Shares of Daily Journal Corporation (DJCO Quick QuoteDJCO - Free Report) have gained 2.8% since the company reported its earnings for the six months ended March 31, 2025. This compares to the S&P 500 index’s 2.5% decline over the same time frame. Over the past month, the stock has gained 10.5% compared with the S&P 500’s 4.9% growth, underscoring the market's positive reception of the company’s latest financial results.

For the six months ended March 31, 2025, Daily Journal reported net income of $40.34 per share compared to $20.36 per share in the year-ago period. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The company posted consolidated revenues of $35.9 million, marking a 10.2% increase from $32.6 million in the same period a year earlier. The company’s consolidated pretax income more than doubled to $76.2 million from $36.4 million, driven largely by investment-related gains. Net income surged to $55.6 million, compared to $28 million in the year-ago period, a 98% year-over-year increase in net earnings.

Daily Journal Corporation Price, Consensus and EPS Surprise

Daily Journal Corporation price-consensus-eps-surprise-chart | Daily Journal Corporation Quote

Revenue Drivers and Segment Performance

The top-line growth was propelled primarily by Journal Technologies, whose license and maintenance fees rose by $1.6 million, while public service fees increased by $2.5 million. These gains were partially offset by a $1.2 million decline in consulting fees. The Traditional Business segment also contributed to revenue growth with a $0.4 million rise in advertising revenues and a $0.1 million increase in other service fees.

Segment-level profitability reflected this dynamic. Journal Technologies posted a pretax income of $0.5 million, up from $0.4 million, with revenue gains of $2.8 million largely neutralized by a $2.7 million rise in operating expenses. These higher costs were attributed to salary increases, expanded contractor engagement, staffing to manage installation projects, and increased third-party hosting fees. Meanwhile, the Traditional Business saw its pretax income grow by $0.3 million to $1.2 million, supported by its more modest revenue increase of $0.5 million.

Non-Operating Income Surge

A key contributor to the company’s earnings growth was the substantial increase in non-operating income, which reached $74.5 million, up from $35.1 million in the prior-year period. This jump was mainly due to net unrealized gains of $72.8 million on marketable securities, far exceeding the $34.5 million in realized and unrealized gains reported a year earlier. However, dividend and interest income slightly declined by $0.4 million to $2.4 million.

As of March 31, 2025, Daily Journal held $431.5 million in marketable securities with net pretax unrealized gains of $292.4 million. The company also recorded a deferred tax liability of $76.9 million associated with these appreciated securities, payable only upon their sale.

Tax Impact and Effective Rate

The company’s income tax provision for the period totaled $20.6 million on pretax income of $76.2 million. Of this, $19.2 million stemmed from taxes on unrealized gains in the investment portfolio. Other components included $0.9 million from U.S. operations, $0.04 million from foreign income, and $0.6 million due to a change in state apportionment. These were partially offset by a $0.1 million tax benefit related to dividend deductions and other permanent book-tax differences. The effective tax rate, including unrealized gains, stood at 27%.