Gurunavi,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.37B
• Operating Income: ¥105M
• Net Income: ¥248M
• EPS: ¥2.28

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

Gurunavi (TSE: 2440) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth but sharp profit compression, indicative of negative operating leverage and reinvestment drag. Revenue rose 6.6% year over year to ¥6.374 billion, while operating income fell 62.3% to ¥105 million as SG&A and other fixed costs outpaced gross profit gains. Gross profit of ¥4.046 billion implies a robust gross margin of 63.5%, consistent with a platform/service model, yet operating margin compressed to 1.6%, highlighting cost pressure and/or strategic spending. Ordinary income was ¥101 million and net income ¥128 million, with EPS of ¥2.28, implying non-operating items and a light tax burden supported bottom-line resilience. DuPont decomposition points to a calculated ROE of 2.47%, driven by a low net profit margin of 2.01%, moderate asset turnover of 0.574 (likely understated for a half-year period), and financial leverage of 2.15x. EBITDA was ¥201.8 million, translating to a 3.2% EBITDA margin—low for the business model and underscoring cost intensity at this stage of recovery. Cash conversion was strong: operating cash flow reached ¥714.7 million, yielding an OCF/Net Income ratio of 5.58, likely aided by favorable working capital movements. Liquidity appears solid with a current ratio of 237% and working capital of ¥4.997 billion, giving the company notable near-term funding flexibility. Solvency is acceptable with a reported debt-to-equity ratio of 1.19x and manageable interest expense of ¥11.4 million; interest coverage stands at 9.2x. The equity ratio shown as 0.0% is not reflective of true capitalization given reported total equity of ¥5.181 billion; treat the equity ratio figure as unavailable rather than zero. Dividend payments are currently suspended (DPS ¥0; payout 0%), aligning with a focus on rebuilding profitability and balance sheet strength. Free cash flow is not computable from the disclosures because investing cash flows are not reported in the period metrics presented (values shown as 0 indicate unreported, not actual zero). The improvement in revenue alongside falling operating profit suggests that the recovery in the dining-out and restaurant marketing ecosystem is still uneven and/or accompanied by increased customer acquisition and content costs. Asset turnover at 0.574 should be interpreted with caution given the interim period; an annualized view would improve this ratio materially. Overall, Gurunavi exhibits adequate liquidity and cash generation capacity, but profitability remains thin and sensitive to cost control and monetization effectiveness. Key watchpoints include operating expense discipline, merchant subscription retention, advertising yields, and the sustainability of favorable working capital that bolstered OCF this quarter.

Profitability Analysis

ROE of 2.47% decomposes into a 2.01% net profit margin, 0.574x asset turnover, and 2.15x financial leverage. The low net margin reflects substantial SG&A intensity relative to a healthy 63.5% gross margin, with operating income of ¥105 million equating to a 1.6% operating margin. EBITDA of ¥201.8 million (3.2% margin) indicates limited operating cushion and points to continued cost pressure or reinvestment. Operating leverage was negative in the period: revenue rose 6.6% YoY, yet operating income fell 62.3%, signaling that fixed cost increases (personnel, sales/marketing, content, or system costs) outweighed gross profit gains. Ordinary income (¥101 million) tracked operating income closely, implying limited non-operating drag; net income exceeded ordinary income due to a favorable tax and/or extraordinary item effect. Interest burden is modest with ¥11.4 million expense and 9.2x coverage (EBIT basis), so financial costs are not the main profit constraint. Given interim timing, asset turnover of 0.574 likely understates full-year efficiency; a normalized annual turnover closer to ~1.15x would be more consistent for a service platform with low inventories. The effective tax rate metric is shown as 0.0% in the provided summary but taxes were recorded (¥17.3 million), suggesting that the displayed tax rate is not a reliable indicator; the period’s tax burden appears light relative to pre-tax income.

Growth Assessment

Top-line growth of 6.6% YoY to ¥6.374 billion suggests gradual recovery in advertiser and merchant demand for restaurant discovery and booking services. However, profit quality weakened as operating income fell 62.3%, implying growth was likely supported by higher promotional spend, content/technology investments, or elevated personnel costs. Gross margin strength at 63.5% indicates that core monetization per unit of revenue remains solid, but conversion to operating profit is currently constrained. The net income performance (¥128 million) benefited from a favorable below-OP line and light tax impact this quarter; sustainability of this support is uncertain. OCF strength (¥714.7 million) suggests underlying cash torque from working capital and collections, which is constructive for growth funding without balance sheet strain. Looking ahead, sustaining revenue growth will likely depend on merchant subscription retention, premium listing penetration, and ad yield per active merchant, alongside consumer traffic trends in dining. Profit recovery requires tighter SG&A control and improved operating leverage as revenue scales. The sector backdrop—post-pandemic normalization in dining-out and intensified competition from other platforms—remains a swing factor for both revenue trajectory and pricing power.

Financial Health

Liquidity is strong: current assets of ¥8.645 billion vs. current liabilities of ¥3.648 billion produce a current ratio of 237%, with quick ratio equivalent due to no inventories reported. Working capital stands at ¥4.997 billion, providing ample cushion for operations and reinvestment. Solvency is sound to moderate: total liabilities of ¥6.151 billion vs. equity of ¥5.181 billion imply a debt-to-equity measure of about 1.19x on a broad liabilities basis; interest expense is low at ¥11.4 million with 9.2x coverage. Total assets are ¥11.114 billion, yielding financial leverage of 2.15x (Assets/Equity), acceptable for an asset-light platform. The equity ratio shown as 0.0% is not reliable given reported equity; treat as unavailable. Cash and equivalents are not disclosed in the provided summary (shown as 0, indicating unreported), but liquidity metrics imply adequate cash or liquid assets. Overall, the balance sheet supports ongoing operations and selective investment without immediate need for external funding, assuming OCF remains positive.

Cash Flow Quality

Operating cash flow of ¥714.7 million versus net income of ¥128.0 million (OCF/NI 5.58x) indicates strong cash conversion, likely driven by working capital inflows (receivables collection and/or payables timing). Depreciation and amortization of ¥96.8 million suggests limited non-cash expense relative to revenue scale, consistent with an asset-light model. Free cash flow cannot be assessed because investing cash flows are not disclosed in the period dataset (Investing CF shows 0, indicating unreported); consequently, the FCF figure in the metrics should be treated as unavailable. Earnings quality appears better than GAAP earnings would suggest for this quarter due to cash inflows; however, reliance on working capital releases may not be repeatable every period. Interest outflows are modest and well covered by OCF. Monitor whether OCF remains robust as profit normalizes and working capital effects reverse.

Dividend Sustainability

The company paid no dividend (DPS ¥0; payout ratio 0%), consistent with preserving capital while profitability is thin. With OCF positive at ¥714.7 million, internal cash generation appears adequate for operations and selective reinvestment, but lack of investing cash flow disclosure prevents a clear FCF coverage assessment. Given operating margin of 1.6% and pressure on OP YoY, reinstating dividends would likely hinge on sustained improvement in operating profit and visibility on stable cash generation absent one-off working capital benefits. Capital structure is stable and liquidity strong, so policy flexibility exists, but near-term prudence is appropriate until operating leverage turns positive.

Risk Assessment

Business Risks:

• Intense competition in restaurant discovery/booking and local advertising from large platforms reducing pricing power
• Macroeconomic and consumer-spending sensitivity in dining-out demand
• Merchant churn risk affecting subscription revenue and ad inventory utilization
• Cost inflation in sales, marketing, and technology impacting operating leverage
• Regulatory or platform policy changes affecting data usage, listings, or advertising practices
• Execution risk in product enhancements and monetization (premium features, ad yield)

Financial Risks:

• Thin operating margin (1.6%) leaving limited buffer against revenue volatility
• Potential normalization of working capital that could temper OCF after a strong quarter
• Moderate leverage on a liabilities basis (D/E ~1.19x) though interest burden currently low
• Limited visibility on cash and investing needs due to unreported cash and investing CF figures
• Tax rate variability given light tax burden indications in the period

Key Concerns:

• Negative operating leverage despite 6.6% revenue growth (OP -62.3% YoY)
• Sustainability of cash conversion (OCF/NI 5.58x) if working capital tailwinds fade
• Low EBITDA margin (3.2%) highlighting the need for cost control and monetization improvements

Investment Implications

Key Takeaways:

• Top-line recovery continued (+6.6% YoY) but profit compressed sharply, reflecting reinvestment and/or cost pressure
• Gross margin remains strong (63.5%), but operating margin is thin (1.6%), indicating room for SG&A optimization
• Cash generation was robust (OCF ¥715m), supporting liquidity, though FCF cannot be confirmed without investing CF
• Balance sheet liquidity is ample (current ratio 237%; working capital ~¥5.0b) with manageable interest burden (9.2x coverage)
• ROE is low at 2.47%; improvement hinges on margin expansion and better asset turnover as scale returns

Metrics to Watch:

• Operating expense growth vs. revenue growth (to gauge operating leverage)
• EBITDA and operating margins trajectory
• Merchant subscription count, ARPU, and ad yield per active merchant
• OCF sustainability and working capital movements (receivables/payables trends)
• Asset turnover on a full-year basis (annualized vs. interim)
• Interest coverage and any changes in borrowing costs
• Visibility on capex/investing cash flows to assess true FCF

Relative Positioning: Within Japan’s restaurant discovery and local advertising ecosystem, Gurunavi exhibits solid liquidity and gross margin but lags leading peers on profitability scale and operating leverage; success will depend on stabilizing merchant monetization and tightening SG&A to convert modest revenue growth into durable earnings.

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