Writeup Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.03B
• Operating Income: ¥311M
• Net Income: ¥68M
• EPS: ¥38.50

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Light Up Co., Ltd. (consolidated, JGAAP) delivered a strong FY2026 Q2 performance with revenue of ¥2,034 million, up 20.8% year over year, indicating solid top-line momentum. Gross profit is reported at ¥1,309 million, implying a gross margin of 64.4%, which is high for service-centric models and suggests favorable pricing and/or mix. Operating income rose sharply to ¥311 million (+180.0% YoY), demonstrating powerful operating leverage as fixed costs were held in check relative to revenue growth. Ordinary income of ¥316 million was slightly above operating income, indicating small positive non-operating contributions (e.g., interest/dividend income or subsidies). Net income reached ¥197 million (+190.1% YoY), with EPS of ¥38.50, reflecting substantial profit recovery and improved efficiency. DuPont analysis shows a calculated ROE of 6.10%, driven by a 9.69% net margin, asset turnover of 0.495x, and modest financial leverage of 1.27x. The operating margin stands at approximately 15.3% (¥311m/¥2,034m), underscoring a meaningful uplift in profitability. On the balance sheet, total assets are ¥4,105 million, equity is ¥3,231 million, and total liabilities are ¥1,066 million, implying an equity ratio of around 78.7% (the disclosed 0.0% should be viewed as not reported). Liquidity appears ample with current assets of ¥3,740 million versus current liabilities of ¥1,062 million, yielding a current ratio of 352%. Operating cash flow was ¥120 million, resulting in an OCF-to-net-income ratio of 0.61, signaling weaker cash conversion due to working capital needs amid growth. Investing cash flow and cash/equivalents are shown as zero, which should be interpreted as undisclosed rather than actual zero. Financing cash flow was an outflow of ¥55 million, likely reflecting debt repayment and/or shareholder returns; however, dividends are listed as zero, also likely not disclosed at this stage. EBITDA was ¥330 million and the EBITDA margin 16.2%, corroborating improved operating efficiency. Interest expense is reported as zero, consistent with a low-leverage balance sheet and strong interest coverage in substance. There is a numerical inconsistency between revenue, cost of sales, and gross profit; we rely on the internally consistent gross profit and margin as the more coherent reference. Overall, Light Up shows accelerating profitability, strong balance sheet resilience, and solid top-line growth, with the main watchpoint being cash conversion and the sustainability of operating leverage gains.

Profitability Analysis

ROE_decomposition: ROE 6.10% = Net Margin 9.69% × Asset Turnover 0.495 × Financial Leverage 1.27. The principal driver is improved margin, with modest leverage and relatively low asset turnover restraining ROE. margin_quality: Gross margin 64.4% and operating margin ~15.3% indicate favorable pricing and mix, plus cost discipline. Ordinary income modestly exceeds operating income (+¥5m), suggesting benign non-operating items. Tax expense of ¥48.2m implies a rough tax rate in the mid-teens, although the gap between ordinary income and net income indicates other below-the-line items under JGAAP. operating_leverage: Revenue grew +20.8% YoY while operating income rose +180% YoY, reflecting strong operating leverage from a largely fixed-cost base and scale benefits in SG&A. EBITDA grew to ¥330m (16.2% margin), reinforcing improved cost absorption.

Growth Assessment

revenue_sustainability: Top-line growth of +20.8% YoY appears robust and likely supported by demand in core services; sustainability hinges on client acquisition/retention and recurring components. Asset turnover at 0.495x suggests room to utilize assets more efficiently to support further growth. profit_quality: Net margin of 9.69% and operating margin ~15.3% improved meaningfully, consistent with scale benefits. The OCF/NI ratio at 0.61 points to working capital drag; sustaining profit quality will require tighter collections and disciplined contract terms. outlook: With strong margins and a conservative capital structure, the company is positioned to pursue growth without balance sheet strain. Near-term growth durability depends on backlog visibility, churn, and the mix of higher-margin services. Monitor whether elevated operating margins are repeatable into H2.

Financial Health

liquidity: Current assets ¥3,740m vs current liabilities ¥1,062m yield a current ratio of 352% and quick ratio effectively similar, indicating strong short-term liquidity. Working capital stands at ~¥2,679m. solvency: Total liabilities ¥1,066m vs equity ¥3,231m indicate low leverage and high solvency; implied equity ratio is ~78.7% (disclosed 0.0% is not reported). Interest expense is reported as zero, suggesting minimal interest-bearing debt. capital_structure: Debt-to-equity reported at 0.33x appears to be total liabilities-to-equity; actual interest-bearing leverage is likely lower. The company has ample capacity for investment without stressing the balance sheet.

Cash Flow Quality

earnings_quality: OCF of ¥119.9m vs net income of ¥197.0m (OCF/NI = 0.61) indicates weaker cash conversion, likely due to receivables growth or other working capital increases amid revenue expansion. FCF_analysis: Investing CF is shown as 0 (not disclosed). Using D&A of ¥19.3m as a rough proxy for underlying asset intensity suggests maintenance capex is modest; if capex is in line with D&A, underlying FCF would likely be positive but below net income. Absent capex disclosure, reported FCF cannot be robustly determined. working_capital: Given strong growth, increases in trade receivables and contract assets likely absorbed cash. The large working capital base (¥2,679m) provides cushion but can suppress OCF during growth spurts; focus on Days Sales Outstanding and billing milestones.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.00, which should be treated as undisclosed. EPS is ¥38.50, and the balance sheet could support distributions; however, without an explicit policy or interim dividend disclosure, payout sustainability cannot be assessed quantitatively. FCF_coverage: With OCF at ¥120m and capex undisclosed, FCF coverage of dividends cannot be evaluated. If capex is modest (implied by D&A ¥19m), prospective coverage is likely adequate, but this remains an assumption. policy_outlook: Given low leverage and improving profitability, the company has flexibility for shareholder returns, but management’s policy (growth reinvestment vs. payout) is not disclosed for this period. Watch for guidance at year-end.

Risk Assessment

Business Risks:

• Demand cyclicality in core client industries that could slow project inflows and consulting/service utilization.
• Customer concentration risk if revenue is reliant on a limited number of large clients or channels.
• Execution risk in scaling delivery capacity while maintaining service quality and margin.
• Regulatory or subsidy program changes if part of revenue is linked to government-related support schemes.
• Competition from larger consulting/IT service providers compressing pricing and win rates.

Financial Risks:

• Working capital expansion pressuring operating cash flow during high-growth periods.
• Potential receivables collection risk if client base includes SMEs with weaker credit.
• Margin volatility if mix shifts to lower-margin services or if wage inflation lifts SG&A.
• Limited disclosure on investing cash flows and cash balance creates uncertainty on liquidity buffers.

Key Concerns:

• OCF/NI of 0.61 suggests weaker cash conversion; need to see improvement in H2.
• Numerical inconsistency between cost of sales and gross profit; reliance on internally consistent margins is necessary until clarification.
• Non-disclosure of cash, capex, and dividend details limits precision on FCF and payout capacity.

Investment Implications

Key Takeaways:

• Strong top-line growth (+20.8% YoY) and outsized operating profit growth (+180% YoY) demonstrate meaningful operating leverage.
• High gross margin (64.4%) and ~15.3% operating margin indicate a favorable mix and disciplined cost control.
• ROE at 6.10% is moderate; improvement hinges on better asset turnover and sustained margins.
• Balance sheet is conservative with an implied equity ratio ~78.7% and minimal interest burden.
• Cash conversion is the main watchpoint (OCF/NI 0.61) amid working capital build.

Metrics to Watch:

• OCF/NI ratio and changes in receivables/contract assets (cash conversion).
• Operating margin trajectory and SG&A-to-sales ratio (sustainability of leverage).
• Asset turnover and backlog/book-to-bill (growth efficiency and visibility).
• Capex and investing CF disclosures (true FCF profile).
• Client concentration and churn metrics (revenue durability).

Relative Positioning: Relative to Japanese small/mid-cap business support and IT-enabled service peers, Light Up exhibits above-average gross margins, improving operating efficiency, and below-average leverage, with ROE constrained by conservative gearing and sub-0.5x asset turnover.

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