VELTRA Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.44B
• Operating Income: ¥92M
• Net Income: ¥-346M
• EPS: ¥2.35

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

Verdict: FY2025 Q3 was modestly profitable at the bottom line, but quality and consistency of earnings are mixed given a negative pre-tax result and heavy reliance on current liabilities. Revenue reached 34.38 (100M JPY units), with operating income of 0.92 and net income of 0.86, implying an operating margin of roughly 2.7% and a net margin of 2.5%. Ordinary income was 0.87, slightly below operating income due to net non-operating losses (non-op income 0.02 vs non-op expenses 0.94). Despite positive net income, profit before tax was reported at -3.35, indicating significant below-the-line adjustments or classification effects; comprehensive income was slightly negative at -0.02, pointing to adverse OCI movements. Asset turnover was 0.347 and financial leverage 3.45x, yielding a calculated ROE of 3.0%, in line with the reported ROE. Liquidity is adequate with a current ratio of 128.2% and cash and deposits of 63.81 against current liabilities of 70.34, but coverage of current liabilities by cash alone is below 1.0x, suggesting some maturity management needs. Capital structure is stretched with a D/E ratio of 2.45x and an equity ratio of about 29%, reflecting accumulated losses (retained earnings -29.51) offset by paid-in capital. Interest burden appears manageable with an interest coverage ratio of 39.93x, supported by low interest expense (0.02). ROIC is reported at -2.6%, signaling subpar capital efficiency despite positive net income. Operating margin and net margin movements versus prior periods cannot be assessed due to lack of YoY disclosure, so margin expansion/compression in basis points is not determinable. Cash flow data are not disclosed, preventing assessment of earnings quality via OCF/NI; this is a key limitation given the mixed signals in P/L and comprehensive income. With 36.6 million average shares, EPS was 2.35 JPY, consistent with reported net income. Intangible assets of 6.37 suggest ongoing platform and technology investments that must translate into higher ROIC to be value-accretive. Forward-looking, the company needs to convert accounting profitability into cash flow, improve ROIC above the 5% warning threshold, and deleverage to strengthen resilience amid travel demand and FX volatility typical for its business model.

Profitability Analysis

ROE decomposition: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 2.5% × 0.347 × 3.45 ≈ 3.0%. The dominant driver in the quarter is financial leverage (3.45x), while profitability is thin (2.5% NPM) and asset turnover moderate. The component showing the most pressure is net margin, constrained by low operating margin (~2.7%) and non-operating drag (non-op expenses 0.94 exceeding non-op income 0.02). Business context likely includes continued cost to support travel platform operations and marketing, with limited gross margin visibility due to undisclosed COGS. The negative profit before tax despite positive net income suggests one-time or classification effects below ordinary income, which are unlikely to be sustainable drivers of ROE. Sustainability: leverage-driven ROE is fragile; without improvement in operating margin or asset turnover, ROE will remain low and sensitive to shocks. Concerning trend flags: we cannot compare SG&A vs revenue growth due to undisclosed SG&A and lack of YoY data; however, ROIC at -2.6% indicates returns on invested capital are below cost of capital, underscoring margin and capital efficiency challenges.

Growth Assessment

Top-line for Q3 stands at 34.38 (100M JPY units), but no YoY or QoQ figures are available to assess growth momentum. Operating income of 0.92 suggests the business is running at low single-digit operating margin, implying limited operating leverage in the reported period. Ordinary income of 0.87 and net income of 0.86 indicate profit contribution is primarily from core operations with a small non-operating drag, but the negative profit before tax implies one-off or reclassification effects that complicate profit quality. With ROIC at -2.6% and equity-based ROE of 3.0%, capital efficiency is insufficient and must improve via higher unit economics (take rate, mix shift to higher-margin experiences) and scale. Outlook hinges on sustained travel demand recovery, conversion improvements, and cost discipline; without those, profit scaling could stall and ROIC remain below thresholds. Given the limited disclosures, we cannot assess recurring vs one-time impacts; prudence suggests focusing on improving cash conversion and narrowing the gap between operating and comprehensive results.

Financial Health

Liquidity: Current assets of 90.18 vs current liabilities of 70.34 yield a current ratio of 1.28 (128.2%); quick ratio is the same given lack of inventories disclosure. This is above the 1.0 warning but below a comfortable 1.5 benchmark. Cash and deposits of 63.81 cover ~91% of current liabilities, indicating some reliance on receivables or other current assets to meet near-term obligations. Solvency: Total equity of 28.78 vs total assets of 99.19 implies an equity ratio of ~29%; financial leverage (assets/equity) is 3.45x. Debt-to-equity is flagged at 2.45x (>2.0), indicating high leverage risk; explicit interest-bearing debt amounts are not disclosed. Maturity mismatch: With almost all liabilities current (70.34 current vs 0.07 noncurrent), there is moderate refinancing/rollover risk if current liabilities are not matched by stable current assets (e.g., customer advances vs payable cycles). Off-balance sheet: No disclosures provided; cannot assess lease commitments or guarantees.

Cash Flow Quality

Operating cash flow is not disclosed, so OCF/Net Income cannot be computed; we cannot conclusively assess earnings quality on a cash basis. Free cash flow and capex are also unreported, preventing coverage analysis for any shareholder returns or growth investments. Working capital quality: Given cash covers ~91% of current liabilities and working capital is 19.84, liquidity is adequate but could tighten if receivables stretch or if customer advances unwind seasonally. The discrepancy between positive net income (0.86) and negative profit before tax (-3.35) plus negative comprehensive income (-0.02) raises quality questions; without cash flow data we cannot verify whether these are non-cash or timing-related items.

Dividend Sustainability

Dividend data are not disclosed and retained earnings are negative (-29.51), indicating an accumulated deficit. In the absence of OCF/FCF and payout information, dividend sustainability cannot be assessed; prudently, priority would likely remain on balance sheet strengthening and reinvestment to improve ROIC. Cash balance (63.81) provides liquidity, but without recurring free cash flow disclosure, long-term distribution capacity remains unclear.

Risk Assessment

Business Risks:

• Demand volatility in travel and activities impacting booking volumes and take rates
• Competitive pressure in OTA and experiences platforms, potentially compressing margins
• FX fluctuations affecting cross-border bookings and reported results
• Supplier/partner concentration risk and service quality variability

Financial Risks:

• High leverage with D/E at 2.45x and equity ratio ~29%
• Maturity profile risk as liabilities are predominantly current (70.34 vs 0.07 noncurrent)
• Earnings quality concerns given negative profit before tax and negative comprehensive income
• Potential covenant/refinancing risks if interest rates rise or liquidity conditions tighten

Key Concerns:

• ROIC at -2.6% is below the 5% warning threshold, signaling poor capital efficiency
• Thin operating margin (~2.7%) and net margin (2.5%) leave little buffer for shocks
• Cash flow data absence limits validation of earnings and investment needs
• Accumulated deficit (retained earnings -29.51) constrains capital policy flexibility

Investment Implications

Key Takeaways:

• Modest profitability (NI 0.86) but mixed quality signals due to negative PBT and negative OCI
• Leverage elevated (D/E 2.45x); balance sheet resilience depends on working capital discipline
• Liquidity adequate (current ratio 1.28; cash 63.81) but not abundant relative to current liabilities
• ROE at 3.0% driven largely by leverage; underlying ROIC at -2.6% highlights efficiency gap
• Margin trajectory and cash conversion are the critical swing factors for the next quarters

Metrics to Watch:

• Operating cash flow and OCF/NI ratio (target >1.0)
• ROIC trend toward >5% and ideally >7%
• Operating and net margins (bps movement) and take-rate improvements
• Working capital turns and cash/current liabilities coverage
• Composition of non-operating items and reconciliation between ordinary income, PBT, and NI

Relative Positioning: Within Japan-listed online travel/experiences peers, the company shows adequate liquidity but higher leverage and weaker capital efficiency (negative ROIC). Profitability is positive but thin, making it more sensitive to demand and cost fluctuations than better-capitalized, higher-ROIC peers.

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