Enigmo Inc. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥4.33B
• Operating Income: ¥-69M
• Net Income: ¥-97M
• EPS: ¥-1.20

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: Soft quarter operationally with an operating loss despite solid top-line growth, while bottom-line profitability was supported by non-core/one-off items and other comprehensive income. Revenue rose 10.6% YoY to 43.30, with gross profit of 30.83 and a high gross margin of 71.2%, indicating the core marketplace model remains fundamentally high-margin at the gross level. SG&A of 27.93 absorbed nearly the entire gross profit, resulting in operating income of -0.69 (operating margin -1.6%). Ordinary income deteriorated to -0.89, reflecting limited non-operating income (0.06) versus expenses (0.66). Profit before tax is shown as 2.42 and net income at 3.87 (-10.7% YoY), implying material non-recurring or below-ordinary items offsetting the operating loss (data on extraordinary items not disclosed). Comprehensive income surged to 17.05, pointing to sizable valuation gains in OCI (likely from investment securities at 35.52 on the balance sheet). DuPont decomposition indicates ROE of 3.0% (Net margin 8.9% × Asset turnover 0.266 × Leverage 1.28x), but this is quality-challenged because net margin was not driven by operations. Operating margin likely compressed sharply YoY (swinging to -1.6% from a prior profit; estimated contraction >4,000 bps), driven by SG&A growth outpacing revenue. Interest coverage is flagged negative (-79.6x) due to operating loss, albeit interest burden is de minimis (0.01). Liquidity remains very strong with a current ratio of 402% and net cash of roughly 90.8 (cash 92.88 minus total loans 2.08). Debt/leverage are conservative (D/E 0.24x; asset/equity 1.28x), lowering solvency risk. Cash flow was not disclosed, preventing assessment of earnings quality via OCF/NI; this is a key limitation given the NI/OCI reliance. The calculated payout ratio of 110.2% suggests potential strain on dividend sustainability absent stronger FCF, though dividend figures were not disclosed. Overall, the quarter underscores execution risk on cost discipline and reliance on non-core gains, with a strong balance sheet providing cushion but not a substitute for operating recovery.

Profitability Analysis

ROE decomposition: 3.0% = Net profit margin (8.9%) × Asset turnover (0.266) × Financial leverage (1.28x). The most material swing versus the business model’s norm is the net profit margin, which is positive at 8.9% despite an operating loss, indicating that below-ordinary items (likely extraordinary gains and/or equity-related/valuation effects) and OCI drove reported profitability. Asset turnover at 0.266 is modest and broadly consistent with an asset-light marketplace holding significant cash and investment securities. Financial leverage is low at 1.28x, implying limited balance-sheet amplification of returns. Business driver: SG&A of 27.93 nearly matched gross profit (30.83), pushing operating income to -0.69; this suggests elevated marketing, personnel, or platform investments. Non-operating balance (0.06 income vs 0.66 expenses) pulled ordinary income to -0.89, but net income recovered via items outside ordinary results and strong OCI. Sustainability: The margin mix is not sustainable if NI continues to depend on non-core/one-off items; operating margin must normalize for sustainable ROE. Concerning trends: SG&A intensity appears too high relative to revenue growth (+10.6% YoY revenue vs a swing to operating loss), signaling negative operating leverage.

Growth Assessment

Revenue grew 10.6% YoY to 43.30, an encouraging topline result amid a soft consumer environment. However, operating income fell to -0.69, indicating growth was not profitable this quarter. Gross margin remains strong at 71.2%, consistent with a take-rate driven, asset-light model. The translation of gross profit to operating profit deteriorated materially due to SG&A absorption, implying higher customer acquisition costs, promotional activity, or fixed cost drag. Net income of 3.87 (-10.7% YoY) was supported by non-core factors rather than operating strength; comprehensive income of 17.05 suggests securities-related valuation tailwinds that may not recur. Outlook hinges on: (1) SG&A normalization versus revenue, (2) sustained GMV and take-rate, and (3) reduced reliance on extraordinary/OCI gains. Without OCF disclosure, the durability of growth is uncertain; watch for evidence of improving operating leverage in subsequent quarters.

Financial Health

Liquidity is strong: current ratio 401.9% and quick ratio 401.9% (cash and deposits 92.88 vs current liabilities 25.72). No warning for Current Ratio (<1.0) or D/E (>2.0); D/E is 0.24x, conservative. Net cash position is robust at ~90.8 (cash 92.88 minus total loans 2.08), with minimal long-term debt (0.08) limiting refinancing risk. Maturity mismatch risk is low: cash and current assets comfortably exceed short-term loans (2.00). Investment securities of 35.52 elevate market valuation exposure on equity and OCI, but also represent liquidity if they are marketable. No off-balance sheet obligations were disclosed; absence of data limits assessment. Interest coverage is flagged negative due to operating loss, but absolute interest expense is negligible (0.01), reducing immediate debt-service risk.

Cash Flow Quality

OCF and FCF were not disclosed, so OCF/Net Income and FCF coverage cannot be computed; this is a key limitation. Given operating loss and positive net income, quality concerns arise: earnings appear supported by non-operating/extraordinary and OCI components rather than cash-generative operations. Working capital indicators from the balance sheet (receivables 2.91 vs revenue 43.30; high cash balance) are consistent with an asset-light marketplace model with low DSO and limited inventory exposure, reducing manipulation risk via inventory but not ruling out timing effects in payables/receivables. Dividend and capex cash commitments were not reported, so FCF sufficiency for distributions cannot be verified. Flag: inability to compute OCF/NI (<0.8 threshold) prevents a definitive quality call; monitoring subsequent cash flow statements is essential.

Dividend Sustainability

Dividend data were not disclosed. The calculated payout ratio of 110.2% suggests potential stress if based on current-period earnings, especially given the operating loss and reliance on non-core gains; however, with no cash flow or DPS data, this indicator should be treated cautiously. Strong net cash (~90.8) provides capacity to maintain dividends in the near term, but long-term sustainability requires positive, stable OCF and restored operating profitability. Policy outlook depends on management’s capital allocation stance and visibility on operating recovery; without FCF data, coverage cannot be assessed.

Risk Assessment

Business Risks:

• Operating leverage risk: SG&A absorbing gross profit, driving operating loss despite revenue growth.
• Marketplace competition and take-rate pressure impacting monetization and margins.
• Consumer demand cyclicality for cross-border/apparel/luxury categories affecting GMV.
• FX volatility influencing cross-border transactions and user pricing.
• Regulatory/brand enforcement risk related to parallel imports and authentication standards.
• Execution risk in marketing spend efficiency and user acquisition costs.

Financial Risks:

• Earnings quality risk: net income supported by non-operating/extraordinary and OCI gains while core operations are loss-making.
• Valuation risk on investment securities (35.52) driving OCI and potentially P/L volatility.
• Negative interest coverage (operating loss vs interest expense), albeit with small absolute interest burden.
• Potential dividend strain (calculated payout ratio 110.2%) if FCF is insufficient.
• Data limitations: absence of OCF/FCF/DPS disclosures masks liquidity outflows and coverage metrics.

Key Concerns:

• Sustained SG&A discipline to restore operating margin from -1.6%.
• Dependence on non-core items to achieve positive net income and comprehensive income.
• Lack of cash flow disclosure hindering verification of earnings convertibility.
• Sensitivity to market conditions affecting investment securities and OCI.

Investment Implications

Key Takeaways:

• Top-line grew 10.6% YoY, but operating income turned to a loss (-0.69).
• Gross margin is high (71.2%), yet SG&A intensity erased operating profits.
• ROE of 3.0% is driven by non-operating/OCI effects rather than core operations.
• Balance sheet is very strong: current ratio ~402% and net cash ~90.8.
• Interest coverage is flagged negative due to operating loss, but interest burden is immaterial.
• Comprehensive income (17.05) signals sizable valuation gains in securities.
• Dividend sustainability uncertain; calculated payout ratio 110.2% with no FCF data.

Metrics to Watch:

• Operating margin and SG&A-to-revenue ratio trend.
• GMV growth, take-rate, and active user/merchant KPIs.
• Breakdown of non-operating vs extraordinary gains and OCI drivers.
• OCF/Net Income and FCF after capex to gauge cash conversion.
• Movement in investment securities and related valuation impacts.
• FX exposure and hedging effectiveness.

Relative Positioning: Asset-light marketplace with strong liquidity and low leverage, but currently weaker operating leverage versus peers that maintain positive operating margins; earnings more volatile due to reliance on non-core gains and securities valuation.

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