GMO Media,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥5.40B
• Operating Income: ¥802M
• Net Income: ¥428M
• EPS: ¥330.16

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

GMO Media Co., Ltd. reported solid FY2025 Q3 year-to-date results with revenue of ¥5,398 million, up 9.9% YoY, demonstrating healthy topline momentum. Operating income rose 35.3% YoY to ¥802 million, indicating strong operating leverage as costs grew slower than revenue. Net income increased 38.3% YoY to ¥592 million, with EPS of ¥330.16, underscoring improved profitability and earnings scalability. Gross profit was ¥2,202 million, translating to a gross margin of 40.8%, which is robust for a digital media/services model with low inventory intensity. Operating margin stands at approximately 14.9% (¥802m/¥5,398m), up meaningfully from an estimated ~12.1% in the prior year period, suggesting effective cost control and/or favorable mix. DuPont analysis shows ROE at 19.28%, driven by a 10.97% net margin, asset turnover of 0.868x, and modest financial leverage of 2.03x (assets/equity). The balance sheet is sound with total assets of ¥6,220 million and equity of ¥3,070 million, implying an equity ratio of roughly 49.4% despite the reported 0.0% figure (the latter reflects undisclosed XBRL, not actual zero). Liquidity appears comfortable: current assets of ¥4,772 million versus current liabilities of ¥3,015 million yields a current ratio of 158.3% and working capital of ¥1,757 million. Interest expense is negligible at ¥86 thousand, and implied interest coverage using operating income is extremely high (~9,326x), indicating minimal financial risk from debt costs. Ordinary income is ¥803 million, broadly aligned with operating income, suggesting limited non-operating noise this period. Based on the tax expense disclosed (¥163.5 million), the implied effective tax rate is roughly 20–25% of pre-tax profit, though exact pre-tax profit was not separately presented; the 0.0% effective tax rate in the calculated metrics appears to reflect incomplete disclosures. Cash flow data (OCF/FCF/Cash) were not disclosed and thus reported as zero; these are placeholders, not actual values, limiting assessment of earnings-to-cash conversion. Dividend information shows DPS as 0 and payout ratio as 0.0%, which may indicate no dividend or simply non-disclosure; EPS suggests distributable capacity exists, but policy clarity is needed. Overall, the company is executing well with expanding margins and high ROE, underpinned by a conservative capital structure and strong liquidity. The absence of cash flow disclosures is the main analytical limitation; once available, OCF/FCF will be key to validate the sustainability of earnings and potential return of capital. Given the digital nature of operations (no inventories), working capital dynamics likely hinge on receivables and payables cycles. The outlook depends on the durability of revenue growth in advertising- and media-related segments, cost discipline, and platform dynamics within the GMO group ecosystem.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 10.97% (¥592m net income / ¥5,398m revenue)
• asset_turnover: 0.868x
• financial_leverage: 2.03x (Assets/Equity ≈ ¥6,220m/¥3,070m)
• calculated_ROE: 19.28% (matches reported) margin_quality:
• gross_margin: 40.8% (¥2,202m/¥5,398m) – strong for a digital media/services mix
• operating_margin: ≈14.9% (¥802m/¥5,398m) – up ~2.8pp YoY by estimation
• net_margin: 10.97% – conversion from revenue to bottom line improving
• tax_rate_commentary: Disclosed income tax of ¥163.5m implies ~20–25% effective rate on pre-tax profit; the displayed 0.0% metric is not reliable due to data limitations. operating_leverage: Revenue +9.9% YoY vs operating income +35.3% YoY indicates strong operating leverage, likely from fixed-cost dilution and/or improved media mix and customer acquisition efficiency.

Growth Assessment

revenue_sustainability: Topline growth of 9.9% YoY suggests resilient demand across media/ad-related offerings; sustainability will hinge on advertising market conditions, user engagement metrics, and client retention. profit_quality: Operating profit growth outpacing revenue reflects margin expansion, implying improved efficiency; minimal non-operating items (ordinary income ≈ operating income) supports quality of earnings. outlook: If current mix and cost discipline persist, mid-teens operating margins appear achievable in the near term. Key swing factors include ad pricing, traffic acquisition costs, and platform policy changes. Absence of cash flow data tempers visibility on cash conversion.

Financial Health

liquidity:

• current_assets: ¥4,772m
• current_liabilities: ¥3,015m
• current_ratio: 158.3%
• quick_ratio: 158.3% (no inventories reported)
• working_capital: ¥1,756.993m solvency:
• total_assets: ¥6,220m
• total_liabilities: ¥3,050m
• total_equity: ¥3,070m
• equity_ratio_estimate: ≈49.4% (computed), despite the 0.0% placeholder
• debt_to_equity: 0.99x (total liabilities/equity) capital_structure_commentary: Low leverage, ample equity buffer, and negligible interest expense (¥86k) imply limited balance sheet risk and capacity to absorb volatility.

Cash Flow Quality

earnings_quality: Earnings appear primarily operational given ordinary income ≈ operating income and minimal interest burden. However, without OCF/FCF disclosure, conversion cannot be validated. free_cash_flow_analysis: FCF not disclosed (reported as 0 due to data limitation). Given the asset-light profile (no inventories, likely modest D&A), structural FCF potential could be solid, but confirmation requires OCF and capex data. working_capital_dynamics: Digital model suggests receivables/payables drive cash cycles; positive working capital (¥1,757m) supports liquidity, but turnover metrics are unavailable.

Dividend Sustainability

payout_ratio_assessment: Reported payout ratio 0.0% and DPS 0.00 may indicate no dividend or non-disclosure; EPS of ¥330.16 suggests capacity exists if policy allows. FCF_coverage: Not assessable; FCF is undisclosed (0 placeholder). Dividend coverage cannot be evaluated without OCF/capex. policy_outlook: Clarity on capital allocation policy (dividends vs. reinvestment) is needed. Given high ROE and low leverage, future distributions are plausible, contingent on consistent cash generation.

Risk Assessment

Business Risks:

• Cyclicality in online advertising spend impacting media revenues
• Platform dependency (search engines, app stores, social platforms) and algorithm/policy changes
• User acquisition cost inflation and competition for traffic
• Regulatory changes around data privacy and advertising compliance
• Concentration risk in key clients or media channels
• Execution risk in launching/scaling new services within the GMO ecosystem

Financial Risks:

• Working capital swings in receivables/payables affecting OCF timing
• Potential increase in traffic acquisition or hosting costs compressing margins
• Exposure to interest rate normalization is minimal but not zero (albeit tiny interest expense)
• Limited visibility due to non-disclosure of cash, OCF, and capex data

Key Concerns:

• Lack of cash flow disclosure prevents validation of earnings-to-cash conversion
• Sustainability of margin expansion if advertising markets weaken
• Reliance on platform policies and third-party ecosystems

Investment Implications

Key Takeaways:

• Healthy topline growth (+9.9% YoY) with outsized operating profit growth (+35.3% YoY) indicates strong operating leverage
• High ROE of 19.28% driven by solid net margin (10.97%) and moderate leverage (2.03x)
• Robust liquidity (current ratio 158.3%) and low financial risk (interest expense ¥86k, coverage ~9,326x)
• Margin expansion to ~14.9% operating margin from ~12.1% estimated prior year
• Analytical blind spot: OCF/FCF and cash balances not disclosed; cash conversion remains unverified

Metrics to Watch:

• Operating cash flow and free cash flow once disclosed (OCF/NI ratio target >80% over time)
• Operating margin trajectory and cost of traffic acquisition
• Gross margin stability (currently 40.8%)
• Asset turnover and ROE sustainability
• Client concentration, AR, DSO, and payables cycles
• Any updates to dividend/capital return policy

Relative Positioning: Within Japan’s internet media/services cohort, GMO Media exhibits above-average profitability (mid-teens operating margin, ~19% ROE) and conservative leverage, positioning it favorably on quality metrics, contingent on confirmation of cash flow generation.

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