Green Monster Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥516M
• Operating Income: ¥-13M
• Net Income: ¥-50M
• EPS: ¥-13.30

Income Statement

Balance Sheet

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: Strong top-line growth but loss-making quarter, with weak profitability and an apparent one-off below-the-line hit driving deeper net loss despite ample liquidity. Revenue rose 57.7% YoY to 5.16 (100M JPY), highlighting robust demand or successful business expansion. Gross profit was 0.59, implying a low gross margin of 11.4% that could not cover SG&A of 1.10, resulting in operating loss of -0.13. Ordinary income was -0.11 as non-operating income of 0.03 provided only a minor offset. Profit before tax deteriorated to -0.50, suggesting a sizable extraordinary loss (~-0.39) not disclosed in detail. Net income was -0.41 (EPS -13.30 JPY), declining 53.4% YoY despite the revenue surge. Operating margin stands at -2.5% and net margin at -8.0%, underscoring monetization challenges. DuPont ROE calculated at -3.0% (Net margin -8.0% × Asset turnover 0.286 × Leverage 1.33x), confirming that margin weakness is the principal driver of negative equity returns. ROIC is -4.8%, below the 5% warning threshold, indicating value dilution at current returns. Liquidity is a bright spot: cash and deposits of 12.07 cover current liabilities (3.68) comfortably, with current ratio 401% and D/E 0.33x. Balance sheet quality appears solid but includes meaningful goodwill and intangibles (2.04 and 2.24), raising medium-term impairment risk if profitability does not recover. Interest expense is effectively nil, so the flagged “-40x” interest coverage is not economically meaningful. Margin changes in basis points versus prior year cannot be quantified due to missing comparable margin disclosure; however, the current gross margin of 11.4% appears too thin to achieve breakeven at the present SG&A run-rate. Earnings quality assessment is constrained by the absence of cash flow data; OCF/NI cannot be evaluated. Forward-looking, the company must either lift gross margin materially or improve operating leverage (revenue scale vs fixed SG&A) to reach profitability. Near-term focus should be on restoring positive operating profit and clarifying the nature of the Q1 extraordinary loss.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (-8.0%) × Asset Turnover (0.286) × Financial Leverage (1.33x) = ROE (-3.0%). The net profit margin is the dominant negative driver; even modest leverage and low asset turnover cannot overcome the deep net loss. Gross margin is just 11.4% (0.59/5.16), insufficient to cover SG&A of 1.10, producing operating margin of -2.5%. The decline from ordinary income (-0.11) to pre-tax (-0.50) indicates a non-recurring or non-operating loss (~-0.39) that worsened net margin. Asset turnover of 0.286 (based on period figures) is subdued for a growth stage entity, reflecting either early-stage investment or underutilized assets. Financial leverage at 1.33x is low, so ROE is not being boosted by leverage—a prudent but return-dilutive posture when margins are negative. Business reason: cost scale (SG&A) outpaced monetization efficiency; despite 57.7% revenue growth, gross margin and opex mix led to an operating loss, and an extraordinary item amplified bottom-line weakness. Sustainability: the margin drag from SG&A could improve with scale if revenue growth persists and unit economics improve; however, the extraordinary loss appears one-time, so the pre-tax gap may narrow absent further charges. Watch for concerning trend: expense intensity—SG&A (1.10) versus gross profit (0.59) indicates negative operating leverage in Q1; unless gross margin expands or SG&A growth moderates, profitability will remain constrained.

Growth Assessment

Revenue expanded 57.7% YoY to 5.16, signaling strong demand or expanded offerings. The growth is not yet translating to profits: operating income is -0.13 and net income -0.41, implying that incremental gross profit is too low relative to fixed and semi-fixed costs. Current gross margin (11.4%) suggests either pricing pressure, cost inflation, or a business mix skewed to low-margin lines. The presence of an extraordinary loss (~-0.39) depresses PBT, masking underlying ordinary results; excluding one-offs, ordinary loss (-0.11) still indicates structural profitability issues. With cash of 12.07 and limited debt, the company has runway to invest in growth and optimization. Outlook hinges on improving unit economics: levers include pricing, procurement, product mix shift, and utilization of intangible assets (goodwill-backed businesses) to drive higher-margin revenue. Near-term, prioritizing breakeven at the operating level via cost discipline and margin enhancement is essential. Absent disclosure of pipeline, bookings, or segment mix, sustainability of 50%+ revenue growth cannot be verified. Guidance and commentary on the extraordinary loss and margin roadmap will be key for assessing full-year trajectory.

Financial Health

Liquidity is strong: current ratio 401% and quick ratio 401%, with cash and deposits of 12.07 comfortably covering current liabilities of 3.68. No warning on D/E; leverage is modest at 0.33x with long-term loans of 0.38 and no material interest burden disclosed. There is no maturity mismatch risk evident—cash exceeds current liabilities by 8.39. Balance sheet quality considerations: goodwill 2.04 and intangibles 2.24 represent 23.6% of total assets; sustained losses heighten impairment risk. Equity is 13.59 vs total assets 18.03 (equity ratio ~75%), indicating a solid solvency buffer. No off-balance sheet obligations are disclosed in the provided data. Note: the reported interest coverage of -40x is not economically meaningful given near-zero interest expense.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported; therefore OCF/Net Income and FCF cannot be assessed. With negative net income (-0.41) and no OCF data, earnings quality and cash conversion are indeterminable this quarter. Working capital position appears healthy (working capital 11.09), but without period-over-period movements we cannot assess whether working capital contributed to or detracted from OCF. FCF sustainability for dividends and capex cannot be evaluated due to missing capex and dividend cash outflows.

Dividend Sustainability

Dividend information is unreported; total dividends paid and DPS are N/A. The calculated payout ratio shown (-78.6%) is not reliable given negative earnings and lack of dividend disclosures. With negative NI and no FCF data, we cannot assert coverage. Policy outlook is unclear; prudence would suggest retention of cash to fund operations until profitability improves, but there is no explicit policy disclosed.

Risk Assessment

Business Risks:

• Low gross margin (11.4%) insufficient to cover SG&A, risking prolonged operating losses.
• Extraordinary loss (~-0.39) in Q1 indicates exposure to one-off charges (e.g., asset write-downs or settlements), details undisclosed.
• Intangible asset and goodwill concentration (total 4.28) raises impairment risk if performance underwhelms.
• Execution risk in scaling revenue while improving unit economics and cost efficiency.

Financial Risks:

• Negative ROIC (-4.8%) suggests returns below cost of capital, risking value erosion.
• Profitability-dependent covenants or financing access risks cannot be ruled out, though leverage is currently low.
• Limited visibility on cash flow generation due to unreported OCF/FCF.

Key Concerns:

• Sustainability of 57.7% YoY revenue growth without margin improvement.
• Lack of disclosure on the nature of the extraordinary loss driving PBT to -0.50.
• Potential data inconsistency between reported cost of sales (2.69) and gross profit (0.59) vs revenue (5.16); analysis relies on provided gross profit and margin.
• Dependence on cash reserves to fund losses if profitability does not recover.

Investment Implications

Key Takeaways:

• Top-line growth is strong but monetization remains weak; current cost structure not supported by 11.4% gross margin.
• Operating loss (-0.13) and net loss (-0.41) persist despite non-operating income contribution (0.03).
• A significant undisclosed extraordinary item likely widened PBT loss by ~0.39.
• Balance sheet liquidity is ample (cash 12.07; current ratio 401%; D/E 0.33x), providing runway.
• ROE (-3.0%) and ROIC (-4.8%) are negative, requiring margin and efficiency improvements to reverse.
• Goodwill/intangibles are sizable, elevating impairment sensitivity.

Metrics to Watch:

• Gross margin progression (target sustained improvement above current 11.4%).
• Operating margin and SG&A growth relative to revenue.
• Disclosure and recurrence of extraordinary items.
• OCF/NI ratio once cash flow statement is available (target >1.0).
• ROIC trend versus a 5–8% threshold.
• Cash burn rate and runway relative to cash balance.

Relative Positioning: Relative to small-cap peers, liquidity is stronger and leverage lower, but profitability and ROIC underperform; near-term investment case depends on a credible path to margin expansion and the non-recurrence of extraordinary losses.

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