JELLY BEANS GROUP Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.33B
• Operating Income: ¥-124M
• Net Income: ¥-341M
• EPS: ¥-6.11

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

Jelly Beans Group (30700) reported FY2026 Q3 consolidated results under JGAAP showing rapid top-line expansion but continued losses. Revenue reached 13.30 (100M JPY), up 111.8% YoY, indicating strong growth momentum or scope expansion, but profitability remains weak. Gross profit is disclosed at 3.09, implying a gross margin of 23.2%, which is modest for a services/brand-driven model and suggests either elevated cost-to-serve or pricing pressure. Operating income was -1.24, and ordinary income -1.40, with non-operating items (net -0.13) having a limited impact on the loss profile. Profit before tax deteriorated to -3.38, implying the presence of significant extraordinary losses (roughly -1.98) not itemized in the disclosure. Net income was -2.71, with a small tax expense of 0.03, yielding an unusual negative effective tax rate of around -0.8% due to losses. DuPont indicates ROE at -5.6%, driven by a net margin of -20.4%, low asset turnover of 0.231, and relatively low financial leverage of 1.20x. Liquidity appears ample with a current ratio of 247.9% and quick ratio of 185.2%, supported by cash and deposits of 2.65 and limited near-term obligations. The balance sheet is lightly levered with a debt-to-equity ratio of 0.09x and long-term loans of 1.48, suggesting low solvency risk from financial debt. Retained earnings are deeply negative at -35.33, signaling cumulative deficits and potential legal constraints on dividends absent distributable amounts. Intangibles and goodwill are sizable (intangible assets 5.59 and goodwill 5.54), raising sensitivity to impairment amid losses. Several data points exhibit inconsistencies (e.g., cost of sales vs gross profit; assets aggregation vs disclosed subtotals), and many items are unreported (OCF, capex, DPS, EBITDA), necessitating cautious interpretation. Nonetheless, available metrics point to a business still in investment or scaling mode with insufficient operating leverage to cover SG&A. The combination of strong revenue growth and weak margins highlights execution risk around unit economics and cost discipline. Near-term priorities likely include improving gross margin, rationalizing SG&A, and addressing extraordinary items to stabilize earnings. With liquidity adequate and leverage low, the company has runway, but sustained losses could pressure equity (BVPS 61.34 JPY) and increase impairment risk. Overall, growth is promising, but profitability conversion is the central challenge.

Profitability Analysis

ROE is -5.6% per DuPont, decomposed into net profit margin -20.4%, asset turnover 0.231, and financial leverage 1.20x, indicating losses are margin-driven rather than leverage- or asset-intensity-driven. Gross margin is 23.2% (3.09/13.30), which is relatively low for a brand/platform model and leaves little to absorb SG&A. Operating income of -1.24 implies the operating margin is negative; however, the disclosed SG&A of 6.55 does not reconcile with the gross profit figure (3.09-6.55 would imply -3.46 operating income), indicating classification or timing differences. Ordinary loss of -1.40 suggests limited non-operating drag (net -0.13), so core operations are the main driver of losses. Interest burden is negligible (interest expense 0.02), and the interest coverage ratio is negative (-73.85x) due to negative EBIT, not high financing costs. The step-down from ordinary income (-1.40) to pretax (-3.38) suggests material extraordinary losses (~-1.98) weighing on bottom line quality this quarter. Operating leverage appears unfavorable: even with 112% YoY revenue growth, the company remains loss-making, implying SG&A growth and/or gross margin compression offset scale benefits. Margin quality is weak with the current mix; the path to profitability likely requires gross margin uplift and SG&A efficiency.

Growth Assessment

Revenue grew 111.8% YoY to 13.30, signaling strong expansion, likely from new business lines, acquisitions, or rapid scaling. However, profit did not follow revenue: operating loss was -1.24 and net loss -2.71, indicating growth is not yet profitable. Gross margin at 23.2% suggests revenue quality may be skewed toward lower-margin categories or early-stage offerings with higher fulfillment costs. Ordinary loss widened relative to operating loss primarily due to modest non-operating expenses; extraordinary losses (~-1.98) materially depressed pretax results, lowering profit quality. Without cash flow data, sustainability of growth cannot be triangulated via OCF; however, ample liquidity (current ratio ~2.48x) provides runway. Outlook hinges on improving unit economics, reducing extraordinary items, and realizing operating leverage as scale builds. Given low asset turnover (0.231), further revenue scale against the asset base is needed to improve ROA and ROE. Near-term, expect continued focus on cost control and mix optimization to lift gross margins while moderating SG&A growth. The negative effective tax rate reflects losses and tax effects rather than sustainable tax efficiency.

Financial Health

Liquidity is strong: current assets 6.15 vs current liabilities 2.48 yields a current ratio of 247.9%; quick ratio is 185.2%, indicating comfortable short-term coverage. Cash and deposits of 2.65 provide a cash buffer relative to current liabilities. Solvency risk appears low with total liabilities 4.23 and long-term loans 1.48; the debt-to-equity ratio is 0.09x. Interest expense is minimal (0.02), limiting financial risk from debt service. Equity is sizable at 48.07; however, retained earnings are -35.33, reflecting cumulative losses and reducing flexibility for shareholder returns. Book value per share is 61.34 JPY, offering cushion but vulnerable to further losses or impairments. Intangible assets and goodwill are large (intangible 5.59; goodwill 5.54), which could be a source of impairment risk if profitability does not improve. Note: There are inconsistencies between subtotals (e.g., current/noncurrent assets vs total assets), so ratios relying on those subtotals should be treated cautiously.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported, limiting assessment of earnings quality and free cash flow. OCF/Net income is not calculable, so we cannot verify whether losses are cash or non-cash driven. Depreciation/amortization is unreported, further constraining EBITDA and non-cash add-back analysis. Working capital components disclosed (AR 0.71; inventories 1.56; AP 0.33) suggest a net working capital investment, but period-over-period dynamics are unavailable. With negative earnings and unknown capex, FCF cannot be determined. Given the negative ordinary income and the presence of extraordinary losses, earnings quality appears weak this quarter. Cash balance (2.65) relative to current liabilities (2.48) and strong quick ratio indicate liquidity support even if OCF is weak, but sustainability depends on future OCF normalization.

Dividend Sustainability

Dividend data is unreported (DPS, total dividends, payout ratio, FCF coverage all N/A). With net losses (-2.71) and retained earnings of -35.33, legal capacity to pay dividends may be constrained under the Companies Act unless there are distributable amounts in other reserves. Absent positive earnings and positive OCF, sustainable dividends are unlikely in the near term. Policy outlook likely prioritizes reinvestment and balance sheet preservation over distributions. Once profitability and OCF improve, the company could reassess returns to shareholders, but current data points indicate limited flexibility.

Risk Assessment

Business Risks:

• Margin risk: low gross margin (23.2%) and negative operating margin despite >100% revenue growth
• Execution risk: inability to translate scale into operating leverage given high SG&A
• Revenue mix risk: potential exposure to lower-margin categories or promotional intensity
• Extraordinary loss volatility affecting earnings visibility
• Impairment risk: sizable goodwill (5.54) and intangibles (5.59)
• Client/segment concentration risk (not disclosed but typical for scaling businesses)

Financial Risks:

• Accumulated deficits (retained earnings -35.33) constrain capital allocation flexibility
• Negative interest coverage due to operating losses
• Potential covenant or refinancing risk if losses persist (loans 1.48), albeit currently low leverage
• Equity erosion risk if losses and/or impairments continue

Key Concerns:

• Sustained operating losses with weak gross margin
• Presence of sizable extraordinary losses this quarter
• Data inconsistencies across disclosed subtotals complicating analysis
• Large intangible asset base amid losses heightens impairment risk

Investment Implications

Key Takeaways:

• Top-line growth is strong (+111.8% YoY) but not yet monetized into profits
• Core profitability is the main challenge; ordinary loss (-1.40) close to operating loss (-1.24)
• Extraordinary losses (~-1.98) significantly worsened pretax results
• Liquidity is adequate (current ratio ~2.48x; quick ratio ~1.85x) and leverage low (D/E 0.09x)
• Retained earnings are deeply negative (-35.33), limiting dividend capacity
• Goodwill/intangibles are high, increasing impairment sensitivity
• ROE (-5.6%) depressed by low margin and low asset turnover rather than leverage

Metrics to Watch:

• Gross margin trajectory and unit economics
• SG&A ratio to sales and evidence of operating leverage
• Ordinary income vs operating income gap (non-operating stability)
• Magnitude and frequency of extraordinary gains/losses
• OCF and FCF once disclosed; OCF/NI conversion
• Goodwill and intangible impairment tests and disclosures
• Working capital turns (AR and inventory days) and asset turnover

Relative Positioning: Relative to small-cap TSE peers in high-growth phases, the company exhibits above-peer revenue growth but below-peer profitability and earnings quality, offset by stronger-than-average liquidity and low leverage; balance-sheet-driven resilience contrasts with weaker margin structure.

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