ENECHANGE Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.98B
• Operating Income: ¥323M
• Net Income: ¥-1.78B
• EPS: ¥-5.38

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

ENECHANGE (41690) reported FY2026 Q2 consolidated results under JGAAP featuring strong top-line growth but persistent bottom-line losses driven by non-operating items and weak operating cash flow. Revenue grew 33.0% YoY to ¥2,980 million, demonstrating robust demand and execution. Gross profit was ¥2,175.7 million with a high gross margin of 73.0%, indicating a capital-light, platform-like model with favorable unit economics at the gross level. Operating income was ¥323 million, flat YoY, implying material operating cost absorption despite revenue expansion and suggesting operating leverage has yet to materialize in SG&A. Ordinary income deteriorated to a loss of ¥267 million, with non-operating losses of roughly ¥590 million offsetting operating profit; within this, interest expense of ¥97.3 million was only a part, leaving about ¥493 million in other non-operating losses not detailed in the provided data. Net income was a loss of ¥229 million (EPS -5.38), and the effective tax rate was effectively nil due to the loss position. DuPont analysis shows a net margin of -7.68%, asset turnover of 0.456x, and financial leverage of 1.50x, yielding a calculated ROE of -5.26%. Liquidity appears strong with a current ratio of 228.8% and working capital of ¥3,082 million, supported by significant financing inflows of ¥4,196 million in the period. However, operating cash flow was negative ¥526.6 million, worse than the accounting loss (OCF/NI = 2.30), signaling pressure from working capital or cash costs. Interest coverage on an operating basis is 3.3x, but the ordinary loss highlights vulnerability to non-operating swings. The balance sheet shows moderate leverage (D/E 0.66x; assets/equity 1.50x), but cash and cash equivalents are not disclosed in the XBRL (shown as 0), limiting clarity on liquidity buffers. No dividends were paid (DPS ¥0), which is appropriate given negative earnings and OCF. Key uncertainties include the composition of non-operating losses and the sustainability of growth with improving operating leverage. Overall, the company exhibits solid revenue momentum and gross margins but must address OCF weakness and non-operating volatility to translate growth into durable returns.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.0768
• asset_turnover: 0.456
• financial_leverage: 1.5
• calculated_ROE: -0.0526
• commentary: Negative ROE is driven primarily by a -7.68% net margin; asset turnover is modest at 0.456x and leverage is moderate at 1.50x. Improving net margin (via non-operating stabilization and SG&A efficiency) is the key lever. margin_quality: Gross margin of 73.0% is strong, consistent with a high-value software/platform/service mix. Operating margin is 10.8% (¥323m/¥2,980m), but ordinary margin is -9.0% due to sizable non-operating losses (~¥590m), only partially explained by interest expense (¥97m). The margin bridge suggests heavy SG&A: gross profit (¥2,175.7m) less operating income (¥323m) implies ¥1,852.7m in operating costs (~62% of revenue). operating_leverage: Despite 33% YoY revenue growth, operating income was flat, implying negative operating leverage in the period—likely from customer acquisition, product development, or expansion costs. With depreciation at only ¥37.7m, fixed-cost absorption should eventually support leverage if SG&A growth normalizes, but current data show limited operating gearing.

Growth Assessment

revenue_sustainability: Revenue growth +33.0% YoY to ¥2.98bn indicates solid demand and likely market share gains. High gross margin suggests pricing power or scalable unit economics. Sustainability depends on retention and customer acquisition efficiency; data on cohort retention and churn are not disclosed here. profit_quality: Operating income positive but flat YoY, while ordinary and net losses reflect poor quality of earnings due to non-operating volatility. OCF of -¥526.6m versus EBITDA of ¥360.7m indicates cash conversion issues, likely from working capital expansion (e.g., receivables) or cash-intensive growth investments expensed through OPEX. outlook: If growth moderates to prioritize cash generation and SG&A efficiency, operating leverage could improve. Key to inflecting bottom line will be reducing non-operating losses (≈¥493m beyond interest) and improving cash conversion. Financing inflows bolster near-term capacity to invest, but sustained profitability will require tighter cost discipline and working capital control.

Financial Health

liquidity: Current ratio 228.8% and quick ratio 228.8% reflect ample near-term liquidity; working capital is ¥3,082m. Cash balance is not disclosed (reported as 0), limiting visibility on immediate cash buffers. Negative OCF raises near-term liquidity management considerations despite strong current assets. solvency: Debt-to-equity is 0.66x; financial leverage (A/E) is 1.50x, both moderate. Interest coverage (operating income/interest) is 3.3x, acceptable, but ordinary loss indicates that non-operating items could impair overall financial flexibility. capital_structure: Total assets ¥6,532m; equity ¥4,353m; liabilities ¥2,860m. The large financing inflow of ¥4,196m in the period suggests recent capital raising (equity or debt not specified). Equity ratio is not disclosed in XBRL (shown as 0%), so standard solvency assessment relies on the provided D/E and leverage metrics.

Cash Flow Quality

earnings_quality: Accounting profit at the operating level did not translate into positive cash flow: OCF -¥526.6m despite EBITDA ¥360.7m. The OCF/Net Income ratio of 2.30 indicates cash outflows exceeded the accounting loss magnitude, pointing to working capital draw or upfront cash costs. FCF_analysis: Free cash flow is not disclosed (shown as 0). Investing CF is also unreported (0), so we cannot compute true FCF. Given negative OCF and likely ongoing investments, underlying FCF is likely negative in this period. working_capital: Current assets ¥5,476m vs current liabilities ¥2,393m support liquidity, but the negative OCF suggests a build in receivables or other current assets. Inventory is negligible (¥0.385m), consistent with a service/platform model.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS ¥0; payout 0%). With net loss and negative OCF, a payout would not be sustainable. FCF_coverage: FCF coverage is shown as 0.00x due to unreported FCF; given negative OCF, dividend coverage would be weak if initiated. policy_outlook: Given growth investments, negative OCF, and net losses, retaining earnings and preserving liquidity is sensible. A dividend policy change appears unlikely until the company achieves consistent positive OCF and net profitability.

Risk Assessment

Business Risks:

• Execution risk in scaling while controlling SG&A, given flat operating income despite 33% revenue growth
• Customer acquisition and retention risk that could pressure unit economics and delay operating leverage
• Dependence on energy market dynamics and potential regulatory changes affecting demand and partner economics
• Product expansion risk (e.g., new services) potentially requiring elevated upfront spend and longer payback periods

Financial Risks:

• Non-operating loss volatility (~¥590m negative swing vs operating income) beyond interest expense
• Negative operating cash flow (¥-526.6m) increasing reliance on external financing
• Interest expense of ¥97.3m with 3.3x coverage susceptible to pressure if operating profit softens
• Limited visibility on cash and cash equivalents (undisclosed), complicating liquidity assessment

Key Concerns:

• Sustained negative ordinary and net income despite positive operating income
• Working capital-driven cash outflows impairing cash conversion
• Unclear composition of non-operating losses (~¥493m beyond interest), creating earnings unpredictability

Investment Implications

Key Takeaways:

• Top-line growth strong (+33% YoY) with high gross margin (73%), validating demand and unit economics at gross level
• Operating leverage not yet realized: operating income flat YoY and operating margin 10.8%
• Material non-operating losses (~¥590m) drove ordinary and net losses despite operating profit
• OCF significantly negative (¥-526.6m) points to cash conversion challenges
• Liquidity ratios are strong, and financing inflow of ¥4.2bn provides runway; leverage moderate (D/E 0.66x)

Metrics to Watch:

• Breakdown of non-operating income/expenses (especially items beyond interest)
• Operating cash flow trend and receivables/working capital movements
• SG&A growth vs revenue and resulting operating margin trajectory
• Interest expense and coverage as financing mix evolves
• Asset turnover and customer cohort retention to assess sustainable growth

Relative Positioning: Within Japan-listed growth-oriented, asset-light service/platform peers, ENECHANGE exhibits solid revenue momentum and high gross margins but lags on cash conversion and earnings stability due to non-operating volatility; balance sheet leverage is moderate with strong reported liquidity, offering capacity to invest if cash burn is managed.

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