JUSTSYSTEMS CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥25.95B
• Operating Income: ¥12.05B
• Net Income: ¥6.61B
• EPS: ¥129.11

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

JustSystems (4686) delivered strong FY2026 Q2 consolidated results under JGAAP, with revenue of ¥25.95bn (+17.5% YoY) and operating income of ¥12.05bn (+22.9% YoY), indicating robust topline growth with expanding operating leverage. Gross profit of ¥17.40bn translates to a gross margin of 67.1%, reflecting a high-value software/service mix and solid pricing power. Operating margin stands at 46.4%, underscoring disciplined cost control and scale efficiency. Ordinary income of ¥12.26bn exceeded operating income, implying positive non-operating balance (e.g., interest/dividend income), though detailed components are not disclosed. Net income rose to ¥8.29bn (+25.4% YoY), delivering a net margin of 31.95%, which is high for the sector and consistent with a scalable subscription/software-oriented business. EPS was ¥129.11, but share count and book value per share were not disclosed in the XBRL snapshot, limiting per-share capital metrics beyond EPS. On balance sheet strength, total assets were ¥132.41bn against total liabilities of ¥16.02bn, yielding a low leverage profile (D/E 0.14x) and high equity buffer (equity ¥112.55bn). Liquidity is very strong, with current assets of ¥109.65bn vs. current liabilities of ¥15.82bn, producing a current ratio of 693% and working capital of ¥93.83bn. Cash flow quality is solid: operating cash flow of ¥11.36bn is 1.37x net income, indicating healthy earnings conversion and limited accrual build. DuPont analysis shows ROE of 7.37%, driven by a high net margin (31.95%), modest asset turnover (0.196x), and conservative leverage (1.18x), suggesting return is primarily profit-margin driven rather than balance-sheet leverage. EBITDA of ¥13.25bn (51.1% margin) confirms significant operating cash generation capacity; D&A is modest at ¥1.21bn, consistent with a software-heavy model. Despite strong profitability and cash generation, dividend-related disclosures show DPS and payout at zero in the dataset; financing cash outflows of ¥0.64bn suggest some capital returns or other financing uses, but details are not specified. Several items appear unreported (e.g., cash balance, investing cash flows, equity ratio, interest expense), so conclusions rely on available non-zero datapoints and standard interpretations. Overall, results indicate a quality growth franchise with strong margins, robust OCF conversion, and a conservative balance sheet, although clarity on capex/investing and capital allocation policy would enhance the assessment.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin 31.95% × Asset Turnover 0.196 × Financial Leverage 1.18 = ROE 7.37%. Margin quality: Gross margin 67.1% and operating margin 46.4% point to a high-value software/services mix with limited variable costs and effective cost control. Ordinary income margin of 47.2% exceeds operating margin, indicating net positive non-operating items (likely interest/dividend income). Effective tax rate implied by income tax (¥3.12bn) over ordinary income (¥12.26bn) is approximately 25%–26%, in line with typical Japanese corporate rates, despite the placeholder 0.0% metric provided. EBITDA margin at 51.1% indicates strong cash earnings capacity with modest D&A burden (D&A ~9.2% of revenue). Operating leverage: Operating income growth (+22.9% YoY) outpaced revenue growth (+17.5% YoY), confirming positive operating leverage from scaling SG&A over a growing base. Profitability appears driven by subscription/recurring components and disciplined acquisition costs; however, without segment disclosure, the durability of margin expansion should be monitored.

Growth Assessment

Topline grew 17.5% YoY to ¥25.95bn, signaling robust demand and/or successful customer acquisition and retention. Operating profit rose 22.9% YoY to ¥12.05bn, suggesting continued scale benefits and favorable mix, with non-operating tailwinds further supporting ordinary income. Net income increased 25.4% YoY to ¥8.29bn, indicating incremental margin expansion through both operations and financial income. The net margin at 31.95% implies a sticky, high-quality revenue base, consistent with subscription or license models, though details on recurring revenue, churn, or ARR are not disclosed. Asset turnover is modest (0.196x), typical for cash-rich, IP-heavy businesses; growth is more P&L-driven than asset-intensive, which bodes well for return scalability. Outlook-wise, if current customer acquisition costs and retention remain favorable, double-digit revenue growth with sustained high margins is plausible; however, seasonality (education/calendar cycles) and marketing spend timing could add quarter-to-quarter volatility. With non-operating income positive and leverage low, earnings trajectory should be primarily a function of core operations. Absence of investment cash flow detail limits visibility into product development and capex intensity; sustained growth will hinge on ongoing R&D and content/services enhancement.

Financial Health

Liquidity is strong: current assets ¥109.65bn vs. current liabilities ¥15.82bn yields a current ratio of 6.93x and a quick ratio of ~6.88x (inventory is only ¥0.85bn), indicating ample near-term coverage. Working capital of ¥93.83bn provides significant operating flexibility. Solvency: total liabilities of ¥16.02bn vs. equity of ¥112.55bn imply a D/E of 0.14x and leverage of 1.18x; the balance sheet is conservatively capitalized. Interest expense is not disclosed in the dataset (shown as zero), but given low debt, interest burden is likely minimal; the reported 0.0x interest coverage is not informative. The equity ratio figure is unreported; however, implied equity/asset ratio is ~85%, derived from disclosed totals. Overall, the company appears highly solvent with substantial equity and liquid resources, supporting resilience and optionality for investment.

Cash Flow Quality

OCF of ¥11.36bn versus net income of ¥8.29bn produces an OCF/NI ratio of 1.37, indicating strong earnings quality with positive working capital dynamics or non-cash add-backs (e.g., D&A of ¥1.21bn). EBITDA of ¥13.25bn further confirms robust cash-generating capacity relative to revenue (51.1% margin). Free cash flow cannot be precisely assessed because investing cash flows are unreported in the dataset; hence the FCF value shown as zero should be treated as a placeholder, not an actual figure. Given the low D&A, structural capex requirements are likely modest for a software-centric model, but product/content investments or intangibles could be meaningful and would affect true FCF. Working capital: inventory is minimal (¥0.85bn), consistent with software/services; the large current asset base suggests significant cash and receivables, but exact cash balance and AR/deferral details are not available. Overall, cash conversion appears healthy, but confirmation requires visibility into capex, intangible investments, and deferred revenue movements.

Dividend Sustainability

Dividends per share and payout ratio are shown as zero in the dataset, which likely reflects non-disclosure rather than actual zero payments for the fiscal year to date. Financing cash outflow of ¥0.64bn suggests some capital return or other financing uses, but specifics are not provided. Without confirmed dividends and FCF, coverage analysis cannot be finalized. From a capacity standpoint, strong profitability, low leverage, and high liquidity imply ability to sustain distributions if prioritized. Policy outlook depends on management’s capital allocation between growth investments (R&D, marketing, content) and shareholder returns; the company historically balances growth with returns, but no policy data is provided here. Monitor official dividend guidance, interim distributions, and buyback authorizations for clarity.

Risk Assessment

Business Risks:

• Sustainability of double-digit revenue growth amid potential saturation in core customer segments
• Customer acquisition cost inflation and marketing efficiency variability affecting margins
• Churn/retention risk in subscription or license-based offerings
• Product roadmap execution and competitive responses in key software/education/enterprise segments
• Seasonality linked to academic/fiscal calendars impacting quarterly results
• Regulatory and data privacy requirements for user data and education-related services

Financial Risks:

• Limited disclosure of investing cash flows and cash balance obscures true free cash flow
• Dependence on non-operating income (if material) could add earnings variability
• Potential FX exposure if there is overseas revenue or USD-denominated costs (not disclosed)
• Concentration of liquid assets may lead to low asset turnover and pressure on ROE if not deployed efficiently

Key Concerns:

• Visibility into capex/intangible investment levels and resulting FCF is lacking
• Absence of detailed segment and recurring revenue metrics to assess durability
• Unreported interest expense and equity ratio figures reduce precision in coverage and capital adequacy analysis

Investment Implications

Key Takeaways:

• Strong Q2 performance with revenue +17.5% and operating income +22.9% YoY indicates positive operating leverage
• High margins (gross 67.1%, operating 46.4%, EBITDA 51.1%) reflect a scalable software/services model
• ROE of 7.37% is margin-driven; conservative leverage limits return amplification but enhances resilience
• OCF/NI of 1.37 signals solid earnings quality; confirmation of FCF awaits investing cash flow data
• Balance sheet is robust with D/E 0.14x and current ratio 6.93x, providing significant strategic optionality

Metrics to Watch:

• Revenue growth rate and cohort/retention indicators (ARR, churn, LTV/CAC, if disclosed)
• Operating margin trajectory and sales/marketing efficiency
• Investing cash flows (capex and intangibles) to derive true free cash flow
• Deferred revenue and receivables movements to gauge cash conversion sustainability
• Non-operating income components and any changes in financial asset yields
• Capital allocation actions (dividends, buybacks, M&A) and impact on ROE

Relative Positioning: Within Japanese software and IT services peers, JustSystems exhibits above-average profitability and cash generation with below-average leverage, positioning it as a high-margin, low-risk operator; ROE trails some leveraged peers due to conservative capital structure but benefits from superior margins.

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