Succeed co.,ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.99B
• Operating Income: ¥253M
• Net Income: ¥159M
• EPS: ¥48.31

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

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

Succeed Co., Ltd. (TSE: 9256) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥1,988 million, essentially flat YoY, indicating a pause in top-line momentum. Gross profit was ¥448.5 million, implying a gross margin of 22.6%, which is consistent with a labor-intensive service model in education staffing/tutoring where personnel costs are the primary cost of sales. Operating income of ¥253 million translates to an operating margin of roughly 12.7%, suggesting disciplined SG&A control despite flat sales. Ordinary income was ¥254 million, and net income was ¥172 million, yielding a net margin of 8.65%; the limited gap between operating and ordinary income reflects negligible financial income/expenses and a low leverage balance sheet. EBITDA was ¥261.1 million (13.1% margin), only slightly above operating income given minimal depreciation and amortization of ¥8.1 million, underscoring a low-capex, asset-light model typical of service companies. The DuPont analysis indicates ROE of 6.75%, driven by healthy net margins (8.65%), modest asset turnover (0.619x on a half-year basis), and conservative financial leverage (1.26x). Balance sheet quality is strong: total assets were ¥3,213 million with equity of ¥2,550 million, implying an equity ratio of roughly 79.4% by calculation, and a current ratio of 469%, reflecting ample liquidity. Total liabilities of ¥663 million and an implied debt-to-equity of 0.26x point to low solvency risk; interest expense was minimal at ¥43 thousand, and interest coverage was exceptionally high at ~5,884x. Operating cash flow was ¥106.5 million (OCF/NI ~0.62), indicating weaker earnings-to-cash conversion in the period, likely from working capital build (receivables timing typical in education services); investing cash flow and cash balances were not disclosed in the dataset provided. Dividends were not disclosed (DPS shown as 0.00 is likely unreported), and the payout ratio listed as 0.0% is not meaningful without dividend data. EPS was ¥48.31; back-solving suggests an implied share count around 3.56 million, though outstanding shares were not disclosed. Overall, profitability remains stable with flat YoY earnings, balance sheet resilience is notable, and cash conversion bears monitoring. Data limitations exist where items appear as zero (cash and equivalents, investing CF, equity ratio, dividends, share count), which should be treated as undisclosed rather than actual zero. The medium-term outlook hinges on demand from schools and clients, staffing availability, and wage cost management.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.65% (Net Income ¥172m / Revenue ¥1,988m)
• asset_turnover: 0.619x (Revenue ¥1,988m / Total Assets ¥3,213m; half-year timing effect likely depresses AT)
• financial_leverage: 1.26x (Total Assets / Equity; implies equity ratio ~79.4%)
• calculated_ROE: 6.75% (matches reported DuPont figure) margin_quality:
• gross_margin: 22.6% (¥448.5m / ¥1,988m) consistent with labor-intensive model
• operating_margin: 12.7% (¥253m / ¥1,988m) stable YoY per disclosure
• ordinary_margin: 12.8% (¥254m / ¥1,988m) minimal financial distortion
• net_margin: 8.65% (¥172m / ¥1,988m)
• ebitda_margin: 13.1% (¥261.1m / ¥1,988m) minimal D&A (¥8.1m) highlights asset-light operations operating_leverage: With flat revenue and flat operating income YoY, implied operating leverage is neutral in the period; SG&A appears contained. Low D&A and stable margins suggest limited fixed-cost absorption risk, but wage inflation could pressure margins if pricing is not adjusted.

Growth Assessment

revenue_sustainability: Revenue was flat YoY at ¥1,988m in H1, suggesting steady demand but limited volume/price growth in the period. Service mix likely centered on education staffing/tutoring with little inventory, consistent with disclosed inventories of 0 (interpreted as not applicable). profit_quality: Operating income and net income were flat YoY, indicating stable unit economics; margins remained resilient. The narrow gap between operating, ordinary, and net profit indicates low financial and non-operating noise. outlook: Near-term growth will depend on client acquisition/retention in schools and education-related institutions, utilization rates of instructors, and ability to pass through wage cost increases. With a strong equity base and low leverage, the company has capacity to invest in recruitment and service enhancement; however, the flat H1 suggests a cautious growth trajectory unless new contracts or pricing actions accelerate in H2.

Financial Health

liquidity:

• current_ratio: 469.1% (Current Assets ¥2,834.7m / Current Liabilities ¥604.3m)
• quick_ratio: 469.1% (no inventories; service model)
• working_capital: ¥2,230.4m solvency:
• total_liabilities: ¥663.1m
• debt_to_equity: 0.26x (Total Liabilities ¥663.1m / Equity ¥2,550m)
• interest_coverage: ≈5,883.7x (Operating income ¥253m / Interest expense ¥0.043m) indicating negligible financial risk capital_structure: Equity ¥2,550m vs. total assets ¥3,213m implies an equity ratio of ~79.4% (despite a reported 0.0% placeholder). Leverage is conservative, providing ample balance sheet flexibility.

Cash Flow Quality

earnings_quality: OCF of ¥106.5m vs. net income of ¥172.0m yields OCF/NI of 0.62, suggesting working capital absorption during the period (likely receivables timing). Non-cash charges are modest (D&A ¥8.1m), so cash conversion should normalize as collections occur. free_cash_flow_analysis: Investing CF is undisclosed (shown as 0). Without capex data, true FCF cannot be determined; using OCF as a proxy is inadequate for policy analysis. Given low D&A and asset-light model, structural capex needs are likely modest, but this requires confirmation. working_capital_dynamics: Large current asset base relative to current liabilities (CA ¥2,834.7m vs. CL ¥604.3m) suggests significant receivables. Monitoring AR days and seasonal collection patterns is key to understanding cash conversion cycles.

Dividend Sustainability

payout_ratio_assessment: DPS is undisclosed (0.00 in the dataset should be treated as not reported). The stated payout ratio of 0.0% is not meaningful without confirmed dividends. EPS of ¥48.31 and strong equity base could support dividends in principle, but no policy information is provided here. fcf_coverage: FCF coverage cannot be assessed because investing cash flows/capex are undisclosed; OCF was positive at ¥106.5m. policy_outlook: No explicit dividend policy disclosed in the provided data. With low leverage and stable profitability, the company has capacity for shareholder returns, but management’s capital allocation priorities (growth hiring, systems, potential M&A) remain to be clarified.

Risk Assessment

Business Risks:

• Recruitment and retention of qualified instructors/educators in a tight labor market
• Wage inflation pressuring gross margins if not offset by pricing
• Client demand variability from schools and education institutions, including budget constraints
• Seasonality in academic calendars affecting revenue recognition and cash collections
• Regulatory or policy changes in the education sector impacting service models
• Competition from other education staffing/tutoring providers and online alternatives

Financial Risks:

• Earnings-to-cash conversion risk (OCF/NI 0.62) due to working capital swings
• Customer concentration risk could amplify receivables exposure (not disclosed here)
• Potential mismatch between revenue timing and cash collections, affecting intra-period liquidity
• Limited non-operating income buffer; results rely primarily on core operations (which is generally positive but concentrates risk)

Key Concerns:

• Flat YoY revenue and operating income in H1 suggest subdued growth momentum
• OCF lagging net income implies near-term cash conversion headwinds
• Lack of disclosure on cash balances and capex/investing CF constrains FCF visibility
• Dividend policy not disclosed, limiting clarity on shareholder return trajectory

Investment Implications

Key Takeaways:

• Stable profitability with operating margin ~12.7% and net margin 8.65% despite flat revenue
• Very strong balance sheet with calculated equity ratio ~79% and low leverage (D/E ~0.26x)
• Exceptional interest coverage (~5,884x) indicates minimal financial risk
• OCF/NI of 0.62 signals working capital absorption; monitor cash conversion in H2
• Asset-light model (low D&A) suggests modest structural capex, but investing CF not disclosed
• Dividend status/policy unclear based on provided data

Metrics to Watch:

• OCF/Net income and AR days (cash conversion)
• Operating margin and wage inflation pass-through
• Revenue growth reacceleration in H2 (new contracts, pricing)
• Headcount utilization and recruitment costs
• Equity ratio and D/E (capital structure stability)
• Capex and investing CF disclosures (true FCF)

Relative Positioning: Within Japan’s education services/staffing space, Succeed appears financially conservative with high equity backing and stable mid-teen EBITDA margins; near-term differentiation will hinge on execution in recruitment, pricing discipline against wage inflation, and improving cash conversion.

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