jig.jp co.,ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.36B
• Operating Income: ¥1.07B
• Net Income: ¥631M
• EPS: ¥15.09

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

FY2026 Q2 was a solid top-line quarter with mixed margin dynamics, culminating in stronger bottom-line growth versus last year. Revenue rose 10.3% YoY to 73.59, while operating income edged down 1.7% to 10.75, indicating negative operating leverage in the quarter. Despite weaker operating profit, net income increased 23.8% YoY to 6.30, lifting calculated ROE to 13.3%. Gross margin remained exceptionally high at 93.8%, consistent with a software/IT-like cost structure where SG&A is the primary expense line. The operating margin came in at 14.6%, down about 176 bps YoY by our estimate (prior OPM ~16.4%). Ordinary income margin was 13.4%, with limited contribution from non-operating income (0.05) and modest non-operating expenses (0.93). The effective tax rate was 36.1%, within a normal range, suggesting bottom-line outperformance versus revenue was driven by below-operating-line items and/or mix, not tax benefits alone. Cash generation kept pace with earnings: operating cash flow was 6.39 versus net income of 6.30 (OCF/NI ~1.01x), indicating broadly aligned earnings quality. Liquidity is strong with a current ratio of 270% and cash of 47.54 covering current liabilities 2.1x. Leverage is conservative with D/E of 0.54x and negligible interest burden (interest expense 0.01; coverage ~945x). Working capital appears healthy; accounts receivable of 11.69 implies roughly 29 days sales on annualized revenue, supportive of cash conversion. Capital expenditures were modest at 0.48, and financing cash outflows of 1.80 included share repurchases of 0.38; dividend details were not disclosed, though the calculated payout ratio stands at 17.5%. While reported ROIC of 318.4% suggests highly efficient capital use, it is likely inflated by low measured invested capital under JGAAP and should be interpreted cautiously. The key watchpoint is SG&A intensity (79.2% of sales), which drove operating margin compression despite double-digit revenue growth. Looking ahead, maintaining revenue momentum while reining in SG&A growth is essential to reestablish positive operating leverage and sustain ROE in the low-teens. Overall, the balance sheet and cash generation provide ample flexibility for continued investment and shareholder returns, but near-term earnings trajectory hinges on cost discipline.

Profitability Analysis

ROE decomposition (DuPont): ROE 13.3% = Net Profit Margin 8.6% × Asset Turnover 1.014 × Financial Leverage 1.54x. The largest swing factor this quarter appears to be net margin: revenue grew 10.3% YoY while net income grew 23.8% YoY, even as operating income declined 1.7% YoY, implying improvements below the operating line and/or mix effects. Operating margin compressed from an estimated ~16.4% to 14.6% (about -176 bps), driven by elevated SG&A (58.25, or 79.2% of sales). Gross margin remained extremely high (93.8%), showing the core unit economics are intact; the issue is operating cost scale. Asset turnover at ~1.01x is stable and consistent with a cash-rich, asset-light profile; leverage at 1.54x is moderate and supportive to ROE without adding significant financial risk. Business drivers: higher personnel, marketing, or development-related SG&A likely outpaced revenue growth, creating negative operating leverage in the short term. Sustainability: the net margin uplift versus revenue suggests some non-operating tailwinds that may not be structural; without SG&A normalization, operating margin pressure could persist. Concerning trends: SG&A intensity is high and appears to be growing faster than revenue; with OI down on double-digit revenue growth, management must tighten cost controls to avoid further dilution of operating profitability.

Growth Assessment

Revenue growth of 10.3% YoY to 73.59 indicates healthy demand and/or successful monetization initiatives. Gross profit rose in tandem, preserving a 93.8% gross margin that underscores a scalable, high-value model. However, operating income declined 1.7% YoY, signaling negative operating leverage as SG&A growth likely outpaced sales. Net income grew 23.8% YoY to 6.30, benefiting from below-operating-line items and a normalized tax rate, but this may not fully offset the operating margin pressure if SG&A intensity remains elevated. The EBITDA margin of 14.9% aligns with the operating margin profile, suggesting limited non-cash burden (D&A only 0.23). Near-term growth quality hinges on converting revenue expansion into operating profit through SG&A discipline. With cash reserves of 47.54 and modest capex requirements, the company is positioned to invest in growth drivers (e.g., product, sales capacity) without balance sheet strain. Outlook: if management moderates SG&A growth to at/below revenue growth, operating margins can stabilize or expand in H2; absent that, bottom-line reliance on non-operating items may not be repeatable.

Financial Health

Liquidity is robust: current ratio 269.8% and quick ratio 269.8%, with cash 47.54 covering current liabilities 2.11x. No warning triggers (Current Ratio <1.0 or D/E >2.0) are present; D/E is a conservative 0.54x. Maturity mismatch risk is low: current assets of 60.89 far exceed current liabilities of 22.57, and cash alone provides ample coverage. Long-term loans total 2.47, indicating low structural leverage; interest expense is de minimis. Some liability line items (e.g., accounts payable) show as zero but are unreported; our view relies on disclosed aggregates. No off-balance sheet obligations were disclosed in the provided data. Overall solvency and liquidity are strong, supporting ongoing investment and shareholder returns.

Cash Flow Quality

OCF/Net Income is 1.01x, clearing the 0.8x threshold and indicating broadly aligned earnings and cash. Operating cash flow of 6.39 against net income of 6.30 suggests minimal accrual build; AR at roughly 29 days further supports healthy collections. Capex was modest at 0.48; using OCF less capex as an FCF proxy (ex-M&A) implies ~5.91, though full investing CF was not disclosed. Financing CF outflow of 1.80 includes share repurchases of 0.38; dividend cash out is unreported. There are no clear signs of working capital manipulation in the disclosed items; however, the lack of full investing CF detail limits a comprehensive FCF assessment. Cash on hand (47.54) provides a significant buffer for volatility and capital allocation.

Dividend Sustainability

Reported dividend details are not disclosed; however, the calculated payout ratio is 17.5%, implying a conservative stance versus earnings capacity. With OCF approximately equal to net income and low capex needs, cash generation appears sufficient to cover a typical dividend and modest buybacks. FCF coverage cannot be fully assessed given unreported investing CF, but an OCF–capex proxy suggests ample room for distributions. Balance sheet strength (cash-rich, low debt) further supports sustainability. Policy outlook: absent a shift in investment intensity, the company has capacity to maintain or cautiously increase shareholder returns, but near-term priority may be to invest in growth while stabilizing operating margins.

Risk Assessment

Business Risks:

• Operating leverage risk from elevated SG&A; continued growth in fixed costs could compress margins if revenue growth slows
• Execution risk in scaling sales/marketing and R&D productivity to convert revenue growth into operating profit
• Competitive intensity in software/IT services potentially pressuring pricing and customer acquisition costs
• Customer concentration and churn risk typical for high-margin, asset-light models (not disclosed but relevant to profile)

Financial Risks:

• Potential volatility below the operating line; non-operating items supported net income this quarter and may not be repeatable
• Limited disclosure of investing cash flows could mask M&A or investment outlays impacting FCF
• Tax rate variability around the 36% level could affect net margins

Key Concerns:

• Negative operating leverage: revenue +10.3% YoY vs operating income -1.7% YoY
• SG&A ratio high at 79.2% of sales; requires discipline to prevent further operating margin erosion
• Reported ROIC of 318.4% likely inflated by very low measured invested capital; may not be a reliable KPI for trend analysis

Investment Implications

Key Takeaways:

• Top-line growth is healthy, but operating margin compressed ~176 bps YoY on SG&A intensity
• Bottom-line growth outpaced sales, lifting ROE to 13.3%, aided by below-operating-line items
• Liquidity and solvency are strong (current ratio ~270%, D/E 0.54x, cash 47.54), providing flexibility
• Earnings quality is acceptable (OCF/NI ~1.01x), with modest capex burden
• Near-term performance depends on achieving SG&A discipline to restore positive operating leverage

Metrics to Watch:

• SG&A-to-sales ratio and YoY SG&A growth versus revenue growth
• Operating margin trajectory and EBITDA margin recovery
• OCF/Net Income ratio and working capital days (especially AR days)
• Investing cash flows (M&A, capitalized development) to refine FCF view
• Effective tax rate stability and non-operating income/expense volatility

Relative Positioning: Within asset-light, high-gross-margin peers, the company shows strong liquidity and conservative leverage with acceptable ROE; however, its operating margin is currently under pressure due to SG&A intensity, making cost discipline the differentiator for near-term relative performance.

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