Synspective Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.67B
• Operating Income: ¥-3.16B
• Net Income: ¥-2.19B
• EPS: ¥-30.45

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

Synspective (290A0) reported FY2025 Q3 consolidated results under JGAAP with modest top-line growth but continued substantial operating losses characteristic of an early-stage, capital-intensive business. Revenue was ¥1,672m (+4.0% YoY), while cost of sales of ¥1,348.8m yielded a gross profit of ¥259.6m and a gross margin of 15.5%. Operating loss remained large at ¥3,160m (flat YoY per disclosure), indicating heavy ongoing investment in R&D, satellite deployment, and commercialization capabilities. Ordinary loss widened to ¥3,418m, reflecting ¥163.8m of interest expense and other non-operating impacts, and net loss was ¥3,413m (EPS -¥30.45). The DuPont decomposition points to a deeply negative net margin (-204.1%), low asset turnover (0.051x), and moderate financial leverage (1.37x), resulting in calculated ROE of -14.26%. Liquidity appears strong on a current-structure basis, with current assets of ¥16,253m versus current liabilities of ¥2,229m (current ratio ~729%), implying a sizable working capital buffer of ¥14,023.8m. The balance sheet shows total assets of ¥32,708m and total liabilities of ¥8,322m, leaving total equity at ¥23,929m (liability-to-equity ~0.35x), which underpins solvency despite ongoing losses. However, several key items show as zero (cash and equivalents, cash flows, depreciation, shares outstanding), which are unreported rather than true zeros and limit precision in assessing cash burn, capex intensity, and per-share metrics. EBITDA is shown as 0 due to unreported D&A, so EBITDA and related leverage metrics cannot be interpreted. Equity ratio is shown as 0.0% but is clearly non-zero given the reported equity base; this appears to be an unreported ratio rather than a data inconsistency. Given the sector (SAR satellite data/solutions), the negative operating leverage is expected at this stage, with revenue growth yet to scale to cover fixed costs. Interest coverage is deeply negative (-19.3x), highlighting reliance on equity cushions and/or external financing until breakeven. With no dividends (DPS ¥0) and continuing losses, capital will likely be prioritized for growth and deployment. Overall, the quarter shows incremental revenue growth but sustained operating losses; the ample reported working capital and equity base support ongoing execution, but visibility on cash flows and capex is limited by disclosure gaps. Investors should focus on revenue mix quality (recurring data subscriptions vs. project-based), backlog conversion, launch and constellation milestones, and gross margin trajectory as the business scales.

Profitability Analysis

ROE of -14.26% (calculated) is driven by an extremely negative net profit margin (-204.1%), modest asset turnover (0.051x), and moderate financial leverage (assets/equity ~1.37x). Gross margin stands at 15.5%, suggesting limited pricing power or high delivery costs at the current scale; gross profit of ¥259.6m is insufficient to absorb operating expenses. Operating income was -¥3,160m, indicating substantial fixed cost absorption challenges and negative operating leverage: small revenue growth (+4% YoY) did not translate into margin improvement. Ordinary loss of -¥3,418m reflects additional interest burden (¥163.8m), further depressing bottom-line returns. The effective tax rate appears near zero due to loss-making status. EBITDA cannot be assessed given unreported depreciation/amortization (reported as 0), but for a satellite operator, D&A is likely material; true operating profitability is therefore worse than EBIT but EBITDA would be higher than EBIT once D&A is recognized. Overall, the profitability profile remains early-stage with negative returns; scale effects and recurring revenue growth are needed to improve gross margin and operating leverage.

Growth Assessment

Revenue grew 4.0% YoY to ¥1,672m, which is modest relative to the scale of ongoing operating losses. The sustainability of growth will hinge on ramp-up in satellite data subscriptions and analytics solutions, as well as government and enterprise contract wins; current mix is not disclosed. Gross margin of 15.5% indicates limited cost absorption at present scale; sustained margin expansion will likely require higher utilization of satellite capacity, improved delivery efficiency, and a shift toward higher-margin recurring services. Net loss remained large at -¥3,413m, implying that growth did not meaningfully improve operating leverage this period. With interest expense at ¥163.8m, financing costs are becoming more relevant as the asset base expands. Outlook depends on execution of constellation deployment and backlog conversion; absent disclosed backlog and cash flows, near-term growth visibility is constrained. If future launches increase data availability and the company converts pipeline into multi-year contracts, revenue growth could accelerate and margins could inflect; however, current data shows only incremental progress.

Financial Health

Total assets are ¥32,708m, funded by ¥8,322m in liabilities and ¥23,929m in equity, implying a liability-to-equity ratio of ~0.35x and financial leverage (assets/equity) ~1.37x. Liquidity appears ample with current assets of ¥16,253m versus current liabilities of ¥2,229m, yielding a current ratio of ~7.29x and working capital of ¥14,023.8m. Quick ratio is reported equal to current ratio due to unreported inventories; true quick ratio may be lower. Cash and equivalents are shown as 0 (unreported), so immediate liquidity and cash runway cannot be precisely assessed; nonetheless, the magnitude of current assets suggests a cushion. Interest coverage is -19.3x (EBIT/interest), indicating no coverage from operations and dependence on equity/cash reserves. The equity ratio is shown as 0.0% but is evidently substantial given reported equity; this is a disclosure limitation rather than a solvency concern. Overall solvency is supported by a strong equity base, but ongoing losses necessitate careful monitoring of cash burn and financing plans.

Cash Flow Quality

All cash flow figures (operating, investing, financing) are shown as 0, which indicates non-disclosure rather than actual zeros; thus, operating cash flow quality and free cash flow (FCF) cannot be evaluated from this dataset. The OCF/Net Income ratio is displayed as 0.00 but is not meaningful. Given the business model, we would expect negative operating cash flow in line with operating losses and significant investing cash outflows for satellite manufacturing, launch, and ground infrastructure; the absence of D&A disclosure also suggests capex and asset capitalization details are unavailable. Working capital appears strong with current assets well above current liabilities; however, without cash and receivables detail, the timing of collections and contract advances (and therefore cash conversion) cannot be assessed. In sum, earnings quality cannot be triangulated to cash due to data gaps; monitoring actual OCF, capex, and changes in contract assets/liabilities is critical once disclosed.

Dividend Sustainability

The company paid no dividend (DPS ¥0) and reports a payout ratio of 0.0%. With net losses of ¥3,413m and likely negative operating cash flow (though undisclosed), dividend capacity is effectively nil, and internal funds are likely directed toward growth investments and constellation build-out. FCF coverage is shown as 0.00x due to undisclosed cash flows; true coverage cannot be computed. Given early-stage losses and capital intensity, any dividend policy is likely to remain conservative until the company achieves sustainable profitability and positive FCF. No guidance on shareholder returns is provided in the dataset.

Risk Assessment

Business Risks:

• Execution risk in satellite deployment and constellation scaling (launch delays, in-orbit performance).
• Revenue concentration and contract timing risk (government and large enterprise customers).
• Commercialization risk for SAR data analytics and conversion to recurring subscription revenue.
• Pricing pressure and competitive intensity in Earth observation and analytics markets.
• Technology and manufacturing risks, including component supply chain constraints.
• Regulatory and export control compliance for space and dual-use technologies.
• FX exposure if contracts or components are USD or EUR denominated.

Financial Risks:

• Sustained operating losses (operating income -¥3,160m) and negative interest coverage (-19.3x).
• Potential need for external financing, with dilution risk for existing shareholders.
• Limited visibility on cash runway due to undisclosed cash and cash flows.
• Capex intensity and potential cost overruns for satellite builds and launches.
• Interest rate and refinancing risk as interest expense (¥163.8m) rises with asset base.

Key Concerns:

• Deep negative net margin (-204.1%) and low asset turnover (0.051x) driving -14.26% ROE.
• Gross margin at 15.5% suggests scale and mix challenges.
• Cash flow statement and cash balance are undisclosed, constraining assessment of burn and runway.
• Depreciation and amortization unreported, obscuring EBITDA and capex intensity.
• Equity ratio reported as 0.0% despite sizable equity, indicating ratio disclosure gaps.

Investment Implications

Key Takeaways:

• Top-line grew modestly (+4% YoY to ¥1,672m) but operating losses remain substantial (-¥3,160m).
• Negative ROE (-14.26%) is driven by extreme margin pressure and low asset turnover; leverage is modest.
• Liquidity looks strong based on current assets vs. current liabilities (current ratio ~7.29x), but cash is undisclosed.
• Interest expense (¥163.8m) weighs on ordinary results, with no operating coverage.
• Data gaps (cash flows, D&A, cash balance, share count) limit precision of cash burn, EBITDA, and per-share analytics.

Metrics to Watch:

• Order backlog and conversion to revenue, including share of recurring subscriptions.
• Gross margin trajectory and operating expense ratio as satellites/utilization scale.
• Operating cash flow and free cash flow once disclosed; cash burn and runway.
• Capex and depreciation trends to understand capital intensity and asset productivity.
• Interest-bearing debt levels and cost of capital; interest coverage improvement.
• Satellite deployment milestones and uptime/utilization metrics.
• Receivables days and contract advances (working capital efficiency).

Relative Positioning: Synspective appears to be an early-stage, capital-intensive SAR satellite/data analytics player with modest revenue scale versus a sizable asset and cost base; compared with typical growth-stage deep-tech peers on the TSE Growth market, it exhibits similar solvency support via equity but weaker near-term profitability and limited cash flow disclosure, making execution on scaling recurring revenue and improving gross margins the pivotal differentiators.

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