Daily Journal Stock Down 6% Despite FY25 Earnings Rising Y/Y

Shares of Daily Journal Corporation ( DJCO have declined 5.7% since the company reported its earnings for the fiscal year ended Sept. 30, 2025. This compares to the S&P 500 index’s 1.1% decline over the same time frame. Over the past month, the stock has declined 2.5% compared with the S&P 500’s 0.2% decrease, indicating relative underperformance both post-earnings and over the recent one-month horizon.For the fiscal year, Daily Journal reported net income of $81.41 per share, compared to $56.73 per share in the prior year. Total revenue of $87.7 million represented a 25% increase from $69.9 million in the previous year. The company’s net income rose to $112.1 million compared to $78.1 million in the prior year. The surge in earnings reflects both operational growth and strong returns from its investment portfolio. Journal Technologies continued to account for the vast majority of revenue, contributing approximately 80% of the total. The growth was led primarily by increases in consulting fees, public service revenues, and recurring licensing and maintenance contracts.Daily Journal Corporation Price, Consensus and EPS Surprise Daily Journal Corporation price-consensus-eps-surprise-chart | Daily Journal Corporation QuoteOther Key Business MetricsJournal Technologies recorded a 32% year-over-year increase in revenues, reaching $69.9 million, up from $53.1 million. The segment benefited from a 51% increase in consulting fees, which totaled $22.7 million, largely driven by more project completions and the timing of deferred revenue recognition. Licensing and maintenance fees rose 12% to $31.7 million, while other public service fees, mainly related to e-filing and payment services, jumped 59% to $15.5 million. The segment’s pretax income rose dramatically to $12.7 million from $2.5 million a year earlier, reflecting stronger execution and improved project economics.In contrast, the Traditional Business segment posted a slight revenue increase of 6% to $17.8 million from $16.8 million. Advertising revenues rose 8% to $10.1 million, driven by modest gains in commercial and legal advertising. However, circulation revenues fell 4% to $4.3 million, a result of pricing adjustments aimed at subscriber retention. The segment recorded a pretax loss of $0.2 million, reversing a $2 million pretax profit in the prior year, mainly due to higher personnel costs, increased promotional spending, and additional compensation accruals.Management CommentaryManagement underscored the pivotal role of Journal Technologies in driving the company’s growth, noting that nearly all of its customers are government agencies. The segment’s growth was supported by expanded hosting services, more implementation “go-lives,” and higher transaction volumes in online public payment platforms. The company reaffirmed its strategy to continue investing in product development, modernizing its platform, and addressing technical debt. Leadership also acknowledged persistent headwinds in the Traditional Business, including the decline of print advertising and legal requirements for newspaper publication of public notices. Although some gains were achieved in the segment this year, the long-term outlook remains cautious.The company reiterated that it does not expect to initiate new equity investments in unrelated public securities following the death of Charles T. Munger, who long managed its portfolio. Management now sees the investment portfolio as a means to support ongoing operations and development within Journal Technologies, rather than as a source of standalone returns.Factors Influencing Headline NumbersOne of the most significant contributors to the year’s net income was the performance of the company’s investment portfolio. Daily Journal recorded $134.3 million in unrealized gains on marketable securities, up from $96.1 million in the prior year. These gains helped lift pretax income to $150.1 million compared to $104.3 million in fiscal 2024. The investment portfolio had a fair market value of $493 million as of Sept. 30, 2025, and included $353.9 million in cumulative unrealized gains. The company also benefited from a 55% reduction in interest expense, reflecting a $5.5 million paydown on its margin loan balance during the year.Operating expenses rose 19% to $78.2 million, up from $65.9 million. Personnel costs increased due to salary adjustments and additional hiring to support project delivery and software development. Outside services and third-party hosting fees also climbed, with many of the associated costs billed back to clients. Legal and accounting fees rose sharply, as the company undertook initiatives to strengthen internal controls following previously identified material weaknesses.Other DevelopmentsDaily Journal continued to strengthen its balance sheet by reducing debt. The company paid down $5.5 million on its margin loan during the year, lowering the outstanding balance to $22 million. Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. 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