Aucfan Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥4.66B
• Operating Income: ¥-201M
• Net Income: ¥-95M
• EPS: ¥-31.51

Income Statement

Balance Sheet

Cash Flow Statement

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

Verdict: FY2025 Q4 results were weak, marked by a return to operating loss and a widened net loss despite solid liquidity. Revenue declined 3.8% YoY to 46.57, reflecting softer topline momentum. Gross profit was 21.72 with a gross margin of 46.6%, but SG&A of 23.73 exceeded gross profit, driving operating income to -2.01 (down 88.9% YoY). Ordinary loss was -1.68 and net loss widened to -3.29 (+997.7% YoY), indicating substantial bottom-line deterioration. EBITDA was positive at 0.67 (1.4% margin), but not enough to offset depreciation/amortization of 2.68 and SG&A rigidity. Non-operating items (income 0.58 vs expenses 0.25) partially cushioned operating weakness, while interest expense of 0.19 and a tax expense of 1.46 despite a pretax loss resulted in a negative effective tax rate (-79.9%). Operating margin was approximately -4.3% (operating loss 2.01 over revenue 46.57). Due to lack of prior-period margin disclosures, we cannot quantify YoY basis point expansion/compression for gross, operating, or net margins. Earnings quality is mixed: operating cash flow was positive at 2.03, but the OCF/Net Income ratio is -0.62 (flag), indicating OCF and NI moved in opposite directions and cash conversion is not robust relative to reported losses. Free cash flow was negative at -3.43 as investing outflows (-5.46) outweighed OCF, and financing cash outflow was -3.91 (including share repurchases of -0.35). Balance sheet liquidity is strong with cash and deposits of 37.85, current assets of 59.22, and a current ratio of 201%. Leverage is moderate (D/E 0.73x), but interest coverage is negative (-10.81x) given operating losses. ROE deteriorated to -8.0%, driven mainly by a negative net margin (-7.1%) and low asset turnover (0.657), with leverage at 1.73x amplifying losses. ROIC is weak at -12.1%, signaling capital inefficiency and the need for profitability restoration. Forward-looking, cost discipline, mix optimization toward higher-margin services, and monetization of the installed user base are essential to return to operating profitability and fund growth without increasing reliance on short-term borrowings. The ample cash buffer buys time, but sustained negative FCF would pressure capital allocation flexibility.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-7.1%) × 0.657 × 1.73 ≈ -8.0%. The largest drag is the net profit margin turning negative, as SG&A (23.73) exceeded gross profit (21.72), producing an operating margin of about -4.3%. Business driver: fixed/semi-fixed SG&A did not flex down with a 3.8% revenue decline, while EBITDA remained thin (1.4% margin), implying limited operating leverage and possibly higher personnel/marketing or platform costs. Asset turnover at 0.657 suggests modest efficiency for an asset-light model, reflecting sizable cash holdings and low receivables relative to sales; the low turnover magnifies the impact of weak margins on ROE. Financial leverage at 1.73x is not excessive but currently amplifies negative margins into negative ROE. Sustainability: Margin pressure looks partly structural (cost base above gross profit) unless management executes cost rationalization and pricing/mix improvement; non-operating items are not sufficient to bridge losses sustainably. Watch-outs: SG&A growth appears to have outpaced revenue on an annualized basis (revenue -3.8% YoY vs operating income -88.9% YoY), indicating adverse operating leverage and the need to align costs with revenue trajectory.

Growth Assessment

Revenue declined 3.8% YoY to 46.57, signaling softer demand or weaker performance in core services. Gross margin held at a solid 46.6%, but monetization and cost control were insufficient to translate into operating profits. EBITDA margin at 1.4% underscores limited scalability at current volumes; absent cost actions, incremental revenue may not drop meaningfully to the bottom line. Non-operating income (0.58) provided some buffer but is not a reliable growth driver. With ROIC at -12.1%, current investments are not earning their cost of capital, suggesting reallocation or sharper focus on higher-return initiatives is needed. Outlook: Neutral-to-cautious near term, contingent on SG&A discipline, product mix improvement, and conversion of traffic/data assets into recurring, higher-margin revenue streams. Data limitations (no segment detail, no disclosed R&D or marketing breakdown) restrict our view of growth engines and the durability of the revenue base.

Financial Health

Liquidity is strong: current ratio 201% and quick ratio 201% with cash and deposits of 37.85 comfortably exceeding short-term loans of 13.00. No warning on current ratio (<1.0) or D/E (>2.0); D/E is moderate at 0.73x. Maturity mismatch risk is limited in the near term given cash coverage of short-term borrowings and total current assets of 59.22 vs current liabilities of 29.46. Solvency: interest-bearing debt (detail partially unreported) includes 13.00 in short-term and 0.61 in long-term loans; leverage is manageable but earnings do not currently cover interest (interest coverage -10.81x). Equity is 40.92 (BVPS ~389 JPY), providing a buffer against near-term losses. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

OCF was +2.03 despite a net loss of -3.29, likely supported by non-cash D&A of 2.68 and working capital inflows; however, OCF/Net Income is -0.62 (<0.8), which we flag as an earnings quality concern as cash and accounting earnings moved in opposite directions. Free cash flow was -3.43 due to investing outflows of -5.46; on current run-rate, internal cash generation is insufficient to fund investments without drawing on cash or debt. Financing CF was -3.91 (including -0.35 share repurchases), indicating concurrent balance sheet cash usage. We have insufficient detail to detect working capital manipulation, but the combination of positive OCF with operating losses suggests WC release and non-cash add-backs, not core profitability, drove cash generation. Sustainability: absent a return to operating profit, FCF is at risk of remaining negative.

Dividend Sustainability

Dividend data are unreported; thus payout metrics are not calculable. Given net loss (-3.29) and negative FCF (-3.43), dividend-paying capacity from current-period earnings and free cash flow is weak. Cash on hand (37.85) provides buffer, but sustained losses would challenge any consistent shareholder return program. Policy outlook is unclear without disclosures; prudence would favor conserving cash until operating profitability and positive FCF are restored.

Risk Assessment

Business Risks:

• Demand softness and competition in core online marketplace/data/EC support offerings leading to revenue decline (-3.8% YoY).
• Cost rigidity: SG&A exceeding gross profit resulting in operating losses.
• Execution risk in monetizing platform assets to lift EBITDA margin above low single digits.
• Negative ROIC (-12.1%) indicating capital allocation efficiency challenges.

Financial Risks:

• Interest coverage negative (-10.81x) with reliance on short-term loans (13.00).
• Negative FCF (-3.43) and potential need to use cash or debt to fund investments.
• Tax expense despite pretax loss (effective tax rate -79.9%) increasing net losses.
• Low asset turnover (0.657) dampening returns in an asset-light model.

Key Concerns:

• Sustained SG&A above gross profit threatens ongoing operating losses.
• Earnings quality flagged (OCF/NI -0.62).
• ROE -8.0% and ROIC -12.1% well below acceptable thresholds.
• Limited visibility on revenue mix and segment profitability due to unreported detail.

Investment Implications

Key Takeaways:

• Topline contracted 3.8% while operating margin slipped to approximately -4.3%, driving a swing to operating loss.
• Positive OCF (2.03) masks weak core profitability; FCF negative due to investing outflows.
• Balance sheet liquidity is strong (cash 37.85; current ratio 201%), providing near-term resilience.
• Return metrics are poor (ROE -8.0%, ROIC -12.1%), necessitating margin recovery and asset efficiency improvements.
• Non-operating items offer limited offset and cannot underpin earnings sustainably.

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio trajectory.
• EBITDA margin expansion and D&A run-rate.
• Free cash flow and working capital movements.
• Interest coverage and mix of short- vs long-term debt.
• Revenue growth resumption and ARPU/monetization KPIs if disclosed.

Relative Positioning: Within TSE small-cap internet/platform peers, liquidity is above average and leverage moderate, but profitability and capital efficiency are below peer medians given negative operating margin, negative ROIC, and weak cash conversion.

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