Spacemarket,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.76B
• Operating Income: ¥122M
• Net Income: ¥84M
• EPS: ¥9.67

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

Verdict: Solid Q3 with accelerating operating leverage, margin expansion, and ROE improvement, tempered by high leverage and limited cash flow disclosure. Revenue grew 30.0% YoY to 17.63, while operating income rose 53.9% YoY to 1.22, evidencing strong positive operating leverage. Gross profit was 10.52, yielding a gross margin of 59.6%, indicating healthy take-rate and cost discipline on core fulfillment costs. SG&A was 9.72, enabling operating income growth outpacing top-line despite continued investment. Ordinary income increased 51.9% YoY to 1.16, and net income rose 38.2% YoY to 1.16, with a favorable effective tax rate of -9.9% boosting bottom line. Operating margin expanded to 6.9% from roughly 5.9% a year ago (about +110 bps), a notable efficiency gain. Net margin improved to 6.6% from ~6.2% YoY (about +40 bps), though the expansion was partly helped by a negative tax charge. The DuPont bridge shows ROE at 12.8%, driven mainly by higher asset turnover (0.553) and high financial leverage (3.53x), with net margin also contributing. Liquidity is adequate with a current ratio of 152.6% and cash of 11.59, but leverage is elevated with D/E at 2.53x (warning). Interest coverage is strong at 96.5x, suggesting manageable debt service near term. Intangible-heavy assets (goodwill 4.29; intangibles 5.74) introduce potential impairment risk if growth were to slow. Earnings quality cannot be validated due to unreported cash flows; OCF/NI and FCF are N/A. Working capital appears light (A/R 0.45; A/P 0.04), consistent with a marketplace model, but limits balance-sheet shock absorbers outside cash. Forward-looking, sustained revenue growth with SG&A discipline should continue to lift margins, but normalization of tax and any uptick in credit costs or platform incentives could cap net margin gains. Key watchpoints include cash conversion, leverage trajectory, and any goodwill/intangible write-down risk as the company scales.

Profitability Analysis

ROE decomposition (DuPont): ROE 12.8% = Net Profit Margin 6.6% × Asset Turnover 0.553 × Financial Leverage 3.53x. The largest incremental driver YoY is operating leverage translating to higher net margin (from ~6.2% to 6.6%) and improved asset turnover as revenue growth outpaced balance-sheet expansion. Business rationale: higher transaction volumes and take-rate stability lifted gross profit faster than SG&A, expanding operating margin; a negative effective tax rate further flattered net margin. Sustainability: gross margin levels look structurally solid for a platform model, but the tax benefit (-9.9%) is unlikely to recur at the same magnitude, so net margin may normalize slightly. Asset turnover improvement should be sustainable if growth persists without corresponding increases in low-yield assets; however, intangible accumulation (goodwill, software) will cap further gains if capitalized development continues. Operating leverage is favorable now, but if SG&A (notably sales/marketing and product) re-accelerates above revenue to drive growth, margin gains could pause. Flag: revenue +30% vs operating income +53.9% indicates SG&A grew slower than gross profit; however, lack of SG&A detail (no breakdown) prevents verification of cost mix and durability.

Growth Assessment

Top-line expanded 30.0% YoY to 17.63, consistent with accelerating platform adoption. Operating income grew 53.9% YoY to 1.22, reflecting improved unit economics and disciplined overhead. Operating margin widened ~110 bps YoY to 6.9%, and net margin rose ~40 bps to 6.6%, with some boost from a negative tax charge. Gross margin of 59.6% suggests stable take-rate and low direct cost intensity, which is typical for marketplace monetization. With goodwill 4.29 and intangibles 5.74, growth appears driven by product/platform assets rather than heavy physical assets, supporting scalability. However, the step-up in profits partly reflects tax benefits and non-operating items are negligible (non-op income ratio 2.7%), indicating core earnings drove the quarter. ROIC reported at 24.1% is strong versus a 7–8% benchmark, implying efficient deployment, though methodology and period basis are not disclosed. Outlook: if demand momentum continues and customer acquisition costs remain contained, further operating leverage is plausible into FY-end; risks are normalization of tax rate, potential reinvestment spend, and any slowdown in booking volumes due to macro seasonality. Limited disclosure on cohort retention, take-rate trends, and marketing intensity constrains forward visibility.

Financial Health

Liquidity: current ratio 152.6% and quick ratio 152.6% are healthy (>1.5 threshold), with cash and deposits of 11.59 providing a buffer against 15.22 of current liabilities. Solvency: D/E is 2.53x (warning >2.0), and assets/equity of 3.53x implies an equity ratio near ~28%; leverage is elevated for a relatively small platform business. Debt profile: short-term loans 1.50 versus strong current assets 23.24 limits near-term refinancing risk; long-term loans 6.11 concentrate leverage on the noncurrent side, reducing maturity mismatch. Interest coverage at 96.5x (OI/interest expense) indicates low immediate service risk. Maturity mismatch risk is moderate: cash 11.59 plus A/R 0.45 should comfortably meet near-term obligations, but dependence on ongoing cash generation remains unverified due to lack of OCF data. Off-balance sheet: no disclosures provided; inability to assess lease liabilities or contingent considerations may understate true leverage.

Cash Flow Quality

OCF/Net Income is N/A due to unreported cash flows, so earnings quality cannot be validated; this is a key limitation. Free cash flow is also N/A, preventing assessment of self-funding capacity for growth and potential dividends. Working capital appears light (A/R 0.45; A/P 0.04), consistent with a platform but offers limited release in downturns; no signs of working capital manipulation can be assessed without cash flow detail. Interest coverage is strong (96.5x), but without OCF data we cannot confirm cash interest capacity under stress. Given negative reported tax rate, cash taxes may differ from P&L, adding uncertainty to cash conversion.

Dividend Sustainability

Dividend data is unreported; payout and policy remain unknown. With net income at 1.16 and leverage at 2.53x, any initiation or increase in dividends should be weighed against the need to deleverage and fund growth. Absent OCF and capex disclosure, FCF coverage cannot be assessed; prudence suggests prioritizing reinvestment and balance-sheet strengthening over distributions until cash generation is demonstrated. Book value per share is 74.66 JPY versus EPS (basic) 9.67 JPY for the period, implying internal capital formation is modest but positive; sustainability of distributions would hinge on maintaining operating margin expansion and stable cash conversion.

Risk Assessment

Business Risks:

• Demand cyclicality and seasonality in venue/space utilization impacting booking volumes
• Platform competition potentially pressuring take-rates and marketing spend
• Regulatory/permit changes affecting event and short-term space usage in key municipalities
• Intangible asset impairment risk given goodwill 4.29 and intangibles 5.74 relative to equity 9.03

Financial Risks:

• High leverage (D/E 2.53x) increases sensitivity to earnings volatility
• Tax normalization risk given current negative effective tax rate (-9.9%)
• Refinancing risk if credit conditions tighten despite current interest coverage strength
• Cash flow visibility risk due to unreported OCF/FCF

Key Concerns:

• Earnings quality cannot be corroborated without OCF; OCF/NI could be below 0.8 in a stress case
• Margin gains may slow if SG&A re-accelerates to support growth
• Small absolute scale (revenue 17.63) leaves limited cushion against shocks
• Potential hidden obligations (leases, guarantees) not disclosed could raise effective leverage

Investment Implications

Key Takeaways:

• Positive operating leverage with operating margin up ~110 bps YoY to 6.9%
• ROE of 12.8% supported by both improved asset turnover (0.553) and high leverage (3.53x)
• Healthy liquidity (current ratio 152.6%), but leverage elevated (D/E 2.53x, caution)
• Interest coverage strong at 96.5x, reducing near-term debt service risk
• Earnings quality and FCF sustainability remain unverified due to missing cash flow disclosure

Metrics to Watch:

• Operating cash flow and OCF/NI ratio (target >1.0)
• SG&A efficiency versus revenue growth (aim for SG&A growth <= revenue growth)
• Take-rate/gross margin stability
• Leverage trajectory (D/E; net debt to EBITDA once disclosed)
• Effective tax rate normalization and its impact on net margin
• Impairment indicators for goodwill/intangibles

Relative Positioning: Within small-cap Japanese platform/marketplace peers, the company shows above-peer growth and strong reported ROIC (24.1%) with improving operating leverage, but stands out for higher financial leverage and limited cash flow transparency, warranting a balanced stance until cash conversion is demonstrated.

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