Oricon Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.80B
• Operating Income: ¥726M
• Net Income: ¥453M
• EPS: ¥34.85

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

Oricon Co., Ltd. (TSE: 48000) reported solid top-line and operating performance for FY2026 Q2, with revenue of ¥2,799 million, up 19.5% year over year. Operating income rose 15.6% to ¥726 million, indicating healthy core profitability albeit with slight margin compression versus revenue growth. Net income declined 1.2% to ¥447 million, suggesting pressure below the operating line and/or higher taxes compared with the prior-year period. The DuPont-calculated ROE stands at 7.96%, driven by a 15.97% net profit margin, 0.40x asset turnover, and modest leverage of 1.25x, consistent with a conservatively financed balance sheet. Gross profit of ¥1,561,993 thousand implies a gross margin of 55.8%, which is strong for a content/data/media-oriented model, though there is an internal inconsistency with the reported cost of sales figure; we rely on the provided gross profit and margin as the anchor. EBITDA was ¥786 million (28.1% margin), implying limited depreciation burden (¥60 million) and strong cash generative potential from operations. Liquidity is robust with a current ratio of 433.9% and quick ratio of 433.4%, reflecting a light working-capital model and minimal inventories (¥5.4 million). The capital structure is conservative: total liabilities are ¥1,260 million against equity of ¥5,618 million, yielding a low debt-to-equity ratio of 0.22x and exceptionally high interest coverage of 1,638.8x, given negligible interest expense of ¥0.44 million. Operating cash flow of ¥617 million exceeds net income (OCF/NI 1.38x), supporting earnings quality and cash conversion. Free cash flow is not computable from the disclosure provided (investing cash flows are shown as zero/unreported), limiting visibility on capex intensity and reinvestment needs. The reported effective tax rate metric shows 0.0%, but based on the income tax charge of ¥239.1 million and net income of ¥447 million, the implied tax rate is approximately 34–35%, suggesting the 0.0% figure is not reflective of actual taxation. Balance sheet totals indicate asset turnover of 0.40x; given this is a first-half period, the provided metric likely reflects an annualized framework already embedded in the supplied DuPont inputs. Dividend details are unreported (DPS and payout shown as zero placeholders), so distribution policy and return-of-cash stance cannot be assessed for this period. Notably, share count is unreported, but the EPS of ¥34.85 and net income of ¥447 million imply an average diluted share count of roughly 12.8 million shares. Overall, Oricon demonstrates resilient operating fundamentals, strong liquidity, low leverage, and good cash conversion, with the primary limitations being disclosure gaps on investing cash flows and dividend policy, and a minor internal inconsistency in cost of sales versus gross profit.

Profitability Analysis

ROE of 7.96% decomposes into a net margin of 15.97%, asset turnover of 0.40x, and financial leverage of 1.25x. This profile indicates returns largely driven by margin strength rather than leverage, consistent with a content/data franchise and a conservative balance sheet. Operating margin (OI/Revenue) is approximately 25.9% (¥726m / ¥2,799m), down modestly relative to revenue growth (+19.5% YoY) as operating income grew +15.6% YoY, implying modest margin compression and some negative operating leverage in the half. EBITDA margin of 28.1% versus operating margin of ~25.9% suggests a light depreciation load (D&A of ¥60m), reinforcing an asset-light model. Gross margin is 55.8%, indicating strong pricing power and/or favorable mix; we rely on the provided gross profit and margin given the inconsistency with the reported cost of sales figure. Ordinary income of ¥725m is close to operating income, confirming negligible non-operating drag, consistent with minimal interest expense. The implied effective tax rate is around 34–35% based on tax expense and net income, which explains the divergence between operating and net profit growth. Overall profitability remains robust, with slight operating leverage headwinds this period.

Growth Assessment

Revenue growth of +19.5% YoY to ¥2,799m signals healthy demand across Oricon’s data/media offerings, likely supported by continued digital engagement and client stickiness. Operating income growth of +15.6% trails revenue growth, indicating higher operating cost growth (e.g., personnel, content acquisition, marketing, systems) or an unfavorable revenue mix shift in the period. Net income declined 1.2% YoY despite solid operating performance, likely driven by a higher effective tax burden and small non-operating factors. The strong gross margin (55.8%) and EBITDA margin (28.1%) suggest the core economics of the business remain attractive and scalable over time. With asset turnover of 0.40x and D&A of only ¥60m, the company appears asset-light, supporting growth without heavy capital intensity. Sustainability of revenue growth will depend on retention and expansion within corporate clients, continued relevance of rankings/data products, and stability in digital advertising or subscription-linked demand. The resilience in OCF versus net income (1.38x) supports the quality of reported profits. Near-term outlook is constructive from a fundamentals standpoint but watch for cost discipline to close the gap between top-line growth and operating profit growth.

Financial Health

Total assets are ¥7,006m and total liabilities are ¥1,260m, implying an equity base of ¥5,618m and an equity ratio around 80% (the reported 0.0% equity ratio is an unreported placeholder). The current ratio of 433.9% and quick ratio of 433.4% indicate ample liquidity and minimal reliance on inventory, consistent with the low inventory balance of ¥5.4m. Working capital is ¥3,878.5m, reinforcing strong short-term solvency. Debt-to-equity is just 0.22x and interest burden is negligible (interest expense ¥0.44m), translating to an interest coverage ratio of 1,638.8x. The balance sheet is conservatively positioned, providing significant flexibility to absorb shocks or fund growth. No material solvency concerns are evident from the disclosed figures.

Cash Flow Quality

Operating cash flow of ¥617.3m exceeds net income of ¥447.0m, yielding an OCF/NI ratio of 1.38x, which indicates good cash realization and limited accrual risk in the period. EBITDA of ¥786.3m versus OCF of ¥617.3m suggests working capital movements and taxes as primary uses of cash, consistent with the business model. Investing cash flow is shown as zero (unreported), so we cannot determine capex or investment intensity; accordingly, free cash flow cannot be robustly calculated despite a reported placeholder of zero. With limited D&A (¥60.3m), underlying maintenance capex is likely modest, but confirmation requires disclosed investing cash flows. Overall, cash conversion appears strong, and working capital needs seem manageable, supported by the very high current and quick ratios.

Dividend Sustainability

Dividend per share and payout ratio are reported as zero placeholders (unreported), so we cannot infer the company’s distribution policy for the period. EPS is ¥34.85, and operating cash flow is ¥617.3m, which would typically provide substantial coverage for ordinary dividends if they were paid; however, without actual DPS or capex data, we cannot evaluate free-cash-flow coverage. The balance sheet strength and low leverage would support capacity for distributions, but policy visibility is limited due to disclosure gaps this quarter. We therefore treat dividend sustainability and outlook as indeterminate pending confirmed DPS and investing cash flows.

Risk Assessment

Business Risks:

• Dependence on the relevance and credibility of rankings/data products; reputational risk if methodologies are questioned.
• Exposure to advertising/digital marketing cycles affecting media-related revenues.
• Client concentration risk within key corporate accounts or sectors seeking customer satisfaction/brand data.
• Content/IP and licensing risks associated with media and data usage.
• Competition from alternative data providers, media platforms, and user-generated metrics.
• Technology and platform dependency (search/social algorithms, distribution partners) impacting traffic and monetization.
• Regulatory/privacy changes affecting data collection and analytics.

Financial Risks:

• Potential margin pressure from wage inflation, content acquisition costs, or technology investment.
• Tax rate volatility; implied effective tax rate around mid-30% can impact net profitability.
• Limited visibility on capex and investments due to unreported investing cash flows.
• Revenue growth sensitivity to macro conditions that influence marketing and corporate spending.

Key Concerns:

• Internal inconsistency between reported cost of sales and gross profit; analysis anchored on gross profit and margin provided.
• Dividend policy and capital allocation unclear due to unreported DPS and investing cash flows.
• Slight negative operating leverage in the period as operating income growth lagged revenue growth.

Investment Implications

Key Takeaways:

• Top-line growth strong at +19.5% YoY with solid core margins (EBITDA 28.1%, operating ~25.9%).
• ROE of 7.96% is driven by high margins and low leverage; scope exists to improve via efficiency and margin management.
• Liquidity and solvency are very strong; the company operates with a conservative balance sheet.
• Cash conversion is healthy (OCF/NI 1.38x), supporting earnings quality.
• Disclosure gaps (investing CF, dividend policy) limit visibility on free cash flow and capital returns.

Metrics to Watch:

• Operating margin trajectory versus revenue growth (to monitor operating leverage).
• OCF/NI ratio and working capital changes (cash conversion).
• Capex and investing cash flows (to assess sustainable FCF).
• Client retention/expansion metrics and revenue mix (subscription vs. advertising).
• Effective tax rate and any changes in non-operating income/expenses.
• AR days and cash balances when disclosed (to confirm liquidity composition).

Relative Positioning: Within data/media peers, Oricon exhibits an asset-light profile with high margins, strong liquidity, and minimal leverage, positioning it defensively on financial health while maintaining competitive profitability; near-term focus is on sustaining revenue growth and stabilizing operating leverage.

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