PORT INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥12.94B
• Operating Income: ¥1.86B
• Net Income: ¥1.27B
• EPS: ¥95.40

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: Strong top-line growth with solid cash conversion, offset by mild operating margin compression and a balance sheet heavy in intangibles. Revenue rose 30.4% YoY to 129.36, demonstrating robust demand across core businesses. Operating income increased 18.4% YoY to 18.56, tracking below revenue growth and indicating lighter operating leverage this quarter. Net income advanced 31.4% YoY to 12.61, outpacing operating income growth and yielding a net margin of 9.8%. Gross margin was high at 69.8%, consistent with an asset-light, media/service mix. Operating margin was 14.35% this quarter; we estimate a YoY compression of roughly 145 bps versus ~15.8% a year ago. Net margin edged up by roughly 8 bps YoY, aided by below-the-line items and a manageable effective tax rate of 31.3%. ROE is a healthy 13.3% (net margin 9.8% × asset turnover 0.485 × financial leverage 2.82x), with additional support from ROIC of 13.5%—well above common 7–8% targets. Earnings quality is strong: operating cash flow of 30.18 is 2.39x net income, and free cash flow of 15.89 comfortably covered dividends (0.33) and buybacks (5.35). The balance sheet shows moderate leverage (D/E 1.82x) and an equity ratio of 35.5%; however, goodwill and intangibles total 88.37, leaving minimal tangible equity (~6.1), which elevates impairment and downside protection risk. Liquidity assessment is constrained by unreported current liabilities, though receivables quality appears sound given implied DSO of ~39 days. Equity-method income was modest at 0.62 (3.4% of profit), indicating low reliance on affiliates. Financing cash inflows (16.31) suggest net debt raising or other financing activity, partially offset by shareholder returns. The company’s scalable model should support medium-term profitability if SG&A efficiencies improve in H2. Key watchpoints are margin discipline, integration and impairment risk around intangibles, and the sustainability of 30%+ revenue growth amid macro variability. Overall, the quarter underscores a healthy growth trajectory with good cash discipline, tempered by margin pressure and balance-sheet intangibles risk.

Profitability Analysis

ROE decomposition: 13.3% = 9.8% net profit margin × 0.485 asset turnover × 2.82x financial leverage. The most notable change componentally appears to be operating margin, which compressed as operating income (+18.4% YoY) lagged revenue (+30.4% YoY), implying higher SG&A intensity. Business drivers likely included increased sales and marketing to fuel growth, hiring and platform investments, and possibly higher variable partner costs, while gross margin stayed elevated at 69.8%. Below-the-line items (including small equity-method income) and tax dynamics helped sustain net margin roughly flat-to-slightly up YoY (+~8 bps). Sustainability: gross margin profile looks durable given the asset-light mix, but operating leverage will depend on normalizing SG&A growth as revenue scales; we see scope for margin recovery if customer acquisition costs moderate and productivity per head improves. Flags: operating margin down ~145 bps YoY indicates SG&A growth likely outpaced revenue in the quarter; monitor whether this is front-loaded investment or persistent cost inflation.

Growth Assessment

Revenue growth of 30.4% YoY to 129.36 indicates strong demand and likely market share gains across core segments. Operating income growth of 18.4% suggests tactical reinvestment, with near-term operating leverage muted. Net income growth of 31.4% reflects operational growth plus moderate below-the-line support and tax outcomes. Equity-method income (0.62) contributed only 3.4% of profit, indicating growth is primarily organic/operational. ROIC at 13.5% exceeds common hurdle rates (7–8%), supporting value-accretive growth. Near-term outlook hinges on SG&A normalization and conversion of strong gross margins into operating leverage in H2; pipeline conversion and client retention will be key. With high OCF and positive FCF, growth investments appear well-funded without stressing the balance sheet. The sustainability of 30%+ growth may moderate as the base enlarges; maintaining double-digit growth appears feasible if customer acquisition efficiency holds.

Financial Health

Equity ratio is 35.5% with D/E at 1.82x, indicating moderate leverage but below the 2.0x warning threshold. Goodwill (45.54) and intangible assets (42.83) total 88.37, nearly matching total equity (94.47) and leaving tangible equity of roughly 6.10—this reduces loss-absorption capacity and heightens impairment sensitivity. Current ratio is not calculable due to unreported current liabilities; thus, short-term liquidity cannot be fully assessed. Current assets are 90.64, including receivables of 27.62; accounts payable are 2.73, suggesting limited supplier financing and potential working capital intensity, but OCF was strong. Interest-bearing debt details are unreported; financing CF was +16.31, implying net inflows (potentially debt) that partially funded shareholder returns. No off-balance sheet obligations are disclosed in the data provided. Maturity mismatch risk cannot be evaluated without the short-/long-term debt split and current liabilities.

Cash Flow Quality

OCF/Net income at 2.39x indicates high-quality earnings with strong cash conversion. Free cash flow of 15.89 comfortably covers dividends (0.33) and buybacks (5.35), leaving excess to fund growth or de-lever. Capex of 6.02 is well covered by OCF, suggesting organic investment capacity is ample. Working capital appears well-managed: implied DSO ~39 days (27.62 receivables vs half-year revenue) and limited reliance on payables (DPO ~13 days) are consistent with service/media models; no signs of aggressive working capital release. With OCF well above net income (>1.0 threshold), no immediate quality red flags. Sustaining OCF strength will depend on collections discipline and maintaining gross margin while scaling SG&A.

Dividend Sustainability

Payout ratio is a very low 2.8%, implying a conservative distribution stance. FCF coverage is strong at 45.08x, and absolute FCF (15.89) easily funds dividends (0.33) with significant headroom for buybacks and reinvestment. DPS was unreported; however, given cash generation and modest shareholder returns, current dividend appears highly sustainable. Balance-sheet leverage is moderate but manageable; absent a large step-up in payouts or unforeseen cash needs, dividend continuity is well supported. Policy outlook likely remains growth-first with opportunistic buybacks, given low payout and active repurchases this period.

Risk Assessment

Business Risks:

• Margin pressure from elevated SG&A as growth investments continue
• Demand cyclicality tied to hiring and advertising budgets
• Competitive intensity in digital media/platforms affecting customer acquisition costs
• Regulatory/privacy changes impacting data-driven marketing efficiency
• Execution and integration risks around M&A given large goodwill/intangibles

Financial Risks:

• High intangibles relative to equity raising impairment risk and reducing tangible buffer
• Moderate leverage (D/E 1.82x) with limited visibility on debt tenor and covenants
• Liquidity visibility constrained by unreported current liabilities (current ratio not calculable)
• Potential interest rate exposure if borrowings are floating-rate (interest expense unreported)

Key Concerns:

• Operating margin compressed ~145 bps YoY despite strong gross margin
• Tangible equity is minimal (~6.10), heightening sensitivity to write-downs
• Dependence on sustained high growth to absorb SG&A and preserve ROE

Investment Implications

Key Takeaways:

• Top-line momentum strong (+30.4% YoY) with healthy cash conversion (OCF/NI 2.39x)
• Operating margin compressed to 14.35%; watch SG&A discipline for H2 operating leverage
• ROE 13.3% and ROIC 13.5% indicate value-accretive growth despite higher leverage
• Balance sheet dominated by intangibles; impairment sensitivity elevated
• Dividend and buybacks well covered by FCF; payout policy remains conservative

Metrics to Watch:

• Operating margin and SG&A/revenue trajectory
• OCF conversion and working capital (DSO/DPO trends)
• Goodwill and intangible asset testing outcomes
• Debt composition (short vs long, fixed vs floating) and interest coverage when disclosed
• Revenue growth normalization path and customer acquisition efficiency

Relative Positioning: Within growth-oriented, asset-light media/platform peers, the company shows above-peer cash conversion and ROIC with moderate leverage, but carries higher intangible concentration and near-term operating margin pressure.

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