Agile Media Network Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥323M
• Operating Income: ¥-212M
• Net Income: ¥-250M
• EPS: ¥-5.14

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

Agile Media Network Co., Ltd. (6573) reported FY2025 Q3 consolidated results under JGAAP showing continued losses amid modest revenue contraction. Revenue was ¥323 million, down 3.5% YoY, reflecting a soft topline environment for its marketing/engagement services. Gross profit was ¥42.9 million, implying a gross margin of 13.3%, which is thin for a service-oriented business and leaves little buffer to cover fixed costs. Operating income remained deeply negative at -¥212 million (flat YoY), indicating that structural cost issues persist. Ordinary income was -¥224 million, slightly below operating income due to net non-operating expenses of roughly ¥12 million, including ¥2.05 million of interest expense. Net income was -¥159 million (flat YoY), suggesting the presence of positive extraordinary items or other below-ordinary-income gains that partially offset the operating loss. DuPont analysis points to a negative ROE of -32.25%, driven by a sharp net loss margin of -49.23%, middling asset turnover of 0.452x, and moderate financial leverage of 1.45x. Liquidity appears strong with a current ratio of 4.65x and working capital of ¥379.8 million, supported by current assets of ¥484.0 million against current liabilities of ¥104.2 million. The balance sheet is equity-heavy: using reported totals, the equity ratio is approximately 68.9% (¥493 million equity / ¥715 million assets), despite the equity ratio data field showing 0.0% (treated as unreported). Leverage is modest with total liabilities of ¥214.6 million, resulting in a debt-to-equity ratio of 0.44x. Interest burden is small relative to operating losses (interest coverage is -103.5x due to negative EBIT), so solvency pressure currently stems from recurring losses rather than debt service. Cash flow statement figures were not disclosed in this dataset (zeros indicate unreported), limiting assessment of earnings-to-cash conversion and free cash flow. Dividend remains suspended (DPS ¥0), which is consistent with negative earnings and the need to preserve cash. Overall, the quarter underscores weak margin structure and high fixed-cost intensity; achieving break-even would require material gross margin improvement and/or significant SG&A reduction. While the company retains balance sheet capacity today, prolonged losses could erode equity and heighten going concern risk over time. Near-term focus should be on revenue stabilization in core accounts, pricing/mix improvements to lift gross margin, and disciplined cost control to narrow operating losses.

Profitability Analysis

ROE_decomposition_DuPont:

• net_profit_margin: -0.4923
• asset_turnover: 0.452
• financial_leverage: 1.45
• calculated_ROE: -0.3225
• interpretation: Negative ROE is driven primarily by a very weak net margin, not by excessive leverage. Asset turnover is modest for a services model, suggesting underutilized asset base relative to revenue scale. margin_quality:
• gross_profit: 42895000
• gross_margin: 0.133
• operating_income: -212000000
• operating_margin: -0.656
• ordinary_income: -224000000
• net_income: -159000000
• observations: Gross margin at 13.3% is low, leaving insufficient coverage for fixed costs. The gap between operating and ordinary income (~¥12 million) reflects non-operating costs, including ¥2.05 million interest. The improvement at the net level versus ordinary income implies positive extraordinary income or other below-the-line items. operating_leverage:
• SG&A_estimate: 254895000
• SG&A_as_%_of_sales: 0.789
• analysis: With SG&A at roughly 79% of sales and gross margin only 13.3%, the business exhibits high operating leverage. Break-even would require substantial gross margin uplift and/or SG&A reduction. Incremental revenue without margin improvement is unlikely to move the company to profitability.

Growth Assessment

revenue_sustainability: Revenue declined 3.5% YoY to ¥323 million, indicating soft demand or client budget pressure in the marketing domain. Without evidence of new client wins or product mix shifts, revenue sustainability is tentative. profit_quality: Net loss narrowed relative to ordinary loss likely due to one-off gains; underlying operating performance remains weak. Thin gross margin suggests pricing pressure, adverse mix, or elevated direct costs. outlook: Near-term trajectory hinges on order intake, client retention, and margin recovery via pricing, productization, or delivery efficiency. Absent visible top-line catalysts or structural cost reductions, sustained profitability is challenging.

Financial Health

liquidity:

• current_assets: 483964000
• current_liabilities: 104175000
• current_ratio: 4.646
• quick_ratio: 4.536
• working_capital: 379789000
• assessment: Strong liquidity buffer with ample current assets relative to near-term obligations; inventory is small (¥11.4 million), consistent with a services-heavy model. solvency:
• total_assets: 715000000
• total_liabilities: 214635000
• total_equity: 493000000
• equity_ratio_estimated: 0.689
• debt_to_equity: 0.44
• interest_expense: 2049000
• assessment: Balance sheet is equity-rich with modest leverage, reducing refinancing risk. Solvency risk would mainly arise from continued losses eroding equity rather than from debt load. capital_structure: Low reliance on debt financing provides flexibility, but cumulative losses could necessitate future equity raises if cash burn persists.

Cash Flow Quality

earnings_quality: Cash flow details were not disclosed in this dataset. As such, cash conversion (OCF/NI) and FCF cannot be evaluated here. The sizable operating loss indicates likely negative operating cash flow absent significant working capital releases. FCF_analysis: Free cash flow could not be computed due to unreported cash flow and capex data. With depreciation unreported, EBITDA cannot be reliably assessed from this dataset. working_capital: Working capital is positive at ¥379.8 million, supported by large current assets relative to liabilities. Composition beyond inventories is not disclosed, so AR/AP dynamics and collections risk cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio appears 0% in the dataset, consistent with negative earnings. With operating losses, any near-term resumption of dividends would be unlikely without a clear turnaround. FCF_coverage: Not assessable due to unreported OCF and capex; however, the priority should remain cash preservation while losses persist. policy_outlook: Given loss-making status and the need to stabilize operations, the company is likely to maintain a conservative stance on shareholder returns until profitability and cash generation improve.

Risk Assessment

Business Risks:

• Client budget cyclicality in advertising/marketing leading to revenue volatility
• Pricing pressure and low gross margins in competitive campaigns and activation services
• Execution risk in delivering measurable ROI for clients and maintaining renewals
• Concentration risk if revenue is dependent on a limited number of key clients or campaigns
• Technology and platform dependency risk if services rely on third-party social platforms

Financial Risks:

• Persistent operating losses eroding equity and potentially triggering going concern issues over time
• Limited visibility on cash burn due to unreported cash flow data
• Potential need for equity financing if cash reserves decline, causing dilution
• Working capital collection risk (AR) not assessable from disclosed data
• Non-operating expense drag (ordinary income below operating income) modest but persistent

Key Concerns:

• Gross margin at 13.3% is too low to cover fixed costs; structural margin improvement is required
• SG&A at ~79% of revenue indicates high fixed cost base and limited operating flexibility
• Revenue contraction (-3.5% YoY) suggests demand softness without evident growth catalysts
• Absence of disclosed cash flow data limits assessment of runway and liquidity burn
• Negative ROE (-32.25%) reflects value erosion if losses persist

Investment Implications

Key Takeaways:

• Balance sheet remains relatively strong with an estimated equity ratio of ~69% and current ratio of 4.65x
• Core profitability is weak: operating margin -65.6% on gross margin 13.3%, indicating structural issues
• ROE is negative at -32.25%, driven by severe net losses rather than leverage
• Non-operating items modestly worsen ordinary income; net loss partially offset by below-the-line gains
• Visibility on cash generation is limited due to unreported cash flow data

Metrics to Watch:

• Quarterly revenue growth and client retention/new wins
• Gross margin trajectory and unit economics by service line
• SG&A run-rate and cost reduction progress toward break-even
• Operating cash flow and cash balance (when disclosed)
• Ordinary vs. net income gap to identify one-off items vs. recurring earnings
• Accounts receivable days and collection trends (when disclosed)

Relative Positioning: Within Japan’s digital marketing/engagement peer set, the company exhibits weaker profitability and margin structure but maintains a comparatively strong equity base and liquidity; execution on margin improvement and cost discipline is required to converge toward peer profitability.

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