Informetis Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥366M
• Operating Income: ¥-428M
• Net Income: ¥35M
• EPS: ¥-101.99

Income Statement

Balance Sheet

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

Infomethis Co., Ltd. (281A0) reported FY2025 Q3 consolidated results under JGAAP with a sharp top-line contraction and continued operating losses. Revenue was ¥366 million, down 47.6% YoY, highlighting significant demand or project timing pressure. Despite the revenue decline, reported gross profit was ¥444.4 million, implying an unusually high gross margin of 121.4%, likely reflecting non-recurring factors (e.g., cost reversals, reclassification effects, subsidies, or license accounting), rather than underlying unit economics. Operating income was a loss of ¥428 million, essentially unchanged YoY, indicating that management offset revenue pressure with cost measures but that the fixed-cost base remains heavy relative to the current scale. Ordinary income was a loss of ¥496 million, with the step-down from operating income largely explained by interest expense of ¥10.4 million and other non-operating items. Net income was a loss of ¥497 million, translating to EPS of -¥101.99. Using the provided DuPont components, ROE was -62.83%, driven by a deeply negative net margin of -135.79%, modest asset turnover of 0.239x, and financial leverage of 1.93x. Balance sheet strength is relatively solid: total assets were ¥1,529 million and total equity ¥791 million, implying an equity ratio around 51.7% (despite a reported 0.0% ratio, which appears undisclosed rather than zero). Liquidity appears comfortable with current assets of ¥1,126 million and current liabilities of ¥316 million, yielding a current ratio of 3.56x and working capital of ¥809.7 million. Debt-to-equity stands at 0.91x, indicating moderate leverage but manageable in light of the equity base, provided losses narrow. Interest coverage is weak at -41.0x, a direct result of negative operating income; while actual cash interest outflows are modest, sustained losses could erode flexibility over time. Operating cash flow, investing cash flow, financing cash flow, and cash balance were not disclosed (shown as zeros), limiting cash runway analysis and free cash flow assessment. SG&A is inferred at roughly ¥872 million (gross profit of ¥444 million less operating loss of ¥428 million), underscoring a cost base still significantly above revenue. The company paid no dividends (DPS ¥0.00), which is consistent with loss-making status and likely a prudent stance given the need to fund operations. Overall, the quarter underscores a transition period: severe revenue compression, anomalously high gross margin, and continued fixed-cost drag, but with a balance sheet that still affords time for a turnaround if growth can re-accelerate and costs normalize. Data limitations (notably cash flow lines and some ratios) constrain certain aspects of analysis; conclusions focus on reported non-zero items and derived metrics.

Profitability Analysis

ROE_decomposition: ROE of -62.83% reflects: Net profit margin -135.79% x Asset turnover 0.239x x Financial leverage 1.93x. The dominant driver is the deeply negative margin; efficiency (ATO) is low, consistent with early-stage scale or project-driven revenue, while leverage is moderate. margin_quality: Gross margin of 121.4% (¥444.4m GP on ¥366.0m revenue) is atypical for steady-state operations and likely includes non-operating-like effects within cost of sales or revenue mix (e.g., cost reversals, one-time adjustments, or high-margin license/IP recognition). Operating margin is -117.0% (¥-428.0m OI on ¥366.0m revenue), highlighting that SG&A of roughly ¥872m outweighs the top line. operating_leverage: Revenue declined 47.6% YoY while operating loss was flat YoY (+0.0%), implying some cost containment but persistent fixed-cost intensity. As revenue scales back, incremental gross profit (if normalized) would have high flow-through potential, but the current structure yields substantial negative operating leverage.

Growth Assessment

revenue_sustainability: Revenue of ¥366m (-47.6% YoY) signals weak order conversion or timing delays; sustainability hinges on recovering bookings and stabilizing the pipeline. The magnitude suggests either customer concentration or project lumpiness. profit_quality: Net loss of ¥497m and ordinary loss of ¥496m indicate core losses beyond operating level, amplified slightly by interest and other non-operating items. The gross margin anomaly clouds visibility into core unit economics; normalized margin is likely materially lower than 121%. outlook: A return to growth will require renewed bookings, improved revenue visibility, and SG&A discipline. If revenue re-accelerates and gross margin normalizes to sustainable levels, losses should narrow given the existing cost base. Near-term, growth trajectory remains uncertain given the steep YoY decline.

Financial Health

liquidity: Current assets ¥1,126.1m vs current liabilities ¥316.4m yield a current ratio of 3.56x and quick ratio of 3.56x (no inventories reported). Working capital is ¥809.7m, offering a liquidity cushion. solvency: Total equity ¥791.0m vs total assets ¥1,529.0m implies an equity ratio of ~51.7% (calculated). Debt-to-equity of 0.91x indicates moderate leverage; however, persistent losses could pressure equity over time. capital_structure: Liabilities total ¥720.6m; interest expense of ¥10.4m suggests a mix that includes interest-bearing debt but not excessively burdensome at present. Interest coverage is -41.0x due to negative operating income, underscoring sensitivity to ongoing losses.

Cash Flow Quality

earnings_quality: With OCF undisclosed and an anomalously high gross margin, the quality of earnings cannot be verified. The gap between operating loss (¥-428m) and interest expense (¥10.4m) suggests losses are primarily operational rather than financing-driven. FCF_analysis: Free cash flow is not assessable due to missing operating and investing cash flows (reported as zeros). Capex and working capital swings remain unknown. working_capital: Current assets ¥1,126.1m vs current liabilities ¥316.4m imply ample short-term buffer; inventories are undisclosed (0). Receivables vs payables dynamics are not available, limiting assessment of cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 with a payout ratio of 0.0%, consistent with a net loss of ¥497m and negative ROE. Given losses and the need to preserve liquidity, distributions are appropriately suspended. FCF_coverage: FCF coverage cannot be evaluated as OCF and capex are undisclosed. On current earnings, there is no coverage for dividends. policy_outlook: Continuation of a no-dividend policy appears likely until profitability and positive free cash flow are established and the balance sheet can support distributions sustainably.

Risk Assessment

Business Risks:

• Revenue volatility and project timing risk, evidenced by -47.6% YoY decline
• Potential customer concentration and contract lumpiness
• Uncertain gross margin sustainability given 121.4% reported margin
• Execution risk in scaling revenue to cover a high fixed-cost base (~¥872m SG&A)
• Competitive and pricing pressures typical of software/data/solutions markets
• Dependence on non-recurring items or licensing structures (if applicable) for margins

Financial Risks:

• Sustained operating losses (¥-428m) leading to equity erosion and higher leverage over time
• Weak interest coverage (-41.0x), heightening sensitivity to financing costs
• Limited visibility on cash runway due to undisclosed cash flow and cash balances
• Refinancing or capital-raising needs if losses persist and liquidity tightens

Key Concerns:

• Steep revenue contraction without clear evidence of near-term recovery
• Anomalous gross margin obscuring true unit economics
• High SG&A relative to revenue requiring structural cost action or rapid growth
• Lack of disclosed operating and free cash flow constraining assessment of sustainability

Investment Implications

Key Takeaways:

• Top line contracted sharply to ¥366m (-47.6% YoY), pointing to demand or timing issues
• Operating loss remained large at ¥-428m, essentially flat YoY despite revenue pressure
• Gross margin of 121.4% is not likely indicative of steady-state economics
• Balance sheet remains a partial mitigant with ~51.7% equity ratio and ¥809.7m working capital
• Leverage is moderate (D/E 0.91x), but interest coverage is negative due to losses
• Cash flow disclosure is insufficient to evaluate cash burn and runway

Metrics to Watch:

• Quarterly bookings and revenue growth trajectory
• Normalization of gross margin toward sustainable levels
• SG&A trend and operating expense discipline
• Operating cash flow and free cash flow once disclosed
• Equity ratio and net debt evolution
• Non-operating items impacting ordinary income

Relative Positioning: Relative to loss-making small-cap peers on the TSE, the company exhibits stronger near-term liquidity but weaker earnings quality (given margin anomalies) and significant execution risk to restore growth and achieve breakeven.

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