📅 June, 2025
🌐 Website: www.cogstate.com
Here is a forensic financial analysis of Cogstate (ASX:CGS), based on its Half-Year Report for the period ended 31 December 2024, and the FY25 guidance update released on 24 June 2025.
📊 Balance Sheet
| Risk Indicator | Status | Comments |
|---|---|---|
| Goodwill >25% of Assets | ✅ | No goodwill recorded; all intangibles are internally developed IP and software |
| Rising Receivables Days | ✅ | Receivables stable YoY (~US$10M) despite 19% revenue growth |
| Inventory Growth vs Profit | 🟠 Not Applicable | Company operates a services model without physical inventory |
| High Borrowings | ✅ | No borrowings recorded; debt-free status maintained |
| Loans to Related Parties | ✅ | No related party loans disclosed |
| Idle Cash | ✅ | High cash holdings (US$34.2M) are being actively deployed through an ongoing share buy-back program |
📈 Income Statement
| Risk Indicator | Status | Comments |
|---|---|---|
| Revenue vs Profit Divergence | ✅ | Revenue up 19%, NPAT up 95% — positive operating leverage |
| Capitalised R&D/Interest | 🟠 | Capitalised software dev costs of US$655K (~5% of opex); rising trend should be monitored |
| Extraordinary Items | ✅ | No material one-offs or adjustments reported |
| Tax Rate Drop | 🔴 | Effective tax rate fell to 25% from 96% YoY due to prior year deferred tax adjustments |
| Profit vs Cash Flow | ✅ | OCF US$5.0M vs NPAT US$3.9M — strong cash conversion |
| One-Off Gains Boosting Profit | ✅ | No asset sales or revaluation gains boosting profit reported |
🏛️ Governance, Disclosure & Audit
| Risk Indicator | Status | Comments |
|---|---|---|
| Auditor Changes | ✅ | Auditor (Pitcher Partners) unchanged |
| Audit Qualifications | ✅ | Clean review report with no qualifications |
| Exec Departures | ✅ | No senior executive or board departures reported |
| Transparency Issues | ✅ | Strong disclosure across segments and revenue categories |
| Board Weakness | ✅ | Board comprises experienced professionals with sectoral and governance expertise |
| Executive Pay Misalignment | ✅ | No material pay rises; buy-backs and profitability suggest aligned incentives |
| Promotional Language | ✅ | Tone of reporting is factual and grounded in operating data |
🧠 Strategic Risk Factors
| Risk Indicator | Status | Comments |
|---|---|---|
| Chronic Unprofitability | ✅ | Company remains consistently profitable with strong YoY improvement |
| Revenue < Capex | ✅ | Revenue (US$23.9M in 1H25) substantially exceeds capex (US$655K + PPE) |
| Funding Dependency | ✅ | No new equity raised; company returning capital via buy-backs |
| Customer Concentration | 🟠 | Eisai remains a significant revenue source, especially in Healthcare |
| Pre-commercial Product Risk | ✅ | Revenue-generating segments are commercialised |
| Short Cash Runway | ✅ | Cash reserves (US$34.2M) and positive cash flow eliminate short-term funding risk |
| Regulatory/Compliance Exposure | ✅ | No regulatory or compliance breaches reported |
| Leadership Turnover During Expansion | ✅ | Stable leadership during revenue acceleration and segment expansion |
✅ Final Summary
| Category | 🔴 Red Flags | 🟠 Amber Flags |
|---|---|---|
| Balance Sheet | 0 | 0 |
| Income Statement | 1 | 1 |
| Governance / Disclosure | 0 | 0 |
| Strategic Risk Factors | 0 | 1 |
🔴 Total Red Flags: 1
🟠 Total Amber Flags: 2
🟠 Amber & 🔴 Red Flag Overview
-
🔴 Tax Rate Drop: Effective tax rate fell materially from prior period (96% to 25%), with no detailed commentary provided.
-
🟠 Capitalised R&D: Ongoing capitalisation of development costs suggests rising reliance on deferred expensing.
-
🟠 Customer Concentration: Eisai continues to contribute a significant portion of Healthcare revenue, posing concentration risk.
🔄 FY25 Outlook Addendum
As of 24 June 2025, Cogstate upgraded full-year guidance:
-
FY25 Revenue forecast: US$52–54M (+20–24% YoY)
-
FY25 Profit Before Tax forecast: US$12–14M (+69–97% YoY)
This reinforces operational strength and reduces future financial risk. If realised, these figures would materially enhance margin quality and further validate the capital return strategy.
Disclaimer: This report is for educational purposes and does not constitute financial advice. It does not account for personal circumstances. All investors should conduct their own research or consult a qualified adviser before making financial decisions.
Forensic Analysis: Cogstate ASX:CGS