Daily Journal Corporation Announces Financial Results for the three months ended December 31, 2024

Rhea-AI Summary

Daily Journal (NASDAQ:DJCO) reported consolidated revenues of $17.7 million for Q4 2024, up from $16 million year-over-year. The increase was driven by Journal Technologies' higher license and maintenance fees ($968,000) and public service fees ($1.24 million), despite lower consulting fees. The Traditional Business segment saw modest revenue growth.

Journal Technologies' pretax income increased by $120,000 to $456,000, though operating expenses rose by $1.39 million due to increased personnel costs and technical investments. The company held marketable securities valued at $372.1 million, including pretax unrealized gains of $233 million.

Consolidated net income was $10.9 million ($7.91 per share), down from $12.6 million ($9.16 per share) in the prior year. The effective tax rate was 26.9%, including taxes on unrealized gains on marketable securities.

Positive

• Revenue increased 10.7% YoY to $17.7 million
• Journal Technologies' pretax income grew 35.7% to $456,000
• Marketable securities portfolio valued at $372.1 million with $233 million in unrealized gains

Negative

• Net income decreased 13.6% YoY to $10.9 million
• EPS declined from $9.16 to $7.91
• Operating expenses increased $1.39 million in Journal Technologies segment
• Consulting fees decreased by $703,000

Insights

Financial Analyst

Daily Journal 's Q1 FY2025 results reveal a compelling narrative of operational growth coupled with investment portfolio management. The 10.7% YoY revenue growth to $17.7 million demonstrates strong execution in core operations, particularly in Journal Technologies, where license and maintenance fees increased by $968,000 and public service fees grew by $1.2 million.

The company's strategic investments in operational capabilities, including personnel expansion and technical debt reduction, signal a forward-looking approach to sustainable growth. While these investments increased operating expenses by $1.4 million, they're essential for maintaining competitive advantages in the technology segment. The 35.7% increase in Journal Technologies' pretax income to $456,000 validates this strategy.

The investment portfolio, valued at $372.1 million with unrealized gains of $233 million, remains a significant value driver. However, the 13.6% YoY decline in net income to $10.9 million reflects reduced investment gains and lower dividend income, highlighting the importance of operational performance as a stabilizing factor.

The effective tax rate of 26.9% includes significant provisions for unrealized gains, demonstrating prudent financial management. The company's dual revenue streams - operational income and investment returns - provide a unique balance, though the reduced dividend income of $1.2 million suggests a potential shift in investment strategy or market conditions.

  LOS ANGELES, Feb. 18, 2025 (GLOBE NEWSWIRE) -- During the three months ended December 31, 2024, Daily Journal Corporation (NASDAQ:DJCO) had consolidated revenues of $17,704,000 as compared to $15,993,000 in the prior year period. This increase of $1,711,000 was primarily from increases in (i) Journal Technologies’ license and maintenance fees of $968,000, and other public service fees of $1,242,000, partially offset by decreased consulting fees of $703,000, and (ii) the Traditional Business’ advertising revenues of $192,000 and advertising service fees and other of $27,000.

   The Traditional Business’ pretax income remained relatively unchanged with a slight decrease of $1,000 primarily resulting from increased merchant discount fees, additional promotional expenses and postage, partially offset by increased revenues. Journal Technologies’ business segment pretax income increased by $120,000 to $456,000 from $336,000 in the prior fiscal year period primarily resulting from increased operating revenues of $1,507,000, partially offset by increased operating expenses of $1,387,000 primarily due to (i) increased personnel costs because of annual salary adjustments, (ii) additional contractor services and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on the Company’s installation projects, and (iii) increased third-party hosting fees which were billed to clients.

   At December 31, 2024, the Company held marketable securities valued at $372,104,000, including net pretax unrealized gains of $233,010,000, and accrued a deferred tax liability of $60,810,000, for estimated income taxes due only upon the sales of the net appreciated securities.

  The Company’s non-operating income, net of expenses, decreased by $964,000 to $14,153,000 from $15,117,000 in the prior fiscal year period primarily because of the recording of net unrealized gains on marketable securities of $13,413,000 as compared with $14,690,000 in the prior fiscal year period. There was also a decrease in dividends and interest income of $385,000 to $1,184,000 from $1,569,000.

   Consolidated pretax income was $14,895,000, as compared to $15,740,000 in the prior fiscal year period. There was consolidated net income of $10,895,000 ($7.91 per share) for the three months ended December 31, 2024, as compared with $12,615,000 ($9.16 per share) in the prior fiscal year period.

   For the three months ended December 31, 2024, the Company recorded an income tax provision of $4,000,000 on the pretax income of $14,895,000. The income tax provision consisted of tax provisions of $3,500,000 on the unrealized gains on marketable securities, $15,000 on income from foreign operations, $275,000 on income from U.S. operations and dividend income, $10,000 for the dividends received deduction and other permanent book and tax differences, and $200,000 for the effect of a change in state apportionment on the beginning of the year’s deferred tax liability. Consequently, the overall effective tax rate for the three months ended December 31, 2024 was 26.9%, after including the taxes on the unrealized gains on marketable securities.

  This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain statements contained in this press release are “forward-looking” statements that involve risks and uncertainties that may cause actual future events or results to differ materially from those described in the forward-looking statements. Words such as “expects,” “intends,” “anticipates,” “should,” “believes,” “will,” “plans,” “estimates,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments, or otherwise. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in documents we file with the Securities and Exchange Commission.

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FAQ

What was Daily Journal's (DJCO) revenue for Q4 2024?

Daily Journal reported consolidated revenues of $17.7 million for Q4 2024, an increase of $1.71 million from $16 million in the same period last year.

How much did DJCO's earnings per share (EPS) change in Q4 2024?

DJCO's earnings per share decreased to $7.91 in Q4 2024 from $9.16 in the same period last year.

What is the value of DJCO's marketable securities as of December 31, 2024?

As of December 31, 2024, DJCO held marketable securities valued at $372.1 million, including net pretax unrealized gains of $233 million.

What was Daily Journal's effective tax rate for Q4 2024?

The overall effective tax rate for Q4 2024 was 26.9%, which includes taxes on unrealized gains on marketable securities.

How did Journal Technologies' pretax income perform in Q4 2024?

Journal Technologies' pretax income increased by $120,000 to $456,000, up from $336,000 in the prior year period.