TRaaS On Product Inc. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥330M
• Operating Income: ¥-33M
• Net Income: ¥-37M
• EPS: ¥-7.63

Income Statement

Balance Sheet

Profitability Ratios

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

For FY2026 Q3, 株式会社トラース・オン・プロダクト posted revenue of ¥330.0m, flat YoY, with a solid gross profit margin of 45.9% (gross profit ¥151.4m), but remained loss-making at the operating and net levels. Operating income was ¥-33.0m (operating margin about -10.0%), ordinary income ¥-32.0m, and net income ¥-36.0m (net margin -10.9%, EPS -¥7.63). Despite the loss, the balance sheet is relatively strong: total assets are ¥586.0m and total equity is ¥375.0m, implying an equity ratio of roughly 64% based on the balance sheet (the disclosed 0.0% equity ratio appears to be unreported). Leverage is modest with liabilities-to-equity around 0.56x and financial leverage (assets/equity) of 1.56x. Liquidity is ample with a current ratio of 7.94x and a quick ratio of 7.54x, supported by sizeable current assets of ¥435.9m versus current liabilities of ¥54.9m. Interest expense is low at ¥0.66m, and with operating loss the interest coverage is negative (-49.8x), though absolute interest burden remains small. DuPont decomposition indicates ROE of -9.6%, driven by negative net margin (-10.9%), moderate asset turnover (0.563x), and low leverage (1.56x). The gross margin profile suggests decent pricing/payload on cost of goods, but SG&A and overhead exceed gross profit, pushing operating income into a loss. Based on GP of ¥151.4m and operating loss of ¥33.0m, implied SG&A/other operating costs are roughly ¥184.4m; at a 45.9% gross margin, break-even revenue is estimated around ¥402m, about 22% above the current run-rate. Cash flow statements are not disclosed in this dataset (values shown as zero are unreported), so we cannot directly validate earnings quality via OCF/FCF this quarter. Inventory is modest at ¥21.8m, suggesting limited build-up risk at quarter-end, though receivables and payables data are not provided to assess working capital turns. No dividend was declared (DPS ¥0), which aligns with the current loss profile and prudent capital preservation. Overall, the company exhibits strong liquidity and low financial risk but needs revenue growth and/or cost restructuring to reach operating break-even. Visibility on order backlog, quarterly booking trends, and operating cost discipline will be key to improving profitability. Given limited cash flow disclosures and some missing share data, conclusions on cash conversion and per-share metrics rely on partial inference, and should be revisited when full filings are available.

Profitability Analysis

ROE (-9.6%) is explained by DuPont as: net margin -10.91% × asset turnover 0.563 × financial leverage 1.56. The negative ROE is primarily margin-driven, not leverage-driven. Gross margin is robust at 45.9%, indicating decent unit economics at the gross level. Operating margin is approximately -10.0% (¥-33.0m OI on ¥330.0m sales), reflecting overhead exceeding gross profit; implied SG&A/other operating costs are about ¥184.4m (GP ¥151.4m minus OI ¥-33.0m). Ordinary loss (¥-32.0m) is close to operating loss, suggesting minimal non-operating drag besides small interest. Interest expense is low (¥0.66m), but the negative EBIT leads to an interest coverage of -49.8x; in absolute terms, interest burden is not a material driver of losses. The effective tax burden is not meaningful due to losses, though taxes paid/expensed of ¥4.06m indicate non-deductible items or minimum taxes. Operating leverage is high: with a ~46% GP margin, the break-even revenue is estimated near ¥402m (implying ~22% revenue uplift needed from ¥330m if cost structure remains similar). Margin quality hinges on controlling SG&A and improving scale; any deterioration in gross margin would raise the break-even threshold. Overall, profitability is constrained by insufficient scale rather than weak gross economics.

Growth Assessment

Revenue was flat YoY at ¥330.0m, implying limited growth momentum year-to-date. Given the current cost base, sustainable profitability likely requires mid-teens to low-20% revenue growth (or comparable cost reductions) to reach break-even. The gross margin profile (45.9%) is supportive of growth translating to operating leverage if SG&A growth is contained. Profit quality is currently weak at the operating level; however, the small gap between operating and ordinary losses suggests few hidden non-operating drags. Without order intake/backlog data, sustainability of revenues cannot be fully assessed; stability in inventories (¥21.8m) points to no apparent overstocking but provides little read on demand. Outlook will depend on pipeline conversion, customer concentration, and price discipline to defend gross margin while scaling revenue. If the company can execute on cost control, incremental sales should improve OI disproportionately given the high contribution margin.

Financial Health

Liquidity is strong: current assets ¥435.9m vs current liabilities ¥54.9m yield a current ratio of 7.94x and a quick ratio of 7.54x, providing ample short-term cushion. Working capital stands at ¥381.0m, underscoring operational flexibility. Solvency appears comfortable: total liabilities ¥211.6m and equity ¥375.0m imply liabilities-to-equity of ~0.56x and an equity ratio of roughly 64% based on the balance sheet (the disclosed 0.0% equity ratio is not representative). Financial leverage (assets/equity) is low at 1.56x, limiting downside financial risk. Interest burden is small (¥0.66m), reducing refinancing sensitivity. The principal risk to financial health is not balance-sheet stress but ongoing operating losses if they persist, which could gradually erode equity if unaddressed.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed in this dataset (zeros indicate unreported, not true zeros), so direct assessment of cash conversion and FCF is not possible. Earnings quality must therefore be inferred from the income statement: the narrow gap between operating and ordinary results suggests limited non-operating noise, but we cannot confirm working capital impacts or non-cash adjustments. Depreciation is not disclosed, preventing EBITDA reconciliation; however, given the small interest expense and lean inventory, capital intensity may be moderate, but this remains an assumption. Without OCF, the OCF/Net Income ratio and FCF coverage metrics cannot be relied upon for this period. Watch for future filings with full cash flow statements to evaluate accruals, working capital swings (AR/AP/inventory), and maintenance capex needs.

Dividend Sustainability

No dividend is declared (DPS ¥0), appropriate in the context of negative earnings. Payout ratio and FCF coverage figures in the dataset are not informative due to unreported cash flows and the absence of a dividend. With net losses and a break-even revenue level above the current run-rate, near-term dividend capacity is limited. The balance sheet could theoretically support distributions, but prudent policy would prioritize returning to sustainable profitability and reinforcing cash buffers. Future dividend outlook will depend on achieving operating break-even and demonstrating consistent positive OCF.

Risk Assessment

Business Risks:

• Insufficient scale relative to fixed cost base; ~22% revenue uplift needed to reach operating break-even at current margins
• Potential demand volatility given flat YoY revenue
• Gross margin sensitivity to pricing and component costs
• Customer concentration risk (typical in electronics/components; not disclosed here)
• Supply chain and lead-time risks affecting deliveries and inventory
• Execution risk in SG&A cost control and operating efficiency

Financial Risks:

• Continued operating losses could erode equity over time
• Limited visibility on cash generation due to unreported cash flow statements
• Negative interest coverage (driven by operating loss), though absolute interest burden is small
• Potential working capital swings (AR/AP) not observable in current data

Key Concerns:

• Operating loss despite healthy gross margin points to overhead pressure
• Flat revenue trajectory undermines path to break-even
• Lack of disclosed cash flow data limits assessment of earnings quality and liquidity runway

Investment Implications

Key Takeaways:

• Healthy gross margin (45.9%) but operating margin -10% due to overhead exceeding GP
• Strong liquidity (current ratio ~7.9x; quick ratio ~7.5x) and moderate leverage (~0.56x liabilities/equity)
• Break-even revenue estimated around ¥402m, ~22% above current level
• ROE -9.6% driven by negative net margin; leverage is not the driver
• Cash flow information is missing, limiting quality-of-earnings validation

Metrics to Watch:

• Order intake/backlog and quarterly revenue growth
• SG&A trend and operating expense discipline
• Gross margin stability versus input cost/pricing changes
• Working capital metrics (AR days, AP days, inventory turns) and OCF once disclosed
• Capex and depreciation once reported to gauge capital intensity
• Cash balance and net cash/debt position from future filings

Relative Positioning: Within small-cap Japanese electronics/components peers, the company exhibits stronger-than-average liquidity and conservative leverage, but lags on operating profitability due to scale and cost structure; conversion of gross margin into positive operating income is the key differentiator to improve standing.

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