PIXELA CORPORATION FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.00B
• Operating Income: ¥-796M
• Net Income: ¥-604M
• EPS: ¥-13.53

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

Verdict: FY2025 Q4 was very weak, with deep operating and net losses driven by an SG&A burden far in excess of gross profit. Revenue was 10.01 (−13.9% YoY), gross profit was 2.77, but SG&A of 10.73 resulted in operating loss of −7.96. Ordinary income was −8.17 and net income was −8.53 (EPS −13.53 JPY). Operating margin on a calculated basis was approximately −79.5% (−7.96/10.01), reflecting severe diseconomies of scale. Gross margin stood at 27.7%, but the cost base remains misaligned with current sales volume. Non-operating items were small (income 0.07; expenses 0.29), with minor investment securities gains (0.04) and interest income (0.01), and equity-method loss of −0.06, so the loss was fundamentally operating in nature. Liquidity looks ample short term: current assets 10.91 vs current liabilities 2.38 (current ratio ~458%), with cash and deposits of 5.75. The quarter was financed by significant financing cash inflow of 14.74, offsetting operating cash outflow of −9.97 and enabling runway despite losses. OCF/NI was 1.17x (>1.0 suggests alignment), but both OCF and NI were materially negative, so earnings quality is weak in an absolute sense. Free cash flow was −9.95 after minimal investing CF of +0.02 and capex of −0.32, indicating the business is not self-funding. Book equity remains positive at 8.45, supported by paid-in capital (capital stock 12.02, capital surplus 18.42) despite accumulated losses (retained earnings −20.66). ROE was −101.0% via DuPont (NPM −85.2%, ATO 0.889x, leverage 1.33x), highlighting profitability as the primary drag. Margin comparison in basis points versus prior year cannot be quantified due to lack of disclosed prior-period margins, but directionally margins compressed given the swing to large losses and revenue decline. Forward-looking, cash burn at current levels implies continued dependence on external financing unless revenue recovers materially and/or SG&A is reduced. Management likely needs urgent cost restructuring and working capital discipline to stabilize cash flow. With revenue pressure and negative ROIC (−295.3%), strategic realignment or asset monetization may be necessary to preserve equity value.

Profitability Analysis

ROE decomposition: Net Profit Margin (−85.2%) × Asset Turnover (0.889x) × Financial Leverage (1.33x) = ROE (−101.0%). The largest change driver is the net profit margin, which is deeply negative due to SG&A of 10.73 exceeding gross profit of 2.77 by a wide margin. Business reason: subscale revenue (10.01) cannot absorb fixed/semi-fixed operating costs, yielding an operating margin of roughly −7.96/10.01 = −79.5%; non-operating items were minor. Sustainability: current loss profile is unsustainable; improvement requires either material revenue recovery or decisive cost cuts. Asset turnover at 0.889x is modest; without revenue growth, efficiency gains alone are unlikely to offset margin weakness. Watch for cost drift: SG&A growth vs revenue growth cannot be compared YoY due to missing prior SG&A, but the absolute SG&A run-rate is inconsistent with current sales, a negative operating leverage signal.

Growth Assessment

Revenue declined 13.9% YoY to 10.01, indicating demand softness and/or portfolio contraction. Gross profit of 2.77 implies a 27.7% gross margin; absent prior data, we cannot confirm margin trend, but the operating loss signals deterioration in operating efficiency. Profit quality is poor: operating income (−7.96) and net income (−8.53) are both substantially negative, and non-operating items did not mask performance. Equity-method income was a small loss (−0.06), so affiliate contributions are not a swing factor. Outlook hinges on regaining scale or reducing the fixed cost base; without either, continued revenue pressure will keep operating margin negative. Near term, financing cash inflows provided liquidity, but recurring external funding is not a growth strategy. Focus areas: order intake visibility, backlog conversion, and any product refresh that could lift price/mix. Given ROIC at −295.3%, incremental growth must be capital-light and margin-accretive to be value-creating.

Financial Health

Liquidity is strong on paper: current assets 10.91 vs current liabilities 2.38 yields a current ratio of ~457.6% and quick ratio ~349.0%. No warning for Current Ratio <1.0. Solvency appears conservative with total liabilities 2.81 vs equity 8.45 (D/E ~0.33x), far below the 2.0x warning threshold. Maturity mismatch risk is low: cash and deposits (5.75) plus receivables (0.91) comfortably exceed current liabilities (2.38). Interest-bearing debt details are unreported; however, interest expense is near zero (0.00), suggesting limited debt service burden currently. No off-balance sheet obligations are disclosed in the provided data. Accumulated deficits (retained earnings −20.66) constrain flexibility despite paid-in capital buffers.

Cash Flow Quality

OCF was −9.97 vs NI −8.53, giving OCF/NI of 1.17x, which is above the 0.8 threshold but reflects that both figures are negative; quality in a conventional sense is weak as core operations consumed cash. Free cash flow was −9.95 after minimal investing CF (+0.02) and capex (−0.32), indicating operations are not self-financing. Financing CF +14.74 bridged the shortfall, implying dependence on external capital (likely equity given low interest expense), which is not a durable source of cash. Working capital details suggest inventories (2.59) and receivables (0.91) are sizable relative to quarterly revenue, but without period-to-period deltas we cannot diagnose specific working capital manipulation or improvement. Sustainability: without a sharp turnaround in operating cash generation, further dilution or financing will be required.

Dividend Sustainability

Dividends are unreported and likely absent given losses and negative FCF. Payout ratio and FCF coverage are not calculable. Given NI negative, FCF negative, and retained earnings at −20.66, capacity to pay dividends is effectively nil under current conditions. Unless operating cash flow turns positive and losses abate, dividend resumption appears unlikely in the near term based on the provided data.

Risk Assessment

Business Risks:

• Revenue contraction (−13.9% YoY) indicates demand weakness and potential loss of scale.
• High fixed/semi-fixed SG&A relative to revenue drives negative operating leverage.
• Product/technology obsolescence risk in the consumer electronics/IT domain.
• Supply chain and component cost volatility impacting gross margin.
• Affiliate performance risk (equity-method loss −0.06), albeit small currently.

Financial Risks:

• Going-concern pressure if cash burn persists; OCF −9.97 with cash 5.75 suggests limited runway without continued financing.
• Dependence on external financing (Financing CF +14.74), implying dilution risk and funding uncertainty.
• Accumulated deficits (retained earnings −20.66) limit flexibility and may constrain access to certain financing.
• ROIC at −295.3% indicates value destruction if current investment/operations continue unchanged.

Key Concerns:

• Severe operating losses (operating margin about −79.5%).
• Negative FCF (−9.95) and lack of self-funding capacity.
• Potential mismatch between SG&A run-rate (10.73) and current scale (revenue 10.01).
• Execution risk around cost restructuring and revenue recovery.

Investment Implications

Key Takeaways:

• Core business loss is the primary driver of net loss; non-operating items are immaterial.
• Liquidity is currently adequate due to financing inflows, not operating generation.
• Balance sheet remains equity-heavy due to paid-in capital despite cumulative losses.
• Sustained negative ROE (−101%) and ROIC (−295.3%) necessitate urgent margin repair.
• Equity financing dependence raises dilution risk if turnaround is protracted.

Metrics to Watch:

• Quarterly operating margin and SG&A run-rate versus revenue trajectory.
• Operating cash flow and monthly cash burn versus cash and deposits.
• Order intake/backlog and inventory turnover to gauge demand normalization.
• Gross margin stability amid component/input cost movements.
• Any additional equity/debt issuance (financing CF) and equity ratio trends.

Relative Positioning: Relative to small-cap Japanese electronics/IT peers, Pixela exhibits subscale revenue, significantly negative operating margin, and heavy reliance on external financing, placing it in the weaker cohort on profitability and cash self-sufficiency despite currently adequate liquidity.

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