VALUENEX Japan Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥183M
• Operating Income: ¥-1M
• Net Income: ¥-68M
• EPS: ¥0.10

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 Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

VALUENEX reported FY2026 Q1 consolidated results under JGAAP with revenue of 1.83 (100M JPY), up 39.3% YoY, indicating solid top-line momentum. Reported gross profit was 1.03, yielding a gross margin of 56.4%, which is healthy for a software/analytics-oriented model and suggests resilient unit economics. SG&A expenses were 1.72, exceeding gross profit and leading to operating losses at face value; however, operating income is disclosed as only -0.01, which is inconsistent with the arithmetic of gross profit minus SG&A. Profit before tax was -0.69, and non-operating items net to roughly -0.01, further highlighting internal statement inconsistencies for the quarter. Total comprehensive income was a small positive at 0.02, while EPS (basic and diluted) was 0.10 JPY, both difficult to reconcile with the reported pre-tax loss; these discrepancies necessitate caution in interpreting profitability. Balance sheet liquidity is strong: cash and deposits of 7.09 and current assets of 8.51 against current liabilities of 2.02 yield a current ratio of 420% and quick ratio of 420%. The company is effectively net cash, with liabilities of 2.02 versus total equity of 7.11, implying low financial risk and high solvency (equity/asset ratio roughly ~80% based on the provided totals). Retained earnings are negative at -0.99, indicating past accumulated losses, but capital surplus is large at 7.30, which supports the equity base despite deficits. Asset turnover for the quarter is 0.206 (revenue/total assets), typical for an early-stage or IP-heavy model with high cash holdings. Financial leverage is modest at 1.25x (assets/equity), reinforcing a conservative capital structure. Working capital of 6.48 reflects ample operating runway. With operating leverage still negative (SG&A > gross profit), the path to break-even hinges on continued revenue scale and disciplined cost control. Data gaps are substantial (OCF, capex, depreciation, detailed SG&A, and dividend data unreported), and some reported line items appear internally inconsistent; thus, conclusions about earnings quality should be tentative. Near-term focus should be on validating revenue sustainability, aligning reported operating income with underlying expense trends, and confirming cash burn via OCF once disclosed. Overall, the company shows accelerating growth and robust liquidity but has yet to demonstrate consistent profitability and cash generation.

From Earnings Presentation: In the first quarter of the fiscal year ending July 2026, VALUENEX Inc. achieved a substantial increase in revenue, with net sales of 183 million yen (YoY +39.3%), marking the highest first-quarter sales since listing. Operating income improved significantly by +66 million yen YoY, narrowing the loss to ▲1 million yen and reaching the break-even level. Ordinary profit and profit attributable to owners of parent turned positive (0.4 million yen and 0.2 million yen, respectively). As of the end of Q1, actual results plus order backlog reached 73% of the prior full-year sales, indicating strong momentum in new order acquisition. Despite the structural back-half weighting of sales, it is noteworthy that in Q1—typically loss-making due to front-loaded investments—the company landed near break-even. Consulting revenue grew markedly to 97 million yen (YoY +64.9%), and ASP revenue was solid at 83 million yen (+7.1%). Meanwhile, full-year guidance remains undisclosed due to uncertainties such as the Trump tariffs and geopolitical factors, reflecting a cautious stance. Financially, the company remains extremely sound with total assets of 888 million yen, net assets of 711 million yen, an equity ratio of 79.7%, no interest-bearing debt, and ample cash and deposits of 709 million yen. The new product, Radar Tech Intelligence (RTI), was released in Q1, and enhancements to Radar QFD and rollout of the Fusion beta are accelerating the evolution of the ASP service suite. In the U.S., revenue declined ▲11.2% YoY due to organizational changes at three major clients and the impact of the Trump tariffs, while Japan posted a significant increase of +57.1%, driving consolidated growth. The improvement in operating profit was mainly due to higher sales and lower SG&A; personnel expenses decreased due to reclassification to cost of sales, and recruitment costs were curbed with zero hires this quarter versus two in Q1 last year.

Financial Analysis

Profitability

ROE_decomposition: DuPont not calculable due to missing net income; components available: asset turnover 0.206 and financial leverage 1.25x. Net margin is not reliable this quarter given conflicting loss metrics and positive EPS/TCI. margin_quality: Gross margin is 56.4% (1.03/1.83), indicating good product economics. SG&A intensity is very high at ~94% of revenue (1.72/1.83), consuming gross profit and implying negative operating leverage at current scale. Reported operating income (-0.01) conflicts with gross profit and SG&A arithmetic (1.03 - 1.72 = -0.69). operating_leverage: With revenue +39.3% YoY but operating losses persisting, fixed cost absorption has not yet reached breakeven. If gross margin holds near mid-50s, breakeven would require either SG&A reduction or materially higher revenue run-rate. Asset turnover at 0.206 is suppressed by a large cash balance, which dilutes efficiency metrics.

Growth

revenue_sustainability: Top-line growth of +39.3% YoY is strong for Q1, suggesting healthy demand and/or successful sales execution. Sustainability will depend on retention, upsell, and new wins; backlog/ARR were not disclosed. profit_quality: Given inconsistencies (operating income vs PBT) and lack of OCF disclosure, profit quality cannot be validated. The positive total comprehensive income (0.02) and EPS (0.10 JPY) are not aligned with the reported pre-tax loss (-0.69), implying classification, timing, or disclosure differences that need clarification. outlook: If growth persists at 20–30%+ and gross margin stays >50%, operating leverage could inflect within a few quarters provided SG&A growth moderates. Confirmation requires subsequent quarters’ expense trajectory and cash flow.

Financial Health

liquidity: Current assets 8.51 vs current liabilities 2.02 yield a current ratio of 4.20x and quick ratio of 4.20x, supported by cash 7.09. Working capital is 6.48. Near-term liquidity risk appears low. solvency: Total liabilities 2.02 vs equity 7.11 imply a debt-to-equity proxy of 0.28x. Financial leverage 1.25x (assets/equity) indicates a conservative structure with ample equity cushion. capital_structure: High cash and limited liabilities suggest a net cash position (~5.07). Retained earnings are negative (-0.99), reflecting accumulated deficits, offset by substantial capital surplus (7.30), consistent with equity financing.

Cash Flow

earnings_quality: OCF is unreported, preventing reconciliation of accrual earnings to cash. Given the discrepancy between operating income and PBT and the small positive TCI/EPS, earnings quality for the quarter is indeterminate. FCF_analysis: Capex and investing CF are unreported; FCF cannot be assessed. Cash balance is sizeable relative to quarterly operating scale, providing runway even if OCF is negative. working_capital: Accounts receivable of 0.85 against revenue of 1.83 suggests AR at ~46% of quarterly sales, reasonable for a B2B model, but without cash flow data we cannot assess collections timing or DSO trends.

Dividend Sustainability

payout_ratio_assessment: No dividend data disclosed for the quarter; payout ratios are not calculable. Negative retained earnings (-0.99) typically constrain dividend capacity under JGAAP/Companies Act unless covered by surplus/reserves. FCF_coverage: Not assessable due to missing OCF and capex. Given growth stage economics and reported losses, distributions appear unlikely near term absent a stated policy change. policy_outlook: With focus likely on growth and path to profitability, internal reinvestment is expected; no guidance provided.

Business Outlook

Full-year guidance is currently undecided due to continued uncertainty regarding the impact of the Trump tariffs and geopolitical developments. The company intends to disclose promptly once reasonable forecasting becomes possible. Q1 marked an exceptionally strong start, and having reached the break-even level, the company expects operating profitability to become sustainable as sales scale expands. The revenue structure is structurally back-half weighted (H1 39.9%: H2 60.1%), and with actuals plus order backlog at 73% of last year’s full-year sales as of Q1, full-year profitability improvement is anticipated. New order acquisition is progressing well, with growth expected to be led by sales expansion primarily in Japan. While the U.S. business experienced a short-term revenue decline due to organizational changes at major clients and the Trump tariffs, new deals are progressing, and a mid-term recovery is expected. The evolution of the ASP service suite (Radar Tech Intelligence, Radar QFD, Fusion beta) will strengthen approaches to different customer segments and departments, aiming to increase the number of client companies and improve unit prices. Consulting revenue grew significantly by +64.9% YoY, and the company is focusing on securing high-ticket engagements for executives, centered on Bird’s-eye Management Support. Going forward, the company will promote the shift from spot contracts to recurring contracts to expand stable revenues. On the development front, it will advance new services leveraging LLMs and further improve Radar QFD to enhance its ability to solve customer challenges. For global expansion, the company is strengthening executive-level outreach at large enterprises through a hiring partnership with Stanford University (over 1,000 applications in 2025) and collaboration with securities firms. It will prioritize a partnership strategy (consulting/securities and investment banks/government ministries and public institutions/operating companies) to promote Bird’s-eye Management Support, co-selling, M&A support, system implementation, and new business co-creation.

Management Guidance

Management highly values the fact that, although Q1 is typically loss-making due to front-loaded investments, this quarter landed near break-even. They indicated it was “an extremely strong start,” emphasizing the significant improvement in operating income of +66 million yen driven by higher revenue and cost reductions. Although full-year guidance is undisclosed, Q1 results and the order backlog suggest confidence in future earnings expansion. Given the structural back-half weighting of sales, reaching the break-even point in Q1 is viewed as a key indicator pointing toward full-year profitability. Regarding the U.S. business, while revenue declined short term due to organizational changes at three major clients and the Trump tariffs, new deals are progressing, and a mid-term recovery is expected. The company will continue to drive group-wide growth centered on Japan. In product and service development, through the releases of Radar Tech Intelligence and Radar QFD, the company is building a growth cycle that expands from surfacing customer issues to value creation in a virtuous loop. For executive-focused Bird’s-eye Management Support services, the policy is to promote the shift from spot to recurring contracts to expand stable revenues. For self-service analytics, the company will embed professional analysis knowledge into AI functions and expand as ASP services to increase the number of client companies and realize scale benefits. Professional analysis will be focused on government ministries/public institutions and select IP/R&D departments, concentrating expert resources on delivering high-quality outcomes. Financially, the company maintains an extremely sound base with an equity ratio of 79.7% and a debt-free balance sheet, securing funds for investments in new and existing businesses. The cash position is ample with current assets of 823 million yen (of which cash and deposits are 709 million yen), indicating an emphasis on balancing growth investments with financial prudence.

Strategic Initiatives

• Build a growth cycle through ASP evolution and applications: launch of Radar Tech Intelligence (RTI), enhancements to Radar QFD, rollout of the Fusion beta, and continuous evolution of Radar (AI automation, acceleration, UI improvements, AI agent functionality) to expand cyclically from identifying customer issues to creating value
• Optimize the revenue structure through multi-layered deployment: three-layer model consisting of Bird’s-eye Management Support for executives (high unit price, quality-focused, shift from spot to recurring contracts), self-service analytics for R&D/IP (ASP-centric, expand number of client companies), and professional analysis (for government ministries and select IP/R&D departments, deliver high-quality outcomes)
• Accelerate global expansion: expand sales primarily in Japan (Q1 +57.1%), recover the U.S. business (overcome short-term revenue headwinds, build new deal pipeline), and globalize the ASP service suite
• Deepen partnership strategy: hiring partnership with Stanford University (over 1,000 applications), collaboration with securities firms (executive-level outreach at large enterprises), and strengthened cooperation with management consulting firms, government ministries/public institutions, and operating companies (Bird’s-eye Management Support, co-selling, M&A support, system implementation, new business co-creation)
• Maximize customer lifetime value through co-creation: advance proposal-based analysis within customers in a developmental manner and deploy across multiple departments to maximize lifetime value together with customers and create loyal customers
• Strengthen product development: launch of Radar Tech Intelligence and Radar QFD (completed in Q1), functional enhancements to customer tools (VALUENEX Radar app), improvements to VALUENEX Radar, and development of new services utilizing LLMs (U.S.)
• Talent acquisition and organizational strengthening: promote recruitment for future global internship projects (services supporting customer problem-solving, from ideation—especially AI-related—through prototype creation) in the U.S.; new hires in Q1 were 0, curbing costs
• Enhance marketing and sales activities: exhibit at major conferences such as CEATEC2025, the Intellectual Property & Information Fair & Conference 2025, the Air, Space, and Cyber Conference, and Q2B Silicon Valley 2025; present the company at conferences attended by Fortune 100 firms; and focus on defense tech and quantum computing business domains

Risk Assessment

Business Risks:

• Execution risk in scaling sales while controlling SG&A to reach breakeven
• Customer concentration and renewal risk typical of enterprise/B2B models (not disclosed but common)
• Product/technology adoption and competitive intensity in data analytics/AI markets
• Dependence on key personnel given high human-capital content of the model

Financial Risks:

• Earnings volatility and unclear expense classification reflected in inconsistent operating vs pre-tax results
• Negative retained earnings indicating limited historical profitability
• Potential cash burn if OCF is negative; cash runway depends on burn rate (not disclosed)

Key Concerns:

• Data inconsistencies: gross profit vs COGS, operating income vs PBT, and EPS/TCI vs losses
• Lack of cash flow disclosure, impairing assessment of earnings quality and runway
• High SG&A relative to revenue delaying operating leverage realization

Risk Factors from Presentation:

• Reason for non-disclosure of full-year guidance: given ongoing uncertainty over the impact of the Trump tariffs and geopolitical developments on the group’s performance, reasonable profit forecasting is difficult at this time
• Short-term revenue decline in the U.S. business: U.S. sales fell ▲11.2% YoY due to organizational changes at three major clients and the impact of the Trump tariffs
• Back-half weighting of sales: due to customer budget cycles and other factors, sales tend to be weighted to the second half (H1 39.9%: H2 60.1%), resulting in larger quarterly fluctuations
• Order backlog fluctuation risk: backlog is based on contracts as of now, but mid-term changes or cancellations due to customer circumstances cannot be completely ruled out (note)
• Foreign exchange risk: exposure to currency fluctuations due to operations in the U.S.
• Competitive landscape changes: risk of weakened competitiveness due to intensifying competition and accelerating technological innovation in AI and big data analytics
• Talent acquisition and retention risk: securing and developing specialized talent is key to growth; growth may be constrained if hiring and retention do not progress
• Market acceptance of new products/services: potential that market adoption of new products such as Radar Tech Intelligence and Radar QFD may not progress as expected

Investment Implications

Key Takeaways:

• Strong Q1 top-line growth (+39.3% YoY) with robust gross margin (56.4%)
• Operating leverage not yet realized; SG&A (1.72) exceeds gross profit (1.03)
• Reported PBT (-0.69) conflicts with near-breakeven operating income disclosure (-0.01)
• Balance sheet strength: cash 7.09 and low liabilities (2.02) support liquidity
• Negative retained earnings (-0.99) but strong capital surplus (7.30) underpin equity base
• Multiple key cash flow items unreported; earnings quality cannot be validated this quarter

Metrics to Watch:

• OCF and FCF when disclosed to gauge cash burn and earnings quality
• Trend in SG&A growth vs revenue to assess operating leverage
• Gross margin stability around mid-50s%
• Backlog/ARR or retention metrics (if disclosed) to validate revenue durability
• Reconciliation of operating income and PBT in subsequent filings
• Cash balance trajectory and any changes in working capital (AR collections)

Relative Positioning: Versus other small-cap Japanese software/analytics names, VALUENEX shows above-average liquidity and healthy gross margins but below-average visibility on cash generation and a slower path to profitability due to elevated SG&A; clarity on expense structure and OCF would be needed to close the gap.

Supplementary Insights (Key Highlights)

• Q1 net sales of 183 million yen set a new post-listing first-quarter record (YoY +39.3%)
• Operating income improved significantly by +66 million yen, from ▲68 million yen to ▲1 million yen, reaching the break-even level
• As of Q1, actuals plus order backlog reached 73% (503 million yen) of the prior full-year sales of 690 million yen, indicating a strong start to the year
• Released the new product “Radar Tech Intelligence (RTI)” in Q1, a generative AI–powered automated technology report service deployable regardless of company size
• Enhancements and launch of Radar QFD address needs to shorten development/design man-hours, strengthening expansion into engineering departments
• Japan sales grew significantly to 140 million yen (YoY +57.1%); the U.S. declined to 42 million yen (▲11.2%), but new deals are progressing well
• SG&A of 136 million yen was sharply reduced by ▲20.2% YoY, driven by cost reductions and reclassification of personnel expenses to cost of sales
• Equity ratio of 79.7% and cash/deposits of 709 million yen reflect an extremely sound financial base; the company remains debt-free
• Order backlog was 344 million yen (349 million yen at the prior fiscal year-end), with 320 million yen scheduled for revenue recognition in the current period; new order acquisition remains strong
• Ordinary profit and profit attributable to owners of parent turned positive, marking an exceptionally solid start to the first 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