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

JDSC reported FY2026 Q1 consolidated results under JGAAP with revenue of ¥5,138 million, down 4.9% year over year, but delivered strong profit expansion, with operating income up 41.7% to ¥196 million and net income up 53.4% to ¥137 million. The topline softness contrasts with improved profitability, indicating favorable mix, pricing, and/or tighter operating cost control. Gross profit was ¥563.7 million, implying a gross margin of 11.0%, and operating margin expanded to 3.8% (¥196 million/¥5,138 million), a notable improvement given the revenue decline. Ordinary income of ¥178 million suggests non-operating items were modest; interest expense was ¥5.6 million, resulting in a robust interest coverage ratio of 34.9x. Net profit margin was 2.67%, consistent with the DuPont inputs provided. DuPont analysis yields ROE of 3.0% from a net margin of 2.67%, asset turnover of 0.625x, and financial leverage of 1.80x. The balance sheet appears sound: total assets were ¥8,220 million and total equity ¥4,561 million, implying a calculated equity ratio near 55.5% (equity/assets), despite the reported equity ratio field being 0.0% (treated as undisclosed). Liquidity is strong with current assets of ¥5,536 million and current liabilities of ¥2,510 million, giving a current ratio of 2.21x and working capital of ¥3,026 million. Leverage is moderate with total liabilities of ¥4,087 million and a debt-to-equity ratio of roughly 0.90x (using total liabilities as a proxy for interest-bearing debt due to disclosure limits). Effective tax appears closer to ~10–11% based on income tax of ¥18.9 million versus ordinary income of ¥178 million, whereas the reported 0.0% effective tax rate should be viewed as undisclosed. Cash flow data (operating, investing, financing, and cash balance) are not disclosed this quarter, limiting cash conversion assessment. Depreciation and amortization are also not disclosed, so EBITDA and non-cash earnings quality cannot be derived. The company paid no dividends (DPS ¥0), and payout/FCF coverage metrics are not meaningful without cash flow disclosure. Overall, results demonstrate operating leverage and expense discipline amid a softer revenue environment, producing higher profitability and a modest 3.0% ROE on a healthy balance sheet. Key limitations to the analysis include the absence of cash flow data, depreciation, and share count details, which constrain per-share and cash conversion insights.

Profitability Analysis

ROE_decomposition: ROE 3.00% = Net profit margin 2.67% × Asset turnover 0.625× × Financial leverage 1.80×. This indicates modest returns driven primarily by thin margins and moderate asset efficiency, with only moderate leverage. margin_quality: Gross margin is 11.0% (¥563.7m/¥5,138m). Operating margin is 3.8% (¥196m/¥5,138m). Net margin is 2.67% (¥137m/¥5,138m). Year-over-year profit growth despite a 4.9% sales decline points to improved mix/pricing and tighter SG&A control. The gap from gross to operating margin suggests a still-meaningful operating cost base; further scale could enhance margin. operating_leverage: Operating income rose 41.7% despite a 4.9% revenue contraction, evidencing positive operating leverage in the quarter. Interest burden is light (interest expense ¥5.6m) with 34.9x coverage, so leverage does not materially drive earnings volatility.

Growth Assessment

revenue_sustainability: Revenue declined 4.9% YoY to ¥5,138m, implying softer demand or timing of project recognition. Sustainability depends on backlog, win rates, and recurrence of contracts, which are not disclosed. profit_quality: Profit improvement was driven by operating efficiency rather than top-line growth. With gross margin at 11.0% and operating margin at 3.8%, mix and cost control are the likely drivers. Absent cash flow data and D&A, the durability of margin gains cannot be fully validated. outlook: If operating discipline persists and revenue normalizes, margins could improve further via scale benefits. Conversely, if revenue softness reflects structural demand pressure, sustaining current margin may require continued cost control. Visibility is limited due to missing backlog and cash flow disclosures.

Financial Health

liquidity: Current assets ¥5,536.1m vs. current liabilities ¥2,509.7m; current ratio 2.21x and working capital ¥3,026.4m indicate strong short-term liquidity. Quick ratio is shown as 2.21x; inventories are undisclosed (reported as 0). solvency: Total liabilities ¥4,086.5m vs. equity ¥4,561.0m yield a debt-to-equity of ~0.90x. Calculated equity ratio is ~55.5% (vs. disclosed 0.0%, treated as undisclosed), suggesting a solid capital base. capital_structure: Asset base ¥8,220m funded roughly 55% by equity and 45% by liabilities, with financial leverage of 1.80x assets/equity. Interest expense is low, reducing refinancing and coverage risk in the near term.

Cash Flow Quality

earnings_quality: Operating cash flow, investing cash flow, financing cash flow, cash balance, and depreciation are not disclosed this quarter. As a result, OCF/NI, accrual intensity, and cash conversion cannot be assessed. Treat the reported OCF/NI of 0.00 as undisclosed, not indicative of poor quality. FCF_analysis: Free cash flow is not calculable due to missing OCF and capex data. EBITDA is also undisclosed, limiting non-cash adjustment analysis. working_capital: Working capital is positive at ¥3,026.4m. Without receivables/payables breakdown or DSO/DPO, we cannot assess working capital intensity or collection risk.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is shown as 0.0%. With positive earnings (¥137m), capacity for dividends depends on cash generation and policy, neither disclosed. Therefore, payout sustainability cannot be evaluated. FCF_coverage: FCF coverage is not meaningful due to undisclosed OCF and capex. Any assessment of coverage would be speculative. policy_outlook: Given modest ROE (3.0%) and growth needs, reinvestment may be prioritized. Formal dividend policy and capital allocation intentions are not provided in the data.

Risk Assessment

Business Risks:

• Revenue contraction of 4.9% YoY suggests demand variability or project timing risk.
• Potential concentration in large projects or clients could amplify revenue volatility (not disclosed).
• Execution risk on AI/analytics projects with delivery milestones and acceptance criteria.
• Talent acquisition and retention pressures in data science and engineering functions.
• Pricing pressure from competition in digital/AI services impacting gross margins (11.0%).
• Dependence on subcontractors or partners could influence delivery costs and quality (not disclosed).

Financial Risks:

• Limited cash flow disclosure impedes assessment of cash conversion and liquidity buffers.
• Working capital swings could impact OCF, given project-based billing and collection cycles.
• Moderate leverage (D/E ~0.90x) could become more burdensome if profits weaken.
• Interest rate changes have limited but non-zero impact given some interest expense.
• Tax expense variability (apparent ~10–11% vs. undisclosed metric) could affect net margin.

Key Concerns:

• Absence of OCF, capex, and cash balance disclosure this quarter.
• Low ROE (3.0%) relative to potential cost of equity, highlighting the need for margin and/or asset turnover improvement.
• Sustaining operating margin gains amid declining revenue.

Investment Implications

Key Takeaways:

• Top line declined 4.9% YoY to ¥5,138m, but operating income rose 41.7% to ¥196m, demonstrating operating leverage.
• Gross margin 11.0% and operating margin 3.8% indicate improved cost discipline but still thin margins.
• ROE at 3.0% is modest; further improvement hinges on margin expansion and asset efficiency.
• Balance sheet appears healthy with a calculated equity ratio ~55.5% and current ratio 2.21x.
• Interest coverage is strong at 34.9x, indicating low near-term financial stress.
• Cash flow and D&A were not disclosed, limiting earnings quality assessment.

Metrics to Watch:

• Order backlog and book-to-bill for revenue visibility.
• Gross margin and SG&A ratio to track sustainability of margin gains.
• Operating cash flow to net income ratio and free cash flow.
• Days sales outstanding and contract liabilities for working capital discipline.
• Recurring revenue mix and retention rates.
• Capex and capitalization of development costs to gauge investment and accruals.

Relative Positioning: Within the context of project-based technology/services businesses, JDSC exhibits improving operating efficiency and solid balance sheet strength but remains constrained by thin margins, modest ROE, and limited disclosure on cash conversion this quarter.

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