Global Information,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.99B
• Operating Income: ¥282M
• Net Income: ¥231M
• EPS: ¥64.96

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

Global Information Inc. (41710) reported FY2025 Q3 consolidated results under JGAAP showing modest top-line softness and a sharper decline in profitability. Revenue was ¥1,991 million, down 1.6% YoY, while operating income fell 15.9% YoY to ¥282 million, indicating negative operating leverage. Gross profit of ¥966 million implies a solid gross margin of 48.5%, but operating margin compressed to roughly 14.2% as fixed/semi-fixed costs weighed on earnings. Ordinary income came in at ¥281 million and net income at ¥192 million (-16.8% YoY), for a net margin of 9.64%. DuPont shows ROE of 7.74%, driven by a 9.64% net margin, asset turnover of 0.638x, and modest leverage of 1.26x. The balance sheet is strong and conservatively financed: total assets are ¥3,119 million and total equity ¥2,481 million, implying an equity ratio around 79.5% on a simple period-end basis. Liquidity is ample with current assets of ¥3,067 million against current liabilities of ¥390 million, producing a current ratio of 786% and minimal inventories. Debt-to-equity is low at 0.28x (total liabilities to equity), underscoring low solvency risk. Reported cash flow line items were not disclosed (shown as zero), so operating cash flow and free cash flow analysis cannot be performed from the provided data. EPS is ¥64.96; outstanding share count was not disclosed, limiting per-share diagnostics beyond EPS. The decline in operating income outpaced the slight revenue contraction, suggesting higher operating expense growth or reduced operating efficiency during the period. Tax expense of ¥109 million is disclosed, though effective tax rate reconciliation to ordinary income is not possible with limited detail; small discrepancies may reflect non-operating or extraordinary items. Despite near-term margin pressure, the company retains significant working capital of ¥2,677 million and a net-cash-like profile. No dividend data was disclosed (DPS and payout shown as zero indicate non-disclosure), leaving dividend policy visibility low. Overall, fundamentals suggest an asset-light information services model with strong liquidity and moderate ROE, but short-term growth and margin headwinds and absent cash flow disclosures constrain conviction in earnings quality trends.

Profitability Analysis

ROE decomposition: Using provided DuPont metrics, ROE is 7.74% = net margin 9.64% × asset turnover 0.638× × financial leverage 1.26×. Margin quality: gross margin is 48.5% (¥965.6m/¥1,991m), indicating strong value-add after cost of sales; operating margin is ~14.2% (¥282m/¥1,991m), down YoY given operating income decline versus a slight revenue dip, implying cost pressure or increased SG&A. Ordinary margin is ~14.1% and net margin 9.64%, showing limited non-operating drag. Operating leverage: revenue fell 1.6% YoY while operating income fell 15.9% YoY; the disproportionate decline in operating profit points to negative operating leverage, consistent with a fixed cost base or incremental spending (e.g., personnel, marketing). Expense dynamics: gross profit declined modestly with revenue, but operating income contracted more, implying SG&A growth outpaced sales or mix effects reduced operating efficiency. Tax effects: income tax of ¥109.3m suggests a meaningful tax burden, but the effective tax rate cannot be reliably computed from the disclosed figures due to classification/rounding and non-operating items.

Growth Assessment

Revenue sustainability: top line decreased 1.6% YoY to ¥1,991m, a mild contraction that may reflect softer demand, timing of deliverables, or pricing. Profit quality: operating income fell 15.9% YoY to ¥282m, signaling margin compression and reduced operating efficiency; net income declined 16.8% to ¥192m, mirroring operating trends. The gross margin at 48.5% remains healthy, which suggests core economics are intact, but higher SG&A intensity or lower operating leverage weighed on profitability. Outlook considerations (data-driven): absent order/backlog metrics, growth visibility is limited; maintaining revenue stability while reining in fixed costs will be key to stabilizing operating margins. Product/service mix and pricing discipline will matter, given high gross margins characteristic of information services. International exposure, FX, and vendor relationships may also influence trajectory, but are not quantifiable from the current dataset. On balance, near-term growth appears subdued with pressure on operating profit until cost discipline or demand recovery improves operating leverage.

Financial Health

Liquidity: current assets ¥3,067.1m versus current liabilities ¥390.1m implies a very strong current ratio of 786% and quick ratio of ~783% given minimal inventories (¥11.6m). Working capital is substantial at ¥2,677.0m, supporting operational flexibility. Solvency: total liabilities ¥695.3m against equity ¥2,481.0m yields a low liabilities-to-equity ratio of 0.28x and an inferred equity ratio of ~79.5% (equity/assets), indicating a conservatively financed balance sheet. Capital structure: no material interest expense disclosed, consistent with limited financial debt; therefore, interest coverage cannot be assessed from the provided data. Asset base: current assets dominate total assets, implying low capital intensity and an asset-light model. Overall, liquidity and solvency metrics indicate low near-term financial risk.

Cash Flow Quality

Earnings quality cannot be fully assessed because operating, investing, and financing cash flows were not disclosed in this filing set. As such, OCF/Net Income and free cash flow figures shown as zero should be treated as unavailable rather than true zeros. Without cash flow detail, we cannot evaluate cash conversion, working capital absorption, or the sustainability of earnings through cash generation. Working capital appears ample from the balance sheet, but period movements (receivables, payables, deferred revenue) are not provided, preventing a cash conversion cycle analysis. Depreciation and amortization were not disclosed, so EBITDA and non-cash expense contributions to earnings quality cannot be gauged. In summary, cash flow quality is indeterminable from the available data and should be a focus for subsequent disclosures.

Dividend Sustainability

Dividend per share and payout ratio were not disclosed (shown as zero placeholders), so current dividend policy and distributions cannot be assessed. Given net income of ¥192m, strong liquidity, and low leverage, capacity for distributions may exist, but coverage cannot be evaluated without operating/free cash flow details. FCF coverage and payout sustainability are therefore indeterminate. Outlook: monitor management guidance and upcoming filings for DPS announcements, target payout ratio, and cash flow data to assess policy consistency and affordability.

Risk Assessment

Business Risks:

• Revenue cyclicality and demand variability in information services/report distribution
• Pricing pressure and competitive intensity from domestic and global peers
• Vendor/publisher relationship risk affecting content availability and margins
• Execution risk around salesforce productivity and marketing ROI amid negative operating leverage
• FX exposure on international transactions and vendor settlements (if applicable)
• Product mix shifts that could impact gross and operating margins

Financial Risks:

• Limited cash flow visibility due to undisclosed OCF/FCF in the period
• Potential working capital swings (receivables, prepayments, deferred revenue) affecting cash generation
• Tax rate volatility given limited detail on non-operating items
• Concentration risk if a small number of customers or vendors drive a large share of revenue (not disclosed)

Key Concerns:

• Operating income decline (-15.9% YoY) versus modest revenue decline (-1.6% YoY), indicating margin compression
• ROE at 7.74% may face further pressure if operating leverage remains negative
• Absence of cash flow disclosures impedes assessment of earnings quality and dividend capacity

Investment Implications

Key Takeaways:

• Top line down 1.6% YoY to ¥1,991m with sharper 15.9% YoY drop in operating income, signaling negative operating leverage
• Gross margin remains strong at 48.5%, but SG&A intensity likely increased
• Net margin of 9.64% supports a moderate ROE of 7.74% with low financial leverage (1.26x)
• Balance sheet is conservative: equity ratio ~79.5%, current ratio ~786%, liabilities-to-equity 0.28x
• Cash flow data not disclosed; earnings-to-cash conversion and FCF sustainability are unknown
• Dividend policy and payouts not disclosed; distribution capacity cannot be evaluated without OCF/FCF

Metrics to Watch:

• Operating expense growth versus revenue (trajectory of operating margin)
• Order intake/bookings and backlog (if disclosed) to gauge forward revenue
• Receivables days, payables days, and deferred revenue for cash conversion
• Gross margin stability and pricing/mix trends
• ROE drivers: asset turnover and leverage changes alongside net margin
• Any disclosure on DPS, payout ratio targets, and cash flow statements in subsequent filings

Relative Positioning: Asset-light, information services provider with robust liquidity and low leverage, exhibiting healthy gross margins but near-term growth softness and operating margin pressure; visibility on cash generation and dividends remains limited due to undisclosed cash flow data.

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