Bank of Innovation,Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥12.37B
• Operating Income: ¥2.15B
• Net Income: ¥1.36B
• EPS: ¥339.99

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

Bank of Innovation (TSE: 4393) delivered a mixed FY2025 Q4 set with revenue down 9.2% YoY to ¥12.37bn but operating income up 62.0% YoY to ¥2.15bn, indicating substantial margin expansion and disciplined cost control. Gross profit of ¥6.44bn implies a robust gross margin of 52.1%, consistent with an asset-light, digital content model. Operating margin rose to roughly 17.4%, supported by SG&A discipline (estimated SG&A of ~¥4.29bn). Ordinary income of ¥2.19bn is slightly above operating income, suggesting limited non-operating drag or small positive non-operating items. Net income rose 50.9% YoY to ¥1.35bn, with an implied effective tax rate around 25.6% (based on tax expense of ¥466m and net income), despite an uninformative reported 0.0% metric. DuPont analysis shows healthy profitability with a net margin of 10.93%, strong asset turnover of 1.557x, and modest leverage of 1.37x, yielding ROE of 23.23%. The balance sheet is conservative, with total equity of ¥5.82bn against total assets of ¥7.94bn, implying an equity ratio of about 73% (the reported 0.0% equity ratio appears undisclosed rather than zero). Liquidity looks ample with a current ratio and quick ratio both at 439%, reflecting negligible inventories. Cash flow quality is strong: operating cash flow of ¥2.87bn exceeds net income by 2.12x, and total free cash flow of ¥2.99bn was buoyed by a net investing inflow of ¥123m. Depreciation is minimal at ¥17m, underscoring low capital intensity but also limiting non-cash earnings buffers. Financing cash outflow of ¥188m indicates modest capital returns or debt service, though interest expense is not disclosed. The company paid no dividend (DPS ¥0), keeping payout at 0% and preserving cash for growth or balance sheet strength. Despite top-line contraction, profitability and cash generation improved markedly, highlighting operating leverage from cost optimization and product mix. Key uncertainties include the sustainability of revenue in a hit-driven mobile game market and the non-recurring nature of investing inflows supporting FCF. Overall, the period reflects strong earnings quality, a solid financial position, and prudent capital allocation, albeit with data limitations on certain disclosures (cash balance, equity ratio metric, and share count).

Profitability Analysis

ROE_decomposition: Net profit margin 10.93% × Asset turnover 1.557 × Financial leverage 1.37 = ROE 23.23%. This indicates ROE is driven by both efficient asset utilization and improved margins, with only modest leverage contribution. margin_quality: Gross margin at 52.1% is strong for the segment. Operating margin of ~17.4% (¥2,154m/¥12,366m) reflects meaningful SG&A efficiency (SG&A ~¥4,290m). Net margin at 10.93% remains healthy even after taxes, implying low non-operating drag. operating_leverage: Despite a 9.2% YoY revenue decline, operating income rose 62.0% YoY, evidencing favorable operating leverage via SG&A optimization and mix effects. Minimal depreciation (¥17m) suggests results are not flattered by non-cash items; margin gains appear operational.

Growth Assessment

revenue_sustainability: Revenue declined to ¥12.37bn (-9.2% YoY), pointing to title lifecycle and user acquisition normalization typical of mobile gaming. Sustainability hinges on top-grossing title performance, live-ops cadence, and pipeline launches. profit_quality: Net income grew 50.9% YoY to ¥1.35bn as costs were tightly managed. Gross margin stability and rising operating margin support quality, while ordinary income slightly exceeded operating income, suggesting limited non-core volatility. outlook: With cost efficiencies established, forward earnings resilience depends on stabilizing bookings, sustaining user monetization, and maintaining UA efficiency. Any new content launches or major updates could re-accelerate revenue, while a lack thereof could pressure top line and margins.

Financial Health

liquidity: Current assets ¥5,240m vs current liabilities ¥1,193m yield current and quick ratios of 439%, indicating substantial liquidity. Inventories are not disclosed (treated as zero), typical for a digital content model. solvency: Total liabilities ¥1,336m against equity ¥5,816m imply low leverage (D/E 0.23x). Implied equity ratio is ~73% (5,816/7,943), despite the reported metric showing 0.0% due to non-disclosure. capital_structure: Financial leverage at 1.37x (Assets/Equity) is conservative. Interest expense is not reported; thus, conventional coverage ratios are not meaningful this period, but low leverage lowers refinancing risk.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥2,867m is 2.12x net income (¥1,351m), indicating strong cash realization of earnings and limited accrual build. FCF_analysis: Free cash flow of ¥2,990m was supported by a net investing inflow of ¥123m; this inflow may be non-recurring (e.g., asset sales or investment redemptions). Core cash generation remains robust even excluding this tailwind. working_capital: Working capital of ¥4,047m highlights capacity to absorb receivable cycles from platform partners. Absence of disclosed inventories is consistent with the business model.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS ¥0; payout 0%), consistent with reinvestment and balance sheet strengthening priorities. FCF_coverage: With DPS at zero, coverage metrics are not applicable; however, FCF of ¥2,990m indicates ample capacity should policy change. policy_outlook: Given hit-driven revenue and a growth-oriented profile, retention of earnings is likely prioritized; future distributions may depend on pipeline visibility and sustained cash generation.

Risk Assessment

Business Risks:

• Hit-driven demand and title concentration risk in mobile gaming
• User acquisition cost inflation and dependency on ad platforms
• Platform fee structures (Apple/Google) compressing take rates
• Regulatory scrutiny on gacha/loot mechanisms and age-related controls
• Content pipeline execution risk and update cadence
• IP/licensing dependencies and potential royalty escalators
• Ranking volatility in app stores affecting visibility and bookings
• International expansion risks including localization and compliance

Financial Risks:

• Revenue decline pressure on scale efficiencies if UA spend must rise
• Working capital swings due to receivable timing from platforms
• Non-recurring investing inflows supporting FCF this period
• Limited disclosure on cash and equivalents; liquidity composition unknown
• Potential tax rate normalization vs implied 25.6% impacting net margins

Key Concerns:

• Sustainability of current margin profile amid declining revenue
• Concentration in one or few top-grossing titles
• Visibility on pipeline and live-ops to stabilize bookings

Investment Implications

Key Takeaways:

• Strong margin expansion with operating margin ~17.4% despite -9.2% revenue
• ROE of 23.23% driven by both margins and asset efficiency, with modest leverage
• Robust cash conversion (OCF/NI 2.12x) and sizable FCF of ¥2,990m
• Conservative balance sheet with implied equity ratio ~73% and D/E 0.23x
• Depreciation negligible, underscoring asset-light operations

Metrics to Watch:

• Monthly grossing ranks and bookings of key titles
• UA efficiency (marketing-to-sales ratio) and retention/ARPDAU trends
• OCF/NI ratio sustainability and trajectory of working capital
• Composition of investing cash flows (recurring vs one-off)
• Tax rate normalization relative to implied ~25.6%
• Pipeline milestones and cadence of large updates/new titles

Relative Positioning: Versus domestic mobile gaming peers, the company exhibits above-average profitability and strong balance sheet conservatism this period, though revenue headwinds and title concentration risks remain typical for the sector.

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