AI Takeaway
J reported Q2 FY2026 results with gross profit up 6.9% YoY to $1.56B, but operating income collapsed 63.7% to $151M as SG&A expenses surged 35.1%, while net income swung to $79.6M from a prior-year loss, and long-term debt rose 55.1% to $4.08B.
Cost of Revenue
$2.9B
++33.51% YoY
EPS (Basic)
$-0.34
-666.67% YoY
Operating Income
$-81.18M
-138.91% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Cost of Revenue surged 23.8% YoY to $5.43B, significantly outpacing gross profit growth of 6.9% to $1.56B, compressing the gross margin and signaling rising input or operational costs relative to revenue generation.
Source: Source: 10-Q Income Statement
SG&A expenses jumped 35.1% YoY to $1.41B, which was the primary driver behind operating income declining 63.7% to $151.4M, suggesting significant investment in selling, general, and administrative functions that has not yet translated to proportional revenue growth.
Source: Source: 10-Q Income Statement
Net income turned positive at $79.6M compared to a loss of $12.5M in the prior-year period, a 736.1% improvement, likely driven by below-the-line items such as tax benefits or non-operating gains rather than core operating performance.
Source: Source: 10-Q Income Statement
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Upgrade to unlockLong-term debt surged 55.1% YoY to $4.08B while stockholders' equity fell 14.8% to $3.29B, significantly increasing financial leverage. This elevated debt load raises refinancing risk and interest expense burden, particularly in a higher-rate environment. The company's ability to service this debt depends on improving operating cash flows.
Source: Source: 10-Q Balance Sheet
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Upgrade to unlockReported EPS of $1.75 versus the $1.67 analyst consensus — a +5.0% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Cost of Revenue | $2.9B | $2.17B | +33.51% |
Gross Profit | $794.89M | $738.35M | +7.66% |
Operating Income | $-81.18M | $208.65M | -138.91% |
Net Income | $-45.88M | $5.61M | -917.59% |
EPS (Basic) | $-0.34 | $0.06 | -666.67% |
EPS (Diluted) | $-0.34 | $0.06 | -666.67% |
SG&A Expense | $876.07M | $529.7M | +65.39% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $11.94B | $11.21B | +6.52% |
Current Assets | $5.21B | $4.44B | +17.33% |
Current Liabilities | $3.64B | $2.96B | +22.89% |
Stockholders' Equity | $3.29B | $3.86B | -14.79% |
Cash & Equivalents | $1.37B | $1.2B | +13.88% |
Long-Term Debt | $4.08B | $2.63B | +55.08% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $-103.36M | $11.03M | -1037.51% |
Investing Cash FlowYTD | $-31.76M | $-24.34M | -30.46% |
Financing Cash FlowYTD | $392.01M | $106.63M | +267.62% |
Share BuybacksYTD | $471.84M | $552.4M | -14.58% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
ROE | -1.4% | — | — |
ROA | -0.4% | — | — |
Current Ratio | $1.434 | — | — |
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J's Q2 FY2026 results showed a mixed picture: net income recovered to $79.6M from a prior-year loss, but operating income collapsed 63.7% to $151.4M as SG&A expenses surged 35.1% to $1.41B. Operating cash flow also turned deeply negative at -$103.4M, and long-term debt jumped 55.1% to $4.08B, raising concerns about financial leverage and cash generation.
On a net income basis, yes — J swung to a profit of $79.6M from a loss of $12.5M in Q2 of the prior year, with EPS recovering to $0.79 from -$0.05. However, operating income fell sharply by 63.7% to $151.4M, suggesting the net income improvement was driven by below-the-line items rather than stronger core operations.
J's operating income dropped 63.7% YoY to $151.4M primarily because SG&A expenses surged 35.1% to $1.41B, far outpacing gross profit growth of just 6.9% to $1.56B. This means J's overhead and selling costs consumed a much larger portion of gross profit compared to the prior year.
J's financial health shows some stress: long-term debt rose 55.1% to $4.08B while stockholders' equity fell 14.8% to $3.29B, pushing the debt-to-equity ratio above 1.0x. Operating cash flow was negative at -$103.4M, and while the current ratio of 1.43 provides some near-term liquidity, the overall leverage and cash flow trends warrant close monitoring.
J's cash flow performance was notably weak in Q2 FY2026, with operating cash flow turning negative at -$103.4M compared to a positive $11.0M in the prior year. The company relied heavily on financing activities, which generated $392M in cash inflows, largely from new debt issuance, to offset operational cash consumption and $471.8M in share buybacks.