COLOPL,Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥25.93B
• Operating Income: ¥1.00B
• Net Income: ¥-662M
• EPS: ¥-2.39

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

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AI Financial Analysis

Executive Summary

Colopl (3668) reported FY2025 Q4 consolidated results under JGAAP with revenue of ¥25.9bn, essentially flat year over year at -0.2%. Despite stable top line, profitability deteriorated sharply: operating income was ¥1.0bn, down 99.4% YoY, and the company posted a net loss of ¥0.3bn (EPS -¥2.39). Ordinary income of ¥1.81bn exceeded operating income, indicating material non-operating gains; however, below-the-line items and taxes drove the swing to a net loss. Gross margin stood at 26.1%, and EBITDA margin was 5.0%, pointing to a modest value-add and limited operating buffer. DuPont decomposition yields a net margin of -1.18%, asset turnover of 0.342x, and low financial leverage of 1.10x, resulting in a reported ROE of -0.44%. Cash generation was relatively resilient with operating cash flow (OCF) of ¥2.65bn against an accounting net loss, producing an OCF/Net Income ratio of -8.64 (reflecting positive cash earnings versus an accounting loss). Free cash flow was negative at -¥0.64bn, given investing outflows of ¥3.29bn likely tied to content development and other investments. The balance sheet is conservative: total assets of ¥75.7bn, liabilities of ¥8.42bn, and equity of ¥68.94bn imply low leverage (D/E 0.12x) and ample liquidity (current ratio 1,024%). Interest burden is negligible (¥7m), and interest coverage is strong at 143x. Reported equity ratio and several per-share fields are undisclosed (shown as zero), but the sizable equity base indicates robust solvency. Dividend policy remains conservative with DPS of ¥0 and a payout ratio of 0%, likely reflecting earnings volatility and a focus on balance sheet strength. The sharp YoY decline in operating income alongside flat revenue points to negative operating leverage and/or significant one-offs in costs or prior-year gains. Ordinary income outperformance relative to operating income suggests reliance on non-operating items, which may not be sustainable. Overall, the company maintains strong liquidity and low financial risk, but core operating profitability appears pressured, with near-term outlook hinging on pipeline execution and cost control. Data gaps (e.g., cash balance, equity ratio disclosure, share count) limit precision in some ratio analyses, but available figures support a view of strong financial health contrasted with weak profitability.

Profitability Analysis

ROE is -0.44%, decomposed into net margin -1.18%, asset turnover 0.342x, and financial leverage 1.10x; the negative margin and low turnover are the principal drags, while leverage is intentionally modest. Gross margin of 26.1% indicates only moderate value capture in content distribution; the 5.0% EBITDA margin and ¥1.00bn operating income highlight thin operating profitability. The -99.4% YoY decline in operating income despite essentially flat revenue (-0.2% YoY) signals pronounced negative operating leverage, likely from higher development, live-ops, and user acquisition costs or the absence of prior-year one-off gains. Ordinary income of ¥1.81bn exceeding operating income suggests material non-operating gains (e.g., investment income), reducing the transparency of recurring earnings quality. Interest expense is de minimis at ¥7m, with an interest coverage ratio of 143x, so financing costs do not impair profitability. Depreciation and amortization were ¥283m, modest relative to revenue, implying limited fixed-asset intensity but potential capitalized content development elsewhere. Effective tax expense of ¥643m despite a net loss indicates non-deductible items, valuation allowance changes, or extraordinary items under JGAAP, further depressing net margin. Overall margin quality is weak, with limited operating cushion and reliance on non-operating gains to support ordinary income. Sustained improvement will require either mix-shift to higher-margin titles/services or material cost discipline.

Growth Assessment

Revenue of ¥25.93bn was flat YoY (-0.2%), suggesting stable but non-expanding user monetization or title performance in the period. The collapse in operating income (-99.4% YoY) against a steady top line implies either cost inflation in content development and marketing or lapping prior-year non-recurring positives. With ordinary income ahead of operating income, profit quality is questionable and dependent on non-operating factors that may not recur. Near-term growth sustainability hinges on the launch cadence and longevity of titles; without new hits, revenue is likely to remain flat to modestly declining given typical mobile game decay curves. EBITDA margin at 5.0% leaves little room to absorb incremental marketing or platform fee pressures, increasing earnings volatility. OCF of ¥2.65bn demonstrates the business can still generate cash even in a loss-making year, but negative FCF (-¥0.64bn) reflects ongoing investment needs that must translate into future pipeline revenue to be value-accretive. Outlook depends on improving monetization per active user, expanding IP collaborations, and containing UA costs; otherwise, growth will be constrained by competitive intensity and platform economics.

Financial Health

Liquidity is very strong: current assets of ¥67.27bn versus current liabilities of ¥6.57bn yields a current ratio of 1,024%, and quick ratio equivalent given no reported inventories. Working capital is ample at ¥60.7bn. Leverage is low with total liabilities of ¥8.42bn against equity of ¥68.94bn (D/E 0.12x), providing significant solvency headroom. Interest expense is minimal (¥7m), consistent with a net-cash or low-debt posture; the reported equity ratio of 0.0% is an undisclosed field rather than a true zero. Total assets of ¥75.74bn versus revenue imply low asset turnover (0.342x), which is typical for cash-rich content companies but dilutive to ROA absent higher margins. Overall, the balance sheet provides substantial resilience to operating volatility and investment cycles.

Cash Flow Quality

OCF was ¥2.65bn versus a net loss of ¥0.31bn, yielding an OCF/Net Income ratio of -8.64; this reflects positive cash earnings driven by non-cash charges, working capital release, or timing effects rather than aggressive accruals. Free cash flow was -¥0.64bn, with investing outflows of ¥3.29bn likely including content development, IP advances, or securities investments; sustainability of OCF must eventually cover these to avoid cash burn. Financing CF was -¥3.23bn, potentially reflecting share repurchases or lease/debt service; DPS is zero, so outflows are unlikely to be dividends. Depreciation and amortization of ¥283m are modest relative to OCF, indicating working capital movements were likely a material contributor to cash generation. Given missing disclosure on cash and cash equivalents (reported as zero but undisclosed), we infer significant liquidity embedded within current assets supporting operations. Overall earnings-to-cash conversion is mixed: strong OCF in a loss year is positive, but recurring FCF depends on moderating investment outlays or improving operating profitability.

Dividend Sustainability

The company paid no dividends (DPS ¥0) with a payout ratio of 0%, consistent with a net loss and a conservative stance. FCF coverage of dividends is 0.00x by definition, but the substantial liquidity and low leverage would allow flexibility if profitability normalizes. Given earnings volatility, thin operating margins, and ongoing investment needs, maintaining a no-dividend or opportunistic capital return policy (e.g., buybacks) is consistent with balance sheet preservation. A shift to sustainable dividends would require positive, stable net income and FCF coverage comfortably above 1x over multiple periods.

Risk Assessment

Business Risks:

• Title concentration and hit-driven performance inherent in mobile gaming
• User acquisition cost inflation and IDFA/privacy-driven targeting constraints
• Platform fee pressure from Apple/Google and store policy changes
• Regulatory scrutiny of monetization mechanics (e.g., gacha) in Japan
• Short product life cycles and rapid competitive imitation
• Execution risk in new title development and live-ops
• Dependence on IP licensing terms and collaboration availability

Financial Risks:

• Earnings volatility with reliance on non-operating gains (ordinary income > operating income)
• Potential impairments of capitalized development costs or investments under JGAAP
• Negative free cash flow if investing outlays persist without revenue lift
• Tax expense volatility and non-deductible items impacting net income
• Valuation swings in investment securities affecting non-operating results

Key Concerns:

• Operating income collapsed 99.4% YoY despite flat revenue, indicating negative operating leverage
• Net loss of ¥0.31bn driven by below-the-line items and tax despite ¥1.81bn ordinary income
• Low asset turnover (0.342x) and thin margins depress ROE (-0.44%)
• Visibility limited by undisclosed items (equity ratio, cash balance, share count)

Investment Implications

Key Takeaways:

• Core profitability weakened materially; operating margin compression despite stable revenue
• Ordinary income outperformance over operating income highlights non-operating dependence
• Balance sheet strength (D/E 0.12x, large working capital) mitigates financial risk
• OCF positive (¥2.65bn) but FCF negative (-¥0.64bn) due to ongoing investment
• Dividend remains suspended (DPS ¥0); capital returns likely opportunistic rather than formulaic

Metrics to Watch:

• Monthly bookings trend and ARPMAU across key titles
• Development and UA spend as a percent of revenue (operating leverage)
• Pipeline launch schedule and early KPIs (retention, payer conversion)
• Gap between operating and ordinary income (quality of earnings)
• OCF and FCF trajectory versus investing outlays
• Working capital movements and any changes in cash holdings
• Tax expense behavior and extraordinary items under JGAAP

Relative Positioning: Within Japan mobile gaming peers, Colopl exhibits a conservative balance sheet with low leverage and ample liquidity but lags on profitability and scale, with low asset turnover and thin margins making returns more sensitive to hit generation and cost control.

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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