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

QD Laser (single-entity, JGAAP) delivered FY2026 Q2 revenue of ¥631m, up 12.9% YoY, while remaining loss-making at the operating and net levels. Gross profit was ¥155.7m, implying a gross margin of 24.7%, and EBITDA was -¥119.1m, yielding an EBITDA margin of -18.9%. Operating loss was -¥169m (flat YoY per disclosure), indicating limited operating leverage to date despite double-digit top-line growth. Ordinary loss improved marginally to -¥162m, with minimal non-operating burden (interest expense only ¥0.07m). Net loss was -¥163m (EPS -¥3.92), translating to a net margin of -25.8%. DuPont decomposition shows ROE of -3.22%, driven by a negative margin (-25.83%), modest asset turnover (0.120x), and low financial leverage (1.04x). Liquidity appears very strong: current assets of ¥4,555m against current liabilities of ¥256m yield a current ratio of 1,778.6% and working capital of ¥4,299m. The balance sheet is conservatively structured with total liabilities of ¥287m versus equity of ¥5,058m (implying an equity ratio around 96% by calculation, notwithstanding the 0.0% printed field). Operating cash flow was -¥325m, roughly 2.0x the reported net loss, signaling heavier cash burn than accounting losses due to non-cash items and/or working capital movements. Financing cash flow was a modest -¥5m, and investing cash flow was not disclosed (0 indicates unreported). Dividend remains suspended (DPS ¥0) with a payout ratio of 0%, which is appropriate given ongoing losses and cash consumption. The data indicate a company still in an investment and commercialization phase, with growing sales but insufficient scale to cover fixed costs. The low interest burden and low leverage reduce financial risk, but sustained negative OCF requires careful monitoring of runway. Inventory at ¥157m suggests continued preparation for shipments, though turnover can’t be robustly assessed from the limited data. Key uncertainties include the true gross profit/cost structure (given partial inconsistencies across line items) and the cash position/investing outflows, which were not disclosed. Overall, the quarter reflects commercial progress on revenue with continuing operating losses, ample liquidity, and a need to convert order momentum into higher gross margins and scale benefits to narrow losses.

Profitability Analysis

• ROE decomposition (DuPont): Net margin -25.83% x Asset turnover 0.120 x Financial leverage 1.04 = ROE -3.22%, consistent with the reported figure.
• Margin quality: Gross margin of 24.7% (gross profit ¥155.7m on revenue ¥631m) indicates some product-level value-add but remains modest for a specialty photonics platform; operating margin is -26.8% (operating loss -¥169m), implying operating expenses of roughly ¥324.7m. The gap from gross to operating level highlights substantial fixed costs (R&D/SG&A) relative to scale.
• Operating leverage: Despite +12.9% YoY revenue, operating loss is flat YoY, suggesting that incremental gross profit was largely offset by higher operating costs. This points to early-stage scaling where customer acquisition, R&D, and go-to-market spending are still ramping.
• EBITDA: -¥119.1m (margin -18.9%) confirms that even pre-D&A profitability is negative; depreciation of ¥49.9m is meaningful but not the primary driver of losses.
• Non-operating items: Minimal impact (interest expense ~¥0.07m), and ordinary income is close to operating income, implying limited financial income/cost distortions.
• Tax: Effective tax rate reported 0.0%, consistent with loss-making status.
• Overall: Profitability is primarily constrained by scale and cost base; improving gross margin and utilization, while tempering OPEX growth, are key to narrowing losses.

Growth Assessment

• Revenue sustainability: +12.9% YoY to ¥631m suggests demand traction in the core laser/optics products. The level remains small versus total assets, so continued multi-quarter growth is needed to evidence durable product-market fit and repeat orders.
• Profit quality: Net margin -25.8% and EBITDA margin -18.9% indicate growth is not yet profitable; gross margin of 24.7% leaves limited buffer to absorb fixed costs, reinforcing the need for mix improvements and scale.
• Drivers and mix: The data do not disclose segment mix; however, rising revenue alongside flat operating loss implies increased spending on commercialization. Any shift to higher-margin applications (e.g., specialized photonics, medical/AR) would be supportive.
• Outlook: With a strong balance sheet and low leverage, the company can continue investing, but near-term earnings will likely remain negative unless gross margin expansion and operating cost discipline improve. Watch order backlog, ASP trends, and utilization as leading indicators.
• Execution milestones: Converting prototypes to volume shipments, ramping recurring orders, and improving yield/manufacturing efficiency are critical to sustaining growth with improving unit economics.

Financial Health

• Liquidity: Current assets ¥4,554.9m vs current liabilities ¥256.1m produce a current ratio of ~17.8x and quick ratio ~17.2x. Working capital is ¥4,298.8m, indicating substantial short-term buffer.
• Solvency: Total liabilities ¥286.6m vs equity ¥5,058m imply low leverage; debt-to-equity is 0.06x. By calculation, equity ratio is approximately 96% (5,058/5,271), notwithstanding the 0.0% printed equity ratio field.
• Capital structure: Minimal interest expense (¥0.07m) and very high interest coverage in absolute value (negative by definition given losses) reflect negligible debt burden; solvency risk is low in the near term.
• Asset base: Total assets ¥5,271m vs revenue ¥631m yield asset turnover of 0.120x, suggesting underutilized assets or early-stage scaling. Improving turnover is important for ROE.
• Runway: While cash and equivalents are not disclosed, the magnitude of current assets and limited liabilities suggest adequate liquidity; however, sustained negative OCF (-¥325m in the period) will draw down resources over time.

Cash Flow Quality

• Earnings quality: OCF of -¥325.2m compared with net loss of -¥163.0m (OCF/NI ~1.99) indicates cash burn exceeds accounting losses, likely due to working capital investment and non-cash add-backs insufficient to offset cash outflows.
• Free cash flow: Not determinable because investing cash flow was not disclosed (reported as 0 = unreported). Consequently, the provided FCF and FCF coverage figures are not interpretable.
• Working capital: Current assets are high relative to current liabilities; inventory stands at ¥157.1m. Without detailed AR/AP movements, we infer that increases in receivables or inventory and/or reductions in payables contributed to the negative OCF.
• Non-operating cash: Financing CF was a small outflow (-¥5.1m), suggesting no material capital raises or repayments in the period.
• Overall: Cash conversion is weak this quarter, consistent with a growth investment phase; monitoring receivables days, inventory turns, and prepayments is essential once disclosed.

Dividend Sustainability

• Policy context: DPS is ¥0 and payout ratio 0%, which aligns with loss-making status and the need to fund growth.
• Earnings coverage: With net losses and negative OCF, dividends are not currently supportable from earnings or cash generation.
• FCF coverage: Not assessable as investing cash flow is unreported; prudent stance is to conserve cash until operating cash flow approaches breakeven.
• Outlook: Given ongoing investment needs and early-stage profitability, we expect a continuation of a no-dividend policy until sustained positive earnings and OCF are achieved.

Risk Assessment

Business Risks:

• Commercialization risk: converting product validation into repeat, scaled orders
• Gross margin risk from product mix, pricing, and manufacturing yield
• Execution risk in scaling production and supply chain
• Customer concentration typical of niche photonics markets
• Regulatory/market adoption risks for any medical/AR-related applications
• Competitive dynamics from larger photonics and semiconductor peers

Financial Risks:

• Sustained negative OCF (-¥325m) increasing cash burn
• Asset utilization risk (asset turnover 0.120x) dampening ROE
• Potential need for future external funding if cash burn persists
• FX exposure on imported components or export sales (not disclosed)

Key Concerns:

• Operating losses persisting despite double-digit revenue growth
• Low gross margin (24.7%) limits operating leverage realization
• Unreported cash and investing cash flows obscuring true runway
• Discrepancies among cost/gross profit data require careful reconciliation

Investment Implications

Key Takeaways:

• Top-line growth (+12.9% YoY) but no visible operating leverage yet (operating loss flat YoY)
• Gross margin at 24.7% and EBITDA margin at -18.9% underscore need for mix and scale improvement
• Balance sheet strength (calc. equity ratio ~96%, D/E 0.06x) mitigates near-term solvency risk
• OCF burn (-¥325m) exceeds accounting loss, highlighting cash discipline as a priority
• Limited non-operating drag and minimal interest burden simplify the path to breakeven

Metrics to Watch:

• Order backlog and revenue growth trajectory (sequential and YoY)
• Gross margin progression and product mix/ASP trends
• Operating expense growth vs revenue growth (OPEX ratio)
• OCF and working capital movements (AR days, inventory turns, AP days) once disclosed
• Asset turnover improvement and utilization rates
• Cash balance and investing cash flows to gauge runway

Relative Positioning: Within Japan-listed photonics/semiconductor device peers, QD Laser appears earlier-stage with lower scale and profitability but stronger balance sheet conservatism; upside depends on converting technology differentiation into higher-margin, recurring volumes while maintaining cost discipline.

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