i Cubed Systems,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.06B
• Operating Income: ¥341M
• Net Income: ¥149M
• EPS: ¥43.69

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 Financial Analysis

Executive Summary

For FY2026 Q1, I Cubed Systems (TSE: 4495) delivered strong topline and profitability momentum, with revenue of ¥1,057 million, up 16.9% YoY. Operating income rose 61.7% YoY to ¥341 million, indicating substantial operating leverage and disciplined cost control. Net income increased 43.8% YoY to ¥213 million, translating to an EPS of ¥43.69. Gross profit is reported at ¥610.9 million, implying a gross margin of 57.8%, while operating margin stands at approximately 32.3% (¥341m/¥1,057m), showcasing a healthy margin structure for a software-centric business model. Ordinary income (¥345m) was slightly above operating income, suggesting modest net non-operating gains. The DuPont decomposition yields a net margin of 20.15%, asset turnover of 0.245x, and financial leverage of 1.48x, resulting in an ROE of 7.31% for the period. The balance sheet appears sound: total assets ¥4,320 million, liabilities ¥1,577.8 million, and equity ¥2,915 million. Based on these reported figures, the equity ratio is approximately 67.5% (equity/assets), despite a 0.0% figure shown in the data summary, which we treat as undisclosed rather than actual. Liquidity is strong, with a current ratio of 200.5% and working capital of ¥1,495 million. Cash flow data (operating, investing, financing) and cash balance were not disclosed in this dataset, so cash conversion and FCF assessments cannot be verified this quarter. Depreciation and interest expense were also not disclosed, limiting EBITDA and interest coverage analyses. Dividend per share is shown as ¥0.00 and payout ratio 0.0%, which we interpret as either no dividend or undisclosed; the company’s growth profile and reinvestment needs suggest a conservative payout stance. Overall, the quarter reflects solid revenue growth, notable margin expansion, and improving returns, tempered by the absence of cash flow disclosure and some internal data inconsistencies (notably between reported gross profit and cost of sales).

Profitability Analysis

ROE is 7.31% for the quarter, decomposed as net margin 20.15% × asset turnover 0.245 × financial leverage 1.48. The net margin of ~20% is strong for a software/subscription model and is supported by a high operating margin of ~32.3%. Gross margin is reported at 57.8%; however, reported cost of sales and gross profit figures are not fully reconcilable, suggesting classification or disclosure differences—our margin interpretation uses the disclosed gross profit figure. Operating leverage is evident: operating income growth (+61.7% YoY) significantly outpaced revenue growth (+16.9% YoY), indicating improved cost efficiency (likely in S&M and G&A) and/or scale benefits. Ordinary income exceeded operating income by ~¥4 million, implying small net non-operating gains. Effective tax expense was ¥64.1 million; using ordinary income as a proxy for pre-tax yields an indicative tax rate of ~18–19% (approximation, as pre-tax income was not separately disclosed). EBITDA cannot be assessed as depreciation/amortization was not disclosed (zero values indicate nondisclosure). Overall margin quality appears solid, but full validation awaits clearer cost classification and cash flow corroboration.

Growth Assessment

Topline growth of 16.9% YoY to ¥1,057 million suggests healthy demand, likely underpinned by recurring subscription revenue in device management/security. Profit growth was stronger: operating income +61.7% and net income +43.8%, pointing to meaningful operating leverage and disciplined opex scaling. The sustainability of revenue growth will hinge on retention, upsell, and competitive dynamics in enterprise mobility management; while these KPIs are not disclosed here, the margin expansion indicates improving unit economics. Non-operating items had minimal impact, with ordinary income close to operating income. Given the high gross/operating margins, current growth appears profitable rather than discount-driven. Outlook considerations: continued ARR expansion, churn control, and enterprise wins should support mid-teens growth if execution continues; however, lack of billings/deferred revenue data limits forward visibility. Absent cash flow and cohort metrics, we assume growth is primarily organic and subscription-based.

Financial Health

Liquidity is robust: current assets ¥2,982.6 million vs current liabilities ¥1,487.4 million, yielding a current ratio of 200.5% and working capital of ¥1,495.2 million. Quick ratio mirrors the current ratio as inventories were not disclosed (shown as zero). Solvency appears sound: total liabilities ¥1,577.8 million vs equity ¥2,915.0 million implies a liabilities-to-equity ratio of ~0.54x, and an equity ratio of ~67.5% (computed from provided BS). Financial leverage of 1.48x (assets/equity) is modest, consistent with a capital-light software model. Interest expense was not disclosed; thus interest coverage cannot be assessed, though operating profitability is ample. Cash and equivalents were not disclosed, so near-term cash buffer and net cash position cannot be verified; however, strong working capital and low leverage mitigate immediate balance sheet concerns.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, and cash balance were not disclosed in this dataset; therefore, OCF/NI and FCF figures shown as zero are not decision-useful. Earnings quality cannot be validated via cash conversion or accruals analysis this quarter. Without D&A, we cannot separate non-cash components or compute EBITDA-based measures. Working capital appears favorable at face value (current ratio ~2.0x), but changes in receivables, deferred revenue, or payables that drive cash conversion are undisclosed. In absence of OCF, we cannot comment on FCF coverage of earnings or capex intensity.

Dividend Sustainability

Dividend per share is indicated at ¥0.00 and payout ratio at 0.0%, which we treat as either non-distribution this quarter or undisclosed data. Given strong growth and high margins, capital allocation likely prioritizes reinvestment over dividends. FCF coverage cannot be assessed due to undisclosed cash flows. Balance sheet strength (equity ratio ~67.5%) suggests capacity for future shareholder returns if policy shifts, but current visibility supports a conservative payout posture. Monitor management guidance and historical policy for clarity on any year-end distributions.

Risk Assessment

Business Risks:

• Competitive pressure in enterprise mobility management and device security (e.g., Microsoft Intune, Jamf, VMware), potentially impacting pricing and churn.
• Customer concentration in domestic enterprise/public sectors could amplify renewal risk.
• Technology obsolescence and the need for continuous R&D to maintain platform relevance.
• Regulatory and compliance changes (data protection, security standards) affecting product requirements and costs.
• Sales execution risk amid scaling (partner/channel dependence, enterprise deal timing).

Financial Risks:

• Limited visibility on cash generation and liquidity buffer due to undisclosed cash flow and cash balance.
• Potential revenue recognition and cost classification ambiguity (noted discrepancy between reported cost of sales and gross profit).
• Sensitivity of ROE to margin normalization and asset turnover given modest leverage.
• Possible exposure to receivables collection timing and deferred revenue dynamics (billings seasonality).

Key Concerns:

• Absence of operating, investing, and financing cash flow disclosure this quarter impedes earnings quality assessment.
• Inability to verify EBITDA and interest coverage due to undisclosed D&A and interest expense.
• Internal inconsistency between reported cost of sales and gross profit figures, limiting margin precision.

Investment Implications

Key Takeaways:

• Strong quarter with 16.9% revenue growth and 61.7% operating income growth evidencing operating leverage.
• High margin profile: ~58% gross margin and ~32% operating margin support a 20.15% net margin.
• Solid balance sheet with computed equity ratio ~67.5% and current ratio ~2.0x.
• ROE of 7.31% reflects profitable growth with modest leverage.
• Data gaps (cash flows, D&A, cash balance) and a gross profit vs. cost of sales mismatch constrain depth of analysis.

Metrics to Watch:

• ARR growth, net revenue retention, churn, and ARPU to validate sustainability of topline momentum.
• Deferred revenue and billings to gauge forward visibility.
• Operating cash flow and FCF conversion versus net income.
• Sales efficiency (S&M as % of revenue) and CAC payback for scalability.
• Gross margin trajectory and any changes in cost classification.
• Cash and equivalents, and net cash/(debt) to assess liquidity buffer.

Relative Positioning: Within Japanese SaaS/security peers, the company exhibits above-average operating margin and solid ROE with low leverage, suggestive of efficient scaling; however, the absence of cash flow disclosure and certain KPI transparency currently places it at a data-transparency disadvantage versus best-in-class peers that routinely report ARR, NRR, and cash conversion.

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