L is B Corp. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.56B
• Operating Income: ¥123M
• Net Income: ¥83M
• EPS: ¥16.14

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

L is B (145A0) posted strong top-line expansion in FY2025 Q3, with revenue of ¥1,564 million, up 30.5% YoY, indicating robust demand and/or successful customer acquisition and upselling. Profitability inflected meaningfully: operating income rose to ¥123 million (+227.7% YoY), and net income reached ¥82 million (+784.6% YoY), reflecting improved operating leverage and cost discipline. Gross profit was ¥995 million, translating to a high gross margin of 63.6%, consistent with a software/services-heavy or IP-rich model and favorable pricing power. Operating margin improved to approximately 7.9%, a notable step-up given the scale benefits evident in selling, general, and administrative costs. Ordinary income of ¥110 million trails operating income mainly due to net non-operating costs, including ¥10.4 million of interest expense, but interest remains manageable with an interest coverage ratio of 11.8x. The DuPont bridge shows a net margin of 5.24%, asset turnover of 0.565x, and financial leverage of 1.55x, yielding an ROE of 4.59%, which matches the reported calculation. Balance sheet strength is solid: total assets are ¥2,768 million and equity is ¥1,786 million, implying an equity ratio near 64.5% (the reported 0.0% appears to be an undisclosed placeholder). Liquidity is ample with current assets of ¥2,240 million versus current liabilities of ¥546 million, resulting in a current ratio of 4.11x and quick ratio of 4.11x (no inventories reported). Working capital stands at approximately ¥1,695 million, providing a buffer to support growth. While cash flow statements are undisclosed in this XBRL slice (OCF/FCF show as zero due to non-reporting), earnings quality can be partially inferred from margin expansion and manageable interest burden. The effective tax burden, inferred from income tax of ¥27.8 million on pre-tax profit near ¥110 million, is roughly 25%, despite a reported 0.0% placeholder. No dividends were paid (DPS ¥0), which aligns with a reinvestment stance during a scaling phase. Overall, the quarter indicates continued scaling with improving profitability, conservative leverage, and strong liquidity, though the absence of disclosed cash flow data limits full assessment of earnings-to-cash conversion. The key to sustaining momentum will be maintaining high gross margins while controlling operating costs as revenue grows. Monitoring receivables, contract liabilities, and customer acquisition costs will be important to validate the durability of growth and cash conversion.

Profitability Analysis

ROE_decomposition: ROE 4.59% = Net margin 5.24% × Asset turnover 0.565 × Financial leverage 1.55. margin_quality: Gross margin 63.6% (¥994.6m/¥1,564.0m) suggests a high-value service/software mix and pricing power. Operating margin ~7.9% (¥123.0m/¥1,564.0m) reflects improved cost absorption. Net margin 5.24% indicates non-operating and tax drag but remains healthy given growth stage. operating_leverage: Operating income growth (+227.7% YoY) far outpaced revenue growth (+30.5% YoY), indicating strong operating leverage from scale benefits and cost control. Interest expense is modest (¥10.4m), and the 11.8x interest coverage underscores headroom for continued scaling.

Growth Assessment

revenue_sustainability: 30.5% YoY revenue growth demonstrates strong customer demand and potential recurring or multi-period contract dynamics; sustaining this pace will depend on retention, upsell, and new logo wins. profit_quality: Mix-driven gross margin and operating leverage improvements support improving profit quality. Ordinary income is slightly lower than operating income due to net non-operating costs, but these are manageable. outlook: With a high gross margin base and ample liquidity, the company appears positioned to continue scaling. Key to the outlook will be maintaining pricing, controlling customer acquisition costs, and managing receivables. Limited cash flow disclosure tempers visibility into cash-backed growth.

Financial Health

liquidity: Current assets ¥2,240.3m vs current liabilities ¥545.5m yields a current and quick ratio of 4.11x, indicating strong short-term solvency. Working capital of ~¥1,694.7m provides operating flexibility. solvency: Total liabilities ¥999.4m against equity ¥1,786.0m imply an equity ratio around 64.5% and liabilities-to-equity of ~0.56x, a conservative capital structure. capital_structure: Financial leverage at 1.55x (assets/equity) is moderate. Interest expense of ¥10.4m is well covered by operating income (11.8x), leaving room for prudent investment without stressing the balance sheet.

Cash Flow Quality

earnings_quality: Cash flow statements are not disclosed here (OCF shown as 0 due to non-reporting), preventing a direct OCF-to-NI assessment. However, the combination of expanding operating margin and manageable interest suggests earnings are not overly reliant on financial income. FCF_analysis: Free cash flow is undisclosed. With no inventories reported, working capital needs likely revolve around receivables and payables; the large working capital balance may indicate significant receivables and/or cash, but cash itself is undisclosed. working_capital: Current assets are 4.11x current liabilities, implying a cushion to support growth. Monitoring days sales outstanding and contract liabilities is important to validate cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio is 0%, consistent with a reinvestment phase given strong growth and rising profitability. FCF_coverage: FCF is undisclosed; thus, payout coverage cannot be evaluated quantitatively. Given low leverage and strong liquidity, capacity for future distributions could build if cash generation tracks earnings. policy_outlook: Absent a stated policy here, the current stance appears to prioritize growth investment over returns; a shift toward dividends would likely require established free cash flow visibility.

Risk Assessment

Business Risks:

• Sustainability of 30%+ revenue growth amid competitive dynamics
• Potential pricing pressure that could erode the 63.6% gross margin
• Customer concentration or churn risk if growth is driven by a limited number of large accounts
• Execution risk in scaling sales capacity and delivery while maintaining quality
• Dependence on key personnel or proprietary technology if applicable to the business model

Financial Risks:

• Limited transparency on operating and free cash flow conversion due to undisclosed cash flows
• Receivables collection risk given large working capital and no inventory buffer
• Interest rate and refinancing risk, albeit currently limited given modest interest expense
• Potential need for incremental investment that could raise leverage if internally funded cash is insufficient

Key Concerns:

• Cash flow non-disclosure restricts assessment of earnings quality
• Maintaining operating leverage as the company scales
• Ensuring disciplined customer acquisition costs to protect margins

Investment Implications

Key Takeaways:

• Revenue up 30.5% YoY to ¥1,564m with significant operating leverage (+227.7% YoY OI)
• High gross margin at 63.6% supports durable unit economics
• ROE 4.59% with moderate leverage (assets/equity 1.55x); room to improve via margin and turnover
• Strong liquidity (current ratio 4.11x, WC ~¥1.695bn) and manageable interest burden (11.8x coverage)
• Cash flow metrics undisclosed; monitoring OCF/NI and FCF is critical

Metrics to Watch:

• Revenue growth rate and net retention/upsell indicators
• Operating margin trajectory and SG&A efficiency
• DSO and OCF/NI once disclosed; FCF generation and seasonality
• Contract liabilities/deferred revenue and backlog visibility
• Customer concentration and churn
• Effective tax rate normalization versus implied ~25%

Relative Positioning: Within Japan’s software/IT services cohort, the company exhibits above-average gross margins, improving operating leverage, conservative leverage, and strong liquidity, though current ROE and undisclosed cash flow data suggest it is still in a scale-up phase compared to mature, cash-generative peers.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis