CyberBuzz,Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥7.13B
• Operating Income: ¥349M
• Net Income: ¥378M
• EPS: ¥95.93

Income Statement

Balance Sheet

Cash Flow Statement

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

CyberBuzz (70690) reported FY2025 Q4 (full-year) consolidated results under JGAAP with revenue of ¥7,131mn, down 4.4% YoY, indicating a soft top-line environment likely reflective of subdued digital advertising demand and/or client budget rationalization. Gross profit was ¥2,901mn, implying a healthy gross margin of 40.7%, suggesting pricing and mix discipline even as sales contracted. Operating income declined 14.2% YoY to ¥349mn, with an operating margin of 4.9%, pointing to some operating leverage pressure as fixed costs were less flexible against lower revenue. Ordinary income was ¥344mn, broadly aligned with operating income, as financing costs remain low (interest expense ¥8.3mn) and non-operating items appear limited. Net income came in at ¥385mn (-52.1% YoY), a steeper decline than operating profit, implying below-the-line effects (e.g., tax and/or extraordinary items) weighed on the bottom line. EPS was ¥95.93; however, outstanding share data is not disclosed in the provided XBRL, limiting per-share diagnostics beyond the EPS figure. DuPont analysis shows ROE of 51.2% driven by a 5.40% net margin, 2.29x asset turnover, and 4.13x financial leverage; this high ROE is supported by strong turnover and leverage rather than superior margins alone. Liquidity is tight with a current ratio of 75.1% and negative working capital of ¥-542mn, signaling reliance on short-term liabilities to fund operations. The equity base is small at ¥752mn versus total assets of ¥3,108mn, translating to an implied equity ratio near the mid-20% range (versus the reported 0.0%, which appears to be an unreported placeholder). Operating cash flow was ¥272mn, below net income (OCF/NI 0.71), suggesting lower cash conversion than earnings, potentially from working capital outflows. Reported free cash flow was ¥705mn, but this exceeds OCF and coincides with positive investing cash flow (¥433mn), implying disposals or non-recurring inflows that may not be structurally repeatable. Interest coverage is strong at 42.2x, indicating minimal near-term refinancing stress despite leverage (debt-to-equity 3.23x, which here proxies total liabilities to equity). No dividend was disclosed (DPS 0.00; payout ratio 0.0%), consistent with either a no-dividend policy or non-disclosure in XBRL; FCF coverage is therefore not meaningful. The revenue decline alongside resilient gross margins and pressured operating margin suggests cost optimization partially offset top-line weakness but did not fully contain fixed-cost drag. Tax expense of ¥168mn against ordinary income of ¥344mn indicates an implied effective tax rate near 49%, contrasting with the 0.0% figure listed in the metrics, which is likely unreported; this higher tax burden contributed to the sharper YoY fall in net income. Balance sheet indicates a short-term funding model and a thin equity cushion, magnifying sensitivity to working capital swings. Overall, the company delivered positive profitability and strong ROE, but liquidity constraints, lower cash conversion, and FCF boosted by investing inflows warrant caution on sustainability.

Profitability Analysis

ROE (51.2%) decomposes into net margin 5.40% × asset turnover 2.294 × financial leverage 4.13, indicating returns are primarily leverage- and turnover-driven rather than margin-led. Gross margin of 40.7% is solid for a marketing/advertising services model, pointing to value-added services and reasonable pricing power. Operating margin of 4.9% reflects operating leverage sensitivity; the 14.2% YoY decline in operating income versus a 4.4% revenue drop shows fixed cost pressure. EBITDA of ¥451mn (6.3% margin) provides an incremental cushion over operating income; however, the spread between EBITDA and operating margin (about 1.4pp) is modest, implying limited D&A burden (¥102mn). Ordinary income is close to operating income due to low financing costs (¥8.3mn interest), so the core business largely drives earnings. The net income decline (-52.1% YoY) versus operating income (-14.2% YoY) suggests heavier below-the-line impacts, notably taxes; implied ETR is roughly 49% (¥168mn tax / ~¥344mn pre-tax), which compressed the bottom line. Interest coverage of 42.2x indicates that profitability comfortably services financing costs. Overall margin quality is decent at gross level but thinner at operating level, implying the need for volume growth or further cost discipline to defend operating margins if demand remains soft.

Growth Assessment

Revenue declined 4.4% YoY to ¥7,131mn, signaling cyclical or competitive headwinds in digital/influencer marketing spend. Gross profit performance was resilient relative to sales, indicating mix/pricing benefits that partially mitigated the top-line contraction. Operating income fell 14.2% YoY, revealing operating leverage as a key sensitivity; absent a recovery in volumes, profitability growth may be constrained. Net income fell 52.1% YoY due to higher tax burden and below-the-line impacts, which overshadowed operating trends. Sustainability of revenue will depend on client budget normalization, campaign pipeline visibility, and platform dynamics (policy/algorithm changes). Profit quality is mixed: operating earnings are positive with strong interest coverage, but cash conversion (OCF/NI 0.71) indicates working capital friction. Near-term outlook hinges on reacceleration in bookings, stabilization of receivables/payables cadence, and maintaining gross margin discipline; without these, growth could be tepid. Positive investing cash flow suggests asset sales or reduced capex, which are not repeatable growth drivers.

Financial Health

Liquidity is tight: current assets ¥1,636mn vs current liabilities ¥2,178mn yield a current ratio of 75.1% and negative working capital of ¥-542mn. Quick ratio equals current ratio given no inventory disclosure, pointing to reliance on receivables and cash; however, cash and equivalents are undisclosed in XBRL here. Solvency shows a thin equity base (¥752mn) against total assets (¥3,108mn); implied equity ratio is roughly 24% despite the 0.0% placeholder provided. Total liabilities-to-equity approximates 3.23x, indicating a leveraged balance sheet for a services company, although absolute interest costs remain low. Interest coverage is strong at 42.2x, mitigating near-term debt service risk. The capital structure appears short-term weighted (current liabilities ¥2,178mn), elevating refinancing and working capital rollover risk. Overall, solvency is acceptable given earnings coverage, but liquidity is the primary constraint.

Cash Flow Quality

OCF was ¥272mn versus net income of ¥385mn (OCF/NI 0.71), indicating weaker cash conversion, likely from working capital outflows (e.g., slower collections or timing of payables). Free cash flow is reported at ¥705mn, exceeding OCF while investing cash flow is positive (¥433mn), implying that FCF likely benefited from asset disposals or non-recurring inflows rather than organic cash generation. Absent visibility on capex and proceeds breakdown, underlying FCF sustainability is uncertain. EBITDA of ¥451mn provides operating cash capacity, but conversion to OCF was modest this period. Given negative working capital, quarter-to-quarter cash flows can be volatile as receivables and payables timing shifts. Overall earnings quality is moderate: accounting profits are positive, but cash realization lagged and FCF strength appears aided by investing inflows.

Dividend Sustainability

No dividend was disclosed (DPS 0.00) and payout ratio is shown as 0.0%, which may indicate a retention policy or simply lack of disclosure in XBRL. With reported positive FCF, technical coverage would be strong in principle; however, because FCF seems boosted by investing inflows, sustainable coverage from OCF alone is less certain. Given the small equity base, leverage, and tight liquidity, retaining earnings to fortify the balance sheet would be consistent with prudence. Policy outlook cannot be inferred from the provided data; absence of share count and historical DPS trends limits assessment.

Risk Assessment

Business Risks:

• Cyclical advertising and influencer marketing demand tied to client budgets
• Platform dependency risk (policy/algorithm changes at major social media platforms)
• Client concentration risk typical in agency/project businesses
• Competitive pricing pressure from other digital agencies and in-house client teams
• Execution risk in campaign delivery and measurement/ROI proof
• Talent acquisition and retention in a tight digital marketing labor market
• Regulatory/privacy changes affecting targeted advertising effectiveness

Financial Risks:

• Tight liquidity with current ratio 75.1% and negative working capital of ¥-542mn
• High leverage relative to equity base (liabilities/equity ~3.23x)
• Cash conversion below earnings (OCF/NI 0.71), exposing funding needs to working capital timing
• FCF supported by investing inflows, raising sustainability questions
• Small equity buffer increases sensitivity to earnings volatility
• Potential refinancing/rollover risk given heavy current liabilities
• Limited visibility on cash and equivalents due to non-disclosure in XBRL

Key Concerns:

• Sustaining operating margin amid revenue softness and fixed-cost pressure
• Improving OCF conversion to align more closely with net income
• Managing short-term liabilities and reducing reliance on working capital financing
• Clarifying the nature of positive investing cash flow and recurring FCF capacity
• Monitoring effective tax rate drivers that materially impacted net income

Investment Implications

Key Takeaways:

• ROE is high at 51.2% but chiefly leverage- and turnover-driven, not margin-led
• Operating margin compressed to 4.9% on a 4.4% revenue decline, highlighting operating leverage
• Gross margin remains strong at 40.7%, supporting unit economics
• Liquidity is tight (current ratio 75.1%, negative working capital), a key constraint
• OCF trails earnings (0.71x), while reported FCF is inflated by investing inflows
• Interest coverage is robust (42.2x), reducing near-term financial stress
• Equity base is thin (implied equity ratio ~24%), amplifying volatility in returns
• Tax burden elevated (~49% implied ETR), a key driver of net income decline

Metrics to Watch:

• Bookings/pipeline and revenue growth trajectory
• Operating margin and expense discipline (particularly fixed costs)
• OCF/NI conversion and working capital days (DSO/DPO)
• Cash and equivalents balance and short-term debt composition
• Capex versus asset sale proceeds to gauge true FCF
• Client concentration and retention metrics
• Effective tax rate normalization

Relative Positioning: Within Japan’s digital marketing/influencer services space, CyberBuzz exhibits strong gross margins and high ROE but operates with tighter liquidity and a thinner equity cushion than ideal; peers with stronger balance sheets and steadier cash conversion may be better placed to navigate demand softness, while CyberBuzz’s performance will be more sensitive to working capital timing and revenue recovery.

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