PIXTA Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.91B
• Operating Income: ¥101M
• Net Income: ¥317M
• EPS: ¥38.45

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

FY2025 Q3 was weak on underlying operations with earnings heavily pressured despite resilient gross profitability. Revenue declined to 19.10 (100M JPY), down 13.2% YoY, indicating top-line headwinds in the core business. Operating income fell sharply to 1.01 (100M JPY), down 78.0% YoY, driving operating margin down to roughly 5.3%. Net income was 0.66 (100M JPY), down 79.0% YoY, translating to an NPM of about 3.5%. Ordinary income similarly contracted 78.1% YoY to 0.99 (100M JPY), underscoring broad pressure beyond one-time items. The operating margin compressed approximately 1,560 bps YoY (from ~20.9% to ~5.3%, based on reconstructed prior period revenue ~22.0 and OI ~4.59). Net margin compressed about 1,090 bps YoY (from ~14.3% to ~3.5%, using reconstructed prior NI ~3.14 and revenue ~22.0). Gross margin is reported at a high 75.9%, suggesting pricing/mix remains strong, though there is an internal inconsistency between reported cost of sales and gross profit; we rely on the stated gross margin for analysis. Profit before tax surged to 4.59 (100M JPY), which implies approximately 3.60 (100M JPY) in extraordinary gains, but these are non-recurring and not reflective of operating strength. The effective tax rate is 30.9%, and after tax the bottom line remains depressed, highlighting limited benefit from the one-off gains. Liquidity is solid with cash and deposits of 15.93 (100M JPY) and a current ratio of 185.5%, providing near-term protection. Leverage appears moderate on a book basis (D/E 1.07x), with negligible interest burden (interest expense ~0 and interest coverage >500x). ROE is 5.7% per DuPont (NPM 3.5% × AT 0.799 × leverage 2.07x), below an attractive cost-of-equity threshold. Reported ROIC of -15.9% is a red flag for capital efficiency and implies value-dilutive deployment or under-earning assets this period. Earnings quality cannot be assessed fully due to unreported operating cash flow; however, the reliance on extraordinary gains to lift PBT and the steep decline in OI point to low recurring earnings quality in the quarter. Looking ahead, stabilization requires rebuilding operating margin (through cost control and monetization), as one-off gains will not repeat; the strong cash balance buys time but does not solve the earnings gap.

Profitability Analysis

ROE (5.7%) = Net Profit Margin (3.5%) × Asset Turnover (0.799x) × Financial Leverage (2.07x). The biggest deterioration YoY appears in the net profit margin, given revenue fell 13.2% while operating income declined 78.0%, implying severe margin compression. Operating margin dropped from an estimated ~20.9% to 5.3% (-1,560 bps), reflecting weaker operating leverage and cost absorption. Business drivers likely include revenue contraction in core digital content marketplaces and/or increased SG&A intensity (marketing, platform, or personnel costs) that did not scale down as fast as revenue. The PBT boost from ~3.60 (100M JPY) in extraordinary gains suggests mix of one-time items that flattered pre-tax results but did not change the structural margin pressure. Sustainability: the margin compression is concerning unless management realigns costs or reaccelerates topline; the extraordinary gains are by nature one-time and not sustainable. Flags: SG&A of 9.88 (100M JPY) against a revenue base of 19.10 looks heavy; combined with revenue decline, this indicates negative operating leverage. Asset turnover at 0.799x is modest for a digital platform model and could remain under pressure if growth does not re-accelerate.

Growth Assessment

Revenue contracted 13.2% YoY to 19.10 (100M JPY), indicating demand softness and/or competitive pressure. Gross profitability (75.9% margin) remains high, but the operating line deteriorated badly (OI -78%), implying rising customer acquisition costs, platform costs, or insufficient cost flex. Ordinary income (-78.1%) confirms broad-based weakness beyond non-operating items. Net income fell 79.0% YoY, reflecting both poor operating leverage and limited benefit from non-recurring gains after tax. The quarter’s PBT was inflated by ~3.60 (100M JPY) in extraordinary items; excluding this effect, underlying profitability is notably weak. Outlook hinges on restoring revenue momentum and recalibrating SG&A; without that, margin recovery will be slow. Key swing factors: product mix, pricing, subscription retention, and any AI-related content dynamics affecting both supply and demand. Given the cash position, the company has room to pursue selective growth investments, but near-term emphasis likely shifts to efficiency and cost control. Absent visibility into segment trends or OCF, the sustainability of any rebound remains uncertain.

Financial Health

Liquidity is healthy: current assets 22.91 vs current liabilities 12.35 (100M JPY) yield a current ratio of 185.5% and quick ratio of 185.5%. The company holds cash and deposits of 15.93 (100M JPY), comfortably covering accounts payable of 4.35 (100M JPY). All reported liabilities are current; despite this, the large cash cushion mitigates maturity mismatch risk. Debt-to-equity is 1.07x on a book basis, within a moderate range; interest expense is effectively zero, and interest coverage is 567x, indicating minimal financial burden. No noncurrent liabilities or interest-bearing debt were reported in the dataset (could be unreported), and no off-balance sheet obligations were disclosed. There is no warning on current ratio (<1.0) or D/E (>2.0). Equity stands at 11.55 (100M JPY) with owners’ equity of 11.12, supporting solvency. Note: data limitations on debt breakdown (short vs long-term) and potential lease liabilities may understate leverage.

Cash Flow Quality

Operating cash flow was unreported, so OCF/Net Income cannot be assessed; this is a key limitation for earnings quality analysis. Free cash flow is also unreported, preventing direct coverage tests for dividends or capex. The presence of extraordinary gains (~3.60 in 100M JPY) inflating PBT heightens quality concerns, as these are non-recurring and may not be cash. Working capital appears manageable with AR 5.28 (100M JPY) vs AP 4.35, and cash 15.93 provides ample liquidity. Without OCF, we cannot rule out earnings-to-cash divergence; we flag potential quality risk until OCF data confirms conversion. No signs of aggressive working capital manipulation can be inferred from the limited data, but the absence of cash flow disclosures is a constraint.

Dividend Sustainability

Dividend data are largely unreported; however, the calculated payout ratio is 156.6%, suggesting that, if accurate, dividends exceed current earnings capacity amid depressed profits. With FCF unreported, coverage cannot be verified; reliance would be on the cash balance (15.93 in 100M JPY) if management maintained payouts. Given net income weakness and negative ROIC (-15.9%), sustaining a high payout risks constraining reinvestment and balance sheet flexibility. Policy-wise, a prudent stance would be to align payouts with normalized earnings and cash generation; monitoring guidance updates is essential. Absent explicit DPS guidance, dividend visibility is low.

Risk Assessment

Business Risks:

• Top-line contraction (-13.2% YoY) indicating demand softness or competitive pressure in digital content marketplaces.
• Severe operating margin compression (~-1,560 bps YoY), exposing high operating leverage.
• Dependence on non-recurring gains (~3.60 in 100M JPY) to lift PBT, not repeatable.
• Potential impact of AI-generated content on supply-demand dynamics, pricing, and IP compliance.
• Customer acquisition and retention risks in subscription/marketplace models.

Financial Risks:

• Earnings quality uncertainty due to unreported OCF and FCF.
• Capital efficiency flagged (reported ROIC -15.9%), indicating potential value dilution.
• All liabilities classified as current in the dataset; any hidden longer-term obligations (leases, deferred items) could change leverage view.
• High implied payout ratio (156.6%) if maintained despite weak earnings would pressure cash.

Key Concerns:

• Ordinary income and operating income both down ~78% YoY.
• Net income down 79% YoY despite extraordinary gains, underscoring weak core profitability.
• Data inconsistencies (cost of sales vs gross profit) and missing cash flow disclosure limit precision.
• Need for cost realignment to match lower revenue run-rate.

Investment Implications

Key Takeaways:

• Core profitability deteriorated materially; operating margin ~5.3% vs ~20.9% a year ago.
• Revenue decline (-13.2% YoY) alongside high SG&A intensity indicates negative operating leverage.
• PBT buoyed by ~3.60 (100M JPY) in extraordinary gains; underlying earnings power is weak.
• Liquidity is solid (cash 15.93; current ratio 185.5%), cushioning near-term risks.
• ROE at 5.7% and reported ROIC at -15.9% signal sub-par returns and capital efficiency concerns.

Metrics to Watch:

• Operating cash flow and OCF/NI conversion ratio once disclosed (threshold >1.0).
• Revenue trajectory and ARPU/churn in core marketplaces.
• SG&A trend vs revenue and resultant operating margin recovery.
• Recurrence (or absence) of extraordinary gains.
• Capital allocation updates and dividend policy alignment with FCF.

Relative Positioning: Within digital content/platform peers, PIXTA shows resilient gross margin but inferior current-period operating leverage and returns, offset by a comparatively strong cash position that provides time to execute margin stabilization.

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