Cookpad Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥4.04B
• Operating Income: ¥201M
• Net Income: ¥538M
• EPS: ¥6.83

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

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

Verdict: FY2025 Q3 was mixed for Cookpad—top-line contracted and core profitability compressed sharply, but bottom-line benefited from non-operating items and tax credits, keeping ROE positive albeit low. Revenue declined 9.5% YoY to 40.40, while operating income fell 63.6% YoY to 2.01, indicating a significant deterioration in operating leverage. Net income was 5.38 (−39.5% YoY), exceeding operating income by 3.37 due to positive non-operating contributions and a small tax benefit. Profit before tax of 4.93 implies roughly 2.92 of net non-operating gains relative to operating income. The effective tax rate was −2.9%, turning tax into a modest earnings tailwind this quarter. Operating margin compressed to about 5.0% (2.01/40.40) from an estimated ~12.4% a year ago, or roughly 740 bps of margin compression. We estimate prior-year revenue at ~44.64 and operating income at ~5.52, based on the disclosed YoY rates. Gross profit printed at 44.35 versus revenue of 40.40, producing a gross margin above 100%, suggesting IFRS presentation effects (other operating income and/or minimal cost of sales for a platform model) rather than an economic anomaly. SG&A was 38.96, implying GP minus SG&A of ~5.39, yet operating income was only 2.01—suggesting other operating expenses (e.g., impairments or one-off charges) weighed on core profit. Balance sheet strength remains a key positive: equity ratio is 91.0%, total liabilities are only 12.53 against assets of 139.48, and cash & equivalents are a sizable 55.46, implying a net-cash-like position. ROE calculated via DuPont is 4.2% (NPM 13.3% × asset turnover 0.290 × leverage 1.10x), supported more by non-operating items than core operations. ROIC is weak at 1.6%, below the 5% warning threshold, highlighting ongoing capital efficiency challenges. Earnings quality cannot be fully assessed as operating cash flow was not disclosed; this limits confidence in the durability of the reported net income. Comprehensive income of 5.94 exceeded net income by 0.56, indicating positive OCI (likely investment valuation or FX effects). Forward-looking, restoring operating margin will be critical as non-operating gains and tax credits are unlikely to be consistent sources of support. With a strong balance sheet but weak ROIC and pressured operating margin, Cookpad must accelerate revenue stabilization and cost discipline to improve sustainable returns.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 13.3% × 0.290 × 1.10 ≈ 4.2%. The largest change driver YoY is net profit margin, as operating income fell 63.6% on a 9.5% revenue decline, implying sharp operating margin compression. Business reason: core monetization (ads/subscriptions) likely softened with weaker traffic/advertising demand and/or pricing, while fixed costs in SG&A (personnel, development, marketing) created negative operating leverage; additional other operating expenses also reduced operating profit relative to GP. Non-operating gains and a small tax credit elevated net income above operating income, temporarily supporting NPM. Sustainability: the non-operating boost is unlikely to be a recurring earnings engine; absent revenue re-acceleration or cost takeout, operating margins may remain under pressure. Warning flags: operating margin dropped from an estimated ~12.4% to 5.0% (−740 bps), and the gap between GP−SG&A (~5.39) and operating income (2.01) suggests incremental operating charges. While absolute SG&A of 38.96 is not benchmarked to prior year here, the divergence between revenue (−9.5% YoY) and operating income (−63.6% YoY) implies operating costs did not flex down in line with revenue, indicating unfavorable operating leverage.

Growth Assessment

Revenue contracted 9.5% YoY to 40.40, signaling ongoing top-line pressure. Operating income dropped 63.6% YoY to 2.01, showing that cost structure rigidity amplified the revenue decline into outsized profit contraction. Net income fell 39.5% to 5.38 but remained above operating income due to non-operating contributions and a tax benefit, which are not reliable growth drivers. The estimated prior-year operating margin of ~12.4% fell to ~5.0%, indicating weaker pricing/monetization and/or higher operating costs per unit of revenue. The gross margin above 100% likely reflects platform economics and IFRS presentation (low COGS and inclusion of other operating income), not sustainable incremental profitability. Without evidence of user growth, ad recovery, or subscription ARPU uplift, revenue sustainability remains uncertain. For outlook, stabilization hinges on product engagement and monetization initiatives and on aligning SG&A with revenue to restore operating leverage. Near-term growth is more likely to be driven by cost optimization than by top-line acceleration. Non-operating items aided this quarter but should be treated as low-quality, potentially one-off supports to earnings.

Financial Health

Liquidity appears strong but cannot be fully confirmed due to missing current liabilities; current assets are 123.67 and cash & equivalents are 55.46. The equity ratio is 91.0%, and total liabilities are 12.53 versus assets of 139.48, indicating a very conservative balance sheet. Debt-to-equity is reported at 0.10x, suggesting low leverage; interest-bearing debt specifics are unreported. There is no warning for Current Ratio < 1.0 because current liabilities are unreported; however, given low total liabilities, a severe liquidity shortfall appears unlikely. Maturity mismatch risk seems low given large current assets and cash; nonetheless, absence of current liability details limits precision. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow were not disclosed, so we cannot compute OCF/Net Income or FCF coverage. As a result, earnings quality cannot be validated against cash conversion benchmarks. The reliance on non-operating gains and tax credits to lift net income above operating income reduces perceived quality until OCF data confirms cash backing. Working capital specifics beyond accounts receivable (9.53) and inventories (0.09) are limited; we thus cannot assess potential working capital release/absorption or manipulation. With cash & equivalents of 55.46 and low leverage, near-term liquidity for operations appears sufficient, but sustainability of investments/dividends cannot be judged without OCF/CapEx disclosure.

Dividend Sustainability

Dividend data (DPS, total dividends, payout ratio, and FCF coverage) are unreported, preventing a formal sustainability assessment. Given net income of 5.38, low leverage, and significant cash on hand, the balance sheet could support dividends if policy prioritizes returns; however, weak ROIC (1.6%) and compressed operating margin argue for reinvestment or cost restructuring. Without OCF and CapEx, FCF coverage of any dividend is unknown. Policy outlook remains unclear due to missing disclosures.

Risk Assessment

Business Risks:

• Top-line contraction (−9.5% YoY) indicating demand/engagement and monetization headwinds.
• Operating margin compression (~−740 bps YoY) reflecting negative operating leverage and potential cost rigidity.
• Dependence on non-operating gains and tax credits to support bottom-line this quarter.
• Competitive pressure from alternative recipe/content platforms and video-centric ecosystems.
• Potential advertising market softness impacting CPMs and fill rates.
• Subscription churn/ARPU pressure if consumer willingness to pay weakens.

Financial Risks:

• Low ROIC at 1.6% (below 5% warning), indicating poor capital efficiency.
• Limited visibility on cash generation due to unreported OCF/FCF.
• Potential for additional operating charges (gap between GP−SG&A and operating income suggests other operating expenses).
• Unclear debt maturity profile due to missing short/long-term loan disclosures, though overall leverage appears low.

Key Concerns:

• Sustainability of non-operating income that lifted PBT above operating income by ~2.92.
• Gross margin above 100% indicates atypical presentation; sudden shifts in other operating income could swing profit.
• If revenue pressure persists, further negative operating leverage could erode profits despite cost controls.
• Data limitations on cash flows and dividends constrain assessment of shareholder return capacity.

Investment Implications

Key Takeaways:

• Core profitability weakened materially; operating margin fell to ~5.0% with ~−740 bps YoY compression.
• Bottom-line (NI 5.38) was supported by non-operating items and a tax benefit, not core operations.
• Balance sheet is very strong (equity ratio 91%, low liabilities, cash 55.46), reducing solvency risk.
• ROE is modest at 4.2% and ROIC is weak at 1.6%, highlighting capital efficiency concerns.
• Revenue stabilization and SG&A flexibility are the primary levers to restore sustainable profitability.

Metrics to Watch:

• Active users/engagement and ARPU (ads and subscriptions) as leading indicators of revenue stabilization.
• Operating margin and SG&A trend versus revenue to gauge operating leverage normalization.
• Non-operating income components (investment gains, equity-method income, FX) for volatility risk.
• OCF and FCF once disclosed, to validate earnings quality and dividend capacity.
• CapEx and product development spend to assess balance between reinvestment and returns.

Relative Positioning: Versus domestic internet media/platform peers, Cookpad exhibits stronger balance sheet conservatism but weaker growth and ROIC; absent evidence of user/monetization recovery, it sits in a lower-growth, lower-return quadrant despite low financial risk.

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