Daythree Digital’s Q2 2025 Report: A Return to Profitability and a Dividend Surprise
Daythree Digital Berhad, a key player in the Global Business Services (GBS) sector, has just released its financial results for the second quarter ended June 30, 2025. While the first half of the year presented challenges, the latest quarter shows a significant turnaround, marking a return to profitability. Adding to the news, the company has declared a dividend, signaling confidence to its shareholders. Let’s dive deep into the numbers and see what’s driving their performance.
Core Financial Highlights: A Tale of Two Halves
This quarter’s performance paints a picture of resilience. While revenue saw a slight dip compared to the same period last year, the company managed to post a profit, a significant improvement from the loss-making preceding quarter. However, the cumulative results for the first half of the year still reflect earlier challenges.
Key Figures for Q2 2025
- Revenue: RM23.3 million
- Profit Before Tax (PBT): RM0.4 million
- Net Profit: RM0.4 million
- Earnings Per Share (EPS): 0.06 sen
Quarterly Performance: Q2 2025 vs Q2 2024
When we compare this quarter to the same period last year, we see a mixed but telling story. Revenue is nearly stable, but profitability has been squeezed, primarily due to a spike in administrative expenses. The company attributes this to higher legal and professional costs associated with its recent Bonus Issue and new Employees’ Share Option Scheme (ESOS), as well as increased investment in its support function teams.
Q2 2025 (Current Quarter)
Revenue: RM23.25 million
Gross Profit: RM4.52 million
Profit Before Tax: RM0.38 million
Net Profit: RM0.37 million
EPS: 0.06 sen
Q2 2024 (Same Quarter Last Year)
Revenue: RM23.94 million
Gross Profit: RM4.99 million
Profit Before Tax: RM2.28 million
Net Profit: RM1.64 million
EPS: 0.27 sen
A Remarkable Turnaround from the Previous Quarter
Perhaps the most impressive part of this report is the strong rebound from the immediate preceding quarter (Q1 2025). Revenue jumped significantly, and the company swung from a substantial loss to a profit. This was driven by the successful commercialisation of its new digital transformation services, particularly those powered by Generative AI and Agentic AI. This strategic move drastically improved the gross profit margin from a mere 1.1% in Q1 2025 to a healthy 19.5% this quarter.
| Metric | Q2 2025 (Current) | Q1 2025 (Preceding) |
|---|---|---|
| Revenue | RM23.3 million | RM19.4 million |
| Profit/(Loss) Before Tax | RM0.38 million | (RM3.18 million) |
Financial Health and Position
A look at Daythree’s balance sheet reveals a solid foundation. The company boasts a zero gearing ratio (excluding lease liabilities), meaning it operates without bank borrowings, relying on internally generated funds. This is a significant strength, indicating financial prudence and stability. While cash reserves have decreased slightly since the end of 2024, the company maintains a healthy cash position of RM22.4 million.
- Total Assets: RM88.2 million
- Total Equity: RM62.3 million
- Gearing Ratio: 0 times
- Net Assets Per Share: RM0.10
Risks and Future Prospects
Daythree is strategically positioning itself at the forefront of the digital transformation wave. The company is heavily invested in enhancing Customer Experience (CX) through technology, with Artificial Intelligence (AI) at its core. This focus is timely, as Malaysia’s GBS market is projected to grow from RM24.8 billion in 2023 to RM31.7 billion by 2027.
The company’s strategy is evolving from simply using digital tools (“digital enablement”) to selling its advanced AI-powered solutions as a service (“digital monetisation”). This includes new offerings like AI-driven sentiment analysis to gauge customer emotions in real-time. This strategic shift could unlock new, high-margin revenue streams.
However, potential risks exist. The report highlights that four major customers accounted for 75.5% of revenue this quarter. While strong relationships are positive, this concentration poses a risk if any single client reduces its business. Furthermore, managing the rise in administrative and operational costs will be crucial to sustain and improve profitability.
Shareholder Returns: A Dividend Declared!
In a move that will please investors, the Board of Directors has proposed a single-tier first interim dividend of 0.45 sen per share for the financial year ending 31 December 2025. This amounts to a total payout of RM2.7 million.
- Dividend per share: 0.45 sen
- Entitlement Date: 12 September 2025
- Payment Date: 26 September 2025
Summary and Outlook
Daythree Digital’s second-quarter results demonstrate a promising pivot back to profitability, driven by its strategic investments in AI and digital services. The successful commercialisation of these technologies has significantly boosted margins, indicating a viable path for future growth. The company’s strong, debt-free balance sheet provides a stable platform for expansion, and the dividend declaration is a clear sign of the management’s confidence in its long-term strategy. The key challenge ahead will be to manage costs effectively, diversify its client base, and continue executing its shift towards digital monetisation.
Key points for investors to keep in mind:
- Customer Concentration: A high dependency on a small number of major clients remains a key business risk.
- Cost Management: The recent increase in administrative expenses needs to be monitored to ensure it translates into sustainable growth and does not erode margins in the long run.
- Execution of AI Strategy: The company’s future success heavily relies on its ability to successfully sell its advanced GenAI and Agentic AI solutions to a broader market.
Final Thoughts
As a blogger focused on the financial markets, I see Daythree’s latest report as a narrative of strategic adaptation. The company is navigating the high-cost environment by moving up the value chain, transforming its AI capabilities from an internal tool into a revenue-generating product. This is a bold and necessary move in today’s tech-driven economy. The impressive quarterly turnaround suggests the strategy is beginning to bear fruit.
The road ahead will be about execution and scale. Can Daythree maintain this momentum and successfully expand its client portfolio beyond its current major customers?
What are your thoughts on Daythree’s pivot to monetizing its AI services? Do you think this is a sustainable path to growth? Share your views in the comments below!
