GMO Commerce,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.80B
• Operating Income: ¥409M
• Net Income: ¥256M
• EPS: ¥70.67

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

GMO Commerce (JGAAP, non-consolidated) delivered a strong FY2025 Q3 performance with revenue of 1,803,000,000 yen, up 22.1% year over year, evidencing solid topline momentum. Gross profit reached 1,516,364,000 yen, implying an exceptional gross margin of 84.1%, which points to a high value-added, asset-light service mix. Operating income rose 45.4% YoY to 409,000,000 yen, expanding operating margin to roughly 22.7%, highlighting operating leverage. Ordinary income of 394,000,000 yen and net income of 256,000,000 yen (up 56.8% YoY) indicate that below-the-line items had limited drag and that tax impacts were manageable. Net margin of 14.2% demonstrates healthy conversion of revenue into earnings. DuPont metrics show ROE of 10.73% built from a 14.20% net margin, 0.496x asset turnover, and 1.52x financial leverage, a balanced return profile for an internet/services model. Estimated effective tax rate is about 35% (based on income taxes of 137,562,000 yen and implied pre-tax income near 394,000,000 yen), broadly consistent with statutory rates. The balance sheet appears conservative: total assets of 3,633,000,000 yen against equity of 2,386,000,000 yen suggest an equity ratio of roughly 65.7% and debt-to-equity of about 0.55x, with most liabilities being current. Liquidity is adequate with a current ratio of 126% and positive working capital of 331,491,000 yen. Asset turnover at 0.496x is in line with a subscription/fee-based model with limited tangible assets. While cash flow statements were not disclosed in this dataset, earnings quality inference from margins is constructive, but confirmation via operating cash flow will be important. No dividend was reported for the period, implying retained earnings are being prioritized to support growth and resilience. Overall, the company combines robust growth with margin expansion and a sound capital structure. Key watchpoints include the trajectory of selling, general and administrative costs, customer retention dynamics, tax rate normalization, and eventual cash flow disclosure. Data limitations (notably cash flow and certain line-item details) temper confidence in cash conversion assessment, but the available non-zero data show clear operating strength in FY2025 Q3.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 14.20%
• asset_turnover: 0.496
• financial_leverage: 1.52
• calculated_ROE: 10.73%
• notes: Asset turnover and leverage are based on period-end balances; using averages could slightly change ROE. margin_quality:
• gross_margin: 84.1%
• operating_margin: 22.7%
• ordinary_margin: 21.9%
• net_margin: 14.2%
• commentary: High gross margin and expanding operating margin indicate strong pricing power and scale efficiency; limited below-the-line drag. operating_leverage:
• revenue_growth_YoY: 22.1%
• operating_income_growth_YoY: 45.4%
• implied_DOL: ≈2.1x
• commentary: Operating income grew roughly 2x the rate of revenue, evidencing cost discipline and scale benefits.

Growth Assessment

revenue_sustainability: Revenue growth of 22.1% YoY appears underpinned by a high-margin, service-heavy mix. The breadth and durability of demand across customer cohorts will determine sustainability, but the margin profile suggests recurring or subscription-like revenues. profit_quality: Net income grew 56.8% YoY on top of strong operating leverage. Estimated effective tax rate (~35%) looks normal, implying underlying profit growth is not tax-distorted. outlook: If customer retention and acquisition trends hold, double-digit growth with mid-20% operating margin is achievable near term. Key dependencies include maintaining gross margin above 80% and controlling SG&A as sales scale.

Financial Health

liquidity:

• current_assets: 1605734000
• current_liabilities: 1274243000
• current_ratio: 126%
• quick_ratio: 126%
• working_capital: 331491000
• commentary: Adequate short-term liquidity with positive working capital; absence of reported inventories is consistent with a services model. solvency:
• total_assets: 3633000000
• total_liabilities: 1314472000
• total_equity: 2386000000
• debt_to_equity: 0.55x
• equity_ratio_estimate: ≈65.7%
• commentary: Capital structure is conservative; liabilities are predominantly current, likely reflecting operating liabilities (payables/deferred income) rather than heavy financial debt. capital_structure: Leverage at ~0.55x liabilities-to-equity supports flexibility. With equity covering about two thirds of assets, balance sheet risk appears modest.

Cash Flow Quality

earnings_quality: Earnings quality looks solid given high gross and operating margins, but validation requires operating cash flow data, which was not disclosed here. FCF_analysis: Free cash flow cannot be assessed without reported operating and investing cash flows. The asset-light profile and lack of reported D&A suggest low capital intensity, but confirmation is pending. working_capital: Positive working capital and largely current liabilities indicate potential reliance on trade payables or customer advances; monitoring receivables and deferred revenue will be important for cash conversion.

Dividend Sustainability

payout_ratio_assessment: No dividend was reported for the period (payout ratio 0%), consistent with reinvestment in growth. FCF_coverage: Not assessable due to unreported cash flows; on reported earnings alone, capacity appears available, but capital allocation preferences skew to retention. policy_outlook: With double-digit ROE and growth, retaining earnings is rational. Any future dividend initiation would likely hinge on demonstrated, consistent positive OCF and low reinvestment needs.

Risk Assessment

Business Risks:

• Customer concentration and churn risk typical of digital commerce/service platforms
• Competitive intensity in internet services and marketing solutions
• Dependence on maintaining high gross margins and pricing power
• Potential regulatory or policy changes affecting online commerce and data usage
• Execution risk in scaling sales while controlling SG&A

Financial Risks:

• Cash flow visibility is limited pending disclosure of OCF/FCF
• Working capital swings if receivables or deferred revenue change materially
• Tax rate volatility around the estimated ~35% effective rate
• Sensitivity to any rise in personnel or subcontracting costs that could compress margins

Key Concerns:

• Lack of disclosed cash flow statements in this dataset hinders assessment of cash conversion
• High proportion of current liabilities requires careful liquidity management
• Sustaining operating leverage as growth normalizes

Investment Implications

Key Takeaways:

• Strong topline growth (+22.1% YoY) with outsized operating income growth (+45.4% YoY) demonstrates operating leverage
• Exceptional gross margin (84.1%) and solid operating margin (~22.7%) indicate high value-added services
• ROE of 10.73% built on healthy margins and moderate leverage
• Conservative balance sheet with estimated equity ratio ~65.7% and debt-to-equity ~0.55x
• Liquidity adequate with current ratio 126% and positive working capital
• Cash flow data not disclosed; earnings quality appears solid but needs OCF confirmation
• No dividend currently; earnings retained to support growth

Metrics to Watch:

• Operating cash flow and free cash flow once disclosed
• Receivables, payables, and deferred revenue trends
• SG&A-to-sales ratio and headcount costs
• Gross margin stability above 80%
• Operating margin trajectory versus revenue growth
• Effective tax rate versus statutory levels
• Asset turnover (preferably using average assets) to track efficiency

Relative Positioning: Relative to domestic small-cap internet/services peers, GMO Commerce exhibits above-average gross and operating margins with mid-teens ROE and a conservative balance sheet, pending confirmation of 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