AltPlusInc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.90B
• Operating Income: ¥-467M
• Net Income: ¥-480M
• EPS: ¥-12.83

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Disclaimer

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

AI Financial Analysis

Executive Summary

Verdict: FY2025 Q4 results were weak, with a deep operating loss and negative free cash flow despite adequate liquidity on the balance sheet. Revenue was 28.97 (100M JPY), down 17.6% YoY, reflecting contraction in the content/games pipeline. Gross profit was 1.74, implying a gross margin of 6.0%, which is very thin for the sector and left insufficient coverage for fixed costs. SG&A was 6.41, resulting in operating income of -4.67 and an operating margin of roughly -16.1%. Ordinary loss came to -4.42 as small non-operating gains (0.44) partially offset non-operating expenses (0.19). Net loss was -4.34, translating to a calculated net margin of -15.0% and ROE of -42.8%. Asset turnover was relatively high at 1.659, but low margins overwhelmed any efficiency benefits. Cash flow quality was mixed: operating cash flow was -5.73 versus net loss of -4.34 (OCF/NI 1.32x), but both were negative, underscoring ongoing cash burn. Free cash flow was -5.54, requiring external funding; financing cash inflow was 6.51, indicating reliance on equity or other financing. Liquidity is currently sound with a current ratio of 221.6% and cash of 8.64 against current liabilities of 7.32, reducing immediate refinancing pressure. Capital structure is moderate (D/E 0.72x) and equity remains positive at 10.13, although retained earnings are negative (-5.65), evidencing accumulated losses. ROIC was reported at -306.8%, highlighting very poor capital efficiency and the need for urgent profit improvement or asset base optimization. We cannot quantify margin expansion/compression in basis points due to lack of prior-period margin disclosures, but directionally margins deteriorated alongside the revenue decline. Earnings quality concerns remain given the scale of operating losses and reliance on financing cash inflows to fund operations. Forward-looking, the company must execute cost restructuring and improve title performance to move back toward breakeven; without a clear recovery in gross margin and stabilization of SG&A, dilution risk and capital needs could persist. Overall, the quarter signals pressure on profitability and cash sustainability despite near-term liquidity buffers.

Profitability Analysis

ROE decomposition: ROE (-42.8%) = Net Profit Margin (-15.0%) × Asset Turnover (1.659) × Financial Leverage (1.72x). The largest negative driver is net profit margin, as operating losses overwhelmed revenues despite decent asset turnover. Business reason: gross margin of only 6.0% suggests weak monetization per title and/or high platform/distribution costs, while SG&A of 6.41 far exceeded gross profit, implying insufficient scale to absorb fixed costs. Non-operating items were small and could not offset the operating deficit. Sustainability: the margin pressure appears structural rather than one-time given revenue contraction (-17.6% YoY) and low gross profitability; absent a successful new title launch or material cost reset, current margins are not sustainable. Operating leverage is adverse: with gross profit only 1.74 against SG&A 6.41, each revenue shortfall magnifies operating losses. While asset turnover is relatively strong, it cannot compensate for negative margins. Concerning trends: revenue declined while SG&A remained high (we lack YoY SG&A but the level relative to gross profit is problematic), indicating negative operating leverage; reported ROIC of -306.8% underscores poor return on invested capital and value erosion.

Growth Assessment

Top-line contracted 17.6% YoY to 28.97, pointing to weaker title performance, fewer active titles, or aging content. Profitability deteriorated with operating margin at approximately -16.1% and net margin at -15.0%, suggesting that revenue quality and scale are insufficient to cover fixed costs. Non-operating income of 0.44 marginally helped but is not a growth driver. Given the thin gross margin (6.0%), improving monetization per user or reducing cost of sales is critical for sustainable growth. With OCF at -5.73 and FCF at -5.54, internal funding capacity for new development is limited without continued external financing. Outlook depends on pipeline execution and cost discipline; absent evidence of new hit titles or partnership monetization, near-term growth visibility is low. The base effect could aid stabilization if costs are reduced swiftly, but we need further disclosures on pipeline, bookings, and live-ops KPIs to assess revenue sustainability.

Financial Health

Liquidity is currently adequate: current assets 16.23 vs current liabilities 7.32 yields a current ratio of 221.6% and working capital of 8.91. Cash and deposits of 8.64 cover 118% of current liabilities, reducing short-term liquidity risk. Solvency: total liabilities of 7.34 vs equity of 10.13 implies D/E of 0.72x, within conservative bounds. Financial leverage (assets/equity) is 1.72x, moderate. No warning triggers (Current Ratio < 1.0 or D/E > 2.0) are present. Maturity mismatch risk appears low as noncurrent liabilities are minimal (0.01), but ongoing losses could erode equity over time. Interest-bearing debt details are unreported; interest coverage cannot be assessed from the provided data. Off-balance sheet obligations are not disclosed in the dataset.

Cash Flow Quality

OCF/Net Income is 1.32x, which nominally exceeds the 1.0 threshold, but both OCF (-5.73) and NI (-4.34) are negative, indicating cash burn rather than high-quality earnings. Free cash flow is -5.54, implying that operations are not self-funding even with minimal capex (-0.02). Financing CF of 6.51 bridged the deficit, pointing to equity issuance or other financing as the primary liquidity source this period. Without a breakdown of working capital movements, we cannot identify specific manipulation signs; however, the scale of OCF deficit vs operating loss suggests either weak cash collections or elevated payables/production outlays. Sustainability: absent a turnaround in operating margin or a significant revenue catalyst, negative FCF is likely to persist.

Dividend Sustainability

Dividend data are unreported, and given the net loss and negative FCF, we assume no dividend was paid. Payout ratio and FCF coverage are not calculable. From a policy perspective, ongoing operating losses and reliance on financing cash inflows make any near-term dividend initiation unlikely until consistent positive OCF and sufficient retained earnings are restored.

Risk Assessment

Business Risks:

• Title concentration and hit-driven volatility leading to revenue swings (-17.6% YoY this period).
• Low gross margin (6.0%) undermining scalability and profitability.
• Execution risk in new title development and live-ops monetization needed to restore growth.
• Potential user acquisition cost inflation and platform fee pressure compressing margins.

Financial Risks:

• Sustained operating losses (operating margin ~ -16.1%) drive negative OCF (-5.73) and FCF (-5.54).
• Reliance on financing CF (6.51) indicates ongoing need for external capital; dilution risk is high given the increase in outstanding shares vs period average.
• Retained earnings deficit (-5.65) reflecting accumulated losses; future equity erosion risk if losses continue.
• Limited visibility on interest-bearing debt and interest costs (unreported), constraining assessment of coverage risk.

Key Concerns:

• ROE -42.8% and ROIC -306.8% indicate severe value destruction unless profitability improves.
• Thin liquidity buffer relative to cash burn; cash 8.64 vs annual FCF -5.54 implies roughly 1–2 years of runway absent further financing (assumes similar burn).
• Inability to quantify margin trajectory due to missing YoY margin details complicates trend assessment.
• Any delay in pipeline or underperformance of launches would prolong losses and capital needs.

Investment Implications

Key Takeaways:

• Revenue contracted 17.6% YoY to 28.97 with gross margin only 6.0%.
• Operating loss -4.67 and net loss -4.34 drove ROE to -42.8%.
• OCF -5.73 and FCF -5.54 necessitated financing CF of 6.51; dilution risk elevated.
• Liquidity is adequate (current ratio 221.6%, cash 8.64), but profitability must recover to sustain operations.
• Capital efficiency extremely weak (ROIC -306.8%), pointing to urgent need for profit and asset efficiency improvements.

Metrics to Watch:

• Gross margin trajectory and cost of sales control.
• SG&A run-rate vs quarterly revenue (evidence of cost restructuring).
• Operating cash burn and FCF; cash runway versus financing plans.
• Active titles’ KPIs (ARPDAU, retention) and pipeline launch schedule (when available).
• Share count changes and potential equity financing/dilution.
• Any disclosure on interest-bearing debt and interest expense to assess coverage.

Relative Positioning: Within the Japanese mobile/content developer peer set, AltPlus currently sits in the lower quartile on profitability and cash generation, with adequate near-term liquidity but higher dependence on external financing and lower gross margins than typical profitable peers.

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