SOFT99corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥15.25B
• Operating Income: ¥1.92B
• Net Income: ¥1.28B
• EPS: ¥59.04

Income Statement

Balance Sheet

Cash Flow Statement

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

Soft99 Corporation (4464) delivered steady top-line and operating performance in FY2026 Q2 under JGAAP on a consolidated basis. Revenue increased 5.9% year over year to ¥15.252 billion, supported by resilient demand and solid execution. Gross profit reached ¥5.461 billion, implying a gross margin of 35.8%, which is healthy for a specialty consumer/industrial products mix. Operating income grew 6.0% YoY to ¥1.924 billion, marginally outpacing revenue and indicating modest positive operating leverage. Ordinary income was ¥2.070 billion, exceeding operating income, suggesting non-operating gains or financial income contributed positively. Net income came in at ¥1.268 billion, down 0.6% YoY, pointing to headwinds below the operating line and/or tax normalization. EBITDA was ¥2.360 billion (margin 15.5%), reflecting adequate cash earnings and disciplined cost control. The DuPont decomposition shows a net margin of 8.31%, asset turnover of 0.232x, and financial leverage of 1.14x, resulting in a reported ROE of 2.20%. Liquidity is very strong: current assets of ¥32.276 billion versus current liabilities of ¥4.589 billion (working capital ¥27.687 billion) translate into an implied current ratio above 7x. Solvency appears robust with total liabilities of ¥8.062 billion against equity of ¥57.737 billion; the implied equity ratio is approximately 87.7% (despite a reported 0.0% due to data not disclosed in that field). Operating cash flow of ¥1.442 billion exceeded net income (OCF/NI 1.14x), supporting decent earnings quality. Financing cash outflow of ¥0.599 billion indicates ongoing shareholder returns (dividends and/or buybacks), although dividend data is not disclosed in the XBRL fields provided. Investing cash flow was not disclosed, so free cash flow cannot be precisely determined from the dataset. Inventory stood at ¥2.559 billion; based on cost of sales, inventory days appear reasonable for the product category. Overall, Soft99 shows stable margins, solid cash conversion, and a conservative balance sheet, though net profit softness and limited disclosure on investing cash flows and dividend details temper visibility. Data limitations include unreported cash, investing CF, equity ratio field, and share count, so certain per-share and coverage metrics rely on estimates or cannot be computed.

Profitability Analysis

ROE decomposition:

• net_profit_margin: 8.31%
• asset_turnover: 0.232x
• financial_leverage: 1.14x
• calculated_ROE: 2.20%
• interpretation: ROE is primarily driven by margin; leverage is low and asset turnover is modest. The low financial leverage constrains ROE but enhances balance sheet resilience. margin_quality:
• gross_margin: 35.8%
• operating_margin: 12.6%
• ordinary_margin: 13.6%
• net_margin: 8.31%
• commentary: Stable gross margin and a solid operating margin indicate good pricing and cost discipline. Ordinary income exceeds operating income, suggesting beneficial non-operating contributions. Net margin declined slightly YoY despite operating growth, implying heavier taxes or lower non-operating gains versus the prior year. operating_leverage:
• revenue_growth_yoy: 5.9%
• operating_income_growth_yoy: 6.0%
• assessment: Slight positive operating leverage; cost base scaled efficiently with revenue.

Growth Assessment

revenue_sustainability: Mid-single-digit YoY growth suggests stable demand across core product lines. No segment detail provided, but the profile is consistent with a steady aftermarket/consumer-care demand environment. profit_quality: Operating profit grew in line with sales, indicating balanced growth. The slight YoY decline in net income likely stems from below-the-line items or tax; operating fundamentals look intact. outlook: With strong balance sheet support and healthy cash generation, the company appears positioned to sustain measured growth. Near-term trajectory depends on input costs, FX, and demand in automotive and related channels; absent shocks, margins should remain resilient.

Financial Health

liquidity:

• current_assets: ¥32,275,527,000
• current_liabilities: ¥4,588,873,000
• current_ratio: 703.3% (approx. 7.0x)
• quick_ratio: 647.6%
• working_capital: ¥27,686,654,000
• assessment: Very strong liquidity with ample working capital buffer. solvency:
• total_assets: ¥65,854,000,000
• total_liabilities: ¥8,062,197,000
• total_equity: ¥57,737,000,000
• equity_ratio_implied: ≈87.7% (equity/total assets)
• debt_to_equity_ratio: 0.14x (as provided)
• assessment: Low leverage and high equity buffer provide strong solvency. Reported equity ratio of 0.0% is a non-disclosure artifact; implied ratio indicates a very conservative capital structure. capital_structure: Predominantly equity-funded with minimal reliance on interest-bearing debt. Ordinary income above operating income also suggests net financial income rather than expense.

Cash Flow Quality

earnings_quality:

• OCF: ¥1,442,224,000
• net_income: ¥1,268,000,000
• OCF_to_NI: 1.14x
• interpretation: Cash generation modestly exceeds accounting earnings, a positive indicator for earnings quality. FCF_analysis:
• investing_CF: Not disclosed
• capex_proxy: Not available
• free_cash_flow: Not computable due to missing investing CF/capex disclosure
• commentary: While OCF is solid, the absence of investing cash flow data prevents a definitive FCF assessment. Historically, maintenance capex for comparable businesses is moderate; if that holds, underlying FCF would likely be positive. working_capital:
• inventories: ¥2,558,634,000
• inventory_days_est: ≈52 days (Inventory/COGS * 182 days; estimate based on half-year COGS)
• commentary: Inventory position appears reasonable for the product mix; no abnormal buildup indicated by available data.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥59.04, but DPS is undisclosed in the dataset (0.00 is a placeholder). Payout ratio cannot be computed from provided fields. FCF_coverage: Not determinable due to missing investing CF. However, financing cash outflows of ¥598.6 million were covered 2.4x by OCF, suggesting capacity to fund shareholder returns. policy_outlook: Given strong balance sheet and cash generation, the company appears capable of maintaining or gradually increasing shareholder returns, subject to capex needs and strategic investments. Confirmation requires official dividend guidance.

Risk Assessment

Business Risks:

• Demand variability in automotive aftermarket and consumer care channels
• Raw material price volatility affecting gross margins
• FX fluctuations impacting import costs and overseas sales (if applicable)
• Competitive pricing pressure in chemicals and consumer products
• Product mix shifts that could influence margin structure
• Potential slowing in domestic consumption affecting volumes

Financial Risks:

• Limited disclosed visibility on investing cash flows and capex timing
• Concentration risk if a few product categories or channels drive a large share of sales
• Working capital swings (seasonality in inventories and receivables) impacting OCF intra-year
• Non-operating income variability influencing ordinary income

Key Concerns:

• Slight YoY decline in net income despite operating growth
• Missing disclosures (investing CF, equity ratio field, DPS, share count), which constrain precision of per-share and FCF analyses
• Dependence on non-operating items to lift ordinary income above operating income

Investment Implications

Key Takeaways:

• Steady revenue growth (+5.9% YoY) with stable-to-improving operating profitability (+6.0% YoY OI)
• Healthy gross (35.8%) and operating (12.6%) margins indicate cost discipline and pricing power
• Strong cash conversion (OCF/NI 1.14x) supports earnings quality
• Very conservative balance sheet with implied equity ratio ~88% and low leverage
• Net income softness (-0.6% YoY) likely due to below-the-line factors or tax normalization
• Non-operating gains supported ordinary income; sustainability should be monitored
• Data gaps (investing CF, DPS, share count) limit FCF and payout precision

Metrics to Watch:

• Operating margin trend and gross margin resilience versus input costs
• Ordinary-to-operating income gap (quality and sustainability of non-operating gains)
• OCF/NI ratio and working capital movements (especially inventories and receivables)
• Capex and investing cash flows to refine FCF
• Dividend declarations, buyback activity, and total shareholder return outflows
• Asset turnover progression and inventory days
• Effective tax rate (implied ~30% using provided tax and ordinary income)

Relative Positioning: Within specialty consumer/industrial products peers, Soft99 exhibits above-average balance sheet strength, solid mid-teens EBITDA margin, and stable cash conversion, albeit with modest asset turnover and low leverage-driven ROE.

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