Manabi-aid Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥138M
• Operating Income: ¥-122M
• Net Income: ¥-130M
• EPS: ¥-41.60

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: Weak quarter with widening losses despite double-digit revenue growth, driven by a heavy cost base and low gross margins. Revenue rose 12.0% YoY to 1.38, but cost of sales was 1.05, leaving a slim gross profit of 0.19 and a gross margin of 13.6%. SG&A of 1.77 overwhelmed gross profit, resulting in operating loss of -1.22 and operating margin of -88.4%. Ordinary loss was -1.29 and profit before tax -1.69, indicating additional non-operating/extraordinary costs of roughly -0.40 beyond ordinary loss. Net loss was -1.30 (EPS -41.60 JPY), yielding a net margin of -94.2%. DuPont shows ROE at -22.2% (NPM -94.2%, asset turnover 0.209x, leverage 1.13x), with profitability the primary drag. Liquidity appears ample near term (current ratio 283.6%, quick ratio 283.6%) and leverage is conservative (D/E 0.14x), but cash burn is evident. Operating cash flow was -0.64 versus net loss of -1.30, an OCF/NI ratio of 0.49x that flags low earnings quality. Free cash flow, approximated as OCF plus capex, was about -0.65, indicating the business is not self-funding. Financing inflow of 1.37 bridged the cash shortfall, signaling reliance on external capital to fund operations. Gross margin at 13.6% is unusually low for a digital/education platform and suggests high delivery or content costs constraining unit economics. With retained earnings at -2.59 and continuing losses, equity cushions are supported primarily by paid-in capital (capital stock and surplus). We cannot compute YoY or QoQ margin changes in basis points due to absent prior-period margin disclosures; nonetheless, current operating and net margins sit at deeply negative levels (-8,840 bps and -9,420 bps, respectively). Interest coverage is flagged at -394.82x in reported metrics, reinforcing limited debt service capacity from operations despite low absolute debt. Forward-looking, the company must either materially lift gross margin and scale revenue or rationalize SG&A to stem cash burn; otherwise, continued external financing or dilution risk remains. Key watchpoints are revenue scalability, gross margin expansion, and improvement in OCF conversion.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-94.2%) × 0.209 × 1.13 ≈ -22.2%. The component that changed (and matters) most is the net profit margin, which is deeply negative due to low gross margin (13.6%) and SG&A (1.77) far exceeding gross profit (0.19). Business reason: revenue scale remains small relative to a fixed/semi-fixed cost base (personnel, content creation, platform ops), while cost of sales is high for the category, compressing unit economics. Asset turnover at 0.209x is low, reflecting early-stage scale and potentially underutilized assets. Leverage is modest at 1.13x assets/equity, so capital structure is not a primary driver of ROE. Sustainability: the current margin profile is not sustainable for value creation; improvement would require either meaningful gross margin expansion (pricing, mix, delivery cost reduction) or SG&A leverage as revenue scales. Concerning trends: SG&A significantly exceeds revenue (1.77 vs 1.38), indicating negative operating leverage; while we lack YoY SG&A growth, the present cost intensity is inconsistent with near-term profitability.

Growth Assessment

Revenue grew 12.0% YoY to 1.38, indicating some commercial traction. However, the growth did not translate into better profitability given gross margin at 13.6% and operating margin at -88.4%. The revenue base remains small relative to the cost structure, suggesting that either customer acquisition costs or content/platform investments are front-loaded. Profit quality is weak: net loss (-1.30) and OCF (-0.64) suggest growth is not yet self-financing. Outlook hinges on unit economics: improvements in gross margin (content amortization efficiency, delivery cost optimization, pricing/ARPU) and SG&A productivity (marketing efficiency, lower G&A per yen of sales) are prerequisites for sustainable growth. Without these, incremental revenue may not meaningfully reduce losses.

Financial Health

Liquidity is strong on reported ratios: current ratio 283.6% and quick ratio 283.6% (current assets 1.51 vs current liabilities 0.53). There is no warning for current ratio < 1.0. Cash and deposits (0.30) plus accounts receivable (0.49) cover current liabilities 1.49x, mitigating near-term maturity mismatch; working capital stands at 0.98. Solvency appears conservative: total liabilities 0.84 vs equity 5.85 (D/E 0.14x); long-term loans are 0.18 and noncurrent liabilities 0.31, implying low structural leverage. Financial leverage from DuPont is 1.13x, consistent with assets/equity (6.60/5.85). Interest coverage is flagged at -394.82x in the provided metrics, indicating operating losses eliminate coverage headroom despite low debt. No off-balance sheet obligations were disclosed in the data provided.

Cash Flow Quality

OCF was -0.64 versus net income of -1.30, yielding OCF/NI of 0.49x, below the 0.8 threshold—an earnings quality concern. Free cash flow, approximated as OCF plus capital expenditures (-0.01), was about -0.65, indicating operations are not funding the asset base. Financing inflows of 1.37 covered the cash burn, evidencing reliance on external capital. Working capital details are limited, but with AR at 0.49 relative to revenue of 1.38 for the period, collection cycles and billing terms bear monitoring; no inventory or payables data were disclosed. We do not see explicit signs of working capital manipulation from the available line items, but limited disclosures constrain assessment.

Dividend Sustainability

Dividend disclosures are unreported; payout ratio and FCF coverage are not calculable. Given negative net income (-1.30) and negative free cash flow (~-0.65), internal capacity to fund dividends appears constrained this period. Policy outlook cannot be inferred from the data; however, current fundamentals suggest prioritization of growth investment and liquidity over distributions would be prudent until profitability and positive FCF are achieved.

Risk Assessment

Business Risks:

• Weak unit economics: gross margin 13.6% and SG&A exceeding revenue indicate structurally negative operating leverage.
• Scale risk: small revenue base (1.38) may not cover fixed/semi-fixed costs without rapid growth.
• Customer acquisition and retention risk in a competitive EdTech market, potentially elevating CAC and churn.
• Product/content cost risk: high delivery or content production costs depressing margins.
• Execution risk in achieving monetization (ARPU uplift, institutional contracts) needed for break-even.

Financial Risks:

• Sustained operating losses (-1.22 OI) and negative OCF (-0.64) necessitating external financing (FinCF 1.37).
• Limited debt service capacity (interest coverage flagged at -394.82x) despite low leverage.
• Equity erosion from recurring losses (retained earnings -2.59), increasing dilution risk if capital is raised.
• Receivables concentration/collection timing risk (AR 0.49) relative to small revenue base.

Key Concerns:

• OCF/NI ratio at 0.49x highlights low earnings quality.
• Extraordinary/non-operating charges (~-0.40 difference between ordinary income and PBT) add volatility.
• Data gaps (SG&A breakdown, investing CF, dividends) limit visibility into cost drivers and capital allocation.
• Gross margin sustainability at 13.6% is questionable for a software/content platform.

Investment Implications

Key Takeaways:

• Revenue up 12.0% YoY, but profitability deteriorated with operating margin -88.4% and net margin -94.2%.
• ROE -22.2% driven primarily by severely negative net profit margin; leverage is not the issue.
• Liquidity is ample near term (current ratio 283.6%), but operations consume cash (OCF -0.64; FCF ~-0.65).
• Business model requires gross margin expansion and SG&A discipline to approach break-even.
• Reliance on financing inflows (1.37) suggests dilution/financing risk if losses persist.

Metrics to Watch:

• Gross margin trajectory (target: sustained improvement from 13.6%).
• Operating margin and SG&A-to-sales ratio for signs of operating leverage.
• OCF/Net income conversion and free cash flow trend.
• ARPU, churn, and LTV/CAC (if disclosed) to assess unit economics.
• Contracted backlog/bookings and enterprise/education partnerships mix.
• Cash runway versus quarterly burn; additional financing events.

Relative Positioning: Relative to listed EdTech/education content peers, the company exhibits weaker gross margins and heavier SG&A intensity at its current scale, offset by stronger liquidity and low leverage; the path to competitiveness hinges on improving unit economics and scaling revenue without proportional cost growth.

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