for Startups,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.26B
• Operating Income: ¥328M
• Net Income: ¥196M
• EPS: ¥85.85

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: A strong FY2026 Q2 with robust top-line growth translating into outsized profit expansion and healthy cash conversion. Revenue rose 33.0% YoY to 22.58, while operating income more than doubled (+110.3% YoY) to 3.28 and net income surged 143.3% YoY to 2.83. Gross profit reached 17.54, delivering a high gross margin of 77.7%, indicative of a scalable, service-centric model. Operating margin improved to 14.5% (3.28/22.58), reflecting operating leverage as SG&A growth lagged revenue growth in absolute terms. Using reported YoY rates, prior-period operating income is estimated at ~1.56 on revenue of ~16.98, implying operating margin expanded by roughly 533 bps YoY. Net margin improved to 12.5%, versus an estimated ~6.8% in the prior year, a ~566 bps expansion. Earnings quality is solid: operating cash flow of 3.39 exceeds net income (OCF/NI = 1.20x), suggesting good cash conversion and no evident working capital stress. Liquidity is strong with a current ratio of 259.1%, backed by cash and deposits of 17.95 and accounts receivable of 5.41 against current liabilities of 11.12. Leverage is conservative (D/E 0.51x) and interest coverage is very strong at 101.77x, indicating minimal financial risk. ROE calculates to 10.0% via DuPont, supported primarily by margin improvement with modest leverage (1.51x) and moderate asset turnover (0.527x). ROIC is reported at 14.1%, comfortably above typical cost of capital thresholds and indicative of value-accretive growth. The effective tax rate is elevated at 40.9%, which may normalize and provide incremental net income tailwind if one-off items were present. Non-operating items remain small (non-operating income ratio 2.6%), so earnings quality is chiefly operational. Dividend data are unreported, limiting payout sustainability assessment, but cash generation and low capex support potential distributions. Forward-looking, the company appears to be scaling efficiently, but sustaining margin gains will depend on disciplined SG&A and stable pricing. Key watchpoints include receivables trends, the durability of demand, and tax rate normalization.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 12.5% × 0.527 × 1.51 ≈ 10.0%. The component that changed the most YoY appears to be net profit margin, inferred from revenue growth of +33.0% vs. net income growth of +143.3%, and operating income growth of +110.3%. Business reason: operating leverage—gross margin stayed high (77.7%), while SG&A of 14.25 grew more slowly than gross profit, allowing operating margin to expand to 14.5%. Sustainability: partially sustainable if revenue growth persists and cost discipline holds; however, as scale increases, incremental margin gains may moderate and require ongoing productivity improvements. Asset turnover at 0.527 is moderate for a service/HR model; without asset trend data, any change cannot be precisely quantified. Financial leverage is modest at 1.51x and unlikely the key ROE driver this quarter. Concerning trends: none evident; SG&A growth does not appear to have outpaced revenue growth, and non-operating items are minor. Monitor the elevated effective tax rate (40.9%), which can introduce volatility to net margin.

Growth Assessment

Revenue growth of +33.0% YoY to 22.58 is strong and appears organic given small non-operating contributions. Operating income growth of +110.3% indicates significant operating leverage as the business scales on a largely fixed SG&A base. Net income growth of +143.3% outpaced operating income, helped by minimal non-operating drag, though a high effective tax rate partially offset gains. Gross margin at 77.7% suggests a defensible value proposition; maintaining pricing and mix will be key for sustainability. With ROIC at 14.1%, incremental investments are generating attractive returns, supporting continued expansion. Outlook hinges on demand in the startup/tech and broader recruitment ecosystem, where hiring cycles can be cyclical; nonetheless, current momentum supports continued mid- to high-teens operating margins if SG&A productivity continues. Absence of segment data and backlog limits visibility; watch for pipeline indicators and client acquisition metrics.

Financial Health

Liquidity is robust with a current ratio of 259.1% and quick ratio equivalent, underpinned by cash and deposits of 17.95 and accounts receivable of 5.41 versus current liabilities of 11.12. No warning on current ratio (<1.0) or D/E (>2.0); D/E is a conservative 0.51x. Maturity mismatch risk appears low: liquid assets (cash + AR = 23.36) comfortably exceed current liabilities (11.12). Long-term loans are 3.42, and interest expense is minimal (0.03), aligned with strong interest coverage (101.77x). Off-balance sheet obligations are not disclosed in the provided data; none can be assessed. Equity stands at 28.29 (owners' equity 24.17), providing a solid capital base.

Cash Flow Quality

OCF of 3.39 exceeds net income of 2.83 (OCF/NI = 1.20x), indicating good earnings quality and cash conversion. Free cash flow cannot be calculated due to unreported investing cash flows; however, capex is negligible (−0.00), suggesting a capital-light model. Financing cash inflow of 0.99 alongside share repurchases of −0.32 suggests capital flexibility; details of other financing components are not disclosed. No clear signs of working capital manipulation can be inferred: receivables are moderate relative to revenue, and OCF is positive despite growth. Sustainability of FCF for dividends/capex appears favorable given low capex and positive OCF, but lack of dividend disclosures limits definitive conclusions.

Dividend Sustainability

Dividend per share and total dividends are unreported, so payout ratio and FCF coverage cannot be calculated. From a capacity perspective, positive OCF and negligible capex imply room for distributions if the company elects to pay. Retained earnings of 19.39 and conservative leverage (D/E 0.51x) add flexibility. Without a stated policy or history, we cannot assess stability or growth prospects of dividends.

Risk Assessment

Business Risks:

• Demand cyclicality in recruitment/startup ecosystems could slow placement volumes and fees.
• Pricing pressure or mix shifts could compress the 77.7% gross margin.
• Talent acquisition and retention costs could lift SG&A, diluting operating leverage.
• High effective tax rate (40.9%) introduces earnings volatility if driven by one-offs or changing tax items.

Financial Risks:

• Customer concentration risk (not disclosed) could impact cash flows if key clients churn.
• AR collection risk during rapid growth; limited visibility into AR aging.
• Potential reliance on external financing not fully observable due to partial cash flow disclosures.

Key Concerns:

• Limited disclosure on investing cash flows and dividends constrains FCF and payout analysis.
• Non-operating items are small now (2.6% of revenue), but any increase could add earnings volatility.
• Absence of segment data reduces visibility into growth durability and margin mix.

Investment Implications

Key Takeaways:

• Strong quarter with revenue +33.0% YoY and operating income +110.3% YoY, demonstrating operating leverage.
• Operating margin expanded by an estimated ~533 bps to 14.5%; net margin rose by ~566 bps to 12.5%.
• Quality of earnings is solid with OCF/NI at 1.20x and negligible capex.
• Balance sheet is liquid (current ratio 259%) and conservatively levered (D/E 0.51x); interest coverage 101.77x.
• ROE at 10.0% and ROIC at 14.1% indicate value-accretive growth.

Metrics to Watch:

• Bookings/pipeline and client additions to gauge revenue durability.
• SG&A growth versus revenue to confirm continued operating leverage.
• Accounts receivable trends and DSO for cash conversion quality.
• Gross margin stability amid competitive/pricing dynamics.
• Effective tax rate normalization and its impact on net margin.
• ROIC and OCF/NI to monitor capital efficiency and earnings quality.

Relative Positioning: Within Japan’s HR/placement and startup-support peers, For Startups exhibits above-average growth, strong margins for a service model, and conservative leverage, positioning it favorably on profitability and balance sheet strength, albeit with higher cyclicality exposure to the startup hiring cycle.

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