monoAI technology Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥842M
• Operating Income: ¥-233M
• Net Income: ¥-400M
• EPS: ¥-14.36

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

monoAI technology (TSE:52400) reported FY2025 Q3 (cumulative) revenue of ¥842 million, declining 23.1% YoY, indicating a challenging demand environment and/or delayed project deliveries. Despite the revenue contraction, the company maintains a robust reported gross margin of 43.0%, implying a comparatively high-value software/services mix and/or disciplined pricing on delivered projects. Operating income was a loss of ¥233 million (essentially flat YoY per disclosure), underscoring that fixed costs (notably SG&A and R&D) continue to outweigh gross profit at current scale. Ordinary loss of ¥226 million was slightly better than operating loss, suggesting non-operating income partially offset interest expense of ¥1.8 million. Net loss was ¥176 million, reflecting continued investment ahead of scale and still-limited operating leverage. DuPont metrics show net margin of -20.90%, asset turnover of 0.532x, and low financial leverage of 1.14x, driving a calculated ROE of -12.72%; losses are primarily margin- and scale-driven rather than leverage-driven. Liquidity appears ample based on reported current ratio of 681.7% and quick ratio of 681.7%, with working capital of approximately ¥1.535 billion, providing near-term operating flexibility. The debt-to-equity ratio of 0.23x indicates modest reliance on debt financing, reducing financial risk despite ongoing losses. Cash flow statement items were not disclosed in the provided XBRL fields, limiting direct assessment of operating cash flow and free cash flow; as a result, we infer cash burn qualitatively from the operating loss and the absence of reported depreciation. Dividend payments remain suspended (DPS ¥0), appropriate given negative earnings and a growth investment phase. The company’s core profitability profile shows healthy unit economics at the gross margin level, but scale is insufficient to cover fixed costs; breakeven requires either revenue recovery or cost optimization. The 23.1% YoY revenue decline is a key watchpoint for sustainability of the business model and backlog conversion. With low leverage and substantial reported working capital, solvency risk appears contained in the near term, though prolonged losses could pressure the equity base and necessitate future funding. Given reporting limitations (notably missing cash flow data and some balance sheet line item mismatches common to taxonomy differences), conclusions are made using the provided non-zero metrics and ratios. Overall, the quarter portrays a company with attractive gross margins but constrained by scale, with sufficient liquidity to continue investing toward improved operating leverage.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -20.9
• asset_turnover: 0.532
• financial_leverage: 1.14
• calculated_ROE: -12.72
• interpretation: Negative ROE is driven by weak net margins and sub-1x asset turnover; leverage is low and does not materially amplify results. margin_quality:
• gross_margin: 43.0
• operating_margin: -27.7
• ordinary_margin: -26.9
• net_margin: -20.9
• comments: A strong reported gross margin indicates solid unit economics; the negative operating margin points to high fixed costs (SG&A/R&D) relative to current scale. Ordinary loss being slightly smaller than operating loss implies net non-operating gains offsetting interest. operating_leverage:
• evidence: Operating loss of ¥233m on ¥842m revenue suggests insufficient scale to absorb fixed costs.
• interest_coverage_ratio: -131.9
• takeaway: Operating leverage potential exists but requires revenue stabilization/re-acceleration or cost base optimization; current earnings do not cover interest.

Growth Assessment

revenue_sustainability: Revenue declined 23.1% YoY to ¥842m, indicating either weaker demand, project delays, or lower backlog conversion. Sustained growth will depend on new bookings, enterprise adoption cycles, and retention. profit_quality: With reported depreciation at 0 (not disclosed), losses appear driven by operating performance rather than large non-cash charges; however, the absence of cash flow data limits assessment of accruals and one-offs. outlook: Key swing factors include recovery in project starts, monetization of platform offerings, and cost discipline. Given the strong gross margin, a moderate revenue rebound could materially reduce losses through operating leverage.

Financial Health

liquidity:

• current_ratio_percent: 681.7
• quick_ratio_percent: 681.7
• working_capital_yen: 1535197000
• assessment: Reported liquidity is very strong, suggesting ample coverage of short-term obligations. solvency:
• debt_to_equity: 0.23
• interest_expense_yen: 1767000
• comment: Low leverage reduces refinancing risk; interest burden is small but not covered by current earnings. capital_structure: Equity-financed with modest liabilities; ability to raise additional equity could be important if losses persist. notes_on_data: Some balance sheet subtotals may not align due to taxonomy/classification; analysis relies on provided ratios and totals.

Cash Flow Quality

earnings_quality: Absent OCF disclosure, we proxy from operating loss (¥233m) and no reported D&A; earnings appear to reflect operating performance rather than accounting effects, but verification via OCF is not possible. FCF_analysis: Free cash flow was not disclosed. Without investing cash flows, we cannot quantify FCF. Given negative operating income, FCF is likely negative unless offset by working capital releases. working_capital: Working capital is sizable at ~¥1.535bn, providing a cushion; however, without AR/AP details, cash conversion efficiency cannot be assessed. OCF_to_NI_ratio: 0.0 caveat: Zeros in cash flow lines denote non-disclosure in the data provided, not actual zero cash flows.

Dividend Sustainability

payout_ratio_assessment: With net loss of ¥176m and DPS of ¥0, payout ratio is effectively 0%. This aligns with a loss-making, investment phase profile. FCF_coverage: Not assessable due to undisclosed OCF/FCF; prudently, the company maintains no dividend while targeting scale and breakeven. policy_outlook: Absent sustained profitability and positive FCF, dividends are unlikely near term; capital is more likely prioritized for growth and runway.

Risk Assessment

Business Risks:

• Revenue volatility from project-based demand and potential customer concentration
• Slower-than-expected enterprise adoption of metaverse/VR/3D-related solutions
• Execution risk in scaling platforms and converting pipeline to bookings
• Pricing pressure and competitive intensity from domestic and global tech peers
• Talent acquisition and retention in specialized engineering roles
• Dependence on a limited number of large projects or partners

Financial Risks:

• Continued operating losses (-¥233m) and negative net margin (-20.9%)
• Potential future funding needs if losses persist and cash consumption continues
• Interest not covered by EBIT (interest coverage -131.9x)
• Sensitivity to working capital swings without disclosed OCF data
• Equity dilution risk if capital is raised via share issuance

Key Concerns:

• Sustained YoY revenue decline (-23.1%) impacting scale and operating leverage
• Lack of cash flow disclosure hindering visibility on cash burn and runway
• Need for clear path to breakeven through revenue reacceleration or cost control

Investment Implications

Key Takeaways:

• Gross margin remains strong at 43.0%, indicating healthy unit economics.
• Revenue contraction (-23.1% YoY) is the primary headwind to profitability.
• Operating loss of ¥233m underscores insufficient scale and high fixed costs.
• Liquidity appears ample (current ratio ~6.8x; working capital ~¥1.54bn).
• Low leverage (D/E 0.23x) limits solvency risk but earnings do not cover interest.
• Non-operating items partially offset expenses (ordinary loss smaller than operating loss).
• Cash flow data is not disclosed; cash burn assessment relies on P/L proxies.

Metrics to Watch:

• Quarterly bookings/backlog and revenue growth trajectory
• SG&A as a percentage of revenue and operating margin improvement
• Cash and cash equivalents, operating cash flow, and runway visibility
• Accounts receivable days and project milestone billings
• Gross margin stability and mix (services vs platform/recurring)
• Headcount and R&D spend relative to pipeline conversion
• Customer concentration and churn/retention indicators

Relative Positioning: Within Japan’s emerging software/VR/metaverse cohort on the TSE Growth market, monoAI shows attractive reported gross margins and low leverage but remains sub-scale and loss-making; near-term positioning hinges on reaccelerating topline and demonstrating operating leverage versus peers pursuing similar platform and services strategies.

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