QD Laser,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥631M
• Operating Income: ¥-169M
• Net Income: ¥-163M
• EPS: ¥-3.92

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

Verdict: FY2026 Q2 (single-entity, JGAAP) shows modest top-line growth but continued heavy operating losses and negative cash flow, with ample liquidity cushioning the burn. Revenue rose 12.9% YoY to 6.31, while gross profit was 1.56 and gross margin stood at 24.7%, indicating weak scale benefits. SG&A of 4.51 (about 71.5% of sales) outweighed gross profit, driving operating income to -1.69 and ordinary income to -1.62. Net income was -1.63 (EPS -3.92 JPY), and EBITDA was -1.19, reflecting persistent negative core profitability. Operating margin was approximately -26.8%, while non-operating items were small (income 0.01, expenses 0.08) and did not alter the loss profile. OCF was -3.25, more negative than net loss, indicating higher cash burn than accrual loss; financing CF was marginal (-0.05) and capex was 1.47. Balance sheet strength remains a key positive: cash and deposits at 37.54, current assets 45.55, current liabilities 2.56, and total liabilities only 2.87 underpin a very high current ratio (1778.6%) and low D/E (0.06x). Asset turnover is very low at 0.120, and leverage at 1.04x offers little ROE amplification, resulting in ROE of -3.2%. Reported ROIC of -13.0% highlights poor capital efficiency at current scale. Margin comparison vs prior periods cannot be quantified due to limited YoY/HoH disclosures; however, the cost structure (SG&A > GP) implies limited operating leverage to date. Earnings quality is mixed: OCF/NI of 1.99x exceeds the 1.0 benchmark but both OCF and NI are negative; the cash burn is the primary concern. Forward-looking, liquidity provides a multi-year runway at the current pace of burn, but achieving breakeven will require a material uplift in gross margin and revenue scale and/or significant SG&A discipline.

Profitability Analysis

ROE decomposes to: Net Profit Margin (-25.8%) × Asset Turnover (0.120) × Financial Leverage (1.04x) = -3.2%. The dominant drag is net profit margin, given the operating loss and limited contribution from non-operating items. Asset turnover is also very low, reflecting early-stage commercialization and a large cash-heavy asset base. Financial leverage is minimal (1.04x), thus providing little scope to offset weak margins (a positive for risk, but negative for ROE). Business drivers: (1) Gross margin at 24.7% coupled with SG&A at 71.5% of sales indicates insufficient scale and price/cost pressure; (2) EBITDA negative suggests limited contribution from depreciation amortization leverage; (3) Non-operating result is negligible, so the P&L is driven by core operations. Sustainability: Without structural changes (higher yields, better mix/pricing of laser products, or SG&A restraint), current margin pressure may persist; however, operating leverage could improve if revenue scales faster than fixed costs. Watch-outs: SG&A growth relative to revenue cannot be benchmarked YoY from provided data, but the absolute SG&A/revenue ratio is high. Any further increase in SG&A ahead of revenue would deepen losses. Overall, margin improvement (gross and operating) is the key lever for ROE recovery; leverage will not be used to engineer ROE.

Growth Assessment

Revenue increased 12.9% YoY to 6.31, indicating continued demand traction, but the scale remains insufficient to cover the fixed cost base. Gross margin of 24.7% suggests modest value-add for a photonics player; improving product mix (e.g., higher-margin modules/systems) or cost-down (manufacturing yields, procurement) will be essential for sustainable growth. Operating loss (-1.69) and EBITDA (-1.19) underscore the gap to breakeven despite growth; unit economics need to strengthen. Given a limited non-operating contribution, sustainable profit growth must come from core operations rather than financial items. Outlook hinges on scaling orders, yield improvements, and SG&A discipline; if revenue growth continues at double-digits and gross margin lifts toward the mid-30s while holding SG&A growth lower than sales, breakeven becomes plausible over the medium term. Data gaps (no segment detail, no order backlog) limit visibility on growth durability.

Financial Health

Liquidity is very strong: current ratio 1778.6% and quick ratio 1717.2%, supported by cash and deposits of 37.54 versus current liabilities of 2.56. There is no warning on current ratio <1.0 or D/E >2.0; D/E is a conservative 0.06x. Maturity mismatch risk appears low given cash dominance and low liabilities. Interest-bearing debt is unreported; however, near-zero interest expense (0.00) and minimal noncurrent liabilities (0.31) imply negligible debt burden. Working capital is ample at 42.99, with receivables 3.15 and inventories 1.57 modest relative to cash. No off-balance sheet obligations are disclosed in the data provided.

Cash Flow Quality

OCF was -3.25 versus net income of -1.63, yielding OCF/NI of 1.99x; while above the 1.0 benchmark, both metrics are negative—cash burn exceeds accrual loss, which is a caution. The delta implies working capital draw and/or non-cash benefits not offsetting losses sufficiently. Capex amounted to 1.47; a proxy free cash flow (OCF - capex) is approximately -4.72, indicating ongoing investment alongside operating burn. With cash of 37.54, the company retains a multi-year runway at the current H1 burn rate, but sustained negative OCF will erode this cushion. No clear signs of working capital manipulation are evident from the limited data, though the internal inconsistency between reported cost of sales and gross profit suggests classification nuances; we rely on the stated gross profit and margin for analysis.

Dividend Sustainability

No dividend data is reported; retained earnings are negative (-10.88), and the company is loss-making with negative OCF. Under these conditions, dividends would not be sustainable and are unlikely to be a near-term priority. FCF coverage of dividends is not calculable from disclosures, but proxy FCF is negative (-4.72), implying no capacity for distributions. Policy-wise, the firm is likely to prioritize R&D, production capability, and commercialization over shareholder returns until profitability is achieved.

Risk Assessment

Business Risks:

• Commercialization risk: continued inability to reach scale where gross profit covers SG&A (operating margin -26.8%).
• Pricing and mix risk: 24.7% gross margin suggests sensitivity to price competition and product mix.
• Manufacturing/yield risk: negative EBITDA and capex needs imply reliance on yield improvements and process stability.
• Customer concentration risk: typical for early-stage photonics; not disclosed but likely material.
• Supply chain and component availability risk for photonics/semiconductor inputs.
• FX risk: probable overseas sales exposure with limited natural hedges (not disclosed).

Financial Risks:

• Cash burn risk: OCF -3.25 in H1 with capex 1.47 drives proxy FCF of -4.72.
• Profitability risk: ROIC -13.0% and ROE -3.2% indicate poor capital efficiency.
• Revenue scale risk: very low asset turnover (0.120) prolongs time to breakeven.
• Equity financing/dilution risk if burn accelerates, despite currently strong cash.

Key Concerns:

• SG&A intensity at ~71.5% of sales with no evidence yet of operating leverage.
• Gross margin needs expansion from 24.7% to reach breakeven at current SG&A.
• OCF more negative than net loss, indicating higher cash burn than accrual loss.

Investment Implications

Key Takeaways:

• Top-line grew 12.9% YoY but operating margin remained deeply negative (-26.8%).
• Gross margin at 24.7% is insufficient to cover SG&A of 4.51 (71.5% of sales).
• OCF -3.25 and capex 1.47 imply proxy FCF of -4.72; cash runway remains ample (cash 37.54).
• Capital efficiency is weak (ROIC -13.0%, ROE -3.2%, asset turnover 0.120).
• Balance sheet is very liquid and conservatively leveraged (current ratio 1778.6%, D/E 0.06x).

Metrics to Watch:

• Gross margin trajectory and product mix (modules/systems vs components).
• SG&A growth versus revenue to confirm emerging operating leverage.
• Order backlog and booking-to-bill (not disclosed) for visibility on scaling.
• OCF burn rate and working capital movements (receivables, inventories).
• Capex plans versus utilization and yield improvements.
• Path to EBITDA breakeven and ROIC uplift.

Relative Positioning: Within Japanese early-stage photonics/semiconductor peers, QD Laser shows a stronger liquidity profile than many but lags on capital efficiency and profitability. The growth rate is decent, yet margins and asset turnover remain subscale, placing it behind more established niche players on earnings quality but with a longer cash runway than highly leveraged competitors.

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