GLOME Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥993M
• Operating Income: ¥-37M
• Net Income: ¥-0
• EPS: ¥-49.72

Income Statement

Balance Sheet

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

For FY2026 Q2 (cumulative), Grom Holdings (89380) reported revenue of ¥993 million, down 7.5% YoY, indicating a soft top line in the period. Despite the revenue decline, the company maintained a high reported gross margin of 55.3%, suggesting resilient pricing or a favorable mix; however, there is an internal inconsistency between reported gross profit (¥549 million) and cost of sales (¥524 million), which would ordinarily imply a lower gross profit. Operating income was a loss of ¥37 million, yet this reflects a significant YoY improvement (+148.4%), implying effective cost control or operating efficiency gains. Ordinary income deteriorated to a loss of ¥358 million, pointing to substantial non-operating expenses or losses overshadowing the operating improvement. Net income was a loss of ¥449 million (EPS: -¥49.72), a material deterioration YoY (-99.3%), and the effective tax rate reads near zero due to the loss position. The DuPont decomposition shows a net margin of -45.22%, asset turnover of 0.124x, and low financial leverage of 1.09x, resulting in an ROE of -6.09%, with profitability the primary drag. Balance sheet strength is notable: total assets of ¥8,039 million versus total equity of ¥7,370 million implies an equity ratio around 91.7% (despite a reported 0.0%), and liabilities are modest at ¥806 million (D/E ~0.11x). Liquidity appears very strong with a current ratio of 728% and negligible inventories (¥16 million), limiting working capital risk from stock holdings. Working capital of ¥3,743 million provides a sizable short-term buffer to absorb operating losses. Cash flow statements are not disclosed (values presented as zero reflect non-disclosure), so operating cash generation and free cash flow cannot be assessed from the provided data. Dividend per share is reported as ¥0, consistent with the loss position and likely a conservative capital allocation stance. The key story this quarter is operating discipline amid weaker revenues, offset by heavy non-operating losses that drove the bottom line deeply negative. Asset intensity remains low (turnover 0.124x), and leverage is minimal, providing solvency resilience while management addresses profitability. The outlook hinges on stabilizing revenue, sustaining cost control, and mitigating non-operating drags to translate operating improvements into net profitability. Data limitations around cash flows and certain per-share metrics constrain a full quality-of-earnings assessment, so near-term monitoring should focus on ordinary income drivers and working capital dynamics.

Profitability Analysis

ROE_decomposition: Reported ROE is -6.09%, driven primarily by a very weak net margin of -45.22% on revenue of ¥993 million and low asset turnover of 0.124x; financial leverage is subdued at 1.09x (assets/equity), so leverage does not amplify returns in either direction. margin_quality: Gross margin is reported at 55.3% (gross profit ¥549 million), which is high and suggests strong unit economics or a favorable revenue mix; note the apparent inconsistency with cost of sales (¥524 million) that would imply a lower gross profit. Operating margin is -3.7%, improved YoY per the +148.4% change in operating income, indicating better cost control. The gap between operating income (-¥37 million) and ordinary income (-¥358 million) indicates sizable non-operating losses (e.g., investment valuation losses, FX, or other financial items) that undermine margin quality at the pre-tax and net levels. operating_leverage: Revenue decreased 7.5% YoY while the operating loss narrowed, implying fixed-cost containment and favorable operating leverage execution. However, ordinary and net losses negate the operating improvements, highlighting sensitivity to non-operating items.

Growth Assessment

revenue_sustainability: Revenue of ¥993 million declined 7.5% YoY, suggesting either demand softness, project timing effects, or a shift in mix. The high gross margin implies pricing power or a richer mix, but sustaining volumes is a near-term challenge. profit_quality: Operating profit trajectory is improving (loss narrowing), but non-operating losses (ordinary income -¥358 million) are overwhelming; without addressing these, net profitability will remain weak. Effective tax rate is near zero due to losses. outlook: Near-term growth depends on stabilizing the top line and preventing non-operating drags. With low leverage and ample liquidity, the company has runway to pursue operational improvements. Monitoring ordinary income components will be crucial to assess the likelihood of a return to net profitability in coming quarters.

Financial Health

liquidity: Current assets ¥4,339 million versus current liabilities ¥596 million yields a current ratio of 728% and quick ratio of 725.3%, indicating very strong short-term liquidity. Working capital stands at ¥3,743 million, providing a significant cushion. solvency: Total liabilities are ¥806 million against equity of ¥7,370 million, implying a debt-to-equity ratio of roughly 0.11x and an equity ratio around 91.7% (despite the reported 0.0% figure). The balance sheet shows substantial solvency capacity. capital_structure: Low financial leverage (assets/equity 1.09x) limits risk but also constrains ROE upside absent margin and turnover improvements. Ordinary losses could erode equity if persistent, but the current equity base appears robust.

Cash Flow Quality

earnings_quality: Cash flow statements are not disclosed in the provided data (zeros reflect non-reporting), so OCF, FCF, and OCF/NI cannot be evaluated. The large gap between operating and ordinary income suggests potential volatility from financial items, which can affect cash conversion. FCF_analysis: Free cash flow is not available. With minimal inventories (¥16 million) and strong liquidity, structural working capital risk appears contained, but the absence of OCF and capex data limits FCF assessment. working_capital: High working capital (¥3,743 million) and negligible inventories imply low inventory risk and strong ability to meet obligations. Receivables and payables detail is not disclosed, so collection and payment cycles cannot be analyzed.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is 0%, consistent with the net loss of ¥449 million. Given negative earnings and unknown cash flow, distributions would be imprudent near-term. FCF_coverage: FCF coverage cannot be determined due to non-disclosure of cash flows; reported 0.00x should be treated as unavailable rather than a true zero. policy_outlook: With strong equity and liquidity but negative earnings, a conservative dividend stance is likely until visibility on sustained profitability and cash generation improves.

Risk Assessment

Business Risks:

• Revenue contraction of 7.5% YoY indicating demand or project timing risk
• Dependence on non-operating items that materially impact ordinary income
• Potential margin volatility given inconsistency between reported gross profit and cost of sales
• Execution risk in sustaining cost controls while stabilizing top-line growth

Financial Risks:

• Persistent ordinary losses (-¥358 million) eroding equity if not addressed
• Limited visibility on cash generation due to non-disclosed cash flows
• Potential exposure to investment valuation or FX losses embedded in non-operating results
• Concentration risk if asset turnover remains low (0.124x), limiting earnings power

Key Concerns:

• Large gap between operating income (-¥37 million) and ordinary income (-¥358 million)
• Data limitations on OCF/FCF hinder assessment of earnings quality
• Apparent inconsistency between cost of sales and gross profit figures
• Sustained net losses (-¥449 million) despite strong balance sheet

Investment Implications

Key Takeaways:

• Operating loss narrowed significantly (+148.4% YoY) despite a 7.5% revenue decline
• Ordinary and net results are heavily negative due to non-operating factors
• Balance sheet is robust with equity ratio ~91.7% and D/E ~0.11x
• Liquidity is strong (current ratio 728%, working capital ¥3,743 million)
• High reported gross margin (55.3%) suggests resilient unit economics, subject to data consistency

Metrics to Watch:

• Ordinary income components (investment/financial items) and their volatility
• Revenue trajectory and order intake/backlog (if disclosed) for signs of stabilization
• Operating margin progression as cost controls continue
• Cash flow from operations and capex once disclosed to assess FCF sustainability
• Asset turnover trends to gauge efficiency improvements

Relative Positioning: Financially conservative balance sheet with strong liquidity and low leverage provides resilience relative to peers, but profitability lags due to significant non-operating losses and soft top-line momentum.

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