gooddays holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.96B
• Operating Income: ¥250M
• Net Income: ¥179M
• EPS: ¥26.25

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: Top-line growth was solid, but profitability compressed and cash conversion was weak in FY2026 Q2. Revenue rose 13.9% YoY to 49.65, demonstrating healthy demand or contribution from recent initiatives. Gross profit reached 10.75 with a gross margin of 21.6%, indicating the company is maintaining a positive spread despite cost pressures. Operating income declined 31.2% YoY to 2.50, with operating margin at 5.0%, signaling margin compression amid higher costs or opex. Using disclosed YoY rates, operating margin compressed by roughly 330 bps YoY (from about 8.3% to 5.0%). Ordinary income decreased 27.6% YoY to 2.42, with non-operating items a small net negative (0.04 income vs 0.12 expense). Net income fell 16.0% YoY to 1.79, cushioned by a lower burden below the operating line and a 26.2% effective tax rate. ROE stood at 5.6% from a 3.6% net margin, 0.578x asset turnover, and 2.69x leverage—returns are modest and leverage-supported. Cash flow quality was weak: operating cash flow was only 0.18 versus net income of 1.79 (OCF/NI 0.10x), pointing to working capital pressure or timing effects. Liquidity is adequate but tight by benchmark standards, with a 112% current ratio and 4.86 in working capital. Debt is meaningful with a 1.69x D/E, though interest coverage remains strong at 28x given current earnings. Capex of 18.30 appears funded primarily by financing inflows (FinCF +18.63), suggesting reliance on external capital amid negative underlying free cash flow this period. ROIC is 4.8%, below the 5% warning threshold, indicating capital efficiency headwinds. EPS (basic) was 26.25 JPY, with BVPS around 467 JPY, implying mid-single-digit annualized ROE if trends persist. Forward-looking, the key to stabilization will be improving operating margin and converting earnings to cash, while keeping leverage in check. Execution on working capital discipline and Capex returns will determine whether growth can translate into higher ROIC and sustainable shareholder returns.

Profitability Analysis

ROE decomposition (DuPont): ROE 5.6% = Net Profit Margin 3.6% × Asset Turnover 0.578 × Financial Leverage 2.69x. The largest change driver YoY appears to be margin compression at the operating level, inferred from operating income -31.2% vs revenue +13.9%. Business context: higher cost of delivery and/or elevated SG&A likely weighed on operating margin; gross margin at 21.6% suggests limited room to absorb rising costs without scale benefits. Sustainability: absent a clear cost normalization plan, margin pressure could persist near term; however, operating leverage could improve if revenue growth continues and cost growth moderates. Asset turnover at 0.578 is moderate; any slowdown in collections (AR 24.48 vs cash 15.66) can dampen turnover and ROE. Leverage at 2.69x supports ROE but raises sensitivity to profit volatility. Concerning trend: operating margin compressed by ~330 bps YoY (calculated from revenue and OI growth rates); without SG&A detail, we cannot confirm whether SG&A growth outpaced revenue, but the outcome is consistent with that risk.

Growth Assessment

Revenue growth of +13.9% YoY to 49.65 is solid for a mid-sized platform, indicating healthy demand or expanded scope. Operating income declined 31.2% YoY to 2.50 despite higher sales, implying negative operating leverage in the period. Non-operating items were small and net negative (-0.08), so core operations explain most of the earnings decline. Net income decreased 16.0% YoY to 1.79, less severe than the operating decline, aided by a manageable tax rate and limited financial drag. EBITDA was 3.28 (margin 6.6%), providing some cushion but still modest for growth reinvestment. Outlook hinges on margin recapture through pricing, mix upgrades, utilization, and SG&A control; with AR elevated, disciplined billing and collection are also necessary to support growth. Absent disclosed backlog or segment data, sustainability of the +13.9% revenue growth cannot be confirmed; near-term focus should be on profitable growth over volume.

Financial Health

Liquidity: Current ratio 112.4% and quick ratio 112.4% are above 1.0 but below the 1.5 comfort benchmark; no explicit warning threshold triggered, yet headroom is limited. Working capital is 4.86 with cash 15.66 and AR 24.48 versus current liabilities 39.08, suggesting reliance on timely collections to meet obligations. Solvency: D/E is 1.69x (above the conservative 1.5x benchmark but below the 2.0x warning level), and total liabilities are 53.95 versus equity 31.90. Interest coverage is strong at 28.4x (EBIT/interest), indicating near-term debt service capacity is sound. Maturity profile: short-term loans of 8.00 and payables of 10.54 are covered by cash plus receivables; however, any collection slippage could tighten liquidity. Long-term loans are 14.08, anchoring total debt load. Off-balance sheet obligations: none reported in the provided data. No explicit red flags (Current Ratio <1.0 or D/E >2.0), but leverage is on the higher side and liquidity cushion is thin.

Cash Flow Quality

OCF/Net Income is 0.10x, flagging weak earnings quality and potential working capital drag. With Capex of 18.30 and OCF of 0.18, indicative free cash flow is approximately -18.1 (OCF - Capex), acknowledging investing CF details are unreported and this is an estimate. Financing inflow of 18.63 largely bridged the investment and operating cash shortfall, implying dependence on external funding this period. Signs of working capital pressure include high accounts receivable (24.48) relative to quarterly scale; without days sales outstanding, we cannot quantify, but the OCF shortfall indicates timing issues. Sustainability: dividends appear low (calculated payout ~15.3%), but negative FCF in the period suggests distributions and capex rely on financing unless cash conversion improves.

Dividend Sustainability

Calculated payout ratio is 15.3%, nominally conservative versus the <60% benchmark. However, with negative indicative FCF (~-18.1) this period and OCF/NI at 0.10x, coverage from internally generated cash is inadequate near term. Financing inflows (18.63) covered investment needs, but reliance on debt/equity financing is not a durable dividend funding model. Policy outlook unknown due to unreported DPS; absent improvement in operating cash generation and ROIC, upward dividend flexibility appears limited. Near-term sustainability is acceptable at the current low payout if cash conversion normalizes; otherwise, the company may prioritize reinvestment and balance sheet over distribution growth.

Risk Assessment

Business Risks:

• Margin compression risk given operating margin down ~330 bps YoY despite double-digit revenue growth
• Execution risk on cost control and utilization needed to restore operating leverage
• Working capital risk from elevated receivables relative to cash and current liabilities
• Project timing/mix risk that can swing quarterly profitability

Financial Risks:

• Leverage at 1.69x D/E heightens sensitivity to earnings volatility
• Liquidity cushion is modest (current ratio 1.12x), exposing the company to collection delays
• Negative indicative FCF with capex funded by financing inflows elevates refinancing/dependency risk
• ROIC at 4.8% below cost-of-capital benchmarks risks value dilution if not improved

Key Concerns:

• OCF/NI at 0.10x indicates weak cash conversion
• Operating margin at 5.0% may not support both growth capex and deleveraging
• Limited disclosure on SG&A and segment drivers constrains root-cause analysis
• Any interest rate increase could raise funding costs given debt usage

Investment Implications

Key Takeaways:

• Strong top-line (+13.9% YoY) but negative operating leverage drove a 31% YoY drop in OI
• Operating margin compressed ~330 bps YoY to 5.0%
• Cash conversion weak (OCF/NI 0.10x); financing covered capex
• Leverage elevated (D/E 1.69x) though interest coverage is strong (28x)
• ROIC 4.8% signals capital efficiency shortfall

Metrics to Watch:

• Operating margin and gross margin trajectory
• OCF/Net income and working capital (AR days)
• Capex intensity and return on incremental invested capital
• Net debt/EBITDA and interest coverage
• ROIC versus 7–8% target range

Relative Positioning: Versus typical TSE Growth/IT-services peers, revenue growth is respectable, but profitability and ROIC are sub-par, and cash conversion is notably weaker; balance sheet flexibility exists but is not ample, making execution on margin recovery and working capital discipline the key differentiators.

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