baby calendar Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.40B
• Operating Income: ¥146M
• Net Income: ¥82M
• EPS: ¥92.60

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: A strong turnaround quarter with robust top-line growth and sharp margin recovery, though special losses depress profit before tax and liquidity remains only modestly comfortable. Revenue rose 27.9% YoY to 13.96, with operating income up 396.1% YoY to 1.46 and ordinary income up 364.1% to 1.39. Net income increased 203.4% YoY to 0.82, translating to a net margin of 5.9%. Gross profit was 7.24, implying a gross margin of 51.9%, supporting the recovery in operating margin. Operating margin expanded to about 10.5%, versus an estimated 2.7% a year ago, a roughly 777 bps improvement. Net margin also improved to 5.9% from an estimated 2.5% a year ago, a roughly 341 bps expansion. Ordinary margin rose to about 10.0% from ~2.7% YoY, ~726 bps expansion, indicating broad-based profitability improvement. ROE calculated via DuPont reached 10.3% (NPM 5.9% × AT 0.847 × leverage 2.08x), reflecting both margin gains and moderate leverage. A notable discrepancy is profit before tax at 0.30 versus ordinary income of 1.39, suggesting substantial extraordinary losses (~1.1) in the period; details were not disclosed. The effective tax rate appears low at 9.5%, which may normalize upward as earnings stabilize. Liquidity improved but remains tight: current ratio 108.6%, quick ratio 108.6%; D/E at 1.08x is moderate. Intangible assets are large (intangible 7.52, including goodwill 5.11) relative to equity (7.87), elevating future impairment risk and indicating low tangible equity. Cash flow data were not disclosed, limiting earnings quality assessment and dividend sustainability analysis. Forward-looking, the recovery in operating leverage is encouraging, but sustainability depends on maintaining demand momentum and avoiding further special losses, while managing liquidity and balancing intangible-related risks.

Profitability Analysis

ROE decomposition: ROE 10.3% = Net Profit Margin 5.9% × Asset Turnover 0.847 × Financial Leverage 2.08x. The largest change versus last year is most likely the margin component: operating income grew +396.1% on +27.9% revenue, implying substantial operating leverage and SG&A discipline. Estimated operating margin expanded from ~2.7% to 10.5% (+777 bps), and net margin from ~2.5% to 5.9% (+341 bps). Business driver: revenue scale effects and better cost structure (SG&A of 6.95 held to 49.8% of sales) are the primary contributors; cost of sales also appears controlled (gross margin 51.9%). Sustainability: some margin improvement should be sustainable if revenue growth persists and mix remains favorable; however, the presence of sizable extraordinary losses this quarter indicates one-time drags may recur depending on investment write-downs. Watch for SG&A growth versus revenue—while not disclosed YoY, current profitability implies SG&A grew slower than revenue this period; any reversal (SG&A growth > revenue growth) would pressure margins. Overall, the improvement in ROE is mainly margin-driven rather than leverage-driven, which is generally higher quality, but sensitive to demand and pricing.

Growth Assessment

Revenue growth of +27.9% YoY to 13.96 indicates strong momentum. Operating income surged +396.1% to 1.46, evidencing strong operating leverage as fixed costs were spread over higher sales. Ordinary income rose +364.1% to 1.39, but profit before tax fell to 0.30 due to significant undisclosed extraordinary losses, tempering the headline improvement. Net income grew +203.4% to 0.82, with net margin improving to 5.9%. The quality of growth appears to be driven by core operations (operating margin expansion), not non-operating gains (non-operating income only 0.01). However, the lack of cash flow disclosure limits confirmation of cash conversion. Outlook: if demand trends persist and special losses abate, double-digit operating margins near the current level look achievable; normalization of the effective tax rate could cap net margin expansion. Key swing factors include customer acquisition costs, platform algorithm changes (if media-driven), and any further impairment or restructuring charges.

Financial Health

Liquidity: current ratio 108.6% and quick ratio 108.6% are above 1.0 but below the 1.5 comfort benchmark; no explicit warning threshold breach (<1.0), but liquidity is tight. Working capital is 0.56, modestly positive. Maturity profile: short-term loans are 1.90 against cash of 3.94 and receivables of 2.32, suggesting manageable near-term refinancing risk; current liabilities (6.52) are largely covered by current assets (7.08). Solvency: D/E at 1.08x (reported) is moderate; interest coverage is very strong at 365.91x, indicating minimal interest burden currently. Balance sheet quality: intangible assets total 7.52 (goodwill 5.11) versus owners’ equity 7.87, implying low tangible equity and heightened impairment sensitivity. No off-balance sheet obligations were disclosed.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow were not disclosed, so OCF/Net Income and FCF coverage cannot be assessed. By rule of thumb, the large improvement in operating margin suggests cash generation likely improved, but this cannot be verified. Potential working capital considerations: accounts receivable of 2.32 against revenue of 13.96 implies receivables equal ~17% of sales; absent prior-period figures, we cannot judge collection acceleration/extension. The presence of substantial extraordinary losses (implied by the gap between ordinary income and PBT) raises the possibility of non-cash impairment, which would depress PBT but not OCF—again, confirmation requires cash flow disclosure. No signs of deliberate working capital manipulation can be identified from available data.

Dividend Sustainability

Dividend data were not disclosed (DPS, payout ratio, total dividends, FCF coverage all N/A). With net income at 0.82 and no OCF/FCF data, sustainability of any dividend policy cannot be evaluated. Balance sheet indicates moderate leverage and tight liquidity; if a dividend exists, prudent sizing would require confirmation of positive and stable FCF and headroom versus debt service and capex needs. Policy outlook is unclear given data limitations.

Risk Assessment

Business Risks:

• Demand volatility in core segments (likely media/health-related digital services) impacting advertising and subscription revenues
• Japan’s declining birth rate potentially shrinking the addressable market over time
• Platform and algorithm dependency risk (search/social) affecting traffic acquisition costs and monetization
• Execution risk in scaling services while controlling SG&A

Financial Risks:

• High proportion of intangible assets (goodwill 5.11; total intangible 7.52) versus equity (7.87), elevating impairment risk
• Tight liquidity (current ratio 1.09) increases sensitivity to collection delays or unexpected cash needs
• Moderate leverage (reported D/E 1.08x) with refinancing risk concentrated in short-term loans (1.90)
• Potential for recurring special losses, as implied by PBT well below ordinary income this quarter

Key Concerns:

• Large gap between ordinary income (1.39) and profit before tax (0.30) suggests significant extraordinary losses without detail
• Lack of cash flow disclosure prevents verification of earnings quality and dividend capacity
• Low effective tax rate (9.5%) may normalize upward, reducing net margins
• Balance sheet quality constrained by low tangible equity, heightening sensitivity to adverse shocks

Investment Implications

Key Takeaways:

• Strong revenue growth (+27.9% YoY) and significant operating margin expansion (~+777 bps) signal a real profitability inflection
• ROE at 10.3% is margin-led rather than leverage-driven, a positive quality indicator
• Extraordinary losses materially reduced PBT, partially masking improved core performance
• Liquidity is only modestly above the 1.0x threshold; careful cash management remains essential
• Large intangibles vs equity create impairment and balance sheet quality risk

Metrics to Watch:

• Operating cash flow and free cash flow (OCF/NI target >1.0)
• SG&A growth rate versus revenue (avoid SG&A growth exceeding revenue)
• Extraordinary gains/losses detail and frequency
• Receivables days and cash balance relative to short-term debt
• Gross and operating margin trajectory
• Impairment testing outcomes for goodwill/intangibles

Relative Positioning: Among small-cap Japanese digital/health-related service providers, the company shows improving profitability and ROE with moderate leverage, but is comparatively weaker on tangible balance sheet strength and disclosure (notably cash flows). Sustained margin gains and clearer cash generation evidence are needed to consolidate its improving position.

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