KURADASHI.Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥730M
• Operating Income: ¥-15M
• Net Income: ¥-83M
• EPS: ¥-3.68

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

FY2026 Q1 was weak overall with a modest top-line increase but a slip into operating and net losses, highlighting cost pressure and limited operating leverage. Revenue rose 11.4% year over year to 7.30, while gross profit was 2.81, implying a gross margin of 38.5%. SG&A expenses were 3.62, exceeding gross profit by 0.81 and driving an operating loss of -0.15 (operating margin -2.1%). Ordinary income deteriorated to -0.34, and net income was -0.41, translating to a net margin of -5.6% and a calculated ROE of -2.7%. Asset turnover stood at 0.239 and financial leverage at 2.03x, indicating moderate balance sheet leverage but insufficient profitability. Liquidity remains adequate with a current ratio of 206% and cash and deposits of 10.67 against current liabilities of 7.05. However, interest coverage is a notable weakness at -19.97x due to negative operating/ordinary results, even though absolute interest expense is small (0.01). The equity base is thin in quality terms as retained earnings are negative (-0.73), and intangibles are sizable (goodwill 4.80; total intangibles 6.45), elevating potential impairment risk if growth underwhelms. ROIC is reported at -1.1%, well below the 5% warning line, signaling that invested capital is not generating sufficient returns at present. Gross margin appears healthy on an absolute basis but is outweighed by SG&A intensity (SG&A-to-sales ~49.6%), suggesting scale and efficiency remain the key swing factors for profitability. With no cash flow statement disclosed, earnings quality cannot be validated against cash conversion, and FCF sufficiency for debt service or potential dividends cannot be assessed. Balance sheet solvency is acceptable with D/E at 1.03x and long-term loans of 8.41, but the combination of operating losses and negative interest coverage raises medium-term funding and covenant resilience questions. From a forward-looking standpoint, the company must either accelerate revenue growth or reduce SG&A intensity to approach break-even and improve ROIC. Near-term priorities likely include cost discipline, monetization efficiency, and careful management of working capital to preserve cash. Overall, the quarter underscores the challenge of scaling profitably while maintaining adequate liquidity headroom.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (-5.6%) × Asset Turnover (0.239) × Financial Leverage (2.03x) = ROE (-2.7%). The dominant driver of negative ROE is the negative net margin, as asset turnover is moderate and leverage is not excessive. Net margin pressure stems from SG&A exceeding gross profit (SG&A 3.62 vs gross profit 2.81), resulting in an operating margin of -2.1% and ordinary margin of -4.7%. Gross margin of 38.5% indicates decent unit economics, but current scale does not cover fixed and semi-fixed costs. With no YoY margin breakdown disclosed, we cannot quantify basis-point changes, but the current profile suggests operating leverage is not yet kicking in. Sustainability: margin improvement would require SG&A discipline and/or higher revenue throughput; absent these, losses could persist. Concerning trend flags: SG&A-to-sales is elevated at ~49.6%, exceeding gross margin capacity, implying profit dilution until scale efficiency improves.

Growth Assessment

Revenue grew 11.4% YoY to 7.30, indicating continued demand expansion. However, profitability did not follow, with operating income at -0.15 and net income at -0.41. The current gross margin (38.5%) is supportive of growth potential, but cost structure is too heavy to translate growth into earnings. Absence of segment data restricts assessment of growth mix and recurring versus one-off contributions. No equity-method or non-operating income contributions of note are reported, so the P/L remains primarily driven by core operations. Outlook hinges on whether the company can lift throughput without a commensurate rise in SG&A, improve marketing efficiency/customer acquisition costs, and reduce overhead per unit of sales. Execution on cost control and monetization improvements (take rate, pricing, mix) will be critical for achieving break-even and positive ROIC. Near-term, growth at current profitability levels is unlikely to produce value accretion without cost reform.

Financial Health

Liquidity: Current ratio 206.2% and quick ratio 191.5% indicate solid short-term coverage; explicit warning thresholds are not breached. Cash and deposits (10.67) exceed current liabilities (7.05), and short-term loans are modest (1.00), reducing near-term liquidity risk. Solvency: Debt-to-equity is 1.03x (below the 1.5x caution benchmark), with long-term loans of 8.41 forming the bulk of liabilities. No explicit red flag for D/E > 2.0. Maturity mismatch risk appears manageable given strong current assets versus current liabilities, but continued operating losses could erode buffers. Asset quality: Intangibles (6.45) including goodwill (4.80) are sizable relative to equity (15.05), posing impairment risk if performance underwhelms. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported, so OCF/Net Income and FCF cannot be calculated. Accordingly, we cannot validate earnings quality via cash conversion or assess working capital dynamics. Given negative operating and ordinary income and weak interest coverage, internal cash generation is likely limited near-term, making cash preservation and external funding availability important. With cash and deposits of 10.67, the company has a cushion, but sustainability depends on the trajectory of operating losses and capex needs (unreported). No working capital manipulation signals can be assessed due to the absence of cash flow details.

Dividend Sustainability

Dividend data are unreported, and the period recorded a net loss (-0.41). Without OCF/FCF disclosure, payout capacity cannot be evaluated quantitatively. Given negative earnings and a focus on scaling operations, sustaining or initiating dividends would likely require clear visibility on a return to positive OCF and earnings. Policy outlook is uncertain from the disclosed data; prioritization of reinvestment and balance sheet resilience appears prudent until profitability improves.

Risk Assessment

Business Risks:

• Inability to achieve operating leverage: SG&A-to-sales (~49.6%) exceeds gross margin capacity, sustaining losses.
• Execution risk in scaling the platform and improving monetization/take rate.
• Customer acquisition and retention cost inflation pressuring margins.
• Potential impairment risk due to sizable goodwill (4.80) and intangibles (6.45).
• Competitive intensity in e-commerce/food-related platforms compressing pricing power.

Financial Risks:

• Negative interest coverage (-19.97x) despite small absolute interest expense, indicating thin earnings buffer.
• Negative retained earnings (-0.73) limiting equity flexibility.
• ROIC at -1.1% suggests value dilution if losses persist.
• Reliance on long-term loans (8.41) necessitates consistent servicing amid operating losses.
• Potential need for external financing if cash burn continues (cash flow data unreported).

Key Concerns:

• Profitability gap: operating margin -2.1% and net margin -5.6% despite 38.5% gross margin.
• Scale dependence: growth must outpace SG&A to reach break-even.
• Intangible-heavy balance sheet heightening impairment sensitivity.
• Data limitations: absence of cash flow statements and segment detail constrains risk visibility.

Investment Implications

Key Takeaways:

• Revenue growth (+11.4% YoY) is not yet translating into profit; operating loss of -0.15 and net loss of -0.41.
• Gross margin is solid at 38.5%, but SG&A intensity (~49.6% of sales) drives negative operating leverage.
• Liquidity is adequate (current ratio 206%, cash 10.67 vs CL 7.05), but interest coverage is negative (-19.97x).
• ROE (-2.7%) and ROIC (-1.1%) indicate subpar returns; improvement hinges on margin expansion.
• Intangibles (6.45) and goodwill (4.80) introduce potential impairment downside if growth stalls.

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio trend each quarter.
• OCF and FCF once disclosed; OCF/NI ratio as a quality check (>1.0 target).
• Customer acquisition cost and LTV/CAC (if disclosed) as proxies for commercialization efficiency.
• Cash balance vs burn rate; interest coverage moving toward >2x.
• ROIC trajectory toward the 5%+ threshold as a minimum hurdle.

Relative Positioning: Within small-cap growth platforms, the company shows decent gross margin but below-peer profitability and return metrics, with adequate liquidity yet weak earnings cover; near-term investment case depends on evidence of operating leverage and cash conversion.

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