CARTA HOLDINGS, Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥19.48B
• Operating Income: ¥2.42B
• Net Income: ¥958M
• EPS: ¥53.87

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

CARTA HOLDINGS reported FY2025 Q3 (cumulative) consolidated results under JGAAP showing solid top-line expansion and strong operating leverage. Revenue was 19,481 million yen, up 11.8% YoY, indicating resilient demand in core businesses. Gross profit reached 15,661 million yen, implying a very high gross margin of 80.4%, consistent with a platform/intermediation model with low direct costs. Operating income rose to 2,420 million yen (+79.4% YoY), materially outpacing revenue growth and evidencing effective cost discipline and operating leverage. Ordinary income was 2,496 million yen, reflecting modest positive non-operating contributions of roughly 76 million yen. Net income came in at 1,363 million yen (+48.6% YoY), translating to a net profit margin of 7.0%. The DuPont framework indicates ROE of 5.42% built from a 7.0% net margin, 0.405x asset turnover, and 1.91x financial leverage. Liquidity appears healthy with current assets of 37,760 million yen and current liabilities of 23,503 million yen, yielding a current ratio of 160.7% and working capital of 14,257 million yen. Based on total equity of 25,126 million yen and total assets of 48,078 million yen, the implied equity ratio is approximately 52.2%, although the reported equity ratio metric shows 0.0% (likely undisclosed). The company’s debt-to-equity ratio is 0.95x, indicating a balanced capital structure without apparent over-leverage. Effective tax expense was 542 million yen; relative to ordinary income, this implies an effective tax rate in the low 20% range, not 0.0% (the 0.0% figure is a non-disclosed calculated metric). Cash flow statement line items are not disclosed in this dataset (all zeros represent unreported items), preventing assessment of operating cash conversion and free cash flow. Dividend information is also not disclosed here; DPS and payout ratios show as zero due to non-disclosure, not actual zero. While earnings momentum is positive and margins are improving, the lack of cash flow and share data limits a full assessment of earnings quality and per-share dynamics. Overall, Q3 performance demonstrates improving profitability on stable revenue growth and a solid balance sheet foundation, with further confirmation needed from actual cash flow disclosures.

Profitability Analysis

ROE of 5.42% decomposes into a 7.0% net profit margin, 0.405x asset turnover, and 1.91x financial leverage, indicating that current returns are primarily margin-driven rather than efficiency- or leverage-driven. The gross margin of 80.4% underscores a high-value, low COGS model typical of digital advertising/platform services. Operating margin is approximately 12.4% (2,420/19,481), showing a meaningful step-up YoY given operating income growth of +79.4% versus revenue growth of +11.8%. The spread between gross profit and operating income (13,241 million yen in operating expenses) suggests improved operating efficiency and cost control despite growth investments. Ordinary income exceeded operating income by about 76 million yen, suggesting modest non-operating gains or financial income; with interest expense undisclosed, interest burden appears limited. The tax expense of 542 million yen implies an effective rate near 21–22% versus ordinary income (assuming limited other below-ordinary items), consistent with prior domestic norms. Operating leverage is evident: a mid-teens uplift in revenue driving outsized operating profit growth indicates fixed-cost absorption and scale benefits. Net margin at 7.0% is reasonable for the sector and could expand further if the company sustains cost discipline and mix shift toward higher-margin solutions. Asset turnover of 0.405x (likely on a period-average basis) is modest, typical for businesses holding substantial current assets and receivables tied to media trading flows. Financial leverage at 1.91x is moderate and contributes only modestly to ROE. With depreciation and amortization not disclosed, EBITDA and D&A mix cannot be assessed, but operating profit trends still signal core margin improvement. Overall, profitability trends are favorable, driven by strong gross economics and improved operating cost efficiency.

Growth Assessment

Revenue grew 11.8% YoY to 19,481 million yen, reflecting healthy demand in digital marketing/media monetization. Operating income growth of 79.4% YoY materially outpaced revenue, indicating positive operating leverage and actionable cost initiatives. Net income growth of 48.6% YoY confirms improved profitability after tax and minority interests. The 7.0% net margin and 12.4% operating margin illustrate mix and scale benefits; sustainability will depend on the durability of ad spend, platform fees, and client demand into Q4. Ordinary income exceeding operating income by 76 million yen indicates a small non-operating tailwind; outlook should not rely on this recurring. Without disclosed segment or channel breakdown, it is difficult to attribute growth to specific verticals (e.g., agency vs. platform vs. media), a data limitation. The asset turnover of 0.405x implies moderate growth efficiency; further scaling may require improved working capital velocity. The YoY growth profile suggests that strategic initiatives (cost optimization, mix shift) are gaining traction. Near-term outlook appears constructive if macro advertising trends remain stable and the company maintains pricing/take-rate discipline. Risks to growth include cyclical ad budgets, platform policy changes, and competition in ad tech. Absence of cash flow data prevents validation of growth quality through cash conversion. Overall, the growth trajectory is solid with improving profitability quality, pending confirmation from cash metrics and Q4 seasonality.

Financial Health

Total assets stood at 48,078 million yen and total equity at 25,126 million yen, implying an equity ratio of roughly 52.2% based on the provided balance sheet (the reported 0.0% equity ratio is an undisclosed metric). Total liabilities were 23,852 million yen, leading to a debt-to-equity ratio of 0.95x, which is moderate for the sector. Current assets of 37,760 million yen versus current liabilities of 23,503 million yen yield a current ratio of 160.7% and quick ratio of 160.7% (inventories are not disclosed), supporting strong short-term liquidity. Working capital of 14,257 million yen provides a buffer against receivable cycles typical in advertising settlements. Interest expense is undisclosed; given positive non-operating balance, interest burden appears limited, suggesting comfortable coverage against operating income of 2,420 million yen. The capital structure appears balanced with no signs of over-reliance on debt. However, cash and equivalents are not disclosed, constraining precise liquidity assessment. Absent details on long-term debt maturities or lease obligations, solvency assessment relies on headline ratios, which look solid. Overall financial health appears sound with ample liquidity and moderate leverage.

Cash Flow Quality

Cash flow statement items (operating, investing, financing) are undisclosed in this dataset, so OCF, FCF, and cash conversion cannot be evaluated here. The reported OCF/Net Income and FCF metrics showing 0 should be treated as unavailable, not actual zero. Earnings quality is therefore inferred from accrual metrics: high gross margins and improved operating margins suggest healthy economics, but receivable dynamics and revenue recognition in the ad cycle require validation via OCF. Working capital management is a focal area; with current assets substantially higher than current liabilities, the business likely carries significant receivables and payables timing, which can cause volatility in OCF. Without D&A disclosure, we cannot separate cash and non-cash components of operating profit; EBITDA-based analyses are not possible here. Until OCF and capex are disclosed, free cash flow coverage of earnings and dividends cannot be assessed. Monitoring Q4 and full-year cash flow disclosures will be essential to confirm earnings-to-cash conversion.

Dividend Sustainability

Dividend per share (DPS) and payout ratio are shown as zero due to non-disclosure in this dataset and should not be interpreted as no dividend. With net income of 1,363 million yen and moderate leverage, the company appears to have capacity for distributions, but sustainability depends on actual OCF and capex needs, which are not disclosed here. Free cash flow coverage of dividends cannot be assessed without operating and investing cash flows. Historically, companies in this segment often balance dividends with growth investments and buybacks; policy specifics for this period are not available in the provided data. Given the implied equity ratio near 52% and positive profitability, balance sheet capacity appears adequate, but confirmation requires cash flow visibility. Key watchpoints include full-year OCF, capex intensity, and any stated capital allocation policy updates.

Risk Assessment

Business Risks:

• Cyclical advertising spend sensitivity to macroeconomic conditions
• Platform dependency and policy changes (search, social, mobile ecosystems)
• Regulatory shifts in data privacy and targeting (cookie deprecation, ID frameworks)
• Competitive pressure in ad-tech and agency services affecting pricing and take rates
• Traffic and inventory quality risks including ad fraud and brand safety
• Execution risk in scaling higher-margin platforms and solutions
• Client concentration or vertical concentration risk if present (not disclosed)
• Talent retention and technology development requirements in a fast-evolving market

Financial Risks:

• Working capital swings in media settlement cycles impacting OCF
• Potential exposure to credit risk on receivables during downturns
• Limited visibility on interest obligations and leases due to non-disclosed interest expense
• Earnings-to-cash conversion uncertainty given undisclosed cash flows
• Possible non-operating income reliance (small positive this period) not guaranteed to recur

Key Concerns:

• Cash flow statement not disclosed; FCF and OCF conversion cannot be validated
• Equity ratio metric undisclosed; reliance on manual inference from balance sheet
• Lack of D&A and segment detail limits assessment of durability of margin expansion
• Dividend policy and per-share metrics (shares outstanding, BVPS) not available in this dataset

Investment Implications

Key Takeaways:

• Revenue growth of 11.8% YoY with outsized operating income growth of 79.4% indicates notable operating leverage
• High gross margin of 80.4% supports the structural profitability of the business model
• Net margin at 7.0% and ROE at 5.42% are improving but leave room for further efficiency gains
• Balance sheet appears solid with an implied equity ratio around 52% and current ratio at 160.7%
• Non-operating items slightly positive; core profit improvement is the main driver
• Cash flow disclosures are missing; confirmation of earnings quality via OCF/FCF is a key next step

Metrics to Watch:

• Operating cash flow and free cash flow conversion versus net income
• Days sales outstanding and payables turnover to gauge working capital discipline
• Operating margin trajectory and cost-to-income ratio
• Segment mix and take-rate trends across platform/agency/media businesses
• Non-operating gains/losses and any interest/lease obligations as disclosed
• Dividend policy updates and capital allocation (capex, M&A, buybacks) at FY results

Relative Positioning: Within Japan’s digital advertising and ad-tech ecosystem, CARTA HOLDINGS appears as a mid-cap player with strong gross margins, improving operating efficiency, and a balanced balance sheet; continued execution on cash conversion and margin expansion will be key to closing the gap with leading peers on ROE.

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