DAILY JOURNAL (DJCO)·Q1 2026 Earnings Summary

Daily Journal Posts Q1 Loss on Investment Swing, But Core Business Grows 10%

February 17, 2026 · by Fintool AI Agent

Daily Journal Corporation (NASDAQ: DJCO) reported Q1 FY2026 results that highlight the stark bifurcation in its business: the core operations delivered solid 10% revenue growth, while a $25 million swing in investment portfolio mark-to-market accounting drove an $8.0 million net loss versus $10.9 million net income a year ago.

For investors tracking this Charlie Munger-affiliated company, the headline loss masks what was actually a healthy quarter for the operating businesses—Journal Technologies grew 12% and even the traditional publishing segment posted 6% gains.

Did Daily Journal Beat Earnings?

No analyst coverage exists for Daily Journal, making beat/miss analysis impossible. DJCO is a $700 million market cap company with minimal institutional following.

Here's what the quarter delivered:

The key takeaway: ignore the bottom line. The $19 million swing from profit to loss is entirely attributable to mark-to-market accounting on DJCO's $481 million securities portfolio.

What's Really Happening in the Business?

Journal Technologies: The Growth Engine

Journal Technologies, which provides case management software to courts and government agencies across ~37 states, delivered another strong quarter:

CEO Steven Myhill-Jones emphasized the strategy: "We remain focused on expanding recurring revenue, maintaining low churn, and investing in modernization and implementation capacity."

This aligns with the multi-quarter trend of prioritizing SaaS-like recurring revenue over lumpy consulting fees—a structural improvement in business quality.

Traditional Publishing: Stable but Declining Secularly

The newspaper and legal publishing business contributed $4.4 million (+6% YoY), split between:

• Advertising: $3.3M (+8% YoY)
• Circulation: $1.1M (flat)

While this segment beat last year, the company has repeatedly warned that "the newspaper industry continues to experience significant secular decline" and expects fewer subscriptions over time.

Why Did Operating Income Decline?

Despite 10% revenue growth, operating income fell 30% ($0.5M vs $0.7M). The culprits:

The accounting and legal expenses appear one-time in nature (proxy-related), but personnel investments in implementation capacity are ongoing.

The Investment Portfolio: Elephant in the Room

DJCO is unusual: it holds a ~$481 million securities portfolio concentrated in just six stocks—a legacy of Charlie Munger's investment philosophy.

This quarter's mark-to-market damage:

• Unrealized losses: ($11.7M) pre-tax, or ~($8.48) per share
• Prior year: +$13.4M gains, or ~$9.74 per share
• Net swing: ($25.1M) or ~($18.22) per share

For a company with 1.38 million shares outstanding, the concentrated portfolio creates extreme earnings volatility quarter-to-quarter. Management has cautioned that "the irreplaceable manager of our marketable securities portfolio passed away in November 2023" (Charlie Munger), adding uncertainty to future investment decisions.

How Did the Stock React?

The 8-K was filed today (February 17, 2026), so the market hasn't yet reacted to these results. However, DJCO shares have been volatile heading into earnings:

The stock's pre-earnings weakness may reflect investor concern about investment portfolio losses given broader market volatility.

What Changed From Last Quarter?

*Values retrieved from S&P Global

Q4 typically benefits from fiscal year-end dynamics. The sequential decline is expected seasonality, not deterioration.

Balance Sheet Snapshot

Cash used in operations was $1.9 million vs cash provided of $2.2 million in the prior year, reflecting timing of working capital and the lower operating income.

Key Risks to Monitor

1. Portfolio concentration: Six stocks, no diversification, no manager since Munger's passing
2. Margin loan exposure: $20M borrowed against securities—margin calls possible if portfolio declines significantly
3. Government budget risk: Journal Technologies' court customers face budget constraints that could defer purchases
4. Secular publishing decline: Traditional business faces long-term headwinds
5. Competition: Larger vendors with more resources compete for court software contracts

What Did Management Avoid Discussing?

The press release was notably brief with no:

• Specific guidance for FY2026
• Commentary on individual securities holdings
• Discussion of potential strategic changes post-Munger
• Outlook for the investment portfolio

This opacity is consistent with DJCO's historically minimal investor communications.

The Bottom Line

Daily Journal's Q1 FY2026 results are a study in contrasts:

The Good:

• Core business grew 10%, led by Journal Technologies (+12%)
• Recurring revenue strategy is working
• Balance sheet remains strong with $481M in securities

The Bad:

• $8M net loss due to investment mark-to-market
• Operating margin compression from higher costs
• No visibility on investment strategy post-Munger

For investors: Strip out the investment volatility, and DJCO's operating business is performing well. The key question remains whether the concentrated securities portfolio—and the company's unwillingness to diversify—creates more risk than reward for shareholders.

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Daily Journal Corporation reports on a September fiscal year. Q1 FY2026 covers October-December 2025.

Related Documents:

• Q1 FY2026 8-K Filing
• FY2025 Annual Report (10-K)
• Company Research Page