LANCERS,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.49B
• Operating Income: ¥36M
• Net Income: ¥43M
• EPS: ¥2.67

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

Verdict: Solid top-line growth but margin compression led to weaker profitability in FY2026 Q2; cash flow quality was strong and liquidity remained healthy. Revenue rose 10.2% YoY to 24.86, driven by continued platform activity, but operating income fell 26.9% YoY to 0.36. Gross profit reached 10.13 with a gross margin of 40.8%, broadly stable for a marketplace/services model. However, SG&A grew to 9.77, lifting the SG&A-to-sales ratio to 39.3% and squeezing operating margin to 1.5%. Operating margin contracted by approximately 73 bps YoY (from ~2.18% to 1.45%), reflecting negative operating leverage as cost growth outpaced revenue growth. Ordinary income declined 19.5% YoY to 0.41, with non-operating items minor (net +0.05) and interest coverage comfortable at 11.5x. Net income was 0.43 (-9.2% YoY), supported by a slightly negative effective tax rate (-3.8%), which softened the drop in bottom line. ROE was 3.1% via DuPont (NPM 1.7%, asset turnover 0.693x, leverage 2.55x), indicating low returns for the risk profile. Cash generation outperformed earnings: operating cash flow was 0.96 (OCF/NI 2.23x), evidencing good earnings quality this quarter. Liquidity is ample with cash of 19.94 and a current ratio of 183.6%, and short-term debt is modest at 0.59. Balance sheet quality shows a meaningful intangible component (goodwill 3.59; total intangibles 6.34), implying potential impairment sensitivity if growth slows. Leverage is moderate-to-high for a small-cap at D/E 1.55x, slightly above a conservative benchmark, but well supported by cash. CAPEX was light at 0.05, suggesting limited capital intensity; proxy FCF (OCF − CAPEX) was approximately 0.91. Forward-looking, the key swing factor is cost discipline to restore operating margin while maintaining double-digit growth. Without disclosure of dividend plans (unreported), internal reinvestment to improve unit economics appears the default stance.

Profitability Analysis

ROE decomposition: Net Profit Margin (NPM) 1.7% × Asset Turnover 0.693 × Financial Leverage 2.55x = ROE ~3.1%. The principal driver of YoY deterioration is margin pressure: operating income fell 26.9% YoY despite 10.2% revenue growth, implying negative operating leverage. Operating margin compressed by ~73 bps YoY (to ~1.45% from ~2.18%), largely due to SG&A intensity at 39.3% of sales. Business rationale: investments in growth (personnel, marketing, product) and possibly higher variable costs in the marketplace model likely outweighed scale benefits this quarter. Asset turnover is reasonable for a platform business and likely stable; we do not have prior-period asset data to confirm changes. Leverage (2.55x) propped up ROE modestly but does not fully offset low margins. Sustainability: margin compression is reversible if cost growth is moderated and monetization improves; however, sustained SG&A growth above revenue growth would cap ROE. Flags: SG&A-to-sales at 39.3% and EBITDA margin at 3.8% highlight thin operating cushions; revenue growth must continue at double digits to absorb fixed costs. Non-operating contributions were small (interest income 0.02; interest expense 0.03), so the earnings story is predominantly core operations.

Growth Assessment

Revenue growth of 10.2% YoY to 24.86 indicates healthy demand momentum. However, profit growth lagged significantly: operating income -26.9% YoY and ordinary income -19.5% YoY, pointing to cost pressure and/or weaker unit economics. Gross margin at 40.8% suggests the core take-rate/fee structure remains intact, with the issue primarily in overhead intensity. EBITDA of 0.94 (3.8% margin) signals limited buffer to absorb shocks. Outlook hinges on improving operating leverage: stabilizing SG&A growth and lifting operating margin back above 2%+ would be a near-term milestone. With cash of 19.94 and modest capex needs, the company has runway to invest in growth initiatives, but ROE at 3.1% underlines the need for higher returns. Absence of segment or cohort metrics limits visibility into the durability of revenue growth and the path to margin normalization.

Financial Health

Liquidity is strong: current ratio 183.6% and quick ratio 183.6%, with cash 19.94 covering current liabilities (15.08) at ~1.32x. No warning on current ratio (<1.0) and no maturity mismatch risk: short-term loans 0.59 are trivial relative to cash. Solvency: D/E is 1.55x, slightly above a conservative 1.5x benchmark but manageable given cash holdings and interest coverage of 11.5x. Long-term loans total 3.74, indicating some term leverage but not excessive. Intangible assets (6.34, including goodwill 3.59) account for ~17.7% of total assets, implying some balance sheet sensitivity to impairments. Equity is 14.07; net tangible equity is lower after intangibles, which modestly tightens capital buffers. No off-balance sheet obligations were reported in the provided data.

Cash Flow Quality

Earnings quality is high this quarter: OCF/Net Income is 2.23x (0.96 vs 0.43), comfortably above the 0.8 threshold. Working capital appears well-managed: receivables of 4.99 imply an estimated DSO of ~37 days for a half-year revenue run-rate, reasonable for this business model. Proxy free cash flow (OCF − CAPEX) is about 0.91, suggesting internally generated cash can fund operations and small-scale investments. Financing cash inflow of 2.55 indicates reliance on external capital this period (details unreported), but not required for liquidity given positive OCF. No signs of aggressive working capital management are evident from the limited disclosures (inventories N/A; payables 2.92 in line with scale).

Dividend Sustainability

Dividend metrics are unreported; there is no evidence of dividend payments. Given positive OCF and minimal capex, the company could theoretically support a modest dividend, but with ROE at 3.1% and a focus on scaling, reinvestment likely remains the priority. FCF coverage for dividends is not calculable from disclosures; policy outlook is unclear due to lack of guidance in the provided data.

Risk Assessment

Business Risks:

• Operating margin compression (~73 bps YoY) amidst SG&A intensity (39.3% of sales).
• Dependence on sustained double-digit revenue growth to realize operating leverage.
• Intangible asset/goodwill exposure (6.34 total; 3.59 goodwill) creates impairment risk if growth slows.
• Competitive pressure in marketplace/gig economy services potentially impacting take rates and CAC.
• Limited disclosure granularity (SG&A breakdown, segment performance) reduces visibility.

Financial Risks:

• Leverage at D/E 1.55x slightly above conservative benchmark; performance sensitivity if margins weaken.
• Reliance on financing inflows this period (Financing CF 2.55) despite positive OCF may imply planned investments or refinancing needs.
• Low net margin (1.7%) and thin EBITDA margin (3.8%) leave limited cushion against shocks.
• Potential tax normalization risk given a negative effective tax rate (-3.8%) supporting NI.

Key Concerns:

• Quality alert: reported ROIC of -23.3% indicates capital efficiency concerns (note: metric context not fully disclosed).
• Ordinary income decline (-19.5% YoY) despite revenue growth suggests negative operating leverage.
• Sustainability of growth without further margin erosion remains uncertain.

Investment Implications

Key Takeaways:

• Growth remained healthy (+10.2% YoY) but profitability weakened (operating income -26.9% YoY).
• Operating margin compressed ~73 bps to ~1.45%; SG&A ratio rose to 39.3%.
• Cash generation strong (OCF/NI 2.23x) with proxy FCF ~0.91; liquidity ample (cash 19.94).
• Leverage moderate-high (D/E 1.55x) but interest coverage strong (11.5x).
• Intangibles significant (~18% of assets), implying impairment sensitivity.
• ROE 3.1% underscores need for improved capital efficiency.

Metrics to Watch:

• Operating margin and SG&A-to-sales trajectory (target >2% operating margin near term).
• OCF/NI ratio sustainability and working capital turns (DSO).
• Revenue growth rate versus headcount/marketing spend growth.
• Intangible asset balance and any impairment signals.
• Debt mix and financing cash flows; net cash position.
• Effective tax rate normalization and its impact on NI.

Relative Positioning: Within Japan small-cap online services/marketplace peers, revenue growth is respectable but profitability is below average with thinner operating margins. Liquidity is stronger than many peers due to high cash, while leverage is somewhat higher than asset-light peers, resulting in middling risk-adjusted return metrics.

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