BTM,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.83B
• Operating Income: ¥52M
• Net Income: ¥31M
• EPS: ¥11.05

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

BTM reported FY2026 Q2 consolidated results under JGAAP showing strong topline growth with tighter profitability and mixed cash conversion. Revenue grew 22.4% YoY to ¥2,829m, reflecting solid demand and/or increased delivery capacity. Gross profit was ¥439.5m, translating to a gross margin of 15.5%, which is consistent with an asset-light services model but leaves limited buffer for SG&A inflation. Operating income rose 12.4% YoY to ¥52m, implying operating margin of 1.8% and signaling some negative operating leverage as cost growth outpaced gross profit expansion. Ordinary income was ¥48m and net income ¥31m, placing the net margin at 1.10%. DuPont decomposition yields ROE of 4.49%, driven by a low net margin, strong asset turnover of 1.626x, and financial leverage of 2.52x. The asset turnover indicates efficient utilization of a relatively small asset base, typical for human-capital‑intensive businesses. Financial leverage is moderate and supports ROE, but profit margins remain the primary constraint on return profile. Liquidity is comfortable with current ratio at 205%, supported by ¥1,488.8m in current assets versus ¥725.6m in current liabilities. Solvency appears sound with total liabilities of ¥920.6m against equity of ¥690.0m; implied equity ratio is about 39.7% (the field showing 0.0% is likely undisclosed rather than truly zero). Cash conversion was weak in the period: operating cash flow was slightly negative at -¥0.29m against positive earnings, suggestive of working capital absorption. Financing cash inflow of ¥81.43m likely reflects incremental borrowings (share count data are undisclosed), bolstering liquidity. Depreciation and amortization were just ¥2.29m, underscoring an asset-light model and implying EBITDA of roughly ¥54.3m (1.9% margin). Interest expense was modest at ¥3.4m, and EBIT-based interest coverage of about 15.3x indicates manageable financial risk. While the provided “effective tax rate” is shown as 0.0%, the combination of ¥48m pre-tax earnings and ¥17.7m of tax expense implies an effective tax rate in the mid‑30s. No dividend was paid (DPS ¥0), consistent with a focus on growth or balance sheet reinforcement. Overall, BTM exhibits healthy growth and decent balance sheet strength but needs to improve operating efficiency and cash conversion to elevate ROE and support longer-term capital allocation flexibility.

Profitability Analysis

ROE_decomposition: ROE 4.49% = Net margin 1.10% × Asset turnover 1.626 × Financial leverage 2.52. The low net margin is the primary drag; strong turnover and moderate leverage partly offset. margin_quality: Gross margin 15.5% supports a services model but leaves limited buffer for overhead; operating margin at ~1.8% indicates SG&A pressure. Ordinary margin ~1.7% and net margin 1.10% reflect limited pricing power or elevated personnel and recruitment costs. operating_leverage: Revenue grew 22.4% YoY while operating income grew 12.4%, suggesting negative operating leverage in the period. To improve operating leverage, the company needs tighter SG&A control, utilization improvements, and potentially higher value-added service mix to widen gross margin.

Growth Assessment

revenue_sustainability: The 22.4% YoY revenue expansion indicates robust demand and/or headcount ramp, consistent with IT staffing/outsourcing dynamics. Sustainability will hinge on maintaining utilization, retaining key engineers, and avoiding pricing dilution. profit_quality: Net income grew 9.8% YoY, lagging sales growth amid margin compression. D&A is minimal, so earnings quality is not dependent on non-cash items; however, weak OCF versus net income points to working capital intensity and timing effects. outlook: Near-term growth potential remains intact given momentum, but margin recovery is needed to translate growth into ROE accretion. Mix shift to higher-margin projects and disciplined cost management are the key levers.

Financial Health

liquidity: Current assets ¥1,488.8m vs current liabilities ¥725.6m yield a current (and quick) ratio of ~205%, indicating ample short-term liquidity. Working capital stands at ¥763.2m. solvency: Total liabilities of ¥920.6m and equity of ¥690.0m imply a debt-to-equity of ~1.33x and an implied equity ratio of ~39.7% (reported 0.0% appears to be undisclosed). Interest coverage is healthy at ~15.3x on EBIT. capital_structure: Financial leverage (assets/equity) is 2.52x, supporting ROE but not excessive. Financing CF of ¥81.4m suggests incremental external funding, likely debt, to support growth and working capital.

Cash Flow Quality

earnings_quality: OCF/Net income ratio is -0.01, indicating weak cash conversion in the period despite positive earnings. Given the business model, this likely reflects receivables growth from rapid sales expansion and payment term mismatches. FCF_analysis: Free cash flow is not disclosed (investing CF reported as 0 likely indicates no disclosure rather than zero capex). With minimal D&A and an asset-light model, structural capex needs should be modest, but FCF will remain sensitive to working capital swings. working_capital: Large working capital base (¥763m) relative to earnings suggests significant cash tied in receivables. Improving billing cycles, collection efficiency, and contract terms will be critical to stabilize OCF.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS ¥0; payout ratio 0%) aligns with reinvestment and balance sheet reinforcement in a growth phase. Given low margins and modest ROE, retaining earnings appears prudent. FCF_coverage: With OCF near zero and FCF undisclosed, coverage of any prospective dividend would be uncertain near term; prioritizing positive, consistent OCF would be a prerequisite. policy_outlook: Initiation of dividends would likely require sustained operating margin improvement, stable positive OCF, and reduced reliance on external financing. For now, a conservative capital return stance is appropriate.

Risk Assessment

Business Risks:

• Margin pressure from wage inflation and recruitment costs in a tight IT labor market
• Utilization risk if demand softens or projects are delayed
• Pricing power constraints in competitive staffing/outsourcing segments
• Client concentration risk typical of smaller-cap services companies
• Execution risk in scaling headcount while maintaining quality and delivery

Financial Risks:

• Working capital absorption leading to weak OCF despite earnings growth
• Reliance on external financing to support growth (positive financing CF)
• Exposure to interest rate increases, albeit mitigated by strong coverage
• Potential covenant constraints if leverage increases to fund expansion

Key Concerns:

• Negative operating leverage in the period despite strong revenue growth
• Low net margin (1.10%) constraining ROE
• OCF below net income, highlighting cash conversion risk

Investment Implications

Key Takeaways:

• Strong topline momentum (+22.4% YoY) but margin compression
• ROE of 4.49% driven by high asset turnover and moderate leverage, capped by low net margin
• Healthy liquidity with ~205% current ratio and implied ~40% equity ratio
• Weak cash conversion (OCF ≈ -¥0.29m) amid working capital build
• Financing inflow (~¥81m) likely debt-funded growth support

Metrics to Watch:

• Operating margin and SG&A as a percentage of sales
• Receivables days and OCF/Net income conversion
• Headcount utilization and average billing rates
• Repeat business ratio and client concentration
• Interest-bearing debt levels and interest coverage

Relative Positioning: Relative to domestic small-cap IT staffing/outsourcing peers, BTM shows above-peer revenue growth but below-peer operating margin, with balanced leverage and comfortable liquidity; improvement in cash conversion and margin expansion are key to closing the profitability gap.

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