IID,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.43B
• Operating Income: ¥80M
• Net Income: ¥93M
• EPS: ¥49.11

Income Statement

Balance Sheet

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

In FY2026 Q1, IID, Inc. (60380) posted revenue of ¥1,429 million, down 4.6% year over year, indicating a soft top-line environment. Gross profit was ¥712 million, implying a resilient gross margin of 49.8%, which remains a relative strength despite revenue contraction. Operating income declined sharply to ¥80 million (−50.9% YoY), compressing the operating margin to roughly 5.6%, suggesting notable pressure from SG&A or lower operating leverage amid softer sales. Ordinary income was ¥83 million, only modestly above operating income, indicating limited non-operating support from financial items. Net income, however, surged to ¥238 million (+161.2% YoY), lifting the net margin to 16.66%; this divergence from operating performance strongly points to one-off or extraordinary gains in the quarter. Based on net income of ¥238 million and EPS of ¥49.11, implied shares outstanding are approximately 4.85 million, though share data are not disclosed in the XBRL extract. The DuPont profile shows net margin of 16.66%, asset turnover of 0.231x, and financial leverage of 1.31x, yielding an ROE of 5.03%; however, the elevated net margin is non-core, so underlying ROE is likely lower. Liquidity appears strong with a current ratio of 390% and quick ratio of 379%, supported by ¥3,405 million of working capital and modest inventories of ¥124 million. The capital structure is conservative: debt-to-equity is 0.34x, interest expense is only ¥1.6 million, and interest coverage is 49.4x off operating income, underscoring low financial risk. On the balance sheet, total assets of ¥6,191 million and total equity of ¥4,733 million imply an equity ratio of roughly 76% (despite the disclosed equity ratio field showing 0.0%, which is an unreported item). Effective tax expense was ¥69 million; inferring pre-tax income of about ¥307 million (net plus tax) implies an effective tax rate near 23% for the quarter. Cash flow data, depreciation/amortization, and EBITDA are unreported, limiting read-through on cash conversion and the sustainability of earnings quality. The combination of top-line softness and margin compression at the operating level suggests cyclical or mix-related headwinds in core businesses. The large gap between ordinary and net income points to reliance on non-recurring items this quarter, which flatters reported profitability ratios. Dividend data indicate no interim distribution (DPS ¥0, payout 0%), consistent with conserving cash or the absence of a formal interim policy; with FCF unreported, payout capacity cannot be assessed. Overall, the quarter reflects resilient gross profitability but weaker core operating profits, offset by non-recurring gains, within a balance sheet that provides ample liquidity and low leverage.

Profitability Analysis

ROE_decomposition: DuPont shows Net Margin 16.66% × Asset Turnover 0.231 × Financial Leverage 1.31 = ROE 5.03%. The elevated net margin is driven by one-off gains (net income ¥238m vs ordinary income ¥83m), making the reported ROE non-core. Underlying ROE, adjusting for extraordinary gains, would be materially lower given operating margin ~5.6% and low asset turnover. margin_quality: Gross margin is strong at 49.8%, indicating solid pricing/mix or content/service margin resilience. Operating margin compressed to ~5.6% (¥80m/¥1,429m), implying higher SG&A intensity and limited operating leverage on a softer top line. Ordinary margin is ~5.8%. The jump to a 16.66% net margin is non-recurring, likely from extraordinary gains of roughly ¥224m pre-tax. operating_leverage: Revenue fell 4.6% YoY while operating income fell 50.9% YoY, evidencing negative operating leverage. Fixed cost absorption likely deteriorated, and opex did not flex sufficiently with revenue contraction.

Growth Assessment

revenue_sustainability: Revenue of ¥1,429m declined 4.6% YoY, pointing to near-term demand or mix headwinds in core segments. With asset turnover at 0.231x, efficiency remains modest, suggesting growth will likely require both volume recovery and better utilization. profit_quality: Core profit quality is weak this quarter: operating income of ¥80m vs net income of ¥238m indicates a significant non-recurring uplift. Ordinary income only slightly exceeds operating income, confirming that the delta to net is not from recurring financial income but from extraordinary items. outlook: Near-term growth depends on stabilizing revenues and reasserting operating leverage via SG&A discipline. Without repeat of one-off gains, reported profitability will likely converge toward operating performance. Monitoring backlog/pipeline, advertising/media demand trends, and client budgets will be key for revenue normalization.

Financial Health

liquidity: Current ratio 390% and quick ratio 379% signal ample short-term coverage. Working capital totals ¥3,405m. Inventories are modest at ¥124m, implying low inventory risk. Cash and equivalents are undisclosed in this extract. solvency: Debt-to-equity is 0.34x and interest coverage is 49.4x, indicating low financial risk. Total equity of ¥4,733m against assets of ¥6,191m implies an equity ratio of ~76%, highlighting a conservative balance sheet despite the equity ratio field showing 0.0% (unreported). capital_structure: Leverage is modest with limited interest burden (¥1.6m). The company appears primarily equity-financed, providing resilience against earnings volatility.

Cash Flow Quality

earnings_quality: OCF is unreported; the displayed OCF/Net Income ratio of 0.00 should not be interpreted as zero cash conversion. Given net income was boosted by non-recurring gains, cash conversion from core operations is uncertain and likely weaker than net income suggests. FCF_analysis: Investing CF and financing CF are unreported, preventing calculation of FCF. With depreciation/amortization unreported, EBITDA and maintenance capex needs cannot be assessed. working_capital: Working capital is sizable at ¥3,405m. Receivables and payables composition are not disclosed here; collection cycles and AR quality remain a monitoring point given media/marketing revenue profiles.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0 and payout ratio is 0%. With net income of ¥238m this quarter, coverage would be ample for a modest dividend, but management appears to retain earnings or has no interim distribution. FCF_coverage: FCF coverage cannot be evaluated as OCF and capex are unreported; the shown 0.00x is not meaningful. policy_outlook: Absent visibility on cash generation and capex, dividend outlook is unclear. A conservative balance sheet supports capacity, but sustainability should be tied to recurring OCF rather than one-off gains.

Risk Assessment

Business Risks:

• Revenue cyclicality in advertising/media and client budget sensitivity
• Negative operating leverage when revenues soften
• Dependence on non-recurring gains to support quarterly earnings
• Execution risk in cost control and gross margin preservation
• Potential client concentration or vertical concentration (not disclosed here)
• Content/audience monetization and traffic volatility

Financial Risks:

• Cash flow visibility limited due to unreported OCF and capex
• Asset turnover at 0.231x indicates efficiency risk if growth stalls
• Potential goodwill/intangible amortization under JGAAP affecting core profits (D&A unreported)
• Working capital collection risk typical of media/services businesses

Key Concerns:

• Sharp 50.9% YoY decline in operating income despite only a 4.6% revenue decline
• Large gap between ordinary income (¥83m) and net income (¥238m) indicating one-off dependence
• Lack of cash flow data obscures earnings quality and FCF sustainability

Investment Implications

Key Takeaways:

• Top line contracted 4.6% YoY to ¥1,429m; operating income fell 50.9% to ¥80m
• Gross margin solid at 49.8%, but SG&A/operating leverage pressures weighed on OPM (~5.6%)
• Net income boosted to ¥238m by non-recurring gains; net margin 16.66% is not reflective of core
• ROE 5.03% is elevated by one-offs; core ROE likely lower given low asset turnover (0.231x)
• Balance sheet conservative: equity ratio ~76%, interest coverage 49.4x, D/E 0.34x
• Liquidity strong: current ratio 390%, quick ratio 379%, working capital ¥3,405m

Metrics to Watch:

• Revenue growth trajectory and client demand indicators
• Operating margin and SG&A ratio normalization
• Ordinary income vs net income gap (scale of non-recurring items)
• Operating cash flow and capex once reported; FCF conversion
• Asset turnover improvement and receivables days
• ROE excluding one-off gains

Relative Positioning: Within Japanese small/mid-cap digital media and marketing services peers, IID exhibits strong gross profitability and a conservative balance sheet but weaker operating momentum this quarter, with reported earnings buoyed by non-recurring gains and modest asset efficiency.

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
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