KARADANOTE,INC. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥211M
• Operating Income: ¥32M
• Net Income: ¥33M
• EPS: ¥4.97

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: Despite a severe top-line contraction, the company posted a positive bottom line in FY2026 Q1, underpinned by strong liquidity and low leverage but with notable data anomalies in margins. Revenue fell 52.4% YoY to 2.11, signaling a sharp demand or client budget reset versus the prior year. The company reported operating income of 0.32 and ordinary income of 0.33, translating to an operating margin of roughly 15.2% and an ordinary margin of 15.6%. Net income was 0.33, implying a net margin of 15.6% and EPS of 4.97 JPY on 6.69 million average shares. DuPont metrics indicate ROE of 6.4%, driven by 15.6% NPM, asset turnover of 0.271x, and financial leverage of 1.52x. Liquidity is robust with a current ratio of 403.6% and quick ratio of 403.6%, supported by cash and deposits of 5.96 against current liabilities of 1.84. Balance sheet strength is solid: equity of 5.13 (approximately 65.9% equity ratio) and D/E of 0.56x (long-term loans of 1.00). Working capital stands at 5.60, reducing short-term refinancing risk. However, reported gross profit of 2.37 on revenue of 2.11 implies a 112.3% gross margin, which is atypical and suggests classification/timing differences or data mapping anomalies. Additionally, profit before tax is reported at -0.32 while ordinary and net income are positive at 0.33; this discrepancy may reflect non-recurring entries or reporting timing that are not fully disclosed. Earnings quality cannot be validated because operating cash flow and free cash flow are unreported. With a 52.4% YoY revenue decline, sustainability of the mid-teens operating/ordinary margins is uncertain without visibility into cost dynamics and mix. Retained earnings remain negative at -1.10, but substantial capital surplus (5.37) supports a positive equity base. No dividends are reported, which aligns with conserving cash during a revenue trough and given negative retained earnings. Forward-looking, the key will be revenue stabilization, confirmation of margin integrity (resolving gross profit anomalies), and evidence of positive operating cash conversion. In the near term, the ample cash cushion and low leverage provide resilience while the company navigates demand normalization.

Profitability Analysis

ROE decomposition: Net Profit Margin = 15.6% (0.33 / 2.11), Asset Turnover = 0.271x (2.11 / 7.78), Financial Leverage = 1.52x (7.78 / 5.13), yielding ROE ≈ 6.4%. The largest contributor to ROE is the elevated net profit margin, given low asset turnover typical of a cash-heavy balance sheet. The margin profile is unusual: a 112.3% gross margin and a 15.2% operating margin alongside SG&A at 127.5% of sales indicate either reclassifications (e.g., contra-COGS credits, grants, or other operating income included in gross profit) or data mapping inconsistencies. Business drivers behind the reported profitability likely include mix shift to higher-yield offerings or cost discipline in a low-revenue quarter, but the GP anomaly tempers confidence. Sustainability is uncertain: with revenue down 52.4% YoY, maintaining mid-teens operating/ordinary margins would require continued cost flexibility or a rebound in sales mix. Watch for signs of negative operating leverage if SG&A growth outpaces revenue recovery in subsequent quarters.

Growth Assessment

Revenue declined 52.4% YoY to 2.11, indicating significant top-line pressure (likely from client demand cycles or product mix normalization). Profitability at the operating and ordinary levels (both ~15–16% margin) suggests either exceptional cost control or non-recurring/structural items supporting margins this quarter. Without segment or customer data, sustainability of revenue is unclear; a return to growth is the key variable for medium-term earnings power. Given the small scale (assets 7.78; revenue 2.11), results may be volatile quarter-to-quarter. Outlook hinges on stabilization of core monetization channels and evidence that the revenue decline is cyclical rather than structural.

Financial Health

Liquidity is strong: current ratio 403.6% and quick ratio 403.6% (current assets 7.44 vs current liabilities 1.84). No warning flags on liquidity thresholds. Solvency appears solid with D/E of 0.56x and estimated equity ratio near 65.9% (5.13 / 7.78). Interest coverage reported at 79.21x and interest expense near zero underscore low financing burden. Maturity mismatch risk is low: cash and deposits of 5.96 cover all current liabilities (1.84) comfortably; noncurrent liabilities total 1.04 (including long-term loans of 1.00), manageable given cash reserves. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

Operating cash flow and free cash flow are unreported, so OCF/Net Income and FCF coverage cannot be assessed. Earnings quality therefore cannot be validated; caution is warranted given the gross margin anomaly and lack of cash flow disclosure. Working capital is ample (5.60), and cash is high (5.96), mitigating short-term liquidity stress. No signs of working capital manipulation can be assessed without OCF and detailed receivables/payables movements.

Dividend Sustainability

No dividends are reported; payout and FCF coverage metrics are not calculable. Retained earnings are negative (-1.10), while equity is supported by capital surplus (5.37), suggesting a conservative stance on shareholder returns is prudent until earnings and cash flow normalize. Absent OCF/FCF data and with top-line down 52.4% YoY, visibility on dividend capacity is limited; policy appears to prioritize balance sheet strength.

Risk Assessment

Business Risks:

• Severe revenue contraction (-52.4% YoY) indicating demand weakness or client budget cuts
• Potential customer concentration typical for small-scale digital/health platform models
• Regulatory and data-privacy exposure inherent to consumer health/marketing services
• Execution risk in stabilizing monetization and product mix after a sharp revenue decline

Financial Risks:

• Earnings quality uncertainty due to unreported OCF/FCF
• Data anomalies in gross margin and P/L line alignment (GP > revenue; PBT negative vs positive NI)
• Small scale increases volatility and sensitivity to single-quarter shocks
• Refinancing/interest rate risk on 1.00 of long-term loans (albeit mitigated by cash 5.96)

Key Concerns:

• Sustainability of mid-teens operating margin given depressed revenue base
• Negative retained earnings (-1.10) limiting capital return flexibility
• Lack of disclosure granularity (SG&A and non-operating breakdowns unreported)

Investment Implications

Key Takeaways:

• Revenue fell sharply (-52.4% YoY) to 2.11, but net income remained positive at 0.33
• ROE at 6.4% is supported by high NPM (15.6%) rather than asset turnover
• Balance sheet strength: current ratio 404%, D/E 0.56x, cash 5.96
• Profitability metrics are affected by a gross margin anomaly (112.3%), requiring clarification
• Cash flow disclosure is absent, limiting confidence in earnings quality

Metrics to Watch:

• Top-line recovery trajectory and client acquisition/retention indicators
• Operating cash flow and FCF once disclosed (OCF/NI > 1.0 as a quality threshold)
• SG&A run-rate versus revenue to gauge operating leverage
• AR trends (1.12) relative to sales for collection health
• Updates on long-term loan terms and any changes in interest coverage

Relative Positioning: Compared to typical small-cap Japanese digital/health-oriented platforms, the company shows stronger liquidity and lower leverage, but weaker revenue momentum and higher uncertainty around margin quality due to reporting anomalies and limited disclosure.

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