Bitcoin Japan Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.45B
• Operating Income: ¥-193M
• Net Income: ¥-240M
• EPS: ¥-4.27

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

Verdict: FY2026 Q2 was weak, with a notable operating loss and negative bottom line despite a solid liquidity position. Revenue was 14.52 (100M JPY), down 5.1% YoY, reflecting softer topline momentum. Gross profit was 4.76, implying a gross margin of 32.8%, but SG&A of 6.69 exceeded gross profit by 1.93, driving operating income to -1.93. Operating margin was -13.3%, and ordinary income was -1.88 after a small positive net non-operating balance (+0.05). Net income came in at -2.40, translating to an EPS of -4.27 JPY. The SG&A intensity was high at approximately 46.1% of sales, indicating insufficient cost flexibility to match the revenue decline. Cash generation was negative, with operating cash flow at -2.09; however, OCF/NI was 0.87x, suggesting losses were broadly reflected in cash terms without severe working-capital distortions. Liquidity remains very strong: current ratio 474% and quick ratio 315%, supported by cash and deposits of 4.52 and sizeable working capital of 22.63. Leverage is low with total liabilities of 6.35 and a reported D/E of 0.26x, mitigating immediate solvency concerns. Inventory at 9.62 is large relative to half-year sales, implying elevated inventory risk and potential further pressure on margins if discounting is needed. ROE was -9.9% and ROIC -9.8%, both pointing to sub-par capital efficiency and value destruction in the period. Non-operating items were largely neutral, with 0.39 of income (notably 0.34 interest income) offset by 0.34 of expenses, so the loss profile is primarily operational. Basis-point margin comparisons versus prior year are not computable due to missing prior-period margin data; however, the contraction in revenue alongside negative operating leverage likely implies YoY margin compression. The effective tax rate was -1.5% due to losses, with a small tax expense despite pre-tax loss. Forward-looking, restoring breakeven requires either revenue recovery or material SG&A rightsizing; given strong liquidity, the company has runway to execute adjustments, but inventory normalization and cost discipline are near-term priorities.

Profitability Analysis

ROE decomposition (DuPont): ROE -9.9% = Net Profit Margin (-16.5%) × Asset Turnover (0.475) × Financial Leverage (1.26x). The largest negative driver is the net profit margin at -16.5%, as asset turnover is modest and leverage is low. The margin pressure stems from SG&A (6.69) exceeding gross profit (4.76), producing an operating margin of -13.3% and leaving little room for non-operating offsets. With non-operating items netting only +0.05, the business model’s operating cost base is the core issue. Sustainability: without structural SG&A reductions or a clear sales rebound, the negative margin could persist; the small D&A (0.08) limits non-cash cushion, so losses translate to cash outflow. Concerning trends include SG&A growing faster than revenue (or not flexing down with a 5.1% revenue decline), and inventory levels appearing heavy relative to half-year sales, which could pressure gross margin via markdowns. Overall operating leverage is unfavorable at the current scale of revenue.

Growth Assessment

Topline contracted 5.1% YoY to 14.52, pointing to demand softness or share loss in core categories. Gross margin at 32.8% is not weak by absolute level for apparel-related distribution, but SG&A at 46.1% of sales leaves the P&L structurally unprofitable at current scale. Profit quality is weak given the operating loss (-1.93) and net loss (-2.40), though cash realization is reasonably aligned (OCF/NI 0.87x). No evidence of one-off gains; performance is driven by core operations rather than non-recurring items. Outlook hinges on inventory normalization and cost control; even modest revenue growth would need to be coupled with SG&A cuts to restore breakeven. With limited capex (0.07), growth will likely depend on working-capital efficiency and mix improvements rather than investment-led expansion. Absent disclosed order backlog or segment detail, visibility is limited; near-term growth risks skew to the downside until inventory and SG&A are right-sized.

Financial Health

Liquidity is strong: current assets 28.68 vs current liabilities 6.05 yields a current ratio of 473.9% and quick ratio 314.9%. No warning for current ratio (<1.0) or D/E (>2.0); D/E is 0.26x, indicating conservative leverage. Maturity mismatch risk appears low: current assets substantially exceed current liabilities by 22.63 of working capital. Cash and deposits of 4.52 provide additional cushion, though sustained OCF deficits would erode this over time. Interest-bearing debt details are unreported, but total liabilities are modest (6.35). No off-balance sheet obligations are disclosed in the provided data, so contingent liabilities cannot be assessed. Equity base of 24.22 is pressured by accumulated losses (retained earnings -6.00), but solvency is currently adequate.

Cash Flow Quality

OCF/Net Income is 0.87x, slightly below the 1.0 benchmark but above the 0.8 risk threshold, indicating moderate earnings quality with no glaring working-capital manipulation signals evident from the limited data. Operating cash outflow of -2.09 is directionally consistent with the net loss of -2.40. Capex is minimal at 0.07, implying an indicative Free Cash Flow of approximately -2.16 (OCF -2.09 less capex 0.07). With financing CF effectively zero and no reported dividends, cash burn is primarily operational. Inventory at 9.62 relative to half-year sales suggests potential cash tied up in stock; reductions here could improve OCF. Given the small D&A (0.08), cash losses would likely persist unless operating performance improves. No signs of aggressive payables management are apparent (accounts payable 2.60 vs inventory 9.62), but more detail would be needed to fully assess working-capital tactics.

Dividend Sustainability

Dividends are unreported for the period, and EPS is negative (-4.27 JPY). Retained earnings are negative (-6.00), which constrains dividend capacity under a conservative capital policy. With indicative FCF at approximately -2.16 and no financing inflows, distributions would not be covered by internally generated cash. Absent a clear profitability recovery, maintaining or initiating dividends would be challenging. The most prudent near-term stance would be preservation of cash for operations and inventory normalization; however, no formal dividend policy updates are provided in the data.

Risk Assessment

Business Risks:

• Demand softness leading to 5.1% YoY revenue decline
• High SG&A intensity (46.1% of sales) creating structural operating losses
• Inventory risk (inventories 9.62 vs half-year sales 14.52) potentially requiring discounting
• Margin pressure from potential markdowns and mix shifts
• Limited operating leverage at current sales scale

Financial Risks:

• Negative ROE (-9.9%) and ROIC (-9.8%) signaling value destruction
• Persistent OCF deficits (-2.09) eroding cash (4.52) over time
• Retained earnings negative (-6.00), constraining capital allocation flexibility
• Earnings sensitivity to small changes in gross margin due to high fixed SG&A

Key Concerns:

• Operating income -1.93 and net income -2.40 with limited non-operating offsets
• OCF/NI below 1.0 (0.87x), indicating moderate but not strong earnings quality
• Potential need for SG&A restructuring to reach breakeven
• Data gaps limit visibility into segment performance and debt structure

Investment Implications

Key Takeaways:

• Weak quarter with operating margin -13.3% and net margin -16.5%
• Topline down 5.1% YoY, highlighting demand pressure
• SG&A exceeds gross profit by 1.93, indicating structural cost imbalance
• Liquidity strong (current ratio 474%, quick ratio 315%), leverage low (D/E 0.26x)
• Cash burn from operations (-2.09) with minimal capex, indicating operational, not investment-driven, outflow
• Inventory levels elevated relative to sales, posing margin and cash risks
• Capital efficiency poor: ROE -9.9%, ROIC -9.8%

Metrics to Watch:

• Revenue trajectory and order intake
• Gross margin and inventory turnover/markdown rates
• SG&A as a percentage of sales and progress on cost reductions
• Operating cash flow and working-capital changes (inventory and receivables)
• Cash balance versus ongoing OCF burn
• Any updates on financing arrangements or dividend policy

Relative Positioning: Versus small-cap apparel/wholesale peers, profitability is weaker due to high SG&A burden and negative operating margin, but the balance sheet shows stronger-than-average liquidity and conservative leverage, providing runway to execute a turnaround.

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