AlphaPolis Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.99B
• Operating Income: ¥1.70B
• Net Income: ¥1.03B
• EPS: ¥35.43

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

For FY2026 Q2, AlphaPolis (9467) delivered resilient profitability on flat-reported topline, with an operating margin of approximately 21.2% (operating income 1,695 million yen on revenue 7,989 million yen) and an EBITDA margin of 21.4%, underscoring disciplined cost control despite muted growth signals. Gross profit margin remains exceptionally high at 76.6%, consistent with a digital/IP and licensing-heavy content model where cost of sales is structurally low relative to revenue. Ordinary income (1,716 million yen) slightly exceeded operating income, reflecting minimal financial costs (interest expense only 0.269 million yen) and negligible non-operating drag. Net income was 1,029 million yen, translating to EPS of 35.43, and an implied net margin of 12.9% aligns with the provided DuPont net margin of 12.88%. The DuPont framework indicates ROE of 7.18% driven primarily by healthy margins and modest asset turnover (0.432x), with low financial leverage (1.29x) tempering equity returns. Liquidity is strong, with a current ratio of 398.7% and working capital of 11,876 million yen, reflecting a sizable current asset base (15,853 million yen) versus current liabilities (3,976 million yen). The capital structure appears conservative: total liabilities of 4,144 million yen against total equity of 14,331 million yen imply modest leverage, consistent with the very high interest coverage of over 6,300x. Operating cash flow of 610 million yen covers roughly 59% of net income, suggesting timing effects or higher working capital investment in the period; however, the absence of disclosed investing cash flows and cash balances limits full free cash flow assessment. The reported effective tax rate metric (0.0%) is clearly not reflective of the financials; using income tax expense (687 million yen) against pre-tax earnings (proxied by ordinary income of 1,716 million yen) implies an effective rate around 40%, typical for JGAAP filers after adjustments. While revenue and operating income are tagged as +0.0% YoY, such markers likely reflect missing YoY disclosure rather than actual stagnation, so growth interpretation should be conservative. The company appears to prioritize balance sheet strength and operational efficiency over leverage-driven returns, as evidenced by low financial leverage and strong interest coverage. The high gross margin provides cushion against demand variability, but operating leverage exists given SG&A intensity implied by the spread between gross and operating margins. Dividend information is not disclosed (DPS indicated as 0.00 is likely an undisclosed item rather than an actual zero), and financing cash outflows of 422 million yen could reflect lease/other financing items rather than shareholder returns. Asset turnover of 0.432x signals either a cash-rich or working-capital-heavy model relative to sales; given the strong current asset position and missing cash disclosure, the former is plausible. Overall, AlphaPolis demonstrates solid profitability, robust liquidity, and low credit risk, with the key analytical gap being free cash flow visibility due to undisclosed investing and cash balance data. Near-term focus should be on cash generation, working capital dynamics, and the sustainability of high gross margins in a competitive content/IP environment.

Profitability Analysis

ROE of 7.18% is decomposed into: net profit margin 12.88%, asset turnover 0.432x, and financial leverage 1.29x. The primary driver is margin strength, with gross margin at 76.6% and operating margin at ~21.2%, indicating significant value capture per unit of revenue. EBITDA of 1,713 million yen and EBITDA margin of 21.4% corroborate healthy underlying profitability with limited depreciation burden (D&A only 18 million yen). Ordinary income modestly exceeds operating income, reflecting minimal non-operating costs and near-zero interest burden (interest expense 0.269 million yen). Net margin of 12.9% is consistent with content/IP monetization models where variable COGS are low but SG&A (editorial, platform, marketing, royalties/advances) can be substantial. Operating leverage is present: the spread between gross (76.6%) and operating margins (~21%) suggests a sizable fixed/semifixed cost base; incremental revenue growth could translate into outsized operating income growth if SG&A is contained. Interest coverage is extremely high at over 6,300x (EBIT/interest), underscoring negligible financial drag. The provided effective tax rate of 0.0% is not representative; using income tax expense (687 million yen) and pre-tax earnings (~1,716 million yen) implies ~40%, which is consistent with normal taxation and indicates no unusual tax shield. Overall profitability quality is high, supported by strong margins and low financing costs, with ROE moderated by conservative leverage and moderate asset turnover.

Growth Assessment

Top-line growth is marked as +0.0% YoY, which likely reflects missing YoY disclosure rather than true stagnation; thus, growth momentum cannot be precisely assessed from the provided data. Profit metrics (operating income and net income) are also tagged +0.0% YoY, implying YoY comparisons are not disclosed. Nonetheless, the margin structure remains robust (gross margin 76.6%, operating margin ~21.2%), suggesting stable unit economics. With low D&A and minimal interest expense, profit scalability depends primarily on SG&A efficiency and revenue expansion. Asset turnover at 0.432x indicates room for better utilization of the asset base if demand conditions improve. Outlook hinges on pipeline execution (new titles/IP, digital distribution, licensing) and marketing effectiveness; operating leverage suggests upside to profits if revenue growth resumes. Conversely, if revenue softens, the SG&A burden could pressure operating margin. Given the lack of segment/YoY detail, we treat growth sustainability as uncertain near-term, but the profitability profile provides a buffer.

Financial Health

Liquidity is strong: current assets of 15,853 million yen versus current liabilities of 3,976 million yen yield a current ratio of 398.7% and substantial working capital of 11,876 million yen. The quick ratio mirrors the current ratio due to non-disclosure of inventories, suggesting liquid assets dominate the balance sheet. Solvency is robust with total liabilities of 4,144 million yen against equity of 14,331 million yen, and financial leverage of 1.29x indicates a conservative balance sheet. Interest expense is de minimis (0.269 million yen), and interest coverage exceeds 6,300x, highlighting minimal refinancing or rate risk. The equity ratio is shown as 0.0% but should be treated as undisclosed; based on totals, an implied equity ratio would be high given equity of 14,331 million yen versus total assets of 18,475 million yen. No data on interest-bearing debt split is provided, so the debt-to-equity metric of 0.29x should be interpreted cautiously. Overall, the company exhibits low credit risk and ample liquidity to fund operations.

Cash Flow Quality

Operating cash flow (OCF) of 610 million yen represents 59% of net income (1,029 million yen), indicating weaker cash conversion this period, likely due to working capital investment (e.g., increased receivables, advances, or royalty timing). Free cash flow is not determinable because investing cash flows and capex are undisclosed (reported as 0), so the listed FCF of 0 should be treated as not available rather than actual zero. With minimal D&A (18 million yen), non-cash add-backs are limited, amplifying the impact of working capital swings on OCF. Financing cash outflows of 422 million yen suggest repayments or other financing activities; given DPS is undisclosed, we cannot attribute this to dividends. Cash and equivalents are undisclosed (reported as 0), preventing end-of-period liquidity cross-checks. Overall earnings quality is acceptable but not robust this quarter due to sub-1.0x OCF/NI; monitoring working capital turns is key to validate underlying cash generation.

Dividend Sustainability

Dividend data are not disclosed for the period (DPS shown as 0.00 should be treated as undisclosed), and the payout ratio is marked 0.0% but is not meaningful without confirmed distributions. With EPS at 35.43 and OCF at 610 million yen, the company appears capable of supporting dividends in principle, but actual policy and cash priorities are unknown. Free cash flow coverage cannot be assessed due to missing investing/capex data and undisclosed cash balances. The conservative balance sheet and strong interest coverage suggest capacity for shareholder returns, but management’s policy is not inferable from the provided data. Near-term sustainability assessment is therefore inconclusive; clarity on capex, content acquisition cash outlays, and policy statements is required.

Risk Assessment

Business Risks:

• Title/IP concentration risk and hit-driven volatility inherent in content publishing.
• Digital platform competition and algorithm-driven discoverability affecting monetization.
• Royalty and licensing cost variability that can pressure SG&A and operating margins.
• Demand cyclicality and consumer discretionary spending sensitivity.
• Regulatory and compliance risks around content, IP rights, and digital distribution.

Financial Risks:

• Cash conversion risk evidenced by OCF at 59% of net income due to working capital timing.
• Potential increase in content advances/royalties could elevate cash needs in growth phases.
• Limited visibility on cash balances and capex/investing outflows constrains FCF assessment.
• Possible FX exposure from overseas licensing/printing or digital platform settlements (if any), not disclosed.

Key Concerns:

• Lack of disclosed free cash flow and cash balances limits dividend and investment capacity analysis.
• YoY growth metrics are not disclosed, constraining trend analysis and forecasting.
• Effective tax rate discrepancy in provided metrics; actual tax burden appears ~40%, impacting net margins.
• Operating leverage could magnify downside if revenue softens given sizable SG&A base.

Investment Implications

Key Takeaways:

• Margin profile remains strong: 76.6% gross margin and ~21% operating margin.
• ROE of 7.18% is margin-driven and moderated by low leverage and modest asset turnover.
• Balance sheet is conservative with minimal interest burden and strong liquidity.
• Cash conversion lagged (OCF/NI 0.59x), likely from working capital; needs monitoring.
• Growth trajectory is unclear due to undisclosed YoY comparisons; pipeline execution is key.

Metrics to Watch:

• Working capital turns: receivable days, payables days, and any content advance balances.
• OCF/Net income and free cash flow once investing/capex data are disclosed.
• Operating margin trajectory and SG&A as a percentage of sales.
• Asset turnover improvement as a driver of ROE.
• Disclosure on dividend policy or shareholder return framework.

Relative Positioning: Within Japanese content/IP publishers, AlphaPolis exhibits above-average gross margins and low financial leverage, positioning it as a quality, cash-light operator; however, relative cash conversion and growth visibility are currently less clear due to disclosure gaps.

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