LINKBAL INC. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥906M
• Operating Income: ¥-89M
• Net Income: ¥-189M
• Earnings per Unit (EPU): ¥-10.57

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Unit Information

Distribution 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: FY2025 Q4 was a weak quarter with an operating and net loss despite a strong cash position, driven by SG&A exceeding gross profit and a likely one-off special loss below ordinary income. Revenue was 9.06 (100M JPY), down 6.4% YoY, indicating top-line softness. Gross profit was 6.89 with a high gross margin of 76.0%, but SG&A of 7.78 outweighed it, resulting in operating income of -0.89. Ordinary income was -0.83, but profit before tax dropped further to -2.02, implying approximately -1.2 of special losses not detailed in the XBRL. Net income was -1.97 (EPS -10.57 JPY), and total comprehensive income matched at -1.97. Operating cash flow was -1.21, giving OCF/Net Income of 0.61x, below the 0.8 threshold and signaling tentative earnings quality. Free cash flow was -1.54 after -0.28 of capex, reinforcing cash burn this quarter. Liquidity remains very strong with cash and deposits of 9.14, current assets of 10.78 versus current liabilities of 1.74 (current ratio 618.5%). Leverage is conservative with total liabilities 3.11 and D/E at 0.38x; long-term loans are 0.99 and interest expense is minimal (0.01). Margins are weak at the operating and net levels: operating margin -9.8% and net margin -21.7%; YoY basis-point changes cannot be assessed due to lack of prior margin disclosure. DuPont shows ROE of -24.3% mainly driven by the negative net margin; asset turnover is low at 0.809 and financial leverage is modest at 1.38x. The gap between ordinary loss and pre-tax loss suggests non-recurring charges, which depress earnings but do not proportionately affect OCF, partially explaining the 0.61 OCF/NI ratio. Working capital structure is conservative (receivables 1.39 and negligible payables 0.03), limiting supplier financing but reducing counterparty risk. The company has ample liquidity runway to execute cost controls and revenue recovery initiatives, but sustained negative FCF would eventually erode the cash cushion. Forward-looking, priority must be on aligning SG&A with the current revenue base and clarifying the nature and recurrence of special losses to improve visibility on a path back to breakeven.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-21.7%) × 0.809 × 1.38 ≈ -24.3%. The largest drag is the Net Profit Margin turning deeply negative due to SG&A (7.78) exceeding gross profit (6.89) and the additional hit from special losses (ordinary income -0.83 vs PBT -2.02). Asset turnover is weak at 0.809, reflecting a cash-heavy balance sheet (cash 9.14 vs total assets 11.20) and a small revenue base this quarter. Financial leverage at 1.38x is modest and does little to amplify returns. Business reason: revenue softness (-6.4% YoY) alongside a fixed cost base in SG&A produced operating deleverage; further, one-time losses likely inflated PBT and net losses. Sustainability: the negative net margin from operating deleverage is reversible with cost actions and revenue stabilization; however, the special losses appear non-recurring if they represent impairments or write-downs, but recurrence risk cannot be dismissed without disclosure. Concerning trend: SG&A grew faster than revenue or, at minimum, did not flex down with revenue decline—SG&A at 113% of revenue and 113% of gross profit signals insufficient cost flexibility. Gross margin at 76.0% remains high, but operating margin at -9.8% highlights the need for SG&A discipline and scale recovery.

Growth Assessment

Revenue declined 6.4% YoY to 9.06, indicating demand softness or weaker event/activity volumes versus the prior year. The company preserved a high gross margin (76.0%), suggesting product/service unit economics remain sound, but scale is insufficient to absorb fixed costs. Ordinary income at -0.83 and the step-down to PBT -2.02 implies non-operating/special factors weighed on growth in reported earnings. EBITDA of -0.76 and operating margin of -9.8% show negative operating leverage as revenue declined against a largely fixed SG&A base. With OCF at -1.21 and FCF at -1.54, growth investments must be selective and ROI-focused until breakeven is restored. Absent disclosure on segment or service-line trends, the sustainability of revenue is uncertain; stabilization would likely require improvement in user volumes, monetization per event/customer, or new service traction. Near-term outlook depends on cost realignment and clarity on special losses; a path to breakeven could emerge if revenue normalizes and SG&A is trimmed. Without margin improvement, recurring losses would persist despite high gross margin.

Financial Health

Liquidity is strong: current ratio 618.5% and quick ratio 618.5%, with current assets 10.78 far exceeding current liabilities 1.74. There is no warning for Current Ratio (<1.0) or D/E (>2.0); D/E is 0.38x—conservative. Cash and deposits are 9.14, covering all current liabilities 5.3x, indicating minimal short-term liquidity risk. Maturity mismatch risk is low: current assets 10.78 vs current liabilities 1.74 provide a sizable cushion; noncurrent liabilities 1.36 include long-term loans of 0.99, manageable relative to cash. Interest burden is light (interest expense 0.01), although interest coverage is negative due to operating losses. No off-balance sheet obligations are disclosed in the provided data. Equity of 8.10 supports solvency, and working capital of 9.03 provides operational flexibility.

Cash Flow Quality

OCF/Net Income is 0.61x, below the 0.8 threshold, flagging earnings quality concerns this quarter. However, the presence of likely non-cash special losses (PBT -2.02 vs ordinary income -0.83) may partly explain why OCF exceeds NI despite still being negative. Free cash flow is -1.54 after capex of -0.28, indicating cash burn. With cash of 9.14, the company has runway for several quarters at the current burn rate, but sustained negative OCF would erode this buffer. Working capital behavior is conservative: receivables 1.39 are modest, and payables 0.03 suggest little supplier financing; we see no clear signs of aggressive working capital management. The core issue is operating losses, not cash conversion from profits.

Dividend Sustainability

Dividends are unreported for the period; payout ratios are not calculable. Given negative net income (-1.97) and negative FCF (-1.54), capacity to pay or increase dividends is weak this quarter. Any dividend would need to be funded from the cash balance rather than earnings or FCF, which would not be sustainable if losses persist. Policy outlook cannot be inferred without disclosures; prudence would suggest conserving cash until operating breakeven and positive FCF are restored.

Risk Assessment

Business Risks:

• Revenue softness (-6.4% YoY) suggesting demand or volume pressure in core services
• Operating deleverage with SG&A exceeding gross profit (SG&A/GP > 100%)
• Dependence on event/activity demand cycles and consumer discretionary trends (implied by business model)
• Potential recurrence of special losses given the PBT gap versus ordinary income

Financial Risks:

• Negative OCF ( -1.21 ) and negative FCF ( -1.54 ) indicating ongoing cash burn
• Negative interest coverage (-109.88x) due to operating losses, albeit with small absolute interest expense (0.01)
• Low asset turnover (0.809) implying capital inefficiency amid high cash balances

Key Concerns:

• Earnings quality flagged with OCF/NI at 0.61x (<0.8)
• Visibility on special loss drivers is limited; impairment or one-time charges may repeat without clarity
• Sustained SG&A above gross profit jeopardizes return to breakeven unless costs are reduced or revenue recovers

Investment Implications

Key Takeaways:

• Quarter delivered operating and net losses with revenue down 6.4% YoY
• Gross margin remains strong at 76.0%, but SG&A at 7.78 exceeded gross profit
• Likely one-off special losses widened PBT to -2.02 from ordinary income -0.83
• Cash position is robust (9.14) with very strong liquidity (current ratio 618.5%)
• OCF/NI at 0.61x and FCF at -1.54 highlight ongoing cash burn
• ROE is -24.3%, mainly driven by the negative net margin

Metrics to Watch:

• Revenue trajectory and bookings/activity volumes
• SG&A trend and cost-reduction progress (SG&A/Revenue and SG&A/GP ratios)
• Disclosure on special losses and recurrence risk
• OCF and FCF progression; OCF/NI ratio targeting >1.0
• Asset turnover improvement from deploying or right-sizing cash
• Operating and net margin recovery toward breakeven

Relative Positioning: Within small-cap consumer/online services, the company exhibits a stronger liquidity profile than peers with similar losses, but weaker operating leverage and efficiency due to SG&A exceeding gross profit and low asset turnover; near-term performance hinges on cost discipline and stabilization of demand.

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