for Startups,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.26B
• Operating Income: ¥328M
• Net Income: ¥104M
• 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

For FY2026 Q2, For Startups, Inc. delivered strong top-line and bottom-line expansion, with revenue of ¥2,258 million (+33.0% YoY) and operating income of ¥328 million (+110.3% YoY). Profit scalability was evident as operating margin improved to approximately 14.5%, supported by a high gross margin of 62.3% and disciplined operating cost control. Ordinary income was ¥330 million and net income reached ¥283 million (+143.3% YoY), translating to a net margin of 12.53%. DuPont analysis indicates ROE of 10.00%, driven by a healthy net margin (12.53%), moderate asset turnover (0.527x), and modest financial leverage (1.51x). Liquidity is robust with a current ratio of 356.8% and quick ratio of 356.8%, reflecting a largely non-inventory, services-centric model. Solvency appears sound with a reported debt-to-equity ratio of 0.42x and very high interest coverage of roughly 519x, indicating minimal financial strain from borrowing costs. Operating cash flow was ¥270.8 million, closely tracking net income (OCF/NI = 0.96), suggesting reasonable earnings quality and limited accrual distortion in the period. Free cash flow cannot be definitively assessed because investing cash flow is unreported in the dataset; however, positive OCF provides comfort on cash generation from operations. Financing cash flow was positive (¥489.6 million), implying some reliance on external capital (equity or debt) to support growth or balance sheet positioning. The equity ratio is shown as 0.0% and cash and equivalents are shown as 0; per the data note, these zeros indicate non-disclosure or different tagging rather than true zeros. Similarly, the effective tax rate displays as 0.0% in calculated metrics, although the presence of ¥51.2 million in income tax suggests a non-zero tax burden. The company reported no dividend (DPS ¥0.00), consistent with a reinvestment-led stance at this growth stage. Overall, the business demonstrates attractive unit economics (high gross margin, improving operating margin) and resilient cash generation, while maintaining balance sheet flexibility. Key watchpoints include the sustainability of revenue momentum into H2, client hiring demand sensitivity to macro conditions, and potential working capital swings typical in human capital/intermediation models. Given limited disclosures on cash, investing flows, and share data, conclusions are based primarily on income statement strength and observable cash from operations. The outlook appears supported by margin expansion and adequate liquidity to fund ongoing growth initiatives.

Profitability Analysis

ROE decomposition: Net profit margin 12.53% × asset turnover 0.527 × financial leverage 1.51 = ~10.0% ROE, indicating returns are primarily margin-driven rather than leverage-driven. Gross margin is 62.3% (gross profit ¥1,406 million on revenue ¥2,258 million), highlighting strong pricing power/value-add in a services model with low cost of sales (¥292 million). Operating margin is ~14.5% (¥328 million OI), up sharply YoY (OI +110.3% vs revenue +33.0%), evidencing positive operating leverage as fixed costs scale. Ordinary margin is ~14.6% and net margin 12.53%, with limited drag from financing costs (interest expense only ¥0.6 million). EBITDA is ¥385.7 million (margin 17.1%), providing additional buffer versus accounting depreciation/amortization of ¥57.7 million. Margin quality is supported by the modest D&A burden and minimal interest expense, implying that core operations are the key profit driver. The spread between gross and operating margins suggests selling, general and administrative efficiency improved, enabling significant incremental margins on growth. Tax expense of ¥51.2 million implies a non-zero effective tax rate despite the calculated metric showing 0.0%, pointing to a data-tagging limitation rather than absence of tax. Overall, profitability dynamics are healthy, with scope for further operating leverage if revenue growth persists while maintaining cost discipline.

Growth Assessment

Revenue grew 33.0% YoY to ¥2,258 million, an acceleration compatible with strong client demand and effective placement/consulting throughput. Operating income surged 110.3% YoY to ¥328 million, reflecting significant margin expansion and scale benefits. Net income rose 143.3% YoY to ¥283 million, confirming that growth is translating efficiently into bottom-line improvement. Asset turnover of 0.527x indicates moderate capital intensity; scalability likely hinges on headcount productivity and platform throughput rather than heavy capex. The sustainability of revenue growth will depend on continued hiring activity among clients, macro conditions, and competitive dynamics in talent markets. Profit quality appears solid given close alignment of OCF (¥270.8 million) with net income (OCF/NI 0.96), though absence of investing cash flow disclosure limits a full view on reinvestment needs. With financing inflows (¥489.6 million), the company may be funding expansion or maintaining balance sheet reserves; however, the low interest burden suggests any incremental debt is manageable. Outlook-wise, if current win rates and fee yields are preserved, incremental margins could remain attractive, but growth may normalize if hiring sentiment softens. Monitoring client concentration and repeat business metrics will be important for assessing durability.

Financial Health

Liquidity is strong: current assets ¥2,812.9 million versus current liabilities ¥788.3 million yields a current ratio of 356.8%; quick ratio equals the current ratio given no inventories reported. Working capital is ¥2,024.6 million, providing operational flexibility for receivable cycles and growth. Total assets are ¥4,284 million and total equity ¥2,829 million, indicating modest leverage with assets/equity of ~1.51x. The debt-to-equity ratio is reported at 0.42x; while total interest-bearing debt is not separately disclosed here, interest expense is minimal (¥0.6 million), suggesting limited debt service pressure. Interest coverage is extremely high (~519x on EBIT basis), reinforcing solvency strength. The equity ratio shown as 0.0% likely reflects non-disclosure rather than an economic reality; equity comprises roughly two-thirds of assets based on totals provided, indicating a solid capital base. Share data are undisclosed, limiting per-share balance sheet analysis. Overall, liquidity and solvency metrics support continued operations and growth investments without undue balance sheet risk.

Cash Flow Quality

Operating cash flow of ¥270.8 million is close to net income of ¥283.0 million (OCF/NI 0.96), indicating earnings are cash-convertible and accruals are not a major distortion in the period. EBITDA of ¥385.7 million and relatively low D&A (¥57.7 million) suggest limited non-cash profit inflation. Working capital details are not disclosed, but positive OCF implies either stable collections or manageable receivable growth relative to revenue. Investing cash flow is shown as 0 (treated as undisclosed), so free cash flow cannot be precisely computed; using the provided convention, FCF is shown as 0, but this should not be interpreted as true zero. Financing cash inflow of ¥489.6 million indicates external capital support (equity issuance, debt, or other), which enhances liquidity but may introduce dilution or leverage considerations depending on the instrument. Cash and equivalents are shown as 0 due to non-disclosure; consequently, period-end liquidity buffers cannot be quantified from the dataset. Overall, cash flow quality appears reasonable on the strength of OCF tracking earnings, but a fuller assessment awaits detail on investing outlays and cash balances.

Dividend Sustainability

DPS is reported as ¥0.00 with a payout ratio of 0.0%, consistent with a reinvestment-oriented policy typical for growth companies. Given positive net income (¥283 million) and positive OCF (¥270.8 million), internal cash generation is supportive of operations, but with investing cash flows undisclosed, sustainable free cash flow available for distribution cannot be confirmed. FCF coverage is shown as 0.00x due to the data convention (not actual zero). Balance sheet strength (ample working capital and low interest burden) suggests capacity to introduce or raise dividends over time if strategic priorities allow, but current policy appears to favor growth investment and liquidity retention. Future dividend capacity will hinge on sustained OCF generation, visibility on capex/intangibles spend, and any ongoing use of external financing.

Risk Assessment

Business Risks:

• Cyclicality in client hiring and startup funding conditions affecting placement volumes and fees
• Pricing pressure and competitive intensity in human capital/intermediation services
• Client concentration risk if revenue is reliant on a limited set of high-growth customers
• Talent acquisition and retention risk for consultants/key producers impacting throughput
• Regulatory or compliance changes affecting labor intermediation and contracting practices
• Execution risk in scaling processes and systems while maintaining service quality

Financial Risks:

• Working capital volatility (receivables timing) affecting OCF despite profitability
• Dependence on external financing as indicated by positive financing CF, with dilution or leverage implications
• Limited disclosure on cash balances and investing flows, obscuring liquidity runway and reinvestment needs
• Potential mismatch between accounting profit and cash if growth accelerates and AR expands
• Small-cap market liquidity risk potentially increasing cost of capital

Key Concerns:

• Sustainability of 33% YoY revenue growth amid macro uncertainty
• Reliance on operating leverage to drive profit growth; margin sensitivity if growth moderates
• Data gaps (cash, investing CF, equity ratio) reducing visibility into capital allocation and liquidity buffers

Investment Implications

Key Takeaways:

• Strong revenue growth (+33% YoY) translating into outsized operating income growth (+110% YoY) and net income growth (+143% YoY)
• Healthy profitability with 62.3% gross margin and ~14.5% operating margin, driving ROE of ~10%
• Robust liquidity (current ratio 3.57x) and minimal interest burden (coverage ~519x)
• OCF closely tracks net income (0.96x), supporting earnings quality
• Positive financing CF suggests strategic balance sheet bolstering but warrants monitoring for dilution/leverage
• Dividend currently suspended (DPS ¥0), consistent with reinvestment focus

Metrics to Watch:

• Revenue growth rate and booking/placement pipelines into H2
• Operating margin trajectory and SG&A efficiency
• OCF versus NI and receivables days to gauge working capital discipline
• Client concentration and repeat business ratios
• Investing cash flows (capex/intangible investment) and period-end cash balance once disclosed
• Any changes in leverage or equity issuance driving financing CF

Relative Positioning: Compared with typical TSE-listed human capital and professional services peers, the company exhibits above-average revenue growth, strong gross margins, improving operating leverage, and conservative leverage; disclosure gaps on cash and investment outlays modestly constrain full comparability.

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