Logizard Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥561M
• Operating Income: ¥71M
• Net Income: ¥51M
• EPS: ¥16.07

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

FY2026 Q1 was a mixed quarter: modest top-line growth but sharp profit compression amid higher cost intensity. Revenue grew 2.7% YoY to 5.61, while operating income fell 37.7% YoY to 0.71, and net income declined 39.4% YoY to 0.51. Gross profit was 2.98, implying a gross margin of 53.2%, but operating margin dropped to 12.7% (0.71/5.61). Based on the YoY rates, prior-year operating margin is estimated around 20.9%, indicating roughly 820 bps operating margin compression. Net margin compressed to 9.1% from an estimated ~15.4% in the prior year, or roughly 630 bps, reflecting deleveraging and higher expense ratios. Ordinary income of 0.73 suggests core profitability weakened, while profit before tax of 1.16 indicates around 0.43 of non-ordinary gains (extraordinary/one-off) that partially cushioned the decline. Despite this, the effective tax rate was a normal 25.9%, and EPS (basic) stood at 16.07 JPY. Balance sheet strength remains a clear positive: cash and deposits are 17.07, current assets 20.48, with current liabilities of only 4.00, resulting in a current ratio of 512% and working capital of 16.49. Leverage is conservative with total liabilities of 4.00 against equity of 21.71 (D/E 0.18x), and financial leverage is low at 1.12x. DuPont ROE calculates to 2.4% (NPM 9.1% × asset turnover 0.230 × leverage 1.12x), down versus an implied stronger prior period given the margin compression. ROIC is reported at 11.3%, comfortably above typical 7–8% targets, indicating core capital efficiency remains healthy despite quarterly profit pressure. Earnings quality cannot be fully assessed due to unreported cash flow data; OCF/NI and FCF are N/A, which limits conviction on cash conversion. Dividend sustainability is a watch point: the calculated payout ratio is 116.4%, which is high relative to quarterly earnings, though strong cash reserves provide near-term flexibility. Forward-looking, controlling SG&A growth and restoring operating leverage will be critical to re-expand margins, while the strong liquidity position offers runway to invest in growth and product. Overall, the quarter shows resilient demand but deteriorated profitability, with corrective actions on cost discipline likely needed to stabilize ROE and net margins.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 9.1% × 0.230 × 1.12 ≈ 2.4%. The largest driver of the ROE decline this quarter is the sharp reduction in net profit margin (estimated ~630 bps compression YoY from ~15.4% to 9.1%), far outweighing any changes in asset turnover or leverage (both relatively stable and conservative). The business driver appears to be operating deleverage: revenue grew 2.7%, but operating income fell 37.7%, implying SG&A and/or cost inflation outpaced sales growth and absorbed gross profit. Given operating margin fell from an estimated ~20.9% to 12.7% (≈ -820 bps), cost discipline and utilization are the key issues rather than pricing or volume alone. Financial leverage is low (1.12x), so leverage did not amplify ROE. Sustainability: margin headwinds could be reversible if the cost step-up relates to timing (e.g., hiring, product development, or marketing investments) rather than permanent structural pressure; however, absent evidence of one-time items in SG&A, near-term margins may remain under pressure. Concerning trend: SG&A growth likely exceeded revenue growth (exact SG&A YoY not disclosed), as implied by the large operating profit decline on modest sales growth. Focus areas: restore operating leverage by managing SG&A growth below revenue, protect gross margin, and improve utilization to lift asset turnover.

Growth Assessment

Revenue growth of 2.7% YoY to 5.61 indicates steady demand but deceleration relative to the cost base. Operating profit fell 37.7% to 0.71, and ordinary income declined 36.8% to 0.73, highlighting weak operating leverage. Net income declined 39.4% to 0.51; estimated net margin compressed ~630 bps YoY to 9.1%. Profit before tax of 1.16 suggests ~0.43 of non-ordinary gains mitigated the drop in core profitability. With ROIC at 11.3%, the underlying business still generates attractive returns on invested capital, but quarterly profitability softness clouds near-term earnings momentum. Given cash strength (17.07) and low leverage, the company has capacity to invest in product and sales to reaccelerate growth. However, without disclosure on segment or subscription metrics, sustainability of growth is unclear. Outlook: near-term growth appears modest with a focus on cost control to stabilize margins; any reacceleration will likely require improved go-to-market efficiency or product-driven upsell while containing SG&A.

Financial Health

Liquidity is very strong: current assets 20.48 vs current liabilities 4.00, yielding a current ratio of 512% and quick ratio of 512%. No warning on liquidity thresholds (Current Ratio >> 1.0). Cash and deposits of 17.07 comfortably cover all current liabilities, minimizing short-term refinancing risk. Solvency is conservative: total liabilities 4.00 vs equity 21.71 (D/E 0.18x), and financial leverage is low at 1.12x. Maturity mismatch risk appears low given the predominance of cash and lack of disclosed short-term borrowings. No off-balance sheet obligations are reported in the data provided. Intangible assets of 3.82 (≈16% of total assets) are meaningful but not excessive, implying limited balance sheet impairment risk in the near term absent major write-downs.

Cash Flow Quality

Operating cash flow, investing cash flow, and FCF are unreported, so OCF/Net Income and FCF coverage cannot be assessed. Therefore, we cannot verify cash conversion or working capital dynamics this quarter. Given the strong cash balance (17.07) relative to earnings and liabilities, near-term liquidity is ample even if cash conversion were weaker than earnings. No signs of working capital manipulation can be identified due to lack of AR/AP/inventory turnover disclosures; note that accounts payable is small at 0.30, consistent with a software/service-heavy cost structure. Flag: OCF/NI is N/A (not calculable), so earnings quality cannot be validated this period.

Dividend Sustainability

The calculated payout ratio of 116.4% indicates dividends exceeded quarterly earnings on this basis, which is not sustainable if maintained over a full year without corresponding FCF support. However, the company holds significant cash (17.07), providing flexibility to maintain dividends in the short term even if earnings remain pressured. FCF coverage is N/A due to missing cash flow and capex data, limiting a definitive conclusion. Policy outlook: absent guidance, prudent expectation is for management to align payouts with full-year earnings and cash generation; if margins recover and ROIC stays >10%, medium-term dividend capacity is supported. Near-term watch points are earnings recovery, OCF trends, and any capex or R&D intensity that could compete with dividends for cash.

Risk Assessment

Business Risks:

• Margin pressure from SG&A growth outpacing revenue, leading to operating deleverage
• Potential slowdown in new customer acquisition or upsell, given modest 2.7% revenue growth
• Dependence on intangibles and product innovation; increased R&D or staffing costs could weigh on profitability
• Competition in logistics/warehouse management software potentially pressuring pricing and win rates
• Customer concentration risk (not disclosed), common in B2B software niches

Financial Risks:

• Earnings quality uncertainty due to unreported OCF and FCF
• High calculated payout ratio (116.4%) raising risk of future payout adjustments
• Limited non-operating income visibility; reliance on one-off gains (PBT > ordinary by ~0.43) is not repeatable
• Intangible asset base (3.82) could be exposed to impairment risk if growth stalls

Key Concerns:

• Operating margin compression of ~820 bps YoY to 12.7%
• Net margin compression of ~630 bps YoY to 9.1%
• Large gap between ordinary income (0.73) and profit before tax (1.16), suggesting non-recurring items
• Lack of cash flow disclosure obscures cash conversion and FCF

Investment Implications

Key Takeaways:

• Top-line grew 2.7% YoY but profits fell sharply; operating income -37.7%, net income -39.4%
• Operating margin down to 12.7% (≈ -820 bps YoY), signaling weak operating leverage
• Net margin at 9.1% (≈ -630 bps YoY) and ROE at 2.4% reflect profit compression
• Balance sheet is very strong: cash 17.07, current ratio 512%, D/E 0.18x
• ROIC reported at 11.3% remains attractive despite the quarterly margin dip
• Payout ratio at 116.4% appears elevated relative to earnings; sustainability depends on FCF
• Earnings quality indeterminable this quarter due to missing OCF/FCF data

Metrics to Watch:

• OCF/Net Income and FCF once disclosed
• SG&A as a percentage of revenue and headcount trends
• Gross margin stability and pricing discipline
• Sales pipeline/ARR growth (if disclosed) and churn/retention metrics
• Ordinary income vs PBT gap (to identify non-recurring effects)
• Cash balance and working capital movements (AR/AP turns)

Relative Positioning: Within Japanese small-cap software/services peers, the company stands out for a fortress-like balance sheet and solid ROIC, but underperforms on near-term profitability momentum due to sharp operating deleverage; recovery depends on cost control and reacceleration of revenue growth.

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