Globalway,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥845M
• Operating Income: ¥-55M
• Net Income: ¥-217M
• EPS: ¥-0.66

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Globalway Co., Ltd. (TSE:3936) reported FY2026 Q1 consolidated results under JGAAP with strong top-line growth but continued operating losses. Revenue rose 35.6% year on year to ¥845 million, signaling solid demand recovery or successful business development initiatives. Gross profit was ¥253.8 million, implying a 30.0% gross margin, which appears stable to slightly pressured depending on prior-year levels (not disclosed). Despite higher sales, operating income remained a loss of ¥55 million (flat YoY per disclosure), indicating that SG&A growth offset gross profit gains. Ordinary loss widened to ¥65 million, suggesting modest non-operating headwinds beyond the small reported interest burden. Net loss was ¥24 million and EPS was ¥-0.66; tax expense of ¥0.6 million despite pretax losses likely reflects minimum taxes (inhabitant/business taxes) under JGAAP. Working capital is ample with current assets of ¥1,601.3 million and current liabilities of ¥596.6 million, resulting in a current ratio of 268% and quick ratio of 268% (no inventories reported). Total assets were ¥1,691 million and equity ¥1,128 million, implying a healthy leverage profile (liabilities/equity ≈ 0.53x) and an equity ratio of roughly 66.7% based on provided totals (the reported 0.0% equity ratio is not reflective of the balance sheet and should be treated as undisclosed). DuPont analysis indicates a net margin of -2.84%, asset turnover of 0.50x, and financial leverage of 1.50x, yielding ROE of -2.13%. The interest coverage ratio is deeply negative (about -487x) due to operating losses, though absolute interest expense is small at ¥0.11 million. Cash flow statements are undisclosed this quarter (items show as zero), limiting assessment of earnings-to-cash conversion and free cash flow. Dividend remains suspended (DPS ¥0), appropriate given loss-making status and scarce CF disclosure. Overall, the quarter shows encouraging revenue momentum but insufficient operating leverage and cost control to achieve break-even. Balance sheet resilience mitigates solvency concerns, but the path to sustainable profitability depends on SG&A discipline and margin improvement. Data limitations, especially cash flow and share count, necessitate caution when interpreting per-share and cash-based metrics.

Profitability Analysis

ROE_decomposition: Net margin -2.84% × Asset turnover 0.50x × Financial leverage 1.50x = ROE -2.13%. The negative ROE is driven primarily by weak margins, not leverage or asset efficiency. margin_quality: Revenue ¥845m; gross profit ¥253.8m (30.0% GPM). Operating loss ¥55m implies SG&A of ~¥308.8m (SG&A ≈ G/P + operating loss). Ordinary loss -¥65m indicates small non-operating net expense beyond interest (interest ¥0.11m). Effective tax appears minimum/structural given losses. operating_leverage: Despite 35.6% YoY revenue growth, operating income remained at a ¥55m loss, suggesting limited positive operating leverage this quarter. Cost growth in SG&A likely matched or exceeded gross profit increase. To achieve break-even, either gross margin must expand or SG&A growth must decelerate relative to revenue.

Growth Assessment

revenue_sustainability: Top-line expanded 35.6% YoY to ¥845m, indicating strong demand momentum. Without segment detail, sustainability is uncertain; recurring vs. project-based revenue mix is not disclosed. profit_quality: Gross margin at 30.0% is acceptable but leaves limited room to cover fixed costs at current scale. Flat operating loss YoY suggests efficiency gains did not materialize despite higher sales. outlook: If revenue growth persists and SG&A is contained, operating leverage should begin to surface in subsequent quarters. Key swing factors are gross margin trajectory and SG&A intensity. Absence of OCF data obscures visibility on working-capital needs tied to growth.

Financial Health

liquidity: Current assets ¥1,601.3m vs. current liabilities ¥596.6m; current ratio 268% and quick ratio 268% (no inventories disclosed). Working capital of ¥1,004.7m provides a solid liquidity buffer. solvency: Total liabilities ¥596.6m and equity ¥1,128.0m imply liabilities/equity ≈ 0.53x and an effective equity ratio near 66.7% (based on balance sheet totals). Interest burden is low (¥0.11m), and financial leverage is modest (assets/equity 1.50x). capital_structure: The company appears primarily equity-funded with manageable liabilities. No detail on interest-bearing debt mix is available this quarter.

Cash Flow Quality

earnings_quality: Cash flow statements are undisclosed (OCF, ICF, FCF show as zero placeholders), preventing direct assessment of accrual intensity and earnings-to-cash conversion. FCF_analysis: Free cash flow cannot be calculated due to missing OCF and capex data. Depreciation/amortization is undisclosed, limiting EBITDA and cash earnings analysis. working_capital: Large current asset base vs. current liabilities suggests adequate funding of operations; however, without breakdown (cash, receivables, contract assets), collection risk and cash conversion cycle cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio reported as 0.0%. Given net losses (¥-24m) and undisclosed OCF, resumption of dividends would require sustained profitability and visible free cash flow. FCF_coverage: Not assessable this quarter due to undisclosed OCF and capex; reported FCF coverage of 0.00x reflects missing data rather than true coverage. policy_outlook: With negative earnings and a focus on growth/turnaround, maintaining a conservative dividend stance appears prudent until operating break-even and consistent cash generation are demonstrated.

Risk Assessment

Business Risks:

• Execution risk in achieving operating leverage despite strong revenue growth
• Potential gross margin pressure from pricing, mix, or input costs
• Customer concentration and project timing risk (segment mix undisclosed)
• Talent acquisition/retention costs driving SG&A rigidity
• Competitive intensity in core service/solution lines

Financial Risks:

• Cash conversion risk due to absent OCF data and potential receivables buildup
• Exposure to minimum taxes and non-operating items despite losses
• Refinancing/liquidity visibility limited by lack of cash balance disclosure
• Potential working-capital swings tied to rapid growth

Key Concerns:

• Operating losses unchanged YoY despite +35.6% revenue growth
• Undisclosed cash flow statements hinder earnings quality assessment
• Need to curb SG&A growth or lift gross margin to reach break-even

Investment Implications

Key Takeaways:

• Revenue momentum is strong (+35.6% YoY), but profitability lags (operating loss ¥55m).
• Gross margin stands at 30.0%; SG&A of ~¥309m is the key profitability swing factor.
• Balance sheet is solid with effective equity ratio ~67% and liabilities/equity ~0.53x.
• ROE is negative at -2.13%, driven by a -2.84% net margin rather than leverage.
• Cash flow disclosure is absent, limiting confidence in profit quality and FCF.

Metrics to Watch:

• Operating margin progression and break-even timing
• Gross margin trend and mix/pricing dynamics
• SG&A as a percentage of revenue and hiring/productivity metrics
• OCF and FCF once disclosed; DSO/DPO/contract asset movements
• Ordinary income bridge (non-operating gains/losses) and interest coverage

Relative Positioning: Within Japan small-cap growth-oriented service/IT names, Globalway shows above-average revenue growth but below-peer profitability and limited cash flow visibility; balance sheet strength is a relative positive compared to more leveraged peers.

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