Bitcoin Japan (8105) FY2026 Q3 Earnings Report

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Executive Summary

In addition to the decline in revenue, the final loss widened significantly year on year due to an increase in selling, general and administrative expenses and the recognition of extraordinary losses. Revenue was ¥22.7B (-4.2% YoY), Operating Income was ¥-2.8B (deteriorating from ¥-2.5B in the prior year), Ordinary Income was ¥-3.1B (deteriorating from ¥-2.0B in the prior year), and Net Income was ¥-3.6B (deteriorating from ¥-2.1B in the prior year). Although the gross profit margin improved to 33.8% from the prior year, this was offset by the rise in the SG&A ratio and an increase in corporate expenses, while extraordinary losses, including an impairment loss of 0.4B, also pressured the bottom line.

Factors Affecting Performance

【Revenue】Revenue declined to ¥22.7B, down -4.2% YoY. By segment, the core Fashion Business generated ¥11.2B (composition ratio 49.3%, -2.9% YoY), the Materials Business generated ¥6.2B (27.3%, -9.9% YoY), the Kimono Business generated ¥4.9B (21.6%, +2.0% YoY), and the Lifestyle Business generated ¥0.3B (1.5%, -20.4% YoY). All major businesses other than Fashion recorded revenue declines.

【Profit and Loss】The gross profit margin improved to 33.8% from 32.9% in the same period of the prior year, but the SG&A ratio rose to 46.2%, weighing on earnings. By segment, the Fashion Business turned profitable with Operating Income of 0.2B, while the loss in the Kimono Business widened to 0.8B, resulting in a combined loss of 0.9B for the reported segments. After adding approximately 2.0B in unallocated corporate expenses, the consolidated Operating Loss widened to 2.8B. Ordinary Loss came to 3.1B, impacted by non-operating expenses of 0.8B, including 0.4B in fees paid. After adding extraordinary losses of 0.5B, including an impairment loss of 0.4B, the loss before tax was 3.6B, and Net Income was a loss of 3.6B. This was a decline in revenue and earnings resulting from both lower sales and a deterioration in the cost structure.

Segment Analysis

Segment results showed that the Fashion Business became profitable, generating revenue of ¥11.2B and Operating Income of 0.2B (profit margin 1.5%), making it the only profitable segment after recording a loss in the prior year. The Materials Business generated revenue of ¥6.2B and an Operating Loss of 0.1B, narrowing from a loss of 0.3B in the prior year. Although the Kimono Business increased revenue to ¥4.9B, its Operating Loss widened to 0.8B from 0.6B in the prior year, indicating that higher revenue has not translated into improved earnings. The Lifestyle Business generated revenue of ¥0.3B and an Operating Loss of 0.1B, remaining in the red despite its small scale. Although the combined segment losses are trending toward improvement, unallocated corporate expenses expanded to approximately 2.0B from approximately 1.5B in the prior year, becoming the primary factor behind the expansion of the consolidated Operating Loss.

Key Financial Indicators

【Profitability】The Operating Income margin deteriorated to -12.4% from -10.5% in the prior year, while the Net Income margin also declined substantially to -15.9% from -8.9% in the prior year. The gross profit margin improved to 33.8% from 32.9% in the prior year, but this was more than offset by the rise in the SG&A ratio to 46.2% from 43.4%.【Cash Flow Quality】Comprehensive Income was -3.7B, slightly below Net Income of -3.6B. The foreign currency translation adjustment of -0.1B was the primary difference, and there was no significant divergence.【Investment Efficiency】Annualized ROE was -17.8%, while the Equity Ratio was 76.9%, down from 80.3% in the prior year. Due to continued losses, retained earnings deteriorated to -7.2B, indicating progressing capital impairment.【Financial Soundness】Liquidity remained ample, with current assets of 33.3B against current liabilities of 7.8B. Cash and deposits increased YoY to 9.5B, while short-term loans declined, indicating a shift in the asset composition toward cash.

Cash Flow Analysis

As direct data from the cash flow statement are unavailable, fund movements are analyzed based on balance sheet trends. Cash and deposits increased from 4.7B in the prior year to 9.5B, while short-term loans declined from 11.1B to 7.0B, suggesting that funds were converted into cash through the collection of loans. Inventories increased from 9.4B to 10.2B, and electronically recorded liabilities increased from 2.1B to 2.9B, potentially indicating that inventory accumulation and an increase in trade payables are pressuring working capital. Due to continued Operating Losses and Net Losses, retained earnings deteriorated from -3.6B to -7.2B, and the impairment of internal reserves is affecting financial capacity.

Quality of Earnings

In addition to an Ordinary Loss of 3.1B, extraordinary losses of 0.5B, including an impairment loss of 0.4B, were recorded as a temporary factor, widening the loss before tax to 3.6B. Non-operating income of 0.5B primarily consisted of interest income and has a recurring nature; however, fees paid of 0.4B accounted for more than half of non-operating expenses of 0.8B, and the sustainability of this expense item requires monitoring. Comprehensive Income of -3.7B was broadly in line with Net Income of -3.6B, with no significant divergence attributable to other comprehensive income items such as foreign currency translation adjustments. No material distortion was therefore observed in terms of earnings quality relative to Net Income. The upward trend in inventories is a point of concern due to the risk of future valuation losses.

Earnings Forecast and Guidance

The Full-Year earnings forecast calls for Revenue of 32.0B (+3.3% YoY), an Operating Loss of 2.0B, and an Ordinary Loss of 1.9B. Against this forecast, the Q3 year-to-date revenue progress ratio was only 71.0%, while both the Operating Loss and Ordinary Loss had already exceeded the loss amounts projected for the Full Year (Q3 year-to-date Operating Loss of 2.8B versus the Full-Year forecast of 2.0B). Achieving the Full-Year plan will require a considerable return to profitability on a standalone Q4 basis.

Shareholder Returns

The Q2 dividend was ¥0 per share, and because no dividend was paid, the Payout Ratio is not applicable. Given the continuation of Net Losses and retained earnings of -7.2B, the resumption of dividends will require a return to profitability in the core business and an improvement in accumulated losses. Treasury stock was 3.9B, with no significant change from the prior year, and no active share repurchase activity was identified during the period.

Risk Factors

1. Inventory accumulation risk: Inventories were 10.2B, up from 9.4B in the prior year. A prolonged inventory turnover period could lead to valuation losses or additional discounting, and attention is required regarding fluctuations in inventory value across the Kimono, Fashion, and Materials Businesses.

2. Earnings structure risk: Corporate expenses (unallocated segment expenses) increased to approximately 2.0B from approximately 1.5B in the prior year, reducing fixed-cost absorption capacity as revenue contracts. Despite higher revenue, the Kimono Business recorded a larger loss, indicating that revenue growth has not led to improved profitability.

3. Capital impairment risk: Due to continued Net Losses, retained earnings deteriorated to -7.2B from -3.6B in the prior year. Although the Equity Ratio remains high at 76.9%, it is trending downward from 80.3% in the prior year, requiring attention to capital reserves if losses continue.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (trading)

Profitability and Returns

While the industry median is in positive territory, the Company recorded substantial losses in both Operating Income and Net Income margins, placing its profitability at the lower end of the industry.

Growth and Capital Efficiency

While the industry median is on an upward revenue trend, the Company recorded a revenue decline and ranks toward the lower end of the industry in top-line growth.

※Source: Company analysis

Key Points from the Financial Results

1. The gross profit margin improved by approximately 90bp YoY, but this was offset by an approximately 280bp rise in the SG&A ratio and an increase in corporate expenses, resulting in an approximately 190bp deterioration in the Operating Income margin. Correcting the earnings structure will be a key focus going forward.

2. The Fashion Business turning profitable and the narrowing loss in the Materials Business are positive developments. However, the widening loss in the Kimono Business and the increase in corporate expenses are pressuring consolidated earnings, creating a clear divergence in performance across segments.

3. The loss amount projected for the Full Year had already been exceeded as of Q3 year to date, while the revenue progress ratio of 71.0% was also slightly below plan. The degree to which profitability improves in Q4 will be a key factor determining whether the Full-Year plan is achieved.

Theoretical Share Price (Reference Value)

Sensitivity: ¥25–¥26 at cost of equity ±1%, and ¥25–¥26 at ω±0.1.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing difference relative to the Full-Year forecast).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-08 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmark is reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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