ZenmuTech,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥430M
• Operating Income: ¥-69M
• Net Income: ¥-42M
• EPS: ¥-33.22

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

ZenmuTech (single-entity, JGAAP) reported FY2025 Q3 revenue of ¥430.0m, down 13.2% YoY, indicating softer top-line momentum. Operating income was a loss of ¥69.0m, which improved 47.0% YoY, suggesting meaningful cost discipline or a favorable expense mix despite lower sales. Ordinary loss narrowed to ¥53.0m, implying roughly ¥16–17m of net non-operating income that partially offset the operating deficit despite ¥0.66m of interest expense. Net loss was ¥42.0m, improving 102.9% YoY, pointing to progress toward breakeven. Reported gross profit of ¥452.8m exceeds revenue, producing an implausible gross margin over 100%; this likely reflects classification differences or non-operating items included in gross profit and makes gross margin metrics unreliable for this period. With total assets of ¥1,027.0m and equity of ¥616.0m, financial leverage is modest (assets/equity ≈ 1.67x), and the computed equity ratio is about 60% (vs. a reported 0.0% that appears non-disclosed). Liquidity looks adequate with current assets of ¥603.6m and current liabilities of ¥408.0m, yielding a current ratio of 1.48x and working capital of ¥195.6m. Asset turnover is 0.419x, consistent with a small-cap, product/solution-oriented company still scaling revenue against its asset base. DuPont decomposition yields a calculated ROE of −6.82% driven by a net margin of −9.77%, asset turnover of 0.419x, and leverage of 1.67x. Interest burden remains light; interest coverage based on operating loss and interest expense is −104.9x, highlighting that profitability, not financing cost, is the constraint. Cash flow statements are not disclosed in this dataset (zeros denote unreported), so operating cash flow and free cash flow cannot be assessed; this limits visibility on earnings-to-cash conversion. The company paid no dividend (DPS ¥0), which is consistent with loss-making status and a likely focus on reinvestment and cash preservation. Tax expense of ¥26.8m despite a pre-tax loss likely reflects JGAAP nuances such as valuation allowance changes, non-deductible items, or prior-period adjustments, and should not be interpreted as cash taxes without supporting disclosures. Overall, the quarter shows improving losses and stable balance sheet strength, but revenue contraction and the anomalous gross profit figure complicate margin analysis. Given disclosure gaps (notably cash flows) and classification anomalies, conclusions emphasize operating and ordinary results rather than gross margin. Key watch items include revenue trajectory, operating expense discipline, and any updates to cash and working capital disclosures.

Profitability Analysis

ROE_decomposition: ROE (DuPont) = Net margin × Asset turnover × Leverage = (−9.77%) × 0.419 × 1.67 ≈ −6.82%. The negative ROE is primarily driven by the negative net margin, while leverage is modest and asset turnover is typical for a small-cap with developing scale. margin_quality: Reported gross profit of ¥452.8m exceeds revenue of ¥430.0m, rendering gross margin (105.3%) not decision-useful. We therefore anchor margin assessment on operating level: operating margin ≈ −16.0% (−¥69.0m / ¥430.0m). Ordinary margin improves to about −12.3% (−¥53.0m / ¥430.0m), benefiting from net non-operating income. Net margin is −9.77%, reflecting improvements below the operating line and tax effects. operating_leverage: Revenue declined 13.2% YoY, yet operating loss improved 47% YoY, indicating effective cost containment and favorable operating leverage. Interest costs are minimal (¥0.66m), so EBIT dynamics dominate. Continued fixed-cost control should translate revenue stabilization into faster operating breakeven.

Growth Assessment

revenue_sustainability: Revenue of ¥430.0m declined 13.2% YoY, pointing to demand softness or timing of orders. With asset turnover at 0.419x, utilization is moderate, and improved conversion of assets into revenue will be needed for sustained growth. profit_quality: Ordinary loss (−¥53.0m) is narrower than operating loss (−¥69.0m), indicating supportive non-operating income (~¥16–17m). However, the anomalous gross profit and lack of cash flow data limit assessment of underlying margin quality. outlook: Near-term outlook hinges on re-accelerating top line while preserving opex discipline. If revenue stabilizes, the improved cost base could drive further narrowing of losses. Visibility is constrained by missing CF disclosures and limited detail on order backlog or pipeline.

Financial Health

liquidity: Current assets ¥603.6m vs. current liabilities ¥408.0m yield a current ratio of 1.48x and working capital of ¥195.6m. Quick ratio approximates 1.48x as inventories are undisclosed (0 indicates not reported). Cash balance is not disclosed, so immediate liquidity buffer cannot be verified. solvency: Equity ¥616.0m and total assets ¥1,027.0m imply a computed equity ratio near 60% and leverage (assets/equity) of 1.67x. Total liabilities/ equity ≈ 0.68x, indicating a conservative capital structure. capital_structure: Debt service burden appears light with interest expense of ¥0.66m. The company is primarily equity-financed, providing flexibility to absorb temporary losses while pursuing growth.

Cash Flow Quality

earnings_quality: Operating loss improved YoY, but quality of earnings cannot be validated without cash flow from operations. The net loss alongside a positive tax expense suggests non-cash tax items; absent OCF, accrual intensity cannot be gauged. FCF_analysis: Operating CF and investing CF are not disclosed; Free Cash Flow cannot be computed. Capex intensity and R&D cash outlays remain unclear. working_capital: With current assets of ¥603.6m and current liabilities of ¥408.0m, the company appears to carry a solid current asset buffer. However, the composition (cash, receivables, other) is not disclosed, limiting insight into collection risk and WC efficiency.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is effectively 0% due to a net loss (EPS −¥33.22). Given negative earnings, payout capacity from earnings is not present. FCF_coverage: FCF is not disclosed; therefore, dividend coverage by FCF cannot be assessed. In practice, loss-making status and an apparent reinvestment phase argue for continued retention. policy_outlook: Absent a return to sustained profitability and demonstrable positive FCF, a distribution policy reset is unlikely. The equity-heavy balance sheet supports reinvestment and liquidity preservation rather than dividends.

Risk Assessment

Business Risks:

• Revenue contraction (−13.2% YoY) suggesting demand volatility or execution risk.
• Limited disclosure granularity (e.g., gross profit classification anomaly) impeding margin analysis.
• Concentration risk potential if reliant on a narrow product set or few customers (not disclosed).
• Execution risk in scaling sales to cover fixed costs and reach breakeven.
• Competitive pressure in data security/technology markets (inferred from company domain).

Financial Risks:

• Loss-making status (operating loss ¥69.0m; net loss ¥42.0m).
• Lack of disclosed cash flow data, creating uncertainty on cash burn and liquidity runway.
• Tax expense despite losses (¥26.8m) introduces earnings volatility from non-cash tax effects.
• Potential working capital swings not visible due to undisclosed CF and inventory data.

Key Concerns:

• Anomalous gross margin (>100%) undermines reliability of cost structure analysis.
• Top-line decline while approaching breakeven heightens dependence on revenue stabilization.
• Insufficient cash flow disclosure to assess sustainability of operations without external funding.

Investment Implications

Key Takeaways:

• Revenue fell to ¥430.0m (−13.2% YoY) but losses narrowed materially at all profit lines.
• Operating margin improved to approximately −16%, with ordinary and net losses further reduced.
• Balance sheet remains solid with computed equity ratio ~60% and liabilities/equity ~0.68x.
• Interest burden is minimal (¥0.66m), so profitability hinges on operating efficiency and scale.
• Cash flow information is missing, limiting assessment of cash burn and earnings quality.

Metrics to Watch:

• Quarterly revenue trajectory and order intake/backlog (if disclosed).
• Operating expense run-rate and progress toward operating breakeven.
• Disclosure of operating and free cash flow; cash and equivalents balance.
• Working capital composition (receivables turnover, payables, any inventory build).
• Non-operating income sources sustaining ordinary profit vs. operating loss.
• Tax expense drivers (valuation allowance, deferred tax movements).

Relative Positioning: Financially conservative with moderate leverage and adequate liquidity, but currently sub-scale with negative margins; improving loss trajectory is a positive, yet revenue softness and disclosure gaps place it at a cautious midpoint versus peers prioritizing growth with clearer cash flow visibility.

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