest coverage is negative given operating losses, so solvency rests on equity and financing access while profitability is restored. capital_structure: Assets ¥11,455m are largely equity-funded (assets to equity 1.34x). Positive financing CF of ¥1,056m suggests recent reliance on external funding (debt or equity) to support operations and working capital.

Cash Flow Quality

earnings_quality: OCF/Net Income = 2.33 with both OCF (¥-531m) and NI (¥-228m) negative indicates cash burn is larger than accounting losses, pointing to weak cash earnings quality and likely working capital outflows. FCF_analysis: Investing CF was undisclosed (reported as 0). Conceptually, with OCF negative, free cash flow is likely negative unless significant asset sales occurred; however, precise FCF cannot be determined from disclosed data. working_capital: Details by component are not provided, but the scale of negative OCF suggests increases in receivables or other current assets and/or reductions in payables. Monitoring DSO/DPO and contract liabilities would be important to assess collection efficiency and cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 and payout ratio 0.0%, appropriate given net losses (EPS ¥-48.12) and negative OCF. FCF_coverage: Reported FCF coverage is 0.00x. With negative OCF and undisclosed investing CF, sustainable distributions are not supported by internal cash generation. policy_outlook: While no explicit policy is provided, maintaining a no-dividend stance appears consistent with preserving liquidity to fund operations and growth initiatives until operating cash flow turns positive.

Risk Assessment

Business Risks:

• Revenue contraction risk from weaker client demand or competitive pressures in fintech/media services
• Execution risk in scaling sales while controlling SG&A to achieve breakeven
• Customer concentration or project-based volatility (not disclosed but typical for niche B2B/B2C content/platform models)
• Dependence on non-operating income to narrow ordinary loss, which is not a stable earnings driver
• Potential regulatory changes affecting financial content/solicitation and platform monetization

Financial Risks:

• Negative operating cash flow (¥-531m) driving reliance on external financing (financing CF ¥1,056m)
• Negative interest coverage (-137.5x) despite low interest burden, reflecting vulnerability while loss-making
• Liquidity visibility limited due to undisclosed cash balance and investing cash flows
• Potential working capital strain if receivables growth outpaces collections

Key Concerns:

• Sustained operating losses despite very high gross margin
• Revenue decline of 9.7% YoY undermining path to scale benefits
• OCF magnitude worse than accounting loss, indicating weak cash conversion

Investment Implications

Key Takeaways:

• Topline declined 9.7% YoY to ¥1,283m; scale pressures intensified
• Gross margin remains strong at 74.1%, but operating margin is -14.0%
• Ordinary loss (¥-71m) is notably smaller than operating loss (¥-180m), implying non-operating support
• ROE -2.68% driven by negative net margin and low asset turnover (0.112)
• OCF ¥-531m vs NI ¥-228m signals weak cash earnings; financing inflow ¥1,056m bridged the gap
• Liquidity appears adequate (current ratio 172%), but cash on hand not disclosed
• Moderate leverage (D/E 0.39x) provides solvency buffer while profitability is addressed

Metrics to Watch:

• Quarterly revenue growth reacceleration and net new client additions
• Operating margin progression and SG&A ratio to sales
• OCF trajectory and working capital turns (DSO/DPO, contract liabilities)
• Ordinary income composition (recurring vs non-recurring non-operating items)
• Cash and equivalents and runway vs burn rate
• Retention/churn metrics and ARPU (if disclosed)

Relative Positioning: Within Japan’s listed fintech/media platforms, ZUU exhibits peer-like high gross margins but lags on scale and operating profitability, with lower asset turnover and heavier reliance on external financing during the period.

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