OutlookConsulting Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥859M
• Operating Income: ¥264M
• Net Income: ¥184M
• EPS: ¥58.57

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

Outlook Consulting Co., Ltd. reported FY2026 Q2 single-entity results with steady top-line growth and strong operating leverage. Revenue rose 5.8% year over year to ¥859 million, while operating income grew 24.1% to ¥264 million, expanding the operating margin to roughly 30.7%. Net income increased 24.6% to ¥184 million, lifting the net margin to 21.4%, underscoring robust cost control and favorable mix. Gross margin is indicated at 61.2%, consistent with a high-value-added software/services model with no inventories. DuPont decomposition shows ROE of 16.27% (net margin 21.42% × asset turnover 0.469 × financial leverage 1.62), an attractive level for a Japanese software/IT services peer group. Operating cash flow was strong at ¥445 million, 2.42x net income, implying high earnings quality and beneficial working capital dynamics. The balance sheet is conservative: current ratio is 431% and debt-to-equity is 0.23x, with all liabilities classified as current and no reported interest expense. Although the disclosed “Equity Ratio” is 0.0% (unreported), implied equity to assets is approximately 61.7% (¥1,131 million / ¥1,832 million). EBITDA of ¥272 million and a 31.7% EBITDA margin, coupled with minimal D&A of ¥8 million, indicate low capital intensity. Ordinary income slightly exceeds operating income, likely reflecting net financial income. Dividend payout is currently zero; given the strong cash generation and low leverage, the company retains capacity but appears focused on reinvestment at this stage. Some disclosures (e.g., cash and equivalents, equity ratio, share count) are not reported; however, EPS of ¥58.57 implies roughly 3.14 million shares outstanding. There is a minor inconsistency between reported cost of sales and gross profit; margin metrics suggest some classification differences. Overall, profitability, cash generation, and liquidity appear solid, with the key forward variables being demand sustainability, pricing, and hiring productivity. With limited capex requirements and strong OCF, the company has flexibility to invest in growth or consider future shareholder returns. Continued execution on high-margin services/software and disciplined cost management should support ROE durability. The primary risks are growth deceleration, wage inflation, and potential project timing slippage in a services-centric model.

Profitability Analysis

ROE_decomposition: ROE 16.27% = Net margin 21.42% × Asset turnover 0.469 × Financial leverage 1.62. The high net margin is the largest contributor, with moderate asset turnover reflective of a services/software model and conservative leverage. margin_quality: Gross margin of 61.2% and operating margin of ~30.7% indicate strong pricing power and delivery efficiency. Low D&A (¥8.4m; ~1.0% of sales) supports an EBITDA margin of 31.7%, implying low capital intensity. Effective tax rate is approximately 24.7% (¥65.5m tax on ~¥265m pre-tax), consistent with statutory ranges. operating_leverage: Revenue grew 5.8% YoY while operating income grew 24.1% YoY, evidencing positive operating leverage from scale efficiencies and mix. Expense discipline and utilization likely improved, with ordinary income tracking above operating income due to small net financial income.

Growth Assessment

revenue_sustainability: Top-line growth of 5.8% YoY is modest but consistent for a consulting/software niche player with no inventories. High gross margin suggests value-add services and/or recurring licenses/maintenance underpinning stability. profit_quality: Net margin at 21.4% with strong OCF/NI of 2.42x supports quality of earnings. Minimal D&A and limited below-the-line noise (ordinary ≈ operating) indicate core operations are the primary profit driver. outlook: Near-term growth depends on project pipeline conversion, pricing, and hiring capacity. With robust liquidity and low leverage, the company can invest in talent and productization to sustain mid-single-digit to low-double-digit growth, though project timing could introduce quarterly volatility.

Financial Health

liquidity: Current ratio 430.7% and quick ratio 430.7% reflect ample short-term liquidity; working capital is ¥868.7m. All liabilities are current, but absolute levels are modest relative to current assets. solvency: Debt-to-equity is 0.23x and interest expense is nil, indicating low financial risk. Although the reported equity ratio is 0.0% (unreported), implied equity ratio is ~61.7% (¥1,131m/¥1,832m). capital_structure: Balance sheet is equity-heavy with limited leverage. Ordinary income exceeding operating income suggests net cash position or positive financial income, further reducing solvency risk.

Cash Flow Quality

earnings_quality: OCF of ¥444.6m versus net income of ¥184.0m (2.42x) indicates strong cash conversion, likely supported by upfront billings or improved receivables collection. FCF_analysis: Investing cash flow is unreported; capex data are unavailable. Given low D&A, maintenance capex is likely modest, implying healthy underlying FCF, but precise FCF cannot be determined from disclosed figures. working_capital: No inventories and strong current asset base suggest a services/SaaS-lean profile. Positive OCF points to favorable working capital movement; however, the absence of line-item details (AR/AP changes) limits attribution.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0 with a 0% payout. With net income of ¥184m and strong OCF, the capacity to pay a dividend exists, but management currently prioritizes reinvestment. FCF_coverage: FCF coverage is shown as 0.00x due to unreported capex/FCF. Qualitatively, low capital intensity and strong OCF imply potential for future coverage, subject to investment needs and policy. policy_outlook: Given early growth characteristics (operating leverage, low capex), retention likely continues near term. A shift to dividends or buybacks would depend on sustained cash buildup and visibility on growth investments.

Risk Assessment

Business Risks:

• Demand variability and project timing slippage in consulting/services
• Pricing pressure from larger SIers or global software partners
• Talent acquisition and wage inflation impacting delivery margins
• Client concentration risk typical of niche B2B providers
• Execution risk in scaling recurring/software offerings

Financial Risks:

• Working capital swings affecting quarterly OCF
• Limited disclosure of cash and investing flows complicates FCF visibility
• Potential tax rate normalization or changes (~24.7% current effective rate)
• Exposure to macro IT spending cycles

Key Concerns:

• Modest revenue growth (+5.8% YoY) versus strong profit growth—sustainability of operating leverage
• Data gaps (cash balance, capex) constrain FCF assessment
• Minor inconsistency between reported cost of sales and gross profit figures

Investment Implications

Key Takeaways:

• High-quality margins: 61.2% gross and ~30.7% operating margin
• Strong ROE at 16.27% driven by superior net margin and moderate leverage
• OCF strength (2.42x net income) underscores earnings quality
• Very strong liquidity (current ratio 431%) and low leverage (D/E 0.23x)
• Dividend currently nil; ample capacity for reinvestment

Metrics to Watch:

• Revenue growth pace and backlog/pipeline indicators
• Utilization rates and labor cost trends affecting margins
• OCF sustainability and receivables/contract liabilities movements
• Capex and R&D/productization spend to gauge future FCF
• Client concentration and renewal/retention metrics

Relative Positioning: Within Japan’s software/IT services cohort, the company presents above-average profitability and cash conversion with a conservative balance sheet; growth is solid but not rapid, placing it as a quality compounder contingent on continued execution and demand resilience.

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