MATCHING SERVICE JAPAN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.92B
• Operating Income: ¥912M
• Net Income: ¥611M
• EPS: ¥23.71

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

MS-Japan reported FY2026 Q2 consolidated results showing modest top-line growth and resilient profitability against a high-margin backdrop. Revenue was 3,918 million yen, up 1.3% YoY, while operating income rose 1.0% YoY to 912 million yen, indicating slightly negative operating leverage this half. Gross profit reached 3,076.7 million yen, implying an exceptionally high gross margin of 78.5%, consistent with an asset-light, service-centric model typical of professional talent and advisory services. Operating margin stood at approximately 23.3%, with ordinary income of 963 million yen (ordinary margin ~24.6%) reflecting small non-operating gains net of minimal interest expense. Net income was 589 million yen, essentially flat (-0.1% YoY), translating to a net margin of 15.0% and EPS of 23.71. DuPont decomposition yields a reported ROE of 6.60%, driven by a 15.03% net margin, 0.391x asset turnover, and modest financial leverage of 1.12x. Liquidity is very strong with a current ratio of 630% and working capital of 4,861.5 million yen; balance sheet leverage is low with total liabilities of 1,067.4 million yen and a debt-to-equity ratio of 0.12x. Operating cash flow was robust at 817.1 million yen, equating to 1.39x net income, signaling solid earnings quality and healthy working capital discipline. Financing cash outflows were significant at 1,595.9 million yen, suggesting active shareholder returns or capital structure actions; detailed breakdown is not disclosed here. The effective tax rate calculated from reported figures is approximately 38.9% (taxes of 374.5 million yen over ordinary income of 963 million yen). Several items, including cash and equivalents, investing cash flows, equity ratio, free cash flow, and dividend/distribution specifics, appear as zero and should be interpreted as not disclosed rather than true zero values. Despite limited disclosures on capex/investing flows, the company’s cash generation and low leverage provide ample flexibility for reinvestment and shareholder returns. Overall, MS-Japan delivered stable performance with high margins, strong cash conversion, and a fortified balance sheet, albeit with muted growth momentum and slight negative operating leverage in the period. Near-term outlook will hinge on demand trends in professional recruitment/placement, fee rates, and activity levels in the company’s core verticals. Management’s capital allocation stance, implied by sizable financing outflows, remains an important watchpoint. Given data limitations, the analysis focuses on the available non-zero items and derived metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 15.03%
• asset_turnover: 0.391
• financial_leverage: 1.12
• calculated_ROE: 6.60%
• commentary: ROE is primarily driven by strong margins and low leverage; asset turnover is modest, consistent with a high-margin, asset-light services model. margin_quality:
• gross_margin: 78.5% (gross profit 3,076.7m / revenue 3,918.0m)
• operating_margin: 23.3% (operating income 912.0m / revenue 3,918.0m)
• ordinary_margin: 24.6% (ordinary income 963.0m / revenue 3,918.0m)
• net_margin: 15.0% (net income 589.0m / revenue 3,918.0m)
• tax_rate_estimate: 38.9% (income tax 374.5m / ordinary income 963.0m)
• insight: Margins remain structurally high; the gap between gross and operating margin reflects meaningful SG&A investment, while ordinary margin slightly exceeds operating margin due to minor non-operating gains. operating_leverage:
• revenue_growth_YoY: 1.3%
• operating_income_growth_YoY: 1.0%
• assessment: Slight negative operating leverage in the half, as opex growth marginally outpaced revenue growth. Continuous cost discipline will be key to re-accelerate operating margin expansion.

Growth Assessment

revenue_sustainability: Top-line growth of 1.3% YoY is modest, indicating stable but subdued demand conditions. Given the high gross margin structure, growth likely depends on placement volumes, fill rates, and fee per placement in core professional verticals. profit_quality: Net profit stability (-0.1% YoY) amid steady operating income (+1.0% YoY) underscores resilience. Ordinary income exceeding operating income suggests small non-operating tailwinds; interest burden is negligible. outlook: Near-term growth will hinge on hiring appetite in accounting/legal/administrative segments, pricing power on fees, and client activity levels. With low leverage and strong cash generation, the company has capacity to invest in growth initiatives (e.g., digital matching, marketing) if demand improves, though no investing cash flow details are disclosed for the period.

Financial Health

liquidity: Current assets 5,778.1m vs current liabilities 916.6m yields a current ratio of ~630% and quick ratio of ~630% (no inventories reported), indicating very strong liquidity. Working capital stands at 4,861.5m. solvency: Total liabilities of 1,067.4m vs equity of 8,921.0m yields a debt-to-equity ratio of 0.12x and an implied equity ratio of ~88.9% (derived), signifying a conservative capital structure. capital_structure: Interest expense is minimal at 1.7m with interest coverage of ~536x, implying negligible financial risk from borrowing. Financing CF outflows suggest shareholder returns or balance sheet optimization without impairing solvency.

Cash Flow Quality

earnings_quality: OCF of 817.1m equals 1.39x net income (589.0m), indicating strong cash conversion and limited reliance on accruals. FCF_analysis: Investing cash flows are undisclosed in this dataset (shown as 0). As a result, free cash flow cannot be reliably calculated for the period. Nonetheless, the combination of high OCF and low capital intensity historically associated with the business model suggests capacity to fund operations and returns. working_capital: Healthy working capital of 4,861.5m and strong liquidity ratios suggest limited risk from receivables or payables timing. The OCF strength implies effective working capital management during the half.

Dividend Sustainability

payout_ratio_assessment: Dividend data (DPS and payout) are not disclosed here (zeros should be treated as not reported). Using available earnings and OCF, the company appears capable of sustaining distributions if policy supports it, given low leverage and strong cash generation. FCF_coverage: Free cash flow is not determinable from the provided data due to absent investing cash flows; therefore, coverage ratios cannot be computed. policy_outlook: Substantial financing cash outflows (1,595.9m) indicate active capital return or structure management. Absent explicit DPS data, future dividends will depend on management policy, cash needs for growth, and market conditions.

Risk Assessment

Business Risks:

• Cyclicality in hiring demand across core professional sectors (accounting, legal, administrative).
• Pricing pressure on placement fees or changes in client mix affecting margins.
• Competition from other specialized recruiters and digital platforms.
• Regulatory or labor market changes impacting placement processes and fees.
• Concentration risk if revenue is dependent on specific verticals or client segments.

Financial Risks:

• Limited disclosure of cash and equivalents and investing cash flows reduces visibility into near-term liquidity headroom and reinvestment levels.
• Potential earnings volatility from macroeconomic slowdowns affecting hiring activity.
• Tax rate sensitivity (~39% effective rate) impacting net margins if incentives or mix shift.

Key Concerns:

• Muted revenue growth (+1.3% YoY) and slight negative operating leverage.
• Incomplete disclosure (cash balance, capex/investing CF, dividend specifics) constrains full cash flow and payout analysis.
• Sustainability of exceptionally high gross margins if competition intensifies.

Investment Implications

Key Takeaways:

• High-margin, asset-light model with strong cash conversion (OCF/NI 1.39x).
• Very conservative balance sheet (D/E ~0.12x) and ample liquidity (current ratio ~630%).
• Growth is stable but subdued; modest negative operating leverage in the half.
• Significant financing outflows suggest ongoing shareholder returns or balance sheet actions.
• ROE of 6.6% reflects strong margins but modest asset turnover and low leverage.

Metrics to Watch:

• Revenue growth re-acceleration and placement volumes/fee rates.
• Operating margin trajectory and SG&A efficiency to gauge operating leverage.
• Actual cash and equivalents and detailed investing cash flows to assess FCF.
• Capital return actions (dividends/buybacks) and their alignment with OCF.
• Effective tax rate stability relative to profit mix and any policy changes.

Relative Positioning: Within Japan’s professional recruitment and services peer set, MS-Japan appears more profitable than average with superior gross and operating margins, low leverage, and strong cash conversion, albeit with lower growth momentum in the latest half.

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