LINKBAL INC. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥906M
• Operating Income: ¥-89M
• Net Income: ¥-189M
• EPS: ¥-10.57

Income Statement

Balance Sheet

Cash Flow Statement

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

Linkbal (6046) reported FY2025 Q4 consolidated results under JGAAP showing contracting top line and continued operating losses. Revenue was 906 million yen, down 6.4% year over year, reflecting a softer demand backdrop and/or restrained marketing intensity. Operating income was a loss of 89 million yen, essentially flat versus the prior year, indicating limited progress in restoring operating leverage despite cost controls. Ordinary loss was 83 million yen, and net loss widened to 197 million yen, with EPS at -10.57. Gross profit was reported at 767 million yen and cost of sales at 201 million yen; while the provided gross margin metric (84.7%) implies a high-margin, asset-light model, the arithmetic across revenue, cost of sales, and gross profit appears internally inconsistent, so margin interpretation should rely on the stated ratio rather than line arithmetic. EBITDA was negative 71.8 million yen with an EBITDA margin of -7.9%, underscoring that core cash earnings remain under pressure. On DuPont, net margin of -21.74%, asset turnover of 0.809x, and financial leverage of 1.38x yield a calculated ROE of -24.32%, matching reported ROE and indicating losses are the primary driver of weak equity returns rather than balance sheet leverage. Operating cash flow was -121 million yen versus net income of -197 million yen (OCF/NI 0.61), suggesting losses are partially cushioned by non-cash items and working capital dynamics but still cash-consuming. Free cash flow was -154 million yen after 33 million yen of investing cash outflows, indicating the business required external liquidity or balance sheet drawdown to fund operations. The balance sheet shows total assets of 1.12 billion yen and total equity of 810 million yen, implying healthy solvency (liabilities/equity 0.38x) and modest leverage. Liquidity metrics are strong on paper (current ratio and quick ratio both 732.5%, working capital about 1.015 billion yen), though cash and equivalents were not disclosed in XBRL, limiting precision on near-term funding headroom. Equity ratio was not reported; based on assets and equity, a proxy equity ratio is approximately 72%, supporting balance sheet resilience. Interest expense was de minimis at 0.393 million yen, and financing cash flows were marginal (-3 million yen), indicating limited reliance on debt funding during the period. Dividend per share was 0 with a payout ratio of 0% and FCF coverage of 0x, consistent with loss-making status and a likely capital preservation stance. Overall, Linkbal remains loss-making with negative FCF but maintains a comparatively strong balance sheet and low financial risk, providing runway to execute on revenue stabilization and cost optimization. The high implied gross margin suggests a scalable model if demand and monetization recover, but current results point to under-absorption of fixed costs and insufficient revenue scale. Data limitations (unreported equity ratio, cash balance, and apparent internal line-item mismatches) temper precision; conclusions rely on provided calculated metrics and disclosed totals.

Profitability Analysis

ROE decomposition (DuPont) indicates profitability is the primary drag: net profit margin -21.74% x asset turnover 0.809 x financial leverage 1.38 = ROE -24.32%. The net margin is deeply negative despite a high reported gross margin of 84.7%, implying that operating expenses (notably SG&A and marketing) overwhelm gross profits. Operating loss of 89 million yen on 906 million yen sales implies an operating margin near -9.8%, broadly consistent with negative EBITDA margin (-7.9%) and suggesting limited non-cash add-backs beyond modest D&A (17.2 million yen). Ordinary loss (-83 million yen) is close to operating loss due to minimal interest expense (0.393 million yen) and limited non-operating impacts. Effective tax rate is effectively 0% given loss-making status. Operating leverage remains unfavorable; a 6.4% decline in revenue coincided with flat operating losses YoY, indicating cost base did not flex down proportionally and fixed costs remain high relative to current scale. Margin quality is mixed: high gross margin indicates pricing power and an asset-light service model, but sustainability depends on customer acquisition efficiency and retention economics. Interest coverage is negative (EBITDA/interest -226.5x), but absolute interest costs are very low, so financial strain from debt service is negligible. To return to break-even, Linkbal likely needs either mid-teens percentage revenue growth at current cost base or structurally lower SG&A (especially marketing and personnel) to restore operating leverage.

Growth Assessment

Revenue declined 6.4% YoY to 906 million yen, signaling demand softness or strategic pullback in marketing activities. Given the high implied gross margin, topline growth is the key swing factor for earnings recovery. Profit quality is currently weak: operating and net losses persist, and EBITDA is negative, indicating scale insufficiency. OCF/NI at 0.61 suggests that a portion of accounting loss reflects non-cash items or timing in working capital, but cash burn remains material. Near-term outlook will hinge on user activity recovery across event/matching services, conversion to paid participation, and effectiveness of targeted marketing spend. If revenue stabilizes and grows low double-digits, the model could demonstrate operating leverage due to a largely fixed cost base; conversely, further revenue contraction would likely widen losses. New service features, partnerships, or geographic/segment expansion could reaccelerate growth, but execution risk is non-trivial in a competitive consumer internet space. Given the small absolute scale, quarter-to-quarter volatility may remain high.

Financial Health

Liquidity appears ample based on reported ratios: current ratio and quick ratio both 732.5% with working capital of approximately 1,014.9 million yen, reflecting low current liabilities (160.5 million yen). Cash and equivalents were not disclosed (reported as 0 in XBRL), so immediate liquidity cannot be precisely assessed; however, the magnitude of net current assets implies good short-term solvency absent large off-balance commitments. Total liabilities are 309.6 million yen versus equity of 810 million yen, yielding a liabilities-to-equity ratio of 0.38x and indicating modest leverage. Interest expense is minimal (0.393 million yen), and there is no indication of material financial covenants pressure. Total assets are 1.12 billion yen; with equity of 810 million yen, a proxy equity ratio is roughly 72%, suggesting a conservative capital structure. Note that current assets (1.175 billion yen) exceed total assets (1.12 billion yen), implying classification or timing differences in the data; conclusions are therefore drawn with caution. Overall solvency is strong, but continued negative FCF would gradually erode cash resources if not addressed.

Cash Flow Quality

Earnings quality is mixed: OCF of -121 million yen versus net income of -197 million yen yields an OCF/NI of 0.61, indicating losses are partially non-cash or include timing of working capital that softens cash outflows. D&A was modest at 17.2 million yen, so most adjustments likely stem from working capital movements. Free cash flow was -154 million yen (OCF -121 million yen plus investing CF -33 million yen), implying ongoing cash consumption to sustain operations and limited investment intensity. Financing CF was a small outflow (-3 million yen), suggesting the company did not rely on external funding this period. Working capital is large and positive, but without disclosed cash balance or detail on receivables/payables, the durability of OCF improvement is uncertain. Sustained progress will require either a return to positive EBITDA or reductions in working capital needs (e.g., faster collections, maintaining low inventory, which is unreported).

Dividend Sustainability

No dividend was paid (DPS 0.00) with a payout ratio of 0% and FCF coverage of 0x, appropriate given negative earnings and negative free cash flow. With current losses and cash outflows, reinstating dividends would be unlikely without a clear path to positive, sustainable FCF. The balance sheet is comparatively strong, but capital should be preserved to fund operations and selective growth initiatives. Future policy will likely remain conservative until EBITDA turns positive and FCF consistently covers potential distributions.

Risk Assessment

Business Risks:

• Demand volatility in event and matching services leading to revenue swings
• High customer acquisition cost and marketing efficiency risk impacting margins
• Intense competition from larger platforms and substitutes
• Regulatory and compliance exposure (privacy, data protection, event safety)
• Concentration in domestic market and macro sensitivity of discretionary spending
• Execution risk in product development and partnerships to drive growth
• Small scale increases operating leverage and profit volatility

Financial Risks:

• Ongoing negative FCF (-154 million yen) eroding liquidity over time
• Sustained operating losses (-89 million yen) with uncertain timing to break-even
• Data limitations around cash balance and asset classifications complicate liquidity assessment
• Potential working capital reversals could pressure OCF
• Limited access to external financing if market conditions tighten, despite low current leverage

Key Concerns:

• Topline decline (-6.4% YoY) amid competitive market
• Negative EBITDA and operating margin indicate insufficient scale
• Reliance on high gross margin model that requires demand recovery to realize operating leverage
• Unreported cash balance and unreported equity ratio reduce visibility on runway

Investment Implications

Key Takeaways:

• Revenue contracted 6.4% YoY to 906 million yen; demand stabilization is critical.
• Operating loss remained flat YoY at -89 million yen; cost base still heavy relative to scale.
• High implied gross margin (84.7%) suggests scalability if growth resumes.
• ROE -24.3% driven by negative margins, not leverage (assets/equity ~1.38x).
• OCF (-121 million yen) partially cushions accounting loss (OCF/NI 0.61) but FCF remains negative (-154 million yen).
• Balance sheet is conservative (liabilities/equity 0.38x; proxy equity ratio ~72%), providing resilience.
• Liquidity ratios are strong, but cash balance is not disclosed, tempering confidence in near-term funding runway.

Metrics to Watch:

• Quarterly revenue growth rate and booking trends
• EBITDA margin progression and operating expense ratio
• Operating cash flow and free cash flow trajectory
• Customer acquisition cost (CAC), lifetime value (LTV), and marketing ROI
• Active users/participants and retention metrics
• Deferred revenue and receivables collection cycle
• Cash and equivalents balance and burn rate

Relative Positioning: Within small-cap Japanese internet/services peers, Linkbal exhibits weaker profitability and FCF but maintains a stronger-than-average balance sheet with low leverage; recovery hinges on restoring revenue growth and improving marketing efficiency to regain operating leverage.

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
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