Adventure,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥6.97B
• Operating Income: ¥536M
• Net Income: ¥329M
• EPS: ¥38.18

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: FY2026 Q1 was a mixed quarter with resilient top-line growth but sharp profit compression and an unusually high tax burden weighing on bottom-line results. Revenue rose 4.8% year over year to 69.67, indicating steady booking momentum despite industry normalization. Operating income fell 38.2% YoY to 5.36, implying operating margin deterioration to 7.7%. Net income declined 42.0% YoY to 2.83, bringing net margin down to 4.1%. Based on reported revenue and cost of sales, we estimate gross profit at 45.89 and gross margin at 65.9% (derived), suggesting the margin pressure occurred below gross profit. SG&A was 34.02, and the gap between estimated gross profit and operating income implies approximately 6.5 in other operating costs/charges under IFRS. Operating margin compressed by roughly 533 bps YoY (from ~13.0% to ~7.7%), while net margin compressed by ~328 bps (from ~7.3% to ~4.1%). The effective tax rate was elevated at 65.5% (tax 3.37 vs PBT 5.14), which significantly depressed net income versus operating income. ROE was 2.9% via DuPont (NPM 4.1% × AT 0.263 × leverage 2.75x), highlighting low profitability and modest asset efficiency offset by leverage. ROIC of 2.8% is below the 5% warning threshold, underscoring capital efficiency concerns. The balance sheet shows substantial current assets (214.41) and cash and equivalents (148.45), with accounts payable (79.54) exceeding receivables (37.35), consistent with an OTA working-capital model. Liquidity optics are favorable, but the current ratio is not calculable due to unreported current liabilities. Cash flow data were not disclosed, preventing OCF/NI cross-checks and FCF assessment; thus, earnings quality cannot be validated this quarter. Forward-looking, sustaining revenue growth while normalizing the tax rate and curbing operating cost drift will be critical to restore margins and ROIC. Near-term priorities include addressing the high effective tax rate, managing marketing/other operating expenses, and maintaining conversion and take rates without excessive spend.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin 4.1% × Asset Turnover 0.263 × Financial Leverage 2.75x = ROE 2.9%. The largest adverse change appears to be margin compression: operating income -38.2% YoY versus revenue +4.8% implies operating margin fell from ~13.0% to 7.7% (-533 bps), and net margin from ~7.3% to 4.1% (-328 bps). The business driver likely includes higher SG&A and/or other operating expenses (the ~6.5 gap between estimated gross profit and operating income) plus a markedly higher effective tax rate (65.5%). Asset turnover (0.263 for the quarter) is subdued, reflecting a cash-heavy balance sheet and receivables/payables float typical of OTAs; leverage (2.75x assets/equity) provided some ROE support but cannot offset margin pressure. Sustainability: revenue growth looks steady, but the spike in tax rate and other operating costs seems at least partly non-structural and could normalize; however, competitive marketing spend and payment-processing/platform costs may remain elevated. Watch for SG&A growth exceeding revenue growth, as it would further erode operating leverage and ROE.

Growth Assessment

Revenue grew 4.8% YoY to 69.67, indicating stable demand and/or improved take rate/mix. Operating income contracted 38.2% YoY to 5.36, with implied operating margin slipping to 7.7%, signaling adverse operating leverage. Net income decreased 42.0% to 2.83, mainly due to weaker operating profit and a very high effective tax rate. Estimated gross margin remains strong at 65.9%, suggesting pricing and direct cost control are intact; the pressure is below gross profit (marketing, platform, or other operating items). Absent cash flow disclosure, we cannot validate whether growth was supported by cash generation or working-capital timing. Outlook: near-term growth is likely to track travel demand and conversion, but margin recovery hinges on disciplined SG&A, stabilization of other operating items, and normalization of the tax rate.

Financial Health

Total assets were 265.14 with equity of 96.27 (equity ratio 35.0%), implying financial leverage of 2.75x and a D/E proxy of 1.75x. Warning threshold: D/E > 2.0 not breached; no explicit red flag. Liquidity appears strong with current assets of 214.41 and cash & equivalents of 148.45, but the current ratio is not calculable due to unreported current liabilities. Maturity mismatch risk appears moderate: accounts payable of 79.54 are comfortably covered by receivables (37.35) plus cash, though we lack full visibility on short-term borrowings and other payables. Interest-bearing debt was unreported; interest coverage cannot be assessed. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow were not disclosed, so OCF/Net Income and FCF coverage cannot be calculated. This limits our ability to assess earnings quality, working-capital reliance, and the durability of cash generation. The balance sheet shows a large cash balance (148.45), which supports liquidity, but without OCF we cannot confirm cash conversion. Working-capital signals are mixed but typical for an OTA: payables (79.54) exceeding receivables (37.35) can bolster operating cash flow in growth phases; however, we lack period-over-period deltas to detect timing effects or manipulation.

Dividend Sustainability

Dividend data were not reported for the quarter; payout ratio and FCF coverage are not calculable. With ROIC at 2.8% and lower earnings this quarter, dividend capacity would logically depend on cash on hand (148.45) and forthcoming cash generation. Policy outlook cannot be inferred without guidance; monitoring OCF recovery and tax-rate normalization is essential for future distributions.

Risk Assessment

Business Risks:

• Margin pressure from higher marketing, platform, or other operating costs under IFRS classification
• Demand sensitivity to macro conditions and travel trends (airline capacity/pricing, FX-driven outbound/inbound flows)
• Competitive intensity among OTAs potentially compressing take rates and increasing customer acquisition costs
• Platform and cybersecurity risks that could disrupt booking operations
• Regulatory or tax policy changes affecting cross-border travel and digital services

Financial Risks:

• High effective tax rate (65.5%) depressing net income and potentially volatile quarter to quarter
• ROIC at 2.8% below warning threshold (<5%), implying value creation risk versus cost of capital
• Leverage of 2.75x assets/equity and D/E 1.75x without interest coverage disclosure
• Goodwill (22.19) presents potential impairment risk if growth or margins disappoint
• Dependence on payables float; adverse shifts in settlement terms could impact cash

Key Concerns:

• Sharp operating and net margin compression (-533 bps and -328 bps YoY)
• Absence of cash flow disclosure, limiting earnings quality assessment
• Unusually high tax rate inflating below-the-line drag
• Capital efficiency below benchmarks (ROE 2.9%, ROIC 2.8%)
• Visibility on current liabilities and debt structure is limited in this disclosure

Investment Implications

Key Takeaways:

• Top-line held up (+4.8% YoY), but profits compressed sharply
• Operating margin fell to ~7.7% from ~13.0% YoY; net margin to ~4.1%
• Tax rate spike (65.5%) exacerbated EPS pressure
• Cash position is strong (148.45), but OCF/FCF unreported
• ROIC of 2.8% highlights need for margin and asset-turnaround improvements

Metrics to Watch:

• Operating margin and SG&A trajectory versus revenue growth
• Effective tax rate normalization toward historical levels
• OCF and FCF once disclosed; OCF/Net Income > 1.0 target
• Receivables and payables turnover; settlement terms and seasonality
• Take rate, customer acquisition cost, and repeat booking indicators

Relative Positioning: Within Japan OTAs, the company demonstrates stable revenue resilience but currently lags on profitability and capital efficiency, with elevated tax burden and operating cost pressure offsetting liquidity strength.

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