DJCO

DAILY JOURNAL CORP

NASDAQ · COMMUNICATION SERVICES · NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING

592.84

+19.65 +3.43%

USD · close Oct 23

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Work order

FLAG · shorts 32

Insiders, 90 days

no open-market filings in 90 days

Congress, 90 days

0 / 0

no disclosures naming it

Big money

0 / 15

none of the tracked funds disclose it

Calls on record

nobody we score has called it yet

MKT CAP $816.9MP/E —DIV YIELD —FCF YIELD 2.12%REV TTM —NET INCOME −$11.4M −111.7%NET CASH $31.1M52W 374.53 – 687.66SEC XBRL · TTM TO Invalid Date

How DJCO rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

41%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

−122

words, now 3,194

New in FY2025

Just as the emergence and maturation of the Internet and smartphone technologies had profound implications across many industries, AI has the potential to significantly change key factors related to the Traditional Business, Journal Technologies, and companies in the Company’s holdings of marketable securities.
For the Traditional Business, there may be new and additional opportunities to automate or reduce the cost of content creation and doing business, or allow monetization of existing and/or historic content in new ways.
For Journal Technologies, use of AI may fundamentally alter or automate key customer workflows over time, obviating the need for its technology.
AI will likely also create new and better ways for customers to achieve their mandates, of which the Company is positioning to play a valuable role.
The Company is allocating resources to pursue these opportunities, through in-house engineering, and may also do so through partnerships, or mergers and acquisitions.
Whether it will be successful is uncertain.
The process and approach to engineering software itself may change in notable ways, and this could impact the underlying business model of Journal Technologies.
Monitoring potential impacts of AI on companies in the marketable securities portfolio will also require ongoing attention.
From time to time, the legislatures in California and Arizona (and elsewhere) have considered and/or implemented various proposals that would result in the elimination or reduction of the amount of public notice advertising in printed newspapers required by statute.
In September 2023, the California legislature passed a bill (AB542) effective January 1, 2024 that set in motion a decline in legal advertising revenue of approximately $14,000 during fiscal year 2024 by reducing the number of required publication days in a newspaper for self-service storage facility lien sales.
Effective January 1, 2027, these notices are to be moved to posting on the school district’s website in lieu of being published in a newspaper.
In addition, if the adjudication, which is what gives publishers the legal ability to publish public notice advertising, of one or more of the Company’s newspapers were challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could materially affect the revenues of the Traditional Business.
Competition for readers and advertisers is very competitive, both from established publications and from new entrants into the market.
During fiscal year 2025, the Company reported an overall decrease of $0.2 million (4%) in circulation revenue.
This reduction was mainly driven by a $0.3 million decline in paper circulation revenue, while digital circulation revenue saw a partial offset with a $0.1 million increase.
The decline is largely attributed to lower revenue per subscriber, a result of implementing alternative pricing strategies to support subscriber retention.
This development further reflects the ongoing challenges within the media industry.
After personnel costs, postage and paper costs are typically the Traditional Business next two largest expenses.
Recently, there have been consolidations of newsprint suppliers, and paper prices may fluctuate substantially in the future or otherwise be affected by tariffs and/or changes to trade agreements.
The newspaper industry continues to experience significant secular decline.
Under the relevant accounting guidance, the costs to update and upgrade Journal Technologies’ products are generally expensed as incurred and will impact earnings at least through the foreseeable future.
The Company continues to invest in the development of new and next-generation technology as part of its broader product strategy.
Likewise, investment is required to improve existing technology to simplify the process of configuring, managing and updating systems (and related obligations including documentation, user experience improvements, and more).
The intention is to improve profitability, but if foundational development is not done effectively, it may not yield the expected competitive advantages or intended efficiencies.
Normally, the vendor is selected through a bidding process, and often the customers will express a specific preference for, or effectively require, larger vendors having completed similar types of projects.
Likewise, specialized vendors in specific vertical markets may develop or continue to enhance specific solutions for certain customer types that are sufficiently focused and turnkey, or leverage disruptive new approaches, that Journal Technologies will struggle to compete with them.
The customers of Journal Technologies are public sector entities, thus creating unique issues and risks.
Accordingly, we face unique risks associated with governmental budget constraints, especially during challenging economic times, which could force government entities to defer or forego consulting services or even stop paying their annual software license and maintenance fees.
In addition, economic conditions could affect our ability to win new customers as a result of heightened competition for new business following a decrease in new initiatives available for bidding.
We encounter risks related to a longer and more complicated sales cycle than exists for commercial customers, political issues related to resource allocation, administration turnover and preferences for internal case management solutions or for a particular vendor, complicated bidding procedures, and fluctuations in the demand for information technology products and services.
Although the company has transitioned to a milestone-based system in recent years, installation fees have traditionally been payable only when the customer confirms satisfaction with the installed system and it is operational, or upon achievement of designated milestones.
Accordingly, for these projects we do not recognize revenues for such installation services or for most other consulting services until after the services have been performed and accepted.
Risks Associated with Our Holdings of Marketable Securities A large portion of the Company ’ s assets are held in publicly traded securities, and the prices of those securities may decline.
As of September 30, 2025, the Company held marketable securities worth approximately $493.0 million, with a cumulative unrealized gain of $353.9 million for financial statement purposes.
The value of these securities could decline, which would adversely affect net income and shareholders’ equity.
As of September 30, 2025, the Company’s holdings of marketable securities were concentrated in just six companies.
General Corporate Risks Changes in accounting guidance could have a significant effect on the Company ’ s reported financial results.
As noted above, beginning in fiscal year 2019, changes in unrealized gains (losses) on marketable securities are included in the Company’s net income (loss) and thus may have a significant impact on the Company’s reported results depending on the fluctuations of the prices of the marketable securities owned by the Company.
A third party has initiated a campaign against the Company that may include a proxy contest and litigation, which could be expensive and further divert the attention of management and the Board from the Company’s operations.
In the summer of 2025, a third-party investment adviser sent a series of letters to the Company alleging—incorrectly—that we should be capitalizing rather than expensing Journal Technologies’ software development costs.

and 13 more.

Gone since FY2024

Risks Associated with a Public Health Event The Company ’ s business is likely to be materially and adversely affected by the emergence or resurgence of an epidemic or pandemic such as COVID-19, or by a similar event or the fear of such an event, and the measures that governmental authorities implement to address it.
As COVID-19 spread in early 2020, governmental authorities and health officials implemented numerous unprecedented measures to contain the virus, including “stay at home” orders for non-essential workers, travel restrictions, quarantines and business shutdowns.
Most of Journal Technologies’ customers, which are primarily courts and governmental agencies in the United States, Canada and Australia, either closed or significantly scaled back their activities.
Similarly, many law firms and companies from which the Traditional Business derives advertising and subscription revenues also curtailed their operations and spending.
In addition, the Company relies on its portfolio of marketable securities for dividend income and balance sheet support, and the value of the portfolio can be materially affected by declines in stock prices, particularly among the common stocks of the three U.S. financial institutions and one foreign manufacturer that make up a substantial portion of the portfolio.
Due to the uncertainties associated with the duration and severity of an event like COVID-19, the efforts to contain it, and the changes in business operations and personal behaviors that are likely to follow from it, it is difficult to estimate the magnitude of its impact on the Company’s business in future periods, but it could materially affect the Company’s operations, staffing levels, financial condition, liquidity and cash flows going forward.
Also, with new norms established, many Journal Technologies employees continue working from home most days or following a hybrid schedule.
The long-term downsides of these new norms on innovation and productivity are still being determined.
Just as the emergence and maturation of the Internet and smartphone technologies had profound implications across many industries, AI has the potential to significantly change key factors related to the Traditional Business, Journal Technologies, and companies in the Company’s holdings of marketable securities. - 12 - For the Traditional Business, there may be opportunities to automate or reduce the cost of content creation, or perhaps allow monetization of existing and/or historic content in new ways.
For Journal Technologies, AI may fundamentally alter or automate key customer workflows over time, obviating the need for its technology.
AI will likely also create new and better ways for customers to achieve their mandates.
The Company is allocating certain resources to ensure it has the capacity to recognize and pursue these opportunities, whether through in-house engineering, partnership, or mergers and acquisitions, but whether it will be successful is uncertain.
The process and approach to engineering software itself may change in notable ways, and this could impact the business model of Journal Technologies.
Monitoring potential impacts of AI on companies in the marketable securities portfolio will also require attention.
From time to time, the legislatures in California and Arizona (and elsewhere) have considered various proposals that would result in the elimination or reduction of the amount of public notice advertising in printed newspapers required by statute.
In September 2023, the California legislature passed a bill (AB542) effective January 1, 2024 that set in motion a decline in legal advertising revenue of approximately $14,000 during fiscal 2024 by reducing the number of required publication days in a newspaper for self-service storage facility lien sales.
Effective January 1, 2027, these notices are to be moved to posting on the school district’s website in lieu of being published in a newspaper. - 13 - In addition, if the adjudication, which is what gives publishers the legal ability to publish public notice advertising, of one or more of the Company’s newspapers were challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could materially affect the revenues of the Traditional Business.
Competition for readers and advertisers is very intense, both from established publications and from new entrants into the market.
During fiscal 2024, we had a slight increase of $59,000 (1%) in circulation revenues primarily resulting from promotional sale efforts which we will continue.
However, overall industry-wide circulation revenues have continued to decline as more and more information has become available online.
Law firm mergers have also reduced the number of firms that purchase multiple subscriptions of our newspapers.
It is not practical to assume that we will be able to offset future declines in subscriptions with increases in the subscription rate, and we cannot anticipate that our circulation revenues will continue to increase.
After personnel costs, postage and paper costs are typically the Company’s next two largest expenses.
Recently, there have been consolidations of newsprint suppliers, and paper prices may fluctuate substantially in the future. - 14 - The Traditional Business uses the U.S.
The newspaper industry continues to experience significant secular decline, although the number of subscriptions to The Daily Journals has increased recently primarily due to promotional efforts.
The costs to update and upgrade Journal Technologies’ products are expensed as incurred and will impact earnings at least through the foreseeable future.
To build out next-generation technology there is up-front investment required, which is now underway and will increase.
Likewise, investment is required to improve existing technology to simplify the process of configuring, managing and updating systems.
The intention is to improve profitability, but if this development is not done effectively, it may not yield the expected competitive advantages or intended efficiencies.
Normally, the vendor is selected through a bidding process, and often the customers will express a preference for, or even require, larger vendors.
Likewise, specialized vendors in specific vertical markets may develop or continue to enhance specific solutions for certain customer types that are sufficiently focused and turnkey, or leverage disruptive new approaches, that Journal Technologies will struggle to compete with them. - 15 - The customers of Journal Technologies are public sector entities, thus creating special issues and risks.
Accordingly, we face special risks associated with governmental budget constraints, especially during stressful economic times, which could force government entities to defer or forego consulting services or even stop paying their annual software license and maintenance fees.
In addition, we encounter risks related to a longer and more complicated sales cycle than exists for commercial customers, political issues related to resource allocation, administration turnover and preferences for internal case management solutions or for a particular vendor, complicated bidding procedures, and fluctuations in the demand for information technology products and services.
In many cases, installation fees are not due until the customer has indicated its satisfaction with the installed system, and it has “gone live” or upon completion of certain milestones.
Accordingly, we do not recognize revenues for installation services or for most other consulting services until after the services have been performed and accepted.
Risks Associated with Our Holdings of Marketable Securities A large portion of the Company ’ s assets is held in publicly traded securities, and the prices of those securities may decline.
As of September 30, 2024, the Company held marketable securities worth approximately $358,691,000, with an unrealized gain for financial statement purposes of $219,597,000.
The value of these securities could decline, which would adversely affect net income and shareholders’ equity. - 16 - As of September 30, 2024, the Company’s holdings of marketable securities were concentrated in just six companies.
The Company is required to recognize losses in a particular security for financial statement purposes even though the Company has not actually sold the security.
Under accounting rules that became effective in fiscal 2019, changes in the unrealized gains and losses on marketable securities are included in the Company’s reported net income (loss), even though the Company has not actually realized any gain or loss by selling such marketable securities.

and 11 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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