Commerce One Holdings Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.91B
• Operating Income: ¥205M
• Net Income: ¥78M
• EPS: ¥22.23

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

Commerce One Holdings (44960) reported FY2026 Q2 (cumulative) consolidated results under JGAAP with modest top-line growth and materially compressed operating profitability. Revenue rose 5.2% YoY to ¥1,910m, while operating income fell 35.9% YoY to ¥205m, implying negative operating leverage during the half-year. Despite the weaker operating line, ordinary income reached ¥278m, exceeding operating income and indicating meaningful non-operating gains (e.g., interest/dividend income, subsidies, or valuation gains) offsetting core margin pressure. Net income increased 103.0% YoY to ¥157m, aided by non-operating items and likely period-specific tax effects, although the provided “effective tax rate: 0.0%” is not economically consistent with income tax expense of ¥134.5m and appears to reflect a data limitation. Gross margin remains high at 53.4%, underscoring a software/platform-like revenue mix with limited cost of sales intensity. EBITDA was ¥266m (13.9% margin), while operating margin stood at 10.7%, down versus revenue growth, which indicates elevated SG&A investments or cost inflation. DuPont analysis shows a net margin of 8.22%, asset turnover of 0.519x, and financial leverage of 1.38x, resulting in a reported ROE of 5.9% for the period; given this is a first-half snapshot, annualized profitability may differ. Liquidity is strong with a current ratio of 279% and working capital of ¥1,526m, implying ample cushion for near-term obligations. The balance sheet is conservative: total liabilities are ¥948m against equity of ¥2,659m, for a debt-to-equity of 0.36x; recalculating the equity ratio from disclosed totals suggests roughly 72% (versus the reported 0.0% which is clearly unreported rather than zero). Operating cash flow was ¥97m, which is 0.62x of net income, signaling weaker cash conversion due to working capital outflows or non-cash income. Investing cash flow is shown as zero (unreported), preventing a reliable free cash flow assessment; the “FCF: 0” metric reflects missing data rather than true zero. Financing cash flow was an outflow of ¥96m, likely reflecting lease, debt, or other financing uses, as dividends are shown as zero (unreported). No DPS was disclosed for the period; payout appears nil pending fuller-year policy guidance. Overall, the company shows resilient gross profitability and strong liquidity, but softer operating leverage and weaker cash conversion in the half require monitoring.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.22%
• asset_turnover: 0.519x
• financial_leverage: 1.38x
• calculated_ROE: 5.90%
• commentary: ROE reflects moderate net margins on modest asset turns with low leverage. Ordinary income above operating income implies non-operating boosts that enhance ROE, partially masking core margin compression. margin_quality: Gross margin at 53.4% is solid and consistent with a software/platform or services-heavy mix. Operating margin at 10.7% trails gross margin expansion, implying elevated SG&A (e.g., sales, product development, hiring) or cost inflation. EBITDA margin at 13.9% indicates limited D&A burden (¥61m) and small interest expense (¥0.1m), but non-operating income supports ordinary margin rather than core operations. operating_leverage: Revenue grew 5.2% YoY while operating income declined 35.9% YoY, indicating negative operating leverage in the half. This suggests cost growth outpaced revenue, likely from growth investments or personnel costs. Monitoring SG&A intensity versus revenue growth will be key to restoring operating leverage.

Growth Assessment

revenue_sustainability: Top-line growth of 5.2% YoY is positive but modest; sustaining mid-single-digit growth suggests a maturing base or macro headwinds in client spending. Gross margin stability supports the quality of revenue, likely recurring or subscription-like. profit_quality: Net income growth (+103% YoY) is not driven by core operations given the 35.9% decline in operating income and ordinary income exceeding operating income. Profit quality is thus mixed, with supportive non-operating items and possibly a period-specific tax effect. Cash conversion (OCF/NI of 0.62x) is below ideal, indicating working capital outflows or non-cash gains. outlook: If cost discipline improves and sales efficiency normalizes, operating leverage can recover. However, with modest revenue growth, management may need to balance investment for growth with margin protection. Normalization of non-operating gains and the effective tax rate could temper bottom-line growth in subsequent periods.

Financial Health

liquidity: Current assets of ¥2,379m and current liabilities of ¥853m yield a current ratio of 279% and working capital of ¥1,526m, indicating strong short-term liquidity. Quick ratio equals current ratio as inventories are unreported. solvency: Total liabilities of ¥948m versus equity of ¥2,659m imply a conservative capital structure (debt-to-equity 0.36x). Recomputed equity ratio is approximately 72% (2,659/3,679), despite the reported 0.0% being unreported data. capital_structure: Leverage is modest (assets/equity 1.38x). Interest expense is de minimis (¥0.09m) with an interest coverage of ~2,181x on EBITDA, reflecting minimal financial risk.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥97m vs. net income of ¥157m (OCF/NI 0.62x) indicates weaker cash realization in the half, likely from receivable increases or other working capital needs. The presence of non-operating gains could also reduce cash conversion. FCF_analysis: Investing cash flow is shown as zero (unreported), so free cash flow cannot be reliably derived; the reported FCF of 0 reflects data limitations rather than an economic result. Financing cash outflow of ¥96m suggests repayments, lease outflows, or other financing uses; dividends are not evident in the period data. working_capital: High working capital (¥1,526m) supports operations, but the below-1.0x OCF/NI ratio implies a working capital drag during the half. Monitoring receivables collection, contract liabilities (deferred revenue), and payables cycles is important.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to no DPS disclosed for the period; this likely reflects timing/unreported data rather than a formal no-dividend stance. FCF_coverage: FCF coverage cannot be assessed because investing cash flows are unreported (FCF shown as 0 due to data limitations). On a cash basis, OCF of ¥97m would need to cover any future dividend commitments alongside capex and development spending. policy_outlook: Given modest growth and current investment needs (as implied by negative operating leverage), the company may prioritize reinvestment over distributions in the near term. Full-year guidance and year-end DPS disclosure will clarify policy.

Risk Assessment

Business Risks:

• Slower client demand or macro softness limiting e-commerce/IT spend
• Competition from global and domestic e-commerce/SaaS platforms pressuring pricing and ARPU
• Churn risk in SME customer segments affecting net retention
• Execution risk in product development and feature roadmap delivery
• Cybersecurity and service availability risks affecting reputation and retention
• Talent acquisition/retention in engineering and sales impacting growth velocity

Financial Risks:

• Negative operating leverage if SG&A growth continues to outpace revenue
• Weaker cash conversion from working capital expansion
• Potential normalization of non-operating gains reducing ordinary income
• Tax rate normalization lifting effective tax burden versus the period data
• Limited visibility on capex/intangible investment due to unreported investing cash flows

Key Concerns:

• Operating income down 35.9% YoY despite 5.2% revenue growth
• OCF/NI ratio of 0.62 indicating weaker cash conversion
• Dependence on non-operating items to lift ordinary income above operating income
• Incomplete disclosures (equity ratio, cash balance, investing CF) obscuring cash and FCF assessment

Investment Implications

Key Takeaways:

• Top-line growth of 5.2% YoY with strong gross margin (53.4%) but pressured operating margin (10.7%)
• Ordinary income above operating income suggests reliance on non-operating gains in the half
• Healthy balance sheet and liquidity (current ratio 279%, D/E 0.36x) mitigate financial risk
• Cash conversion soft (OCF/NI 0.62x), requiring vigilance on working capital and earnings quality
• Reported equity ratio of 0.0% is unreported; recalculated ~72% indicates strong solvency

Metrics to Watch:

• SG&A-to-sales ratio and operating margin trajectory
• Net retention rate, ARPU, and churn (if disclosed) to gauge revenue durability
• Deferred revenue and receivables trends for cash conversion signals
• Non-operating income components and their sustainability
• Effective tax rate normalization into 2H and full-year
• Capex/intangible development spend once investing CF is disclosed

Relative Positioning: The company appears financially conservative with strong gross margins typical of platform/software models, but near-term operating leverage is weaker than ideal and growth is in the mid-single digits, placing it in a stable yet investment-intensive posture relative to higher-growth peers.

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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