Geolocation Technology Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥180M
• Operating Income: ¥3M
• Net Income: ¥-0
• EPS: ¥-0.52

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

Geolocation Technology reported FY2026 Q1 standalone results under JGAAP with revenue of ¥180.0m, up 9.2% YoY, indicating continued top-line growth momentum. Gross profit was ¥105.0m, implying a solid gross margin of 58.3%, which points to resilient pricing and/or favorable mix at the gross level. Operating income was ¥3.0m, down 75.6% YoY, translating to an operating margin of 1.7% and signaling substantial operating deleverage or higher opex investments this quarter. Ordinary income equaled operating income at ¥3.0m, suggesting limited non-operating items in the period. Income tax expense of ¥4.3m exceeded operating/ordinary income, implying net loss at the quarterly level despite positive operating profit; however, net income is not disclosed in the dataset (zero values are unreported), while the reported EPS of -¥0.52 indicates a loss. Asset turnover is modest at 0.229x, consistent with a software/data business model with significant current assets and relatively light fixed assets. Financial leverage (A/E) is low at 1.34x, providing balance sheet resilience and limiting ROE volatility. The current ratio stands at a strong 437%, with quick ratio at the same level given no inventories reported, highlighting ample short-term liquidity. Total liabilities of ¥171.1m against equity of ¥585.0m yield a conservative debt-to-equity of 0.29x, reinforcing solvency strength. Working capital is robust at ¥569.5m, which should help absorb intra-year cash flow seasonality. Cash flow statements are not disclosed this quarter (zeros indicate unreported), limiting assessment of cash conversion and free cash flow. The sharp YoY decline in operating income despite revenue growth suggests rising personnel, R&D, or sales and marketing costs as the likely drivers. The effective tax rate cannot be reliably derived given unreported net income; the presence of tax expense alongside a likely net loss may relate to non-deductible items, minimum taxes, or timing effects. Dividend remains nil (DPS 0), consistent with a reinvestment-oriented posture typical of growth-oriented tech firms. Overall, the company exhibits sound liquidity and low leverage, but faces near-term profitability pressure and operating cost intensity that compressed operating margin significantly in the quarter. Data gaps—particularly net income, CF statements, and share count—constrain precision, and the analysis focuses on disclosed, non-zero items and consistent inferences from EPS and taxes.

Profitability Analysis

ROE decomposition (DuPont) based on disclosed metrics shows net profit margin unreported (0 placeholder), asset turnover 0.229x, and financial leverage 1.34x, yielding a calculated ROE placeholder of 0% due to the unreported margin. Using available signals (negative EPS and tax expense exceeding ordinary income), net margin this quarter is likely negative, implying negative ROE despite modest leverage. Gross margin of 58.3% is healthy, indicating good unit economics at the gross level. However, operating margin collapsed to 1.7%, down sharply YoY per the -75.6% decline in operating income vs. +9.2% revenue growth, demonstrating significant operating deleverage. The margin compression likely stems from elevated SG&A (e.g., headcount, product development, or customer acquisition costs) rather than gross cost pressures. Ordinary income equaling operating income indicates minimal non-operating gains/losses this quarter. With interest expense not disclosed, interest burden appears negligible, consistent with low leverage. Overall, profitability quality is mixed: strong gross margin but weak operating leverage this quarter, resulting in likely negative net margin due to tax effects.

Growth Assessment

Revenue grew 9.2% YoY to ¥180.0m, a respectable pace suggesting ongoing demand for the company’s geolocation-related services. The quality of growth is tempered by the sharp contraction in operating income (-75.6% YoY), implying that growth was not accompanied by proportional cost control. No segment or customer concentration data were provided; thus, the sustainability of growth cannot be segmented by product or end-market. The favorable gross margin suggests pricing power or mix benefits, which supports medium-term growth potential if operating costs normalize. Near-term outlook hinges on management’s ability to control SG&A and convert revenue growth into operating profit—especially given asset-light characteristics and low leverage. The implied net loss (from negative EPS) indicates short-term profitability headwinds despite top-line expansion. Without backlog, ARR, or bookings disclosures, we cannot assess pipeline durability; however, the liquidity position provides runway for growth initiatives. Overall, top-line momentum exists, but profit quality is currently weak, and operating leverage execution is the swing factor for outlook.

Financial Health

Liquidity is strong: current assets ¥738.2m vs. current liabilities ¥168.7m produce a current ratio of 4.38x and a quick ratio of 4.38x (no inventories reported). Working capital stands at ¥569.5m, giving ample cushion for intra-quarter cash needs and growth investments. Total assets are ¥786.0m and equity is ¥585.0m, implying financial leverage (A/E) of ~1.34x and a conservative debt-to-equity of ~0.29x. The equity ratio is not disclosed (reported as 0 placeholder), but balance-sheet figures imply an equity ratio of roughly 74% (585/786), reflecting strong solvency. Interest expense is not disclosed; combined with low leverage, interest burden is likely immaterial. Overall, the company’s capital structure is conservative, with sufficient liquidity and limited solvency risk in the near term.

Cash Flow Quality

Cash flow statements (operating, investing, financing) are unreported for the quarter, preventing a direct assessment of cash conversion, capital intensity, or free cash flow. Depreciation and amortization are also unreported, limiting EBITDA analysis beyond operating income. Given the solid working capital position and asset-light profile typical of software/data businesses, structural cash generation potential exists, but the implied net loss suggests cash burn risk in the near term if costs remain elevated. Without OCF and capex data, we cannot calculate OCF/NI or FCF coverage; the reported ratios are placeholders and should not be interpreted as actual zeros. Key watchpoints include receivables collection, contract liabilities dynamics (if subscription/advance billings exist), and capex for product infrastructure.

Dividend Sustainability

Dividend per share is reported as zero, consistent with a reinvestment phase. Payout ratio and FCF coverage are unreported; negative EPS implies distribution capacity would be constrained even if a dividend policy existed. Given strong liquidity and low leverage, capacity exists for future distributions if profitability and cash generation improve; however, current-quarter earnings do not support near-term payouts. No formal dividend policy details are provided; absent policy disclosure, we assume a conservative stance prioritizing growth investments and balance sheet strength.

Risk Assessment

Business Risks:

• Operating deleverage: costs growing faster than revenue, compressing operating margin.
• Customer concentration or contract renewal risk (not disclosed but common in B2B data/software).
• Pricing and mix risk despite strong gross margin if competitive intensity rises.
• Product development and execution risk tied to new feature roadmap and data quality.
• Regulatory/privacy changes affecting geolocation data collection and usage.
• Macroeconomic sensitivity impacting enterprise marketing/IT budgets.

Financial Risks:

• Near-term net loss implied by negative EPS despite positive operating income.
• Cash conversion uncertainty due to unreported OCF and capex.
• Potential working capital volatility (receivables and deferred revenue dynamics).
• Tax expense timing/non-deductible items leading to losses despite pre-tax profit.

Key Concerns:

• Sharp YoY drop in operating income (-75.6%) alongside 9.2% revenue growth.
• Tax expense (¥4.3m) exceeding ordinary income (¥3.0m), implying net loss.
• Lack of cash flow disclosure limits assessment of sustainability of operations.
• Reliance on strong gross margin to offset rising operating costs.

Investment Implications

Key Takeaways:

• Top-line growth of 9.2% YoY with resilient 58.3% gross margin.
• Significant operating margin compression to 1.7% indicates cost pressure.
• Likely net loss this quarter (EPS -¥0.52) despite positive operating/ordinary income.
• Balance sheet strength with low leverage (D/E ~0.29x) and high liquidity (current ratio ~4.38x).
• Data gaps on cash flows constrain visibility on earnings quality and FCF.

Metrics to Watch:

• Operating margin trajectory and SG&A as a percentage of sales.
• ORD/OP gap and any emerging non-operating items.
• Cash conversion: OCF, FCF, and working capital turns when disclosed.
• Revenue growth mix (subscription/recurring vs. project) and churn/renewals.
• Effective tax rate normalization relative to pre-tax profit.

Relative Positioning: Within Japan-listed small-cap software/data peers, the company shows competitive gross margins and conservative leverage but lags on operating margin stability this quarter; sustained revenue growth with improved cost discipline would be needed to align profitability with 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