WILSON LEARNING WORLDWIDE INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.03B
• Operating Income: ¥4M
• Net Income: ¥-192M
• 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

Wilson Learning Worldwide (9610) delivered FY2026 Q2 consolidated results showing solid top-line momentum but fragile bottom-line performance and weak cash conversion. Revenue rose 19.8% YoY to ¥1,029m, highlighting demand resilience in training/consulting services. Gross profit reached ¥608.5m with a robust gross margin of 59.1%, consistent with an asset-light content/licensing and services model. Despite the strong gross margin, operating income was only ¥4m (c. 0.4% margin) and flat YoY, indicating that elevated SG&A absorbed most of the revenue growth. Ordinary income slipped to -¥5m and net income to -¥6m (net margin -0.58%), pressured by interest expense of ¥7.64m that exceeded operating profits. EBITDA was ¥4.24m (0.4% margin), underscoring limited operating leverage so far despite nearly 20% revenue growth. DuPont shows a calculated ROE of -0.72%, combining a slight loss, asset turnover of 0.686, and financial leverage of 1.80; profitability is the key drag rather than efficiency or leverage. Liquidity looks adequate on a snapshot basis, with current assets of ¥1,238.3m against current liabilities of ¥619.2m (current ratio about 200% and quick ratio 198%). Working capital is sizeable at ¥619.1m, but it did not translate into cash: operating cash flow was -¥202.8m, implying heavy cash absorption likely from receivables and contract assets. Interest coverage is weak at ~0.5x (EBIT/interest), raising sensitivity to financing costs until operating profits improve. Balance sheet leverage is moderate with a debt-to-equity ratio of 0.98x and total liabilities of ¥817.7m against equity of ¥836.0m, but the negative OCF elevates financial risk. Financing cash inflow of ¥29.4m provided a partial buffer for the OCF deficit; investing cash flow was not disclosed. No dividend was paid (DPS ¥0, payout 0%), appropriate given the loss and cash burn. The quarter’s combination of strong revenue growth, high gross margin, and minimal operating profit suggests cost inflation or step-up investments (people, content, selling) outpacing efficiency gains. Sustainability of growth will hinge on converting backlog and receivables into cash while containing SG&A. Data limitations exist (e.g., cash balance, capex, equity ratio, share data not disclosed in XBRL), so conclusions focus on reported non-zero items.

Profitability Analysis

ROE_decomposition: Net margin -0.58% × asset turnover 0.686 × financial leverage 1.80 = ROE -0.72% (calculated matches reported). The primary headwind is negative net margin; asset utilization and leverage are within a normal range for a small-cap services firm. margin_quality: Gross margin 59.1% reflects high-value content and service mix. However, operating margin is 0.4% (operating income ¥4m on ¥1,029m revenue), indicating SG&A intensity (sales force, delivery, development) consumed growth. Interest expense of ¥7.64m pushed ordinary income negative, evidencing insufficient operating surplus. operating_leverage: Revenue +19.8% YoY with flat operating income implies limited operating leverage in H1; incremental gross profit (¥100–¥120m implied) was offset by higher operating expenses. EBITDA margin at 0.4% confirms little drop-through. For leverage to materialize, SG&A growth must lag revenue in H2.

Growth Assessment

revenue_sustainability: Top-line growth of 19.8% is strong for the training/consulting category and likely driven by recovering corporate L&D budgets and enterprise projects. High gross margin suggests a favorable mix, but sustainability depends on repeat engagements and backlog conversion. profit_quality: Profit quality is weak: operating profit is minimal and ordinary/net income negative due to financing costs. The gap between gross and operating margins indicates limited cost control or step-up investments not yet yielding returns. outlook: To translate growth into earnings, the company needs tighter expense discipline and improved utilization. If H2 seasonality and execution allow for higher billable delivery and collections, operating leverage could emerge; otherwise, interest expense will keep ordinary profit under pressure.

Financial Health

liquidity: Current assets ¥1,238.3m vs current liabilities ¥619.2m yields a current ratio ~200% and quick ratio ~198%, indicating ample near-term coverage on paper. solvency: Total liabilities ¥817.7m vs equity ¥836.0m implies debt-to-equity ~0.98x. Interest coverage is ~0.5x (EBIT/interest), a weak cushion that heightens sensitivity to rate and earnings shocks. capital_structure: Assets ¥1,501.0m funded roughly half by equity and half by liabilities. Financial leverage (assets/equity) is 1.80x, moderate for services, but negative OCF increases effective risk of this leverage.

Cash Flow Quality

earnings_quality: OCF of -¥202.8m versus net loss of -¥6.0m (OCF/NI ≈ 33.8x) signals that non-cash accruals and working capital movements (likely receivables/contract assets) drove a substantial cash drain despite a small accounting loss. FCF_analysis: Investing cash flow and capex were not disclosed, so true FCF cannot be determined. The reported FCF placeholder is 0 due to missing capex data; based on OCF alone, pre-investing cash generation is negative. working_capital: Working capital is ¥619.1m and likely tied up in receivables/unbilled revenue given the business model. The large negative OCF suggests significant build or slower collections; inventory is minimal at ¥13.6m, so WC pressure is not inventory-driven.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 with payout 0%, appropriate given negative earnings (EPS -¥0.74) and weak cash generation. FCF_coverage: Not assessable due to undisclosed capex; however, negative OCF implies inadequate coverage for any cash distributions. policy_outlook: With low profitability, negative OCF, and moderate leverage, capacity to initiate or increase dividends appears constrained until earnings and cash conversion improve.

Risk Assessment

Business Risks:

• Execution risk in converting backlog to billable work and collections
• Dependence on corporate L&D budgets and macro conditions
• Pricing pressure and competitive intensity in training/consulting
• Utilization risk for delivery staff and contractors
• Project timing/seasonality causing revenue and cash flow volatility

Financial Risks:

• Weak interest coverage (~0.5x) with ordinary loss
• Negative operating cash flow (-¥202.8m) despite revenue growth
• Moderate leverage (D/E ~0.98x) amplifying earnings volatility
• Potential refinancing risk if cash burn persists
• Working capital concentration in receivables/contract assets

Key Concerns:

• Limited operating leverage despite +19.8% YoY revenue
• Interest expense exceeding operating profit
• Large OCF deficit signaling poor cash conversion

Investment Implications

Key Takeaways:

• Strong top-line (+19.8% YoY) but profitability remains tenuous (operating margin ~0.4%)
• High gross margin (59.1%) is a structural strength, offset by SG&A intensity
• Ordinary and net losses driven by financing costs; interest coverage ~0.5x
• Liquidity appears adequate (current ratio ~200%), but cash burn is material (OCF -¥202.8m)
• Leverage moderate (D/E ~0.98x), but negative OCF elevates risk profile

Metrics to Watch:

• Operating cash flow trajectory and receivables/DSO
• SG&A growth vs revenue and resulting operating margin
• Order intake/backlog and utilization rates
• Interest expense and coverage ratio
• Ordinary income inflection in H2

Relative Positioning: Within domestic human capital/training peers, the company shows competitive gross margins but weaker operating margins, lower interest coverage, and poorer cash conversion; scale disadvantages and financing costs are notable headwinds.

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