infoNet inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥884M
• Operating Income: ¥-112M
• Net Income: ¥11M
• EPS: ¥-67.60

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

For FY2026 Q2, 株式会社インフォネット reported revenue of ¥884.0 million, down 3.5% year on year, indicating modest topline pressure likely tied to project timing and a softer order environment. Gross profit was ¥389.8 million, translating to a solid gross margin of 44.1%, which suggests the core delivery economics remain sound despite slower sales. Operating income was a loss of ¥112.0 million, broadly flat in YoY change rate terms, reflecting fixed-cost absorption and continued investment against softer revenue. Ordinary loss was ¥114.0 million, indicating limited non-operating drag beyond modest interest expense of ¥2.33 million. Net loss widened to ¥137.0 million (YoY +356.7% on a loss base), pointing to additional below-the-line items and/or tax effects; income tax expense of ¥31.1 million despite a loss implies timing differences or non-deductible items under JGAAP. DuPont decomposition shows a negative ROE of 14.12%, driven primarily by a net margin of -15.50%, compounded by moderate asset turnover of 0.453 and financial leverage of 2.01. EBITDA was negative at ¥100.1 million with an EBITDA margin of -11.3%, underscoring operating deleverage as revenue softened. Liquidity is ample: current assets of ¥1,112.9 million versus current liabilities of ¥505.1 million yield a current ratio of 220.4% and working capital of ¥607.9 million. The company’s capital structure shows total equity of ¥970.0 million and total liabilities of ¥920.8 million, mapping to financial leverage of ~2.0x assets/equity and a debt-to-equity ratio of 0.95x. Operating cash flow was positive at ¥101.8 million despite the net loss, implying favorable working capital movements and non-cash add-backs (depreciation ¥11.9 million) supporting cash generation. Financing cash flow was an inflow of ¥147.3 million, suggesting reliance on external funding (debt or equity) during the period; investing cash flow and cash balance were undisclosed (reported as zero), limiting full cash bridge analysis. The equity ratio shown as 0.0% is an undisclosed metric in this dataset and does not reflect the reported equity/asset levels. Dividends were not paid (DPS ¥0), consistent with loss-making status and a prudent liquidity stance. Overall, the quarter reflects resilient gross margins but pressured operating profitability from operating leverage, with cash supported by working capital, strong liquidity, and supplemental financing. The near-term focus is likely on stabilizing revenue growth, controlling fixed costs, and sustaining cash discipline to improve ROE from negative territory. Data limitations include several zero placeholders (e.g., cash, investing CF, equity ratio), which are undisclosed rather than true zero values.

Profitability Analysis

ROE of -14.12% decomposes into net margin -15.50%, asset turnover 0.453, and financial leverage 2.01, indicating margin weakness is the primary driver of negative equity returns. Gross margin remains healthy at 44.1%, reflecting pricing power and a relatively asset-light delivery mix (typical of solutions/CMS businesses) with low direct costs. However, the negative operating margin signals that fixed SG&A and development costs are not being absorbed at the current revenue level, evidencing operating deleverage. EBITDA margin of -11.3% highlights that even before depreciation and amortization, the cost base is heavy relative to revenue this quarter. Ordinary loss closely tracks operating loss, indicating limited non-operating deterioration; interest expense was modest at ¥2.33 million. Interest coverage is negative due to operating loss (reported -48.1x), but absolute interest burden remains small. The widening net loss versus ordinary loss reflects tax expense and below-the-line effects, diluting net profitability. The structure suggests that incremental revenue recovery would have a high flow-through to operating income given the existing fixed cost base. Margin quality at the gross level appears stable; the challenge lies in SG&A efficiency and utilization of delivery resources. Continued cost discipline and improved capacity utilization are likely to be the main levers to restore operating margin.

Growth Assessment

Revenue declined 3.5% YoY to ¥884.0 million, pointing to moderate demand softness or project deferrals. Given the business profile (solutions/services), revenue can be lumpy and timing-driven; the reported decline coupled with stable gross margin suggests mix and timing more than structural pricing pressure. The net loss increased to ¥137.0 million, indicating that revenue softness has been magnified by fixed costs. With asset turnover at 0.453, capital intensity is modest; growth should be achievable without heavy asset additions if bookings recover. Operating deleverage is evident: small topline changes have outsized effects on operating income. Near-term growth sustainability hinges on backlog conversion, new order intake, and churn in recurring/maintenance contracts (not disclosed here). Profit quality is mixed: accounting profitability is negative, but operating cash flow was positive, implying cash earnings benefited from working capital timing and non-cash items. Outlook will largely depend on restoring revenue trajectory in H2 and driving SG&A efficiency; absent this, ROE is likely to remain negative.

Financial Health

Total assets were ¥1,950.0 million versus total equity of ¥970.0 million and total liabilities of ¥920.8 million, yielding financial leverage of ~2.01x and a debt-to-equity ratio of 0.95x. Liquidity is strong: current assets of ¥1,112.9 million exceed current liabilities of ¥505.1 million, resulting in a current ratio of 220.4% and working capital of ¥607.9 million. Quick ratio is reported at 220.4% with inventories undisclosed; for a software/services model, inventory is typically minimal. Interest expense is low at ¥2.33 million, so near-term solvency risk from financing costs appears contained despite negative EBIT. The reported equity ratio of 0.0% is an undisclosed placeholder; based on provided totals, equity as a percentage of assets would be roughly 49.7%. Financing inflow of ¥147.3 million suggests the company is proactively maintaining liquidity via external sources. Overall, the balance sheet provides runway to execute improvement initiatives, but persistent losses would erode equity over time if not offset by cash flow or financing.

Cash Flow Quality

Operating cash flow was positive at ¥101.8 million against a net loss of ¥137.0 million, producing an OCF/Net Income ratio of -0.74. This implies that non-cash charges (e.g., depreciation of ¥11.9 million) and favorable working capital movements (e.g., collections, payables) supported cash generation despite losses. EBITDA was negative (¥100.1 million), so OCF positivity likely came primarily from working capital inflows and tax timing. Free cash flow is reported as ¥0 in the dataset but cannot be assessed accurately because investing cash flow is undisclosed (shown as zero placeholder). Cash and equivalents are also undisclosed (shown as zero), preventing reconciliation of ending liquidity. Financing inflow of ¥147.3 million supplemented cash resources, reducing reliance on internal generation amid operating losses. Overall earnings quality is mixed: accounting losses contrasted with positive OCF suggest underlying cash conversion from operations this quarter, albeit potentially non-recurring if working capital reverses. Monitoring the persistence of OCF relative to EBIT in subsequent quarters will be important.

Dividend Sustainability

DPS was ¥0.00 with a payout ratio of 0.0%, appropriate given the net loss of ¥137.0 million. With negative EBITDA and operating losses, distributions would not be supported by earnings. Free cash flow coverage cannot be determined due to undisclosed investing cash flows (FCF shown as zero placeholder). The company also recorded financing inflows of ¥147.3 million, indicating a priority on funding operations and liquidity rather than returning capital. Given current profitability and the need to fund growth and operating improvements, a conservative dividend stance is likely to persist until sustainable profits and consistent FCF are established.

Risk Assessment

Business Risks:

• Revenue volatility from project timing and potential delays in customer decision cycles
• Operating deleverage due to a relatively fixed cost base, amplifying the impact of small revenue swings
• Potential pricing pressure or competitive intensity in digital solutions/CMS and related services
• Execution risk in cost control and utilization improvements needed to restore operating margins
• Customer concentration risk if large projects/clients dominate quarterly revenue (not disclosed)
• Talent retention and wage inflation in IT/services affecting gross and operating margins

Financial Risks:

• Sustained operating losses could erode equity over time
• Negative interest coverage due to EBIT losses, albeit with low absolute interest costs
• Reliance on external financing inflows (¥147.3 million) to bolster liquidity
• Working capital-driven OCF may reverse, reducing cash generation in subsequent periods
• Tax cash outflows or timing effects despite accounting losses (¥31.1 million income tax expense)

Key Concerns:

• Negative ROE of -14.12% driven by a -15.50% net margin
• EBITDA margin at -11.3% indicating insufficient scale against fixed costs
• Revenue decline of 3.5% YoY suggesting demand or timing headwinds
• Undisclosed investing CF and cash balance limit visibility on true FCF and liquidity runway

Investment Implications

Key Takeaways:

• Core gross margin remains solid at 44.1%, but operating losses reflect fixed-cost absorption issues
• ROE is negative at -14.12%, primarily due to a -15.50% net margin
• Operating cash flow positive at ¥101.8 million despite a ¥137.0 million net loss, driven by working capital
• Liquidity is strong (current ratio 220.4%, working capital ¥607.9 million) providing near-term flexibility
• Financing inflow of ¥147.3 million supports cash resources during loss-making period
• Asset-light model with asset turnover of 0.453 and financial leverage of 2.01 suggests earnings can improve quickly with topline recovery

Metrics to Watch:

• Quarterly order intake/backlog and revenue growth reacceleration
• Operating margin and EBITDA margin progression as utilization improves
• OCF sustainability relative to EBIT (to gauge reliance on working capital)
• SG&A as a percentage of revenue and headcount productivity
• Interest coverage and changes in debt levels following financing inflows
• Tax cash outflows and effective tax behavior during loss periods

Relative Positioning: Versus typical TSE small-cap IT/services peers, インフォネット shows comparable gross margins but weaker operating profitability this quarter due to deleverage; liquidity is stronger-than-average, leverage is moderate, and cash flow reliance on working capital is higher, leaving near-term improvements primarily dependent on revenue stabilization and cost discipline.

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
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