RareJob,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.64B
• Operating Income: ¥38M
• Net Income: ¥-27M
• Earnings per Unit (EPU): ¥-2.80

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Unit Information

Distribution 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: FY2026 Q2 was weak, with profitability deteriorating sharply and a swing to a small net loss despite positive operating cash flow. Revenue declined 3.5% YoY to 46.43, while operating income fell 82.5% YoY to 0.38, and ordinary income dropped 78.6% YoY to 0.44. Gross profit was 19.04, implying a 41.0% gross margin. SG&A was 18.66, leaving only 0.38 of operating income, indicating limited operating leverage. Non-operating items were a small net positive (+0.05), with interest income of 0.02 and interest expense of 0.11. Profit before tax was 0.44, but an unusually high tax expense of 0.71 (effective tax rate 160.3%) drove net income to -0.26 and total comprehensive income to -0.38. Operating margin compressed materially: current operating margin is 0.8% versus an estimated ~4.5% a year ago, a compression of roughly 369 bps. Net margin is -0.6% this quarter. Cash generation was better than earnings: operating cash flow was 1.56 versus net income of -0.26 (OCF/NI ratio -6.0x due to negative NI), suggesting non-cash/tax effects dominate the earnings decline. Liquidity is adequate with a current ratio of 142.1% and cash of 28.67 against current liabilities of 26.97, but leverage is elevated with D/E at 2.43x and equity at 29.1% of assets. ROE is negative at -1.4% on a DuPont basis (margin -0.6%, asset turnover 0.724, leverage 3.43x), and ROIC is low at 4.0%, below a 5% warning threshold. The balance sheet includes sizable intangibles (intangible assets 20.69, including goodwill 9.66), raising sensitivity to impairment if growth stalls. Financing cash flow was 2.77, indicating reliance on external funding in the period. Forward-looking, restoring operating margin and normalizing the effective tax rate are key to returning to profitability; cash on hand provides runway, but high leverage and low ROIC constrain flexibility. Monitoring cost discipline, enterprise/customer demand trends, and potential goodwill impairment risk will be critical into 2H.

Profitability Analysis

ROE decomposition: ROE (-1.4%) = Net Profit Margin (-0.6%) × Asset Turnover (0.724) × Financial Leverage (3.43x). The weakest component is net profit margin, which turned negative due to an abnormally high effective tax rate (160.3%) and slim operating margin (0.8%). Operating margin compressed by an estimated ~369 bps YoY (from ~4.5% to 0.8%) as SG&A absorbed most of gross profit (18.66 SG&A vs 19.04 gross profit), indicating limited operating leverage and likely higher customer acquisition/content/people costs against softer sales. Asset turnover at 0.724 is modest for an asset-light education platform but is depressed by large intangibles (intangible assets 20.69, goodwill 9.66). Leverage at 3.43x amplifies the margin impact on ROE to the downside. The margin pressure appears partly cyclical/operational (weaker demand and higher costs) and partly one-off (tax), with sustainability uncertain: operating cost structure needs recalibration for profitability to normalize. Watch for concerning trends: without prior period SG&A we cannot confirm SG&A growth outpacing revenue, but the current SG&A-to-sales ratio (40.2%) is elevated relative to the current gross margin (41.0%), leaving minimal room for profit.

Growth Assessment

Top-line contracted 3.5% YoY to 46.43, indicating near-term demand softness. Operating income declined 82.5% YoY to 0.38, showing negative operating leverage. Ordinary income fell 78.6% YoY to 0.44; non-operating effects were small and not a driver. Net income turned to -0.26 largely due to an unusually high tax burden rather than a collapse in pre-tax profit. Revenue quality appears stable (no one-time gains in revenue), but profit quality is weak given the thin operating margin and high tax rate. EBITDA was 1.46 (3.1% margin), which is low for sustainability of growth investments. Outlook hinges on cost control and reacceleration in core learning demand (consumer and enterprise). With cash of 28.67 and OCF of 1.56, the company retains capacity to invest selectively; however, ROIC at 4.0% indicates current investments are not clearing the cost of capital. Near-term profit recovery likely requires SG&A restraint and normalization of tax effects; organic growth alone may be insufficient without margin actions.

Financial Health

Liquidity: Current ratio 142.1% and quick ratio 142.1% indicate acceptable liquidity, though slightly below the 150% healthy benchmark. Working capital is 11.36, and cash of 28.67 covers current liabilities of 26.97, reducing short-term liquidity risk. Solvency: Debt-to-equity is elevated at 2.43x (warning >2.0). Equity represents ~29.1% of total assets (18.69/64.15), reflecting a leveraged capital structure. Interest coverage at 3.31x is moderate (below the 5x strong benchmark but above the 2x warning), leaving some buffer but limited headroom if earnings weaken further. Maturity mismatch: Current assets (38.32) exceed current liabilities (26.97), providing a cushion; short-term loans are unreported, but long-term loans total 14.76, suggesting some duration to funding. Asset quality: Intangible assets are high at 20.69 (including goodwill 9.66), which elevates impairment risk and depresses tangible equity. Off-balance sheet obligations: not disclosed in the data provided.

Cash Flow Quality

OCF was 1.56 versus net income of -0.26, yielding an OCF/NI ratio of -6.0x (flagged due to negative NI). The positive OCF alongside a net loss suggests significant non-cash items (depreciation/amortization 1.08) and tax timing/adjustments (effective tax rate 160.3%) rather than cash earnings deterioration. A simple FCF proxy (OCF minus capex) is approximately 1.50 (1.56 - 0.06), implying the business generated cash after maintenance investment this period; full investing CF is unreported, so true FCF may differ. Working capital contributions likely supported OCF given the revenue decline, but detailed movements are not disclosed; no clear signs of working capital manipulation can be identified from available data. Interest expense is 0.11 and currently covered by EBITDA (1.46) and OCF; however, with low operating margin, cash flow is sensitive to demand and cost shocks. Sustainability: Near-term OCF appears adequate, but reliance on financing CF (2.77) suggests external funding was used, potentially for debt refinancing or liquidity reinforcement.

Dividend Sustainability

Dividend data are largely unreported; DPS and total dividends paid are N/A. The calculated payout ratio of -189.3% indicates either no dividend with negative NI or a small dividend against a net loss; without cash dividend disclosure, we cannot confirm. Given negative net income, low ROIC (4.0%), and elevated leverage (D/E 2.43x), maintaining or increasing cash dividends would depend on sustained positive FCF (proxy ~1.50 this period) and lender covenants. Policy outlook: With profitability under pressure and a need to delever and invest, a conservative stance on shareholder returns would be prudent until margins and ROE normalize.

Risk Assessment

Business Risks:

• Demand softness in consumer and corporate English-learning segments (revenue -3.5% YoY).
• Operating deleverage due to high fixed SG&A relative to gross profit (SG&A 18.66 vs GP 19.04).
• Competitive intensity in online education driving higher customer acquisition and content costs.
• Execution risk in product innovation/AI-enabled tutoring and enterprise solutions.

Financial Risks:

• High leverage (D/E 2.43x) with moderate interest coverage (3.31x), raising sensitivity to earnings shocks.
• Large intangible asset base (20.69, goodwill 9.66) increases impairment risk and reduces tangible equity.
• Tax volatility (effective tax rate 160.3%) causing divergence between PBT and NI.
• Refinancing/interest rate risk given reliance on financing CF (2.77) and long-term loans (14.76).

Key Concerns:

• Operating margin compressed to 0.8%, down ~369 bps YoY by estimate.
• ROIC at 4.0% below 5% warning threshold, implying value creation challenges.
• Negative net income despite positive OCF, complicating capital allocation and dividend capacity.
• Potential maturity of current liabilities versus available cash requires continued discipline despite current adequate coverage.

Investment Implications

Key Takeaways:

• Profitability deteriorated sharply; net loss (-0.26) driven by slim operating profit and high taxes.
• Operating margin ~0.8% vs ~4.5% a year ago (≈369 bps compression).
• Cash position strong (28.67) relative to current liabilities (26.97), but leverage is high (D/E 2.43x).
• OCF positive (1.56) and FCF proxy ~1.50, but financing CF (2.77) signals external funding reliance.
• Low ROIC (4.0%) and negative ROE (-1.4%) highlight need for margin and capital efficiency improvements.

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio (cost discipline).
• Effective tax rate normalization and any one-off tax items.
• OCF versus NI convergence; FCF after capex and interest.
• Leverage trajectory (D/E) and interest coverage.
• Intangible asset and goodwill impairment assessments.
• Revenue reacceleration in enterprise/consumer cohorts and churn metrics (if disclosed).

Relative Positioning: Within domestic edtech/online learning peers, the company currently exhibits weaker profitability and capital efficiency (ROIC 4%) but maintains adequate liquidity via cash on hand; elevated leverage and large intangibles weigh on resilience until margins recover.

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