WILSON LEARNING WORLDWIDE INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.03B
• Operating Income: ¥4M
• Net Income: ¥-6M
• EPS: ¥-0.74

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: FY2026 Q2 was mixed—solid top-line growth but essentially break-even at the operating level and a small net loss, with weak cash conversion. Revenue grew 19.8% YoY to 10.29, demonstrating demand recovery for training/HR development services. Gross profit was 7.67, delivering a high gross margin of 74.5%, indicative of an asset-light model and favorable mix/pricing. SG&A totaled 7.62, consuming nearly all gross profit; operating income was just 0.04 (operating margin 0.4%). Ordinary income slipped to a loss of -0.05 as non-operating expenses (0.26) exceeded non-operating income (0.16) despite interest income of 0.11. Net income came in at -0.06 (net margin -0.6%), and total comprehensive income was a larger loss of -0.39, implying notable OCI headwinds (likely FX/valuation impacts). Margin comparison in basis points versus last year is not possible due to unreported prior-period margins; however, the current SG&A intensity (74.0% of revenue) capped operating leverage. Earnings quality was weak: operating cash flow was -0.86 versus net income of -0.06, signaling cash burn materially exceeding the accounting loss. Liquidity remains comfortable with a current ratio of 252.7% and working capital of 7.34, supported by cash of 3.47 and accounts receivable of 5.10. Solvency is adequate with total liabilities of 6.65 and equity of 8.36 (equity ratio ~55.7% by calculation), but interest coverage at 0.73x is a clear pressure point. Capital intensity remains low (capex 0.01), but ROIC of 0.7% is far below a healthy threshold, reflecting insufficient operating profit generation. The balance sheet shows an accumulated deficit (retained earnings -15.47), though paid-in capital cushions net assets. With financing cash inflow of 1.67 offsetting negative OCF, funding reliance increased this quarter. Forward-looking, the company needs either mix-driven gross profit uplift or SG&A discipline to translate revenue growth into durable operating profit and cash flow. Monitoring receivables collection and non-operating swings (interest/OCI) will be critical to stabilizing ordinary earnings.

Profitability Analysis

DuPont ROE decomposition: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-0.6%) × 0.686 × 1.80 ≈ -0.7% (matches reported). The weakest component is net margin, driven by SG&A absorbing nearly all gross profit—SG&A was 7.62 vs gross profit 7.67, yielding only 0.04 operating profit (0.4% operating margin). Asset turnover at 0.686 reflects a service/consulting model with moderate efficiency, while financial leverage of ~1.80x (Assets/Equity = 15.01/8.36) is modest. The primary business reason for depressed margin is insufficient operating leverage: despite a high 74.5% gross margin, SG&A intensity (74.0% of revenue) left negligible operating profit; additionally, negative ordinary income (-0.05) reflects non-operating drag (non-operating expenses 0.26 > income 0.16). Sustainability: the high gross margin is likely structural, but without SG&A containment or mix/pricing improvement, net margins will remain thin. Red flags include SG&A growth potentially tracking or exceeding revenue growth; we lack YoY SG&A disclosure to confirm, but the current SG&A-to-sales ratio is elevated for sustainable profitability. One-time elements: total comprehensive loss (-0.39) suggests OCI impacts that may be volatile; ordinary income also depends on financial items (interest income/expenses) which can fluctuate. Overall, ROE is negative chiefly due to margin pressure rather than leverage or turnover.

Growth Assessment

Top-line growth was robust at +19.8% YoY to 10.29, implying healthy demand. However, conversion to profit was weak: operating income was 0.04 (0.4% margin) and net income -0.06 (-0.6% margin). Non-operating items were a net drag: income 0.16 (mainly interest income of 0.11) vs expenses 0.26 (including interest expense 0.06). Comprehensive loss (-0.39) indicates additional headwinds from OCI (likely FX translation or securities valuation). With capex at just 0.01, growth appears not constrained by capacity, but execution on SG&A productivity is the gating factor. Revenue sustainability hinges on client training budgets and project timing; the strong gross margin suggests pricing/mix is favorable, but scaling profit requires SG&A discipline. Outlook: near-term earnings trajectory will be determined by operating leverage (SG&A vs revenue) and stabilization of non-operating/OCI items; absent cost control, incremental revenue may not materially lift earnings.

Financial Health

Liquidity: Current ratio 252.7% and quick ratio 250.3% indicate strong short-term coverage; working capital is 7.34 with cash of 3.47 and receivables of 5.10 comfortably exceeding current liabilities of 4.81. No warning on current ratio (<1.0) or D/E (>2.0); reported D/E of 0.80x is acceptable. Solvency: Equity of 8.36 vs assets of 15.01 implies an equity ratio of ~55.7% (calculated), a healthy capital buffer despite retained earnings of -15.47 (accumulated deficit). Debt and coverage: Long-term loans are 0.54; interest coverage is weak at 0.73x (EBIT/interest), signaling sensitivity to rate/cash flow volatility. Maturity mismatch risk appears limited as current assets (12.14) exceed current liabilities (4.81) by a wide margin; short-term loans are unreported, so the composition of current liabilities is not fully visible. Off-balance sheet obligations: none disclosed in the provided data.

Cash Flow Quality

OCF was -0.86 versus net income of -0.06, producing a mechanically high OCF/NI ratio (14.32x) due to both figures being negative; economically, this indicates weak cash conversion and notable cash burn relative to a small accounting loss. Free cash flow (defined here as OCF minus capex) was approximately -0.87, given capex of 0.01; full investing CF is unreported, so broader investment flows are unknown. Financing CF of 1.67 funded the OCF shortfall, increasing reliance on external capital. Working capital dynamics likely drove OCF weakness: receivables stand at 5.10 against quarterly revenue of 10.29, suggesting cash collection timing risk; detailed AR/contract liability changes are not disclosed. No signs of aggressive working capital management can be confirmed or denied due to limited disclosure; however, negative OCF amid near break-even profits elevates quality concerns.

Dividend Sustainability

Dividend data are unreported; payout ratios and FCF coverage are therefore not calculable. Given negative net income (-0.06), negative FCF (~-0.87), and accumulated deficits (retained earnings -15.47), capacity to pay or increase dividends appears constrained without a turnaround in operating cash flow. Policy outlook cannot be inferred from the data provided; any dividend resumption or initiation would likely require sustained positive OCF and operating margin expansion.

Risk Assessment

Business Risks:

• Demand cyclicality in corporate training/HR development tied to client budgets and macro conditions
• Execution risk on SG&A productivity, given SG&A-to-sales at ~74%
• Project timing/seasonality risk affecting quarterly revenue and cash collection
• Pricing pressure from competitors in learning/consulting markets

Financial Risks:

• Low interest coverage (0.73x) increases vulnerability to interest rate rises or profit shortfalls
• Negative operating cash flow (-0.86) funded by financing inflows (1.67), raising funding reliance
• Accumulated deficit (retained earnings -15.47) limits balance sheet flexibility
• OCI volatility (comprehensive loss -0.39) potentially from FX or valuation changes
• Receivables concentration/collection timing risk (AR 5.10 vs revenue 10.29)

Key Concerns:

• ROIC at 0.7% is well below a sustainable threshold, indicating sub-par capital efficiency
• Ordinary loss (-0.05) despite positive operating income reflects non-operating fragility
• Limited visibility into debt composition and maturities due to unreported short-term loans
• If revenue growth moderates, thin operating margin could revert to losses

Investment Implications

Key Takeaways:

• Strong revenue growth (+19.8% YoY) but profit conversion remains weak (OP margin 0.4%, NI margin -0.6%)
• SG&A intensity (74.0% of sales) is the main brake on profitability despite a high 74.5% gross margin
• Cash burn (OCF -0.86) is a core issue; financing inflow (1.67) covered the gap this quarter
• Interest coverage at 0.73x is a notable pressure point despite moderate leverage
• Calculated equity ratio ~55.7% provides solvency comfort, but retained earnings are deeply negative

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio
• Operating cash flow and receivables days/collection trends
• Ordinary income sensitivity to non-operating items (interest income/expense, OCI)
• ROIC trajectory vs internal cost of capital
• Interest coverage and any changes in borrowing levels or rates

Relative Positioning: Within domestic HR training/learning services, the company exhibits healthy liquidity and high gross margins but lags on operating leverage, ROIC, and cash conversion; profitability and capital efficiency are below typical peer benchmarks, while balance sheet solvency is comparatively solid.

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