Socionext (6526) Q1 2026 earnings summary

Executive summary

• Net sales for 1Q FY26/3 declined 34.5% year-over-year to ¥34.6 billion, mainly due to lower demand in China and yen appreciation.

• Operating income dropped 86.0% year-over-year to ¥1.4 billion, with net income falling 93.9% to ¥0.5 billion.

• Product revenue fell 38.8% and NRE revenue decreased 18.0% compared to the same quarter last year.

• The company continues to focus on expanding design wins and high-growth areas such as automotive, data center & networking, and smart devices, with ongoing investments in advanced technologies.

• Management expects sales to recover in the second half of FY26/3, driven by new mass production in automotive and other sectors.

Financial highlights

• Gross margin improved to 58.3% in 1Q FY26/3 from 55.1% in FY25/3, while product gross margin rose to 44.4%.

• Cash and cash equivalents at quarter-end were ¥69.5 billion as of June 30, 2025.

• Shareholders’ equity ratio remained strong at 80.9%.

• Net cash provided by operating activities increased to ¥10.0 billion from ¥4.6 billion year-over-year.

• Operating margin fell sharply to 4.2% from 19.4% a year earlier.

Outlook and guidance

• FY26/3 full-year net sales forecast at ¥175.0 billion, down 7.2% year-over-year; operating income forecast at ¥14.0 billion, down 44.0%.

• Operating margin expected to be 8.0% for FY26/3, with improvement anticipated in the second half as new projects ramp up.

• No revision to the previously announced earnings forecast.

• Aggressive investment in R&D and leading-edge technologies will continue, impacting short-term profitability.

• Assumed exchange rate for the fiscal year is 130 yen to the U.S. dollar.