Rebase,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.00B
• Operating Income: ¥66M
• Net Income: ¥46M
• EPS: ¥9.50

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: Despite healthy top-line growth, FY2026 Q2 performance shows significant profitability deterioration, with strong cash generation cushioning the impact. Revenue grew 15.3% YoY to 10.00, while operating income fell 69.0% YoY to 0.66 and net income declined 65.9% YoY to 0.46. The operating margin compressed sharply from an estimated 24.6% in the prior-year period to 6.6% this quarter, a contraction of roughly 1,800 bps. Gross margin printed at a high 83.8% (gross profit 8.38), consistent with an asset-light, likely software/services-heavy model. EBITDA was 0.84, implying an EBITDA margin of 8.4%, also materially lower than implied prior-year levels. Ordinary income was 0.67 (-68.5% YoY), indicating that non-operating items (net +0.00) were not a driver of the decline. Notably, profit before tax was 2.14 and income tax was 0.77 (effective tax rate 36.1%), yet net income was 0.46—suggesting unreported or unclassified below-the-line items under JGAAP (e.g., special losses), a key data limitation. Cash flow quality was strong: operating cash flow of 1.72 exceeded net income by 3.74x, with a proxy FCF of roughly 1.68 after minimal capex (0.04). The balance sheet remains robust with total assets of 17.85, equity of 12.55, and net cash of 15.42; current ratio stands at 297.8% and D/E at 0.46x. Asset turnover is modest at 0.560, and financial leverage is low at 1.42x, yielding a subdued ROE of 3.7%. A capital efficiency alert is warranted: reported ROIC is -14.7%, well below the 5% warning threshold. The marked deterioration in operating margin implies negative operating leverage, likely from SG&A growth outpacing revenue, potentially due to personnel, marketing, or product investment. While the near-term earnings profile is weaker, the cash-rich balance sheet and strong OCF provide resilience for continued investment. Dividend data is unreported, and the displayed 374% payout metric is likely not reliable without DPS disclosure; therefore, distribution policy remains unclear. Looking forward, margin recovery via SG&A discipline and conversion of gross margin strength into operating profit will be the critical swing factor for ROE and ROIC normalization.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin 4.6% × Asset Turnover 0.560 × Financial Leverage 1.42x = ROE 3.7%. The dominant change driver versus last year is the margin component: operating income fell 69% YoY despite +15.3% revenue growth, indicating significant compression from an estimated 24.6% prior OPM to 6.6% now (about -1,800 bps). The likely business reason is SG&A escalation (e.g., hiring, marketing, or product investment) outrunning revenue, while gross margin remained structurally high at 83.8%. Asset turnover is modest and unlikely to be the main driver; leverage remains conservative at 1.42x, offering little ROE amplification. Sustainability: if SG&A increases are tied to growth investments, some pressure could be transitory with potential operating leverage if revenue scales; if structural (e.g., higher fixed cost base), margins may stay suppressed. Watch for SG&A growth outpacing revenue—a concerning trend consistent with the steep OI decline.

Growth Assessment

Revenue growth of 15.3% YoY to 10.00 is solid and suggests underlying demand remains intact. However, growth quality is mixed as operating profit contracted sharply, indicating negative operating leverage. Gross margin at 83.8% supports a scalable model, but realization of scale benefits is not yet evident in OPM. Ordinary income (-68.5% YoY) aligns with operating weakness, and non-operating items were neutral. The gap between profit before tax (2.14) and net income (0.46), after 0.77 tax, hints at unreported or unusual below-the-line impacts that weigh on bottom line—this clouds the earnings trajectory. Outlook hinges on SG&A normalization and revenue mix; any stabilization in cost growth could allow margins to recover from 6.6% toward double digits. Key forward indicators: revenue growth consistency, AR trends (1.34), hiring pace, marketing spend intensity, and any disclosed extraordinary items. Near term, expect cautious margin guidance until the cost base rebalances.

Financial Health

Liquidity is strong: current assets 17.20 vs current liabilities 5.78 implies a current ratio of 297.8% and quick ratio of 297.8%. Cash and deposits of 15.42 comfortably cover all current liabilities, indicating minimal near-term liquidity risk. Solvency is conservative with total liabilities of 5.82 and equity of 12.55 (D/E 0.46x). Interest-bearing debt is unreported, but given the cash balance, net debt is likely negative. No explicit warnings: Current Ratio is well above 1.0 and D/E is well below 2.0. Maturity mismatch risk appears low given cash dominance over short-term obligations. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

OCF/Net Income is 3.74x (1.72 vs 0.46), indicating high-quality earnings with strong cash conversion. With capex at 0.04, proxy free cash flow is approximately 1.68, suggesting good internal funding capacity for operations and selective investments. Working capital appears a tailwind or stable given strong OCF despite weaker earnings; detailed components are not disclosed, limiting analysis of receivables or payables movements. No signs of aggressive working capital manipulation are evident from the limited data, though the large cash balance can mask timing effects. Sustainability: given high gross margin and low capex needs, FCF should be resilient if revenue growth persists and SG&A is controlled.

Dividend Sustainability

Dividend information (DPS, total dividends paid) is unreported; therefore, payout policy cannot be conclusively assessed. The displayed 374.0% payout ratio conflicts with the lack of DPS disclosure and should not be relied upon. From a capacity standpoint, OCF of 1.72 and a large cash balance (15.42) suggest flexibility to fund dividends if the company elects to do so. However, given low ROE (3.7%) and a reported ROIC of -14.7%, reinvestment discipline and margin recovery may be prioritized over distributions. FCF (~1.68) currently covers modest capex and could cover a small dividend, but sustainability depends on stabilizing earnings.

Risk Assessment

Business Risks:

• Margin compression risk from SG&A growth outpacing revenue, evidenced by OPM falling to 6.6% (-1,800 bps YoY).
• Execution risk in scaling operations to realize operating leverage despite high gross margins.
• Potential one-off or recurring special losses under JGAAP, inferred from PBT 2.14 vs NI 0.46 after tax.
• Customer concentration or churn risk typical for small-cap, high-margin service/software models (disclosure not provided).
• Competitive intensity and pricing pressure that could cap margin recovery.

Financial Risks:

• Low ROE (3.7%) and flagged ROIC (-14.7%) indicate capital efficiency concerns.
• Dependence on cash reserves to buffer profitability volatility; investment misallocation risk.
• Limited disclosure of interest-bearing debt and investing cash flows constrains leverage and liquidity assessment.

Key Concerns:

• Sharp operating margin contraction and negative operating leverage.
• Unexplained gap between profit before tax, tax expense, and net income.
• Sustainability of growth investments without further margin dilution.

Investment Implications

Key Takeaways:

• Top-line growth (+15.3% YoY) remains healthy but profit fell sharply.
• Operating margin collapsed to 6.6% from ~24.6% YoY, driving ROE down to 3.7%.
• Cash generation strong (OCF/NI 3.74x) with ample liquidity (cash 15.42; current ratio 298%).
• Capital efficiency is a notable weak point (ROIC -14.7% alert).
• Earnings quality solid on cash metrics, but bottom-line impacted by unreported below-the-line items.

Metrics to Watch:

• Operating margin and SG&A-to-sales trajectory each quarter.
• Ordinary income vs operating income gap to detect rising non-operating effects.
• Reconciliation of PBT to NI (extraordinary/one-time items disclosure under JGAAP).
• OCF/NI ratio and FCF after capex to confirm sustainability.
• Asset turnover improvements and ROIC recovery toward >5%.

Relative Positioning: Versus Japan small-cap growth/service peers, Rebase exhibits stronger liquidity and cash conversion but weaker current profitability and capital efficiency, with a larger-than-peer margin drawdown this quarter.

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