CLIP Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.43B
• Operating Income: ¥-50M
• Net Income: ¥-62M
• EPS: ¥-19.49

Income Statement

Balance Sheet

Cash Flow Statement

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

Clip Corporation (consolidated, JGAAP) reported FY2026 Q2 revenue of ¥1,426 million, down 4.5% YoY, reflecting modest top-line contraction. Gross profit was ¥371 million with a gross margin of 26.0%, indicating reasonable direct cost control despite revenue softness. Operating income was a loss of ¥50 million (flat YoY), suggesting limited progress in offsetting revenue pressure with cost measures. Ordinary loss narrowed to ¥44 million, implying positive non-operating contributions offsetting interest expense. Net loss was ¥70 million (EPS -¥19.49), with a tax benefit of ¥12 million, leading to an effective tax rate of approximately 0% due to losses. EBITDA was negative at ¥25 million, highlighting weak operating cash earnings in the half. The DuPont decomposition yields a net margin of -4.91%, asset turnover of 0.269x, and financial leverage of 1.15x, resulting in an ROE of -1.52%. Asset turnover remains low for a consumer services/education/services-type profile, suggesting underutilized assets or seasonal skew within the half-year snapshot. Liquidity is very strong: current ratio 680% and quick ratio 611%, supported by substantial working capital of ¥2,962 million. The balance sheet is conservative with total liabilities of ¥680 million versus equity of ¥4,606 million (implied equity ratio about 87% based on provided assets and equity). Operating cash flow was a negative ¥221 million, materially weaker than net income, pointing to working capital consumption or seasonal timing effects. Interest coverage is deeply negative (-39.5x), yet absolute interest burden is small (¥1.27 million), consistent with low leverage. Dividends are not paid (DPS ¥0, payout 0%), aligning with loss-making conditions and cash outflow from operations. Several data points are unreported in XBRL (e.g., cash balance, investing cash flows, equity ratio), which constrains precision in cash and capex assessments. Overall, the company shows resilient gross margins and a strong balance sheet but faces short-term profitability and cash conversion challenges. The near-term outlook hinges on revenue normalization in H2, operating cost discipline, and stabilization of working capital.

Profitability Analysis

ROE is -1.52% driven by a negative net margin (-4.91%), low asset turnover (0.269x), and modest leverage (1.15x). Gross margin is 26.0%, providing a cushion at the contribution level, but SG&A intensity likely absorbed gross profit, resulting in an operating margin of -3.5% (operating loss ¥50m / revenue ¥1,426m). EBITDA of -¥25.2m indicates insufficient operating scale in the half to cover fixed costs. The improvement from operating to ordinary loss (-¥50m to -¥44m) suggests net non-operating gains of roughly ¥6m despite ¥1.27m in interest expense, possibly from financial income or subsidies. Operating leverage appears unfavorable this half: a 4.5% revenue decline resulted in persistent operating losses, indicating that fixed costs remain high relative to revenue. The negative effective tax rate (benefit of ¥12m) is consistent with losses and does not reflect structural tax efficiency. Interest burden is minimal, and profitability is not constrained by finance costs but by core operations. Margin quality is mixed: stable gross margin suggests cost of sales discipline, but insufficient SG&A flexibility compressed operating results. Without disclosed segment data, we assume seasonality and revenue mix also influenced margin outcomes.

Growth Assessment

Revenue declined 4.5% YoY to ¥1,426m, indicating demand softening or timing effects within the first half. Given ordinary loss improved versus operating loss, non-operating items partially offset weakness but are not a sustainable growth driver. The lack of segment or store count data limits visibility into volume versus price dynamics. Profit quality is weak this period: EBITDA negative and OCF negative despite tax benefits, suggesting underlying earning power needs recovery in H2. If the business exhibits seasonal concentration in Q3–Q4, a second-half rebound could normalize utilization and margins. Absent evidence of mix shift or price actions, revenue sustainability depends on recovering student/customer traffic and retention (if education/services), or project timing (if services). Outlook: cautious near term, with upside contingent on stabilizing sales and SG&A control; downside risk arises if revenue pressure persists and fixed costs cannot be flexed. Monitoring order intake/enrollment trends, utilization rates, and marketing efficiency will be key to assessing trajectory.

Financial Health

Total assets are ¥5,295m, liabilities ¥680m, and equity ¥4,606m, implying low leverage (debt-to-equity 0.15x) and an implied equity ratio around 87% (computed from provided assets and equity; the reported 0% is undisclosed in XBRL). Liquidity is strong: current ratio 680% and quick ratio 611%, with working capital of ¥2,962m. Interest expense is modest at ¥1.27m, and despite negative EBIT, refinancing risk appears low given conservative leverage. Inventory of ¥355m within current assets suggests manageable stock levels relative to scale; however, inventory turnover cannot be assessed without COGS by period days. Solvency risk is low under current structure; the key constraint is operating performance rather than balance sheet strength. Cash and equivalents are undisclosed, so short-term liquidity relies on the high net working capital and low current liabilities.

Cash Flow Quality

Operating cash flow was -¥221.5m versus net loss of -¥70.0m, yielding an OCF/NI ratio of 3.16 (both negative), which signals weak cash conversion and likely working capital outflows or timing effects. EBITDA was -¥25.2m and D&A ¥24.8m, so non-cash charges are not the driver of OCF weakness; rather, changes in receivables, payables, or inventories likely consumed cash. Investing CF is undisclosed, preventing calculation of true free cash flow; the provided FCF value of 0 should be treated as unreported. Financing CF was -¥211.4m, indicating outflows (possibly dividends, debt repayment, or share buybacks), but details are not disclosed. With OCF negative and capex unknown, earnings quality this half is weak and dependent on second-half recovery. Monitoring working capital days (DSO, DPO, DIO) and capex commitments is essential to evaluate sustainability.

Dividend Sustainability

DPS is ¥0 and payout ratio 0%, consistent with a net loss. With OCF negative and FCF undisclosed, coverage cannot be substantiated; the FCF coverage metric of 0.00x reflects non-disclosure rather than meaningful zero. Given conservative leverage, the balance sheet could theoretically support distributions, but current operating losses and cash outflows argue for retention. Near-term dividend policy likely remains cautious until profitability and cash generation normalize. Key determinants: return to positive EBIT/EBITDA, restoration of positive OCF, and visibility on capex needs.

Risk Assessment

Business Risks:

• Revenue softness (-4.5% YoY) and potential demand volatility or seasonality.
• High fixed-cost base driving operating leverage to the downside (operating loss despite 26% gross margin).
• Dependence on H2 seasonality to achieve full-year profitability.
• Potential competitive pressure affecting pricing and utilization.
• Limited visibility due to undisclosed segment and cash data.

Financial Risks:

• Negative operating cash flow (-¥221.5m) despite modest net loss, indicating working capital strain.
• EBITDA negative, reducing internal funding capacity.
• Interest coverage negative, though absolute interest burden is small.
• Unreported cash and investing CF obscure liquidity runway and capex commitments.

Key Concerns:

• Sustained operating losses if revenue does not recover in H2.
• Cash conversion weakness driven by working capital outflows.
• Potential need for cost restructuring if top-line pressure persists.

Investment Implications

Key Takeaways:

• Top line declined 4.5% YoY to ¥1.43bn; gross margin steady at 26.0%.
• Operating loss of ¥50m persisted; ordinary loss slightly narrower at ¥44m.
• ROE -1.52% driven by negative margin and low asset turnover; leverage remains modest (1.15x).
• OCF -¥221.5m signals cash conversion issues; capex and cash levels undisclosed.
• Balance sheet is strong with low liabilities (D/E 0.15x) and large working capital (¥2.96bn).
• Dividend suspended (DPS ¥0) pending recovery in earnings and cash flow.

Metrics to Watch:

• H2 revenue growth and enrollment/order trends.
• Operating margin trajectory and SG&A ratio.
• OCF recovery and working capital days (DSO, DPO, DIO).
• EBITDA turnaround and interest coverage.
• Capex and investing cash flows once disclosed.
• Cash and equivalents disclosure and liquidity headroom.

Relative Positioning: Balance sheet strength and low leverage compare favorably to peers, but current-period profitability and cash conversion lag, placing the company in a defensive posture pending operational recovery.

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