Japan Data Science Consortium Co.Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥5.14B
• Operating Income: ¥196M
• Net Income: ¥105M
• EPS: ¥9.75

Income Statement

Balance Sheet

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

Verdict: A solid profitability beat driven by cost discipline and operating leverage despite a modest revenue decline. Revenue fell 4.9% YoY to 51.38, but operating income rose 41.7% YoY to 1.96 and ordinary income rose 44.2% YoY to 1.78. Net income increased 53.4% YoY to 1.37, with EPS (basic) at 9.75 JPY and diluted at 9.55 JPY. Operating margin improved to roughly 3.8% from about 2.6% a year ago, indicating approximately 125 bps of expansion. Gross margin is reported at 11.0%, although there is an internal inconsistency between reported revenue, cost of sales, and gross profit (noted below). SG&A was 4.25, allowing operating leverage to flow through despite topline pressure. The DuPont decomposition indicates an ROE of 3.0% (NPM 2.7%, asset turnover 0.625x, leverage 1.80x), highlighting modest profitability on a relatively light leverage base. Liquidity is strong with a current ratio of 267% and cash/deposits of 28.88 against current liabilities of 21.56. Debt load appears manageable with long-term loans of 10.74 and an interest coverage ratio of 34.9x, supported by higher operating earnings. ROIC is estimated at 6.0%, below the 7–8% target range, suggesting room for improvement in capital efficiency. Cash flow data is unreported, so earnings quality from a cash conversion perspective cannot be assessed this quarter. Reported PBT (1.24) is below ordinary income (1.78) while net income (1.37) exceeds PBT, implying unreported extraordinary items and/or timing effects; we focus on operating and ordinary income for reliability. Overall, cost control and pricing/mix likely offset the revenue decline, driving better margins. The quarter’s outcome supports a cautiously constructive near-term outlook, contingent on sustaining operating efficiency and improving ROIC. Absent cash flow disclosure and dividend data, capital return capacity and cash conversion remain key watch items. Forward focus: maintaining margin gains, strengthening cash generation, and lifting ROIC above management benchmarks.

Profitability Analysis

ROE decomposition (DuPont): ROE ≈ Net Profit Margin (2.7%) × Asset Turnover (0.625x) × Financial Leverage (1.80x) = ~3.0%. The largest positive delta QoQ/YoY appears to be Net Profit Margin, driven by operating margin expansion to ~3.8% versus 2.6% last year (+125 bps). Business drivers likely include tighter project execution, improved mix/pricing, and SG&A discipline relative to revenue. This operating efficiency improvement is partly sustainable if tied to recurring cost structure optimization, but could be partly one-off if driven by timing of higher-margin deliveries. Watch for warning signs: revenue declined 4.9% YoY while SG&A was 4.25; if SG&A growth outpaces revenue in subsequent quarters, the margin gains could reverse. With ROE at ~3.0%, the primary headroom for improvement lies in raising NPM (through gross margin stabilization and operating leverage) and modestly improving asset turnover.

Growth Assessment

Topline contracted 4.9% YoY to 51.38, indicating near-term demand or project timing softness. Profit growth was strong (OI +41.7%, NI +53.4%), reflecting efficiency gains and possibly better mix. Operating margin rose to ~3.8%, evidencing positive operating leverage despite lower revenue. Sustainability hinges on repeatability of the current cost/price mix and backlog conversion at healthy margins. With ROIC at ~6.0% (below 7–8% target), incremental growth should prioritize returns over volume. Near-term outlook: stabilize revenue via pipeline conversion and protect margin through disciplined pricing; medium term, lift ROIC via focused investment and better asset turns. Data gaps (no segment detail, no cash flow) constrain visibility into recurring versus one-time drivers.

Financial Health

Liquidity is strong: current ratio 267% and quick ratio 267%, supported by 28.88 cash/deposits and 26.93 receivables versus 21.56 current liabilities. No warning on liquidity thresholds (Current Ratio well > 1.0). Solvency profile is conservative-to-moderate: D/E reported at ~0.80x (likely total liabilities to equity), with long-term loans of 10.74; leverage is manageable given coverage of 34.9x. Maturity mismatch risk appears limited given cash on hand exceeding current liabilities; however, detailed debt maturity schedules are not disclosed. No off-balance sheet obligations were reported in the provided data. Equity base stands at 45.61; financial leverage 1.80x is moderate and provides some capacity if returns improve.

Cash Flow Quality

Operating cash flow is unreported, so OCF/Net Income and free cash flow cannot be calculated this quarter. As such, we cannot validate earnings quality via cash conversion, nor assess working capital dynamics (receivables collection, payables stretch, or inventory). Interest coverage (34.9x) suggests near-term solvency is not contingent on aggressive cash management. Dividend/capex coverage is indeterminable without OCF and capex data. Key watch item: confirm OCF/NI > 1.0 and stable receivables days in subsequent filings to substantiate quality of earnings.

Dividend Sustainability

Dividend data (DPS, total dividends, payout) is unreported, and free cash flow is unavailable. With NI at 1.37 and strong liquidity, the balance sheet could support modest shareholder returns, but sustainability depends on recurring OCF and capex intensity. Policy outlook cannot be inferred without guidance; monitor payout ratio and FCF coverage when disclosed. Until cash generation is evidenced, any prospective payout should be conservative.

Risk Assessment

Business Risks:

• Revenue softness (-4.9% YoY) indicating demand/timing headwinds.
• Margin sustainability risk if cost savings are non-recurring or mix normalizes.
• Execution risk on projects that drive gross margin variability.
• Customer concentration or contract timing risk (implied by revenue volatility).

Financial Risks:

• Cash flow visibility risk due to unreported OCF/FCF.
• Working capital risk tied to receivables (26.93) absent collection metrics.
• Potential extraordinary gains/losses not detailed, affecting earnings volatility.
• Moderate leverage with long-term loans (10.74), though coverage is currently strong.

Key Concerns:

• Internal inconsistencies in reported P/L subtotals (e.g., PBT < ordinary income while NI > PBT) and between revenue, cost of sales, and gross profit.
• ROIC at ~6.0%, below typical 7–8% targets, implying below-target capital efficiency.
• Lack of cash flow and dividend disclosures limiting assessment of capital return capacity.

Investment Implications

Key Takeaways:

• Quality beat on profitability: OI +41.7% YoY despite -4.9% revenue, with ~125 bps operating margin expansion.
• ROE at ~3.0% constrained by thin net margins; improving NPM is the clearest lever.
• Strong liquidity (current ratio 267%) and robust interest coverage (34.9x) mitigate near-term financial risk.
• ROIC ~6.0% signals need for better capital efficiency to meet standard benchmarks.
• Data gaps (OCF, capex, dividends) and internal P/L inconsistencies warrant cautious interpretation.

Metrics to Watch:

• Operating cash flow and OCF/NI ratio (target > 1.0).
• Gross margin trend and reconciliation of revenue/COGS/GP.
• Order backlog and book-to-bill for revenue visibility.
• SG&A growth vs revenue growth (for operating leverage durability).
• ROIC trajectory toward or above 7–8% target range.
• Receivables days and any changes in credit terms.

Relative Positioning: Within Japanese small/mid-cap AI/analytics/software peers, JDSC shows improving profitability and strong liquidity, but trails best-in-class on ROIC and lacks cash flow disclosure this quarter; sustained margin gains and validated cash conversion would be needed to close the 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