GREE Holdings,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥12.77B
• Operating Income: ¥1.07B
• Net Income: ¥-1.66B
• EPS: ¥6.29

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

For FY2026 Q1, グリーホールディングス株式会社 reported revenue of ¥12.765bn, down 1.4% YoY, while operating income held flat at ¥1.068bn, indicating a slight margin improvement despite top-line pressure. Gross profit was ¥6.251bn, translating to a robust gross margin of 49.0%, consistent with a digital services/internet business model with low direct costs. Operating margin was approximately 8.4% (¥1.068bn/¥12.765bn), stable YoY with evidence of cost discipline offsetting the modest revenue decline. Ordinary income of ¥1.492bn exceeded operating income by roughly ¥0.424bn, signaling material non-operating gains (likely investment-related income or equity-method contributions) that enhanced pre-tax profitability. Net income was ¥1.078bn; juxtaposing net income and income taxes of ¥0.229bn implies an effective tax rate around the mid-teens (c. 17–18%), not 0.0% as the template suggests (the 0.0% appears to reflect an unreported metric rather than actual tax rate). On the balance sheet, the company shows total assets of ¥125.718bn and equity of ¥92.897bn, implying an equity ratio of approximately 73.9% (not 0.0% as shown, which is likely unreported), underlining a strong capital base. Current assets of ¥117.419bn versus current liabilities of ¥21.602bn yield a very high current ratio of 544%, pointing to abundant liquidity and a likely cash- and securities-heavy asset mix. DuPont metrics indicate a quarterly ROE of 1.16% derived from an 8.44% net margin, 0.102x asset turnover, and 1.35x financial leverage; annualized, ROE would be in the mid-single-digits, suggesting modest capital efficiency. Asset turnover remains low, likely due to large financial assets relative to operating revenue, diluting efficiency measures. Interest expense was modest at ¥44m with a strong interest coverage of 24.3x, consistent with low leverage and ample earnings headroom. Working capital is substantial at ¥95.817bn, reinforcing near-term financial flexibility. Cash flow statement items (OCF, investing CF, financing CF), depreciation and amortization, and cash balance are unreported (shown as 0), limiting our ability to assess earnings-to-cash conversion and capex intensity this quarter. Dividend data (DPS, payout ratio, FCF coverage) and share count are also unreported, so per-share and payout-based assessments are constrained. Overall, profitability quality is mixed: core operations are stable with healthy gross margins, but a notable portion of pre-tax profit comes from non-operating items, making recurring earnings reliance a key watchpoint. Despite data gaps in cash flow and D&A, the company’s balance sheet strength and liquidity appear solid, while the modest revenue decline and reliance on non-operating gains temper the near-term outlook.

Profitability Analysis

ROE decomposition (DuPont): net profit margin 8.44% × asset turnover 0.102 × financial leverage 1.35 yields a quarterly ROE of 1.16% (≈4.6% annualized), indicating modest return on equity chiefly constrained by low asset turnover. Margin quality: gross margin of 49.0% supports a capital-light operating model; operating margin of ~8.4% is stable despite a 1.4% revenue contraction, implying cost control and disciplined opex. Non-operating items contributed ~¥424m to ordinary income above operating profit, indicating a meaningful boost from financial/other income; recurring earnings power should be evaluated ex-non-operating items. Operating leverage: flat operating income against a slight revenue decline implies mild positive operating leverage or cost take-out effects; however, sustained margin resilience will hinge on stabilizing revenue. Interest burden is minimal (¥44m), driving a high interest coverage ratio of 24.3x. Effective tax appears around 17–18% based on net income and tax expense, not the 0.0% displayed (which is unreported). Overall, profitability is adequate with high gross margins but modest core operating margins and a reliance on non-operating contributions.

Growth Assessment

Revenue declined 1.4% YoY to ¥12.765bn, suggesting softness in core segments (likely games/media) or portfolio rebalancing. Operating income was flat YoY at ¥1.068bn, indicating that management offset topline weakness with cost optimization. The gap between operating and ordinary income (+¥424m) suggests growth in investment/financial income; this is less predictable and should not be extrapolated without clarity on underlying sources. Profit quality: net income of ¥1.078bn is partly supported by non-operating gains; underlying growth ex-non-operating looks flat to slightly negative given the revenue trend. Outlook: near-term growth hinges on stabilizing core content monetization, pipeline launches, and the performance of the investment portfolio; absent a revenue inflection, operating margin expansion may be the primary driver of profit stability. Sustainability: high gross margins imply resilient unit economics, but sustained growth requires improving user engagement/ARPU or expanding new services. Given limited disclosure this quarter (no segment or cash flow details), we maintain a cautious view on the durability of the non-operating lift.

Financial Health

Liquidity is strong: current assets ¥117.419bn vs current liabilities ¥21.602bn produce a current ratio of 543.6% and substantial working capital of ¥95.817bn. Quick ratio mirrors the current ratio due to unreported inventories (0 shown indicates not disclosed), reinforcing abundant short-term resources likely anchored by cash and marketable securities. Solvency: total liabilities are ¥39.250bn against equity of ¥92.897bn, implying a liabilities-to-equity ratio of ~0.42x and an estimated equity ratio of ~73.9%; financial leverage of 1.35x is low. Interest expense is small (¥44m) with high coverage (24.3x), signaling low refinancing risk. Capital structure appears conservative with ample equity and limited reliance on debt. Absence of cash and cash flow disclosures (reported as 0) constrains granular analysis of liquidity composition and funding mix but the balance sheet scale of current assets suggests a strong buffer.

Cash Flow Quality

Cash flow data (OCF, investing CF, financing CF) and depreciation/amortization are unreported this quarter (displayed as 0), so OCF/NI, FCF, and EBITDA figures in the template should not be interpreted as actual zeros. Earnings quality cannot be fully assessed without OCF; however, the presence of significant non-operating income inflating ordinary income suggests that cash earnings from operations may be lower than headline pre-tax profit. Working capital: with large current assets and liabilities relatively low, there is likely a net cash/securities position, but changes in receivables, payables, and contract liabilities are not available to judge cash conversion. Capex intensity is unclear due to missing investing CF and D&A; historically, such models exhibit modest capex, but we cannot confirm for this quarter. Overall, cash flow quality assessment remains limited; priority should be given to obtaining the quarterly CF statement and D&A to reconcile earnings to cash.

Dividend Sustainability

Dividend data are unreported (DPS and payout ratio shown as 0.00 are placeholders). Without OCF and FCF disclosure, FCF coverage of dividends cannot be evaluated. From a balance sheet perspective, high equity and liquidity would support capacity for shareholder returns; however, the sustainability of dividends depends on recurring OCF rather than non-operating gains. Policy outlook cannot be inferred from this release; investors should review the company’s stated capital allocation policy and historical payout behavior once data are available.

Risk Assessment

Business Risks:

• Top-line softness (-1.4% YoY) indicating demand or product-cycle headwinds in core businesses.
• Dependence on non-operating gains to lift ordinary income, which may be volatile and non-recurring.
• Competitive intensity in mobile gaming/media potentially pressuring user acquisition costs and ARPU.
• Content pipeline execution risk and hit-driven revenue profile.
• Regulatory and platform policy changes affecting monetization and distribution.

Financial Risks:

• Limited visibility on cash generation due to unreported cash flow statements this quarter.
• Potential mark-to-market volatility in investment holdings impacting non-operating income.
• Concentration of assets in financial instruments could elevate market/liquidity risk.
• Currency risk if overseas operations or USD-denominated investments are material.

Key Concerns:

• Quality and sustainability of earnings given sizable non-operating contribution (≈¥424m).
• Absence of OCF/FCF and D&A disclosure impedes assessment of earnings-to-cash conversion.
• Revenue decline despite stable margins; need for clearer growth drivers.
• Template-reported ratios (e.g., equity ratio, EBITDA, effective tax rate) showing 0.0% reflect missing data and should not guide decisions.

Investment Implications

Key Takeaways:

• Stable operating income (¥1.068bn) despite a 1.4% revenue decline underscores effective cost control.
• Gross margin remains high at 49.0%, supporting resilient unit economics.
• Ordinary income uplift of ~¥424m from non-operating sources raises questions about recurring earnings.
• Balance sheet is strong with an estimated ~73.9% equity ratio and current ratio of ~544%.
• Quarterly ROE of 1.16% (≈4–5% annualized) is constrained by low asset turnover (0.102x).
• Cash flow, D&A, DPS, and share data are unreported; further disclosures are necessary to refine valuation and payout views.

Metrics to Watch:

• Segment revenues and user KPIs (MAU/DAU, ARPU) to gauge core demand.
• Operating income excluding non-operating contributions to assess core profitability.
• Cash flow from operations and FCF to validate earnings quality and dividend capacity.
• Non-operating income breakdown (investment gains, equity-method income, interest/dividends).
• Expense trajectory (marketing/R&D/SG&A) to monitor operating leverage.
• Asset turnover and capital efficiency trends.

Relative Positioning: Within Japan internet/services peers, グリーホールディングス株式会社 exhibits strong liquidity and low leverage but relatively modest ROE due to low asset turnover; profitability is supported by high gross margins, while earnings visibility is somewhat clouded by a sizable non-operating income component.

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