True Data Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥867M
• Operating Income: ¥42M
• Net Income: ¥37M
• EPS: ¥7.65

Income Statement

Balance Sheet

Cash Flow Statement

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

Verdict: Solid top-line growth with modest operating leverage and strong cash conversion, but profitability remains thin and tax/line-item inconsistencies warrant caution. Revenue rose 13.0% YoY to 8.67, while operating income increased 10.2% YoY to 0.42, indicating growth but slightly slower operating leverage than sales. Ordinary income expanded 24.6% YoY to 0.47, outpacing operating income, suggesting some non-operating tailwinds despite non-operating items being largely immaterial this quarter. Net income surged to 0.37 (+494.6% YoY) from a very low base, lifting the net margin to 4.3%. Gross profit was 4.41, yielding a gross margin of 50.8%, and SG&A was 4.02, or 46.4% of sales, reflecting a high but manageable cost structure. Operating margin is approximately 4.8% (0.42/8.67), with an estimated YoY compression of roughly 13 bps given revenue outpaced operating profit. Ordinary income margin improved about 51 bps YoY to ~5.4%, while net margin expanded by an estimated 346 bps YoY from ~0.8% due to the low prior-year base. Cash generation was strong: operating cash flow was 0.89, about 2.39x net income, indicating high earnings quality. The balance sheet is liquid with cash and deposits of 8.60 versus current liabilities of 2.78, yielding a current ratio of 410.9% and quick ratio of 410.9%. Total assets were 13.90 with equity of 11.20, implying low financial leverage (assets/equity 1.24x). Despite healthy liquidity, retained earnings remain negative (-5.00), underscoring limited accumulated profits historically. The effective tax rate appears elevated at 48.3%, which could temper net profitability if sustained. There is an internal consistency issue in the P/L (profit before tax 0.12 vs net income 0.37) that likely reflects unreported extraordinary items or presentation differences under JGAAP; this limits precision in tax and below-the-line analysis. Capex was modest at 0.08, and a proxy FCF (OCF - capex) is about 0.81, supporting reinvestment flexibility. Forward-looking, the company’s ability to curb SG&A ratio, sustain >50% gross margin, and normalize the tax rate will determine whether ROE can rise meaningfully above the current 3.3%. Near-term, strong liquidity and cash conversion provide a buffer to execute on growth without external financing.

Profitability Analysis

ROE decomposition (DuPont): ROE 3.3% = Net Profit Margin (4.3%) × Asset Turnover (0.624) × Financial Leverage (1.24x). The largest change driver versus last year appears to be net profit margin, given net income grew +494.6% on +13.0% revenue, while asset turnover and leverage are relatively stable for a cash-rich, low-debt balance sheet. Business explanation: margin uplift stems from improved ordinary income and a very low prior-year net base, while operating margin leverage was mild as SG&A grew roughly in line with sales (SG&A ratio 46.4%). Sustainability: operating margin gains look fragile (only ~-13 bps YoY compression estimated), but the step-up in net margin is partly base-effect driven and may normalize if the tax rate stays high or if non-operating tailwinds fade. Concerning trends: SG&A intensity remains high at 46.4% of revenue; with operating margin at ~4.8%, any slowdown in sales growth could pressure profits. Asset turnover at 0.624 is reasonable for a service/data business, but meaningful ROE improvement likely requires either faster revenue growth than operating expenses or higher pricing/mix to lift gross and operating margins.

Growth Assessment

Revenue growth of +13.0% YoY to 8.67 is healthy, suggesting resilient demand for the company’s data/analytics offerings. Operating income grew +10.2%, indicating modest operating leverage but also signaling that cost growth (notably SG&A) remains a headwind. Ordinary income rose +24.6%, implying minor non-operating support, though reported non-operating income/expenses were near zero; this may reflect classification effects or small below-OP items. Net income’s +494.6% YoY jump reflects prior-year weakness and some below-the-line effects, not a structural profitability reset. Gross margin at 50.8% is solid for a data-driven model and provides headroom if scale effects can lower unit SG&A. With EBITDA at 0.61 (7.1% margin), additional scale is needed for durable double-digit EBITDA margins. Outlook hinges on sustaining double-digit sales growth while compressing the SG&A ratio by 100–200 bps over the next few quarters; absent that, ROE uplift will be limited. The elevated effective tax rate (48.3%) is a drag; normalization toward statutory rates would support net margins. Overall, growth looks organic and recurring-like, but confirmation via cohort retention, upsell rates, and contract backlog would strengthen confidence (not disclosed).

Financial Health

Liquidity is strong: current assets 11.42 vs current liabilities 2.78 yields a current ratio of 410.9% and ample working capital of 8.64. Quick ratio equals current ratio (410.9%) due to negligible inventories, and cash 8.60 alone covers current liabilities ~3.1x. Solvency: total liabilities are 2.82 and equity 11.20; reported D/E of 0.25x indicates conservative leverage. Interest-bearing debt is unreported; interest expense is de minimis (0.00) and interest coverage is 893.6x, implying negligible financing risk. No warnings: Current Ratio >> 1.0 and D/E well below 2.0. Maturity mismatch risk appears low given cash dominance on the asset side and small payables (0.51). Off-balance sheet obligations are not disclosed; absence of lease/commitment detail is a data limitation under single-entity JGAAP reporting.

Cash Flow Quality

Earnings quality is high this period: OCF/Net income at 2.39x signals cash conversion well above earnings. OCF of 0.89 vs EBITDA of 0.61 suggests favorable working capital (or low non-cash charges beyond D&A of 0.19). Proxy FCF (OCF - capex) is approximately 0.81, indicating capacity to self-fund modest growth investments; full FCF cannot be confirmed as investing CF is unreported. Working capital appears healthy: accounts receivable 1.96 against half-year revenue 8.67 implies DSO roughly ~41 days; payables 0.51 vs cost of sales 3.27 suggests DPO ~28 days; with no inventories reported, the cash conversion cycle is short. No obvious signs of working capital manipulation are evident from the limited data. Financing CF was -0.18, but without dividend/buyback detail we cannot attribute the outflow; leverage remains very low.

Dividend Sustainability

Dividend disclosures are unreported; payout ratios and total dividends paid are N/A. With negative retained earnings (-5.00) but strong cash reserves (8.60) and positive proxy FCF (~0.81), the company has cash capacity but limited accumulated profits under JGAAP, which can constrain distributions. If a dividend policy were adopted, sustainability would hinge on maintaining OCF > capex and preserving liquidity buffers. In the absence of a disclosed policy and given the small scale and ongoing need to invest in growth, a conservative stance on distributions is implied. FCF coverage of any potential dividend cannot be assessed precisely without full investing CF detail.

Risk Assessment

Business Risks:

• High SG&A intensity (46.4% of sales) limits operating leverage and leaves earnings sensitive to growth shortfalls.
• Small scale (revenue 8.67 for the half-year) increases volatility to client/order timing.
• Potential client concentration and contract renewal risk typical for data/analytics businesses (not disclosed).
• Data privacy and compliance risk inherent to handling consumer/retail data.
• Talent retention/recruiting risk in analytics/engineering roles, which drive delivery capacity and cost base.

Financial Risks:

• Negative retained earnings (-5.00) despite positive current profits, constraining distributable reserves.
• Elevated effective tax rate (48.3%) depresses net margin and could remain volatile.
• Thin operating margin (~4.8%) offers limited cushion against revenue shocks.
• Information gaps (investing CF, debt details, dividend data) hinder full assessment of obligations.

Key Concerns:

• P/L inconsistency (profit before tax 0.12 vs net income 0.37) suggests unreported extraordinary items or classification differences under JGAAP.
• Slight operating margin compression despite double-digit sales growth indicates cost pressure.
• Reliance on cash-heavy balance sheet; while liquidity is strong, returns (ROE 3.3%) remain modest.
• Tax normalization path unclear; sustained ~48% effective rate would cap ROE expansion.

Investment Implications

Key Takeaways:

• Top-line growth is healthy (+13% YoY) with stable gross margin (50.8%).
• Operating leverage is modest; SG&A ratio remains high at 46.4%.
• Cash conversion is strong (OCF/NI 2.39x), supporting self-funding of operations.
• Balance sheet is very liquid (cash 8.60 vs CL 2.78) with low leverage (assets/equity 1.24x).
• ROE at 3.3% is constrained by thin margins and low leverage; margin management is key.
• Effective tax rate is elevated, suppressing net profitability.
• Negative retained earnings highlight limited historical profitability despite current improvements.

Metrics to Watch:

• SG&A to sales ratio and trajectory (target sustained reduction of 100–200 bps).
• Operating margin progression vs revenue growth.
• OCF/NI ratio and working capital metrics (DSO, DPO) for cash conversion stability.
• Gross margin stability around >50%.
• Effective tax rate normalization.
• Capex and product investment intensity vs sales.
• Order backlog/ARR/retention metrics (if disclosed) to validate recurring growth.

Relative Positioning: Within small-cap Japanese data/analytics peers, the company exhibits strong liquidity and cash conversion but lags on profitability scale, with ROE below peer leaders. Execution on SG&A efficiency and tax normalization would be required to close the profitability gap.

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