Open Door Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.24B
• Operating Income: ¥-74M
• Net Income: ¥-110M
• EPS: ¥-3.53

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: FY2026 Q2 was weak operationally with a small revenue decline and a return to operating loss, but the balance sheet remains very liquid and lowly levered. Revenue was 12.43 (100M JPY), down 2.0% YoY, while gross profit was 7.57 (100M JPY), implying a high gross margin of 60.9% despite soft top-line. SG&A expenses were 8.32 (100M JPY), exceeding gross profit and driving operating income to -0.74 (100M JPY), an operating margin of roughly -6.0%. Ordinary income was -0.71 (100M JPY) as small non-operating gains and losses netted out, and net income was -1.09 (100M JPY). Total comprehensive income was significantly worse at -3.34 (100M JPY), indicating sizable other comprehensive losses, likely from valuation declines in investment securities (14.01 in assets). Cash and deposits stood at 20.74 against current liabilities of 5.29, underscoring strong liquidity. DuPont shows ROE at -2.7% driven by negative net margin (-8.8%) and low asset turnover (0.271), with only modest leverage (1.14x). Operating cash flow was -1.15 (100M JPY), roughly in line with the net loss (OCF/NI = 1.05x), suggesting no immediate earnings quality red flag but confirming cash burn. The operating margin of approximately -600 bps implies meaningful deleveraging against the revenue base; however, exact YoY basis-point changes cannot be calculated due to missing prior-period margin data. ROIC was -3.8%, below the 5% warning threshold and signaling value destruction near term. The current ratio of 523% and D/E of 0.14x indicate ample solvency headroom, even if losses persist in the short run. With comprehensive income materially below net income, mark-to-market risks on securities are an incremental headwind to equity. Near-term priorities are revenue stabilization and SG&A discipline to restore operating breakeven. Given a lean balance sheet and high cash, the company has runway to execute, but sustained negative ROIC would pressure capital allocation choices. Forward-looking, watch demand recovery in travel-related verticals, marketing efficiency, and any changes in the fair value of investment holdings that could continue to weigh on equity.

Profitability Analysis

ROE is decomposed as Net Profit Margin (-8.8%) × Asset Turnover (0.271) × Financial Leverage (1.14x) = -2.7%. The largest driver of the negative ROE is the net profit margin, given operating losses on a small revenue base. Business-wise, SG&A (8.32) exceeded gross profit (7.57), implying elevated customer acquisition/marketing or fixed costs relative to revenue, typical of a demand-soft patch in an asset-light online platform. Asset turnover at 0.271 is low, reflecting a large cash and investment securities balance against modest sales, which dampens efficiency metrics. Leverage is modest (1.14x), so financial gearing does not amplify returns—positive for risk, negative for ROE uplift. The margin compression appears cyclical and cost-driven rather than structural deterioration in unit economics, but sustainability hinges on restoring traffic/booking volumes and calibrating ad spend. One-time factors likely include the OCI loss in comprehensive income (mark-to-market), which affects equity but not operating margin. A concerning trend is the lack of operating leverage: with revenue down 2% and limited disclosure on SG&A YoY, the fact that SG&A exceeded gross profit indicates cost base rigidity and absorption risk. Until revenue re-accelerates or SG&A is reduced, ROE will remain constrained primarily by margin pressure.

Growth Assessment

Revenue declined 2.0% YoY to 12.43, signaling a modest demand softness or competitive pressure. Gross margin remained high at 60.9%, suggesting underlying take rate/unit economics are intact. However, operating income turned negative (-0.74), indicating deleverage from fixed costs and marketing spend. With non-operating items netting near zero, the earnings trajectory is dominated by core operations. Total comprehensive loss (-3.34) further indicates market-related headwinds to investment holdings, which could weigh on reported equity even if operations stabilize. Near-term growth sustainability depends on traffic/pricing recovery in travel/search verticals and improved marketing efficiency. Absent additional revenue catalysts, management will likely need tighter SG&A control to reach breakeven. Outlook drivers to monitor include seasonal demand, conversion, and partner dynamics; without these, top-line normalization may be gradual. Overall, the quality of profit is currently weak due to operating losses, despite decent gross margin resilience.

Financial Health

Liquidity is strong: current ratio 522.9% and quick ratio 522.9%, with cash and deposits of 20.74 covering current liabilities (5.29) by ~3.9x. There is no warning for current ratio (<1.0) or excessive leverage (D/E > 2.0); reported D/E is 0.14x. Maturity mismatch risk appears low given the large current asset buffer versus current liabilities and the absence of reported interest-bearing debt. Total liabilities are modest at 5.71 against equity of 40.11, implying a conservative capital structure. Noncurrent liabilities are only 0.43, further limiting refinancing risk. Off-balance sheet obligations are not disclosed in the provided data; none can be assessed. Investment securities of 14.01 introduce market valuation sensitivity that affects equity (as reflected in comprehensive income). Overall solvency is solid even under prolonged mild losses.

Cash Flow Quality

OCF was -1.15 versus net income of -1.09, yielding OCF/NI of 1.05x, which is above the 0.8 threshold and does not flag an immediate quality issue. The negative OCF indicates cash burn consistent with operating losses; without working capital detail, we cannot attribute changes to receivables/payables movements. Capital expenditures were modest at -0.13, suggesting low capital intensity. Free cash flow cannot be fully computed due to unreported investing cash flows, but a proxy FCF before other investments would be approximately -1.28 (OCF - Capex), implying limited coverage for discretionary uses absent drawdown of cash reserves. No clear signs of working capital manipulation can be inferred given missing receivables/inventories disclosures; payables are 1.75 but dynamics are unknown. The gap between net and comprehensive income suggests valuation losses in securities, a non-cash item that reduces equity but not OCF.

Dividend Sustainability

Dividend disclosures are unreported, so payout metrics cannot be calculated. Given the current net loss (-1.09) and negative operating cash flow (-1.15), sustainable dividends would require tapping existing cash reserves (20.74) and strong confidence in near-term earnings normalization. Retained earnings remain sizable at 33.76, providing accounting capacity, but ROIC at -3.8% argues for capital preservation until profitability returns. With capex light (-0.13), cash burn is primarily operating; if losses persist, dividend capacity would tighten. Policy outlook is likely conservative under current conditions, prioritizing reinvestment and liquidity over distributions.

Risk Assessment

Business Risks:

• Demand volatility in travel/OTA/metasearch verticals leading to revenue softness (-2.0% YoY).
• High operating leverage to SG&A: SG&A (8.32) exceeding gross profit (7.57) creates loss risk if revenue underperforms.
• Competitive pressure on traffic acquisition and partner terms that could compress margins despite a 60.9% gross margin.
• Reliance on online marketing/SEO platforms; algorithm or ad pricing changes could raise CAC.
• Execution risk in restoring operating breakeven given low asset turnover (0.271).

Financial Risks:

• Market value risk on investment securities (14.01) evidenced by comprehensive loss (-3.34) exceeding net loss.
• Sustained negative ROIC (-3.8%) indicating potential value destruction if trend persists.
• Potential tax expense despite losses (effective tax rate -53.3%), creating cash/timing mismatches if recurring.
• Concentration of liquid assets (cash/securities) lowers returns and depresses asset turnover.

Key Concerns:

• Operating margin around -6.0% with limited visibility on near-term recovery.
• Comprehensive income drag from securities that could continue to erode equity in volatile markets.
• Limited disclosure on revenue mix and SG&A drivers hampers assessment of structural vs cyclical pressures.
• If revenue does not re-accelerate, further cost actions may be required to prevent ongoing cash burn.

Investment Implications

Key Takeaways:

• Top-line declined modestly (-2.0% YoY) while costs outpaced revenue, producing an operating loss.
• High gross margin (60.9%) suggests unit economics are intact; issue is scale and SG&A absorption.
• ROE (-2.7%) and ROIC (-3.8%) are negative, driven by margin pressure and low asset turnover.
• Balance sheet strength (current ratio 523%, D/E 0.14x, cash 20.74) provides ample runway.
• Comprehensive loss indicates securities valuation headwinds that can depress equity without affecting OCF.

Metrics to Watch:

• Quarterly operating margin and SG&A-to-sales ratio for signs of cost discipline.
• Revenue trajectory and booking/traffic KPIs (if disclosed) to gauge demand recovery.
• OCF versus NI to confirm earnings cash conversion improvement (target >1.0x sustainably).
• Fair value changes in investment securities and impact on OCI.
• ROIC trend toward breakeven and ultimately >5%.

Relative Positioning: Versus domestic online travel/metasearch peers, the company remains asset-light with superior liquidity and low leverage, but it currently underperforms on profitability and capital efficiency; recovery hinges on demand normalization and marketing efficiency.

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