Will Smart Co.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥550M
• Operating Income: ¥-241M
• Net Income: ¥-220M
• EPS: ¥-150.16

Income Statement

Balance Sheet

Profitability Ratios

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

Will Smart (175A0) reported FY2025 Q3 (non‑consolidated, JGAAP) results with flat revenue at 550.0 million yen year over year, indicating a pause in top-line momentum. Gross profit was 148.3 million yen, implying a gross margin of 27.0%, which is reasonable but insufficient to cover operating expenses. Operating income was a loss of 241.0 million yen, translating to an operating margin of -43.8% and highlighting a heavy fixed cost base and/or elevated growth investments. Ordinary loss improved versus operating loss by roughly 22 million yen, suggesting net positive non-operating items that partially offset the core loss, despite 1.3 million yen of interest expense. Net loss was 220.0 million yen (net margin -40.0%), resulting in a very high negative ROE of approximately -111%, driven by losses and modest equity. The DuPont decomposition shows asset turnover at 1.005x and financial leverage at 2.76x; profitability (net margin) is the primary drag on ROE. Liquidity appears adequate on headline ratios, with a current ratio of 203.6% and quick ratio of 198.9%, though the quality and composition of current assets are not disclosed. Total assets were 547.0 million yen and total equity 198.0 million yen, implying an equity ratio around 36.2% by calculation (equity/assets), which provides some buffer but is vulnerable to continued losses. Working capital of 245.2 million yen suggests room to fund near-term operations, but cash flow statements are not disclosed for this period, limiting our ability to assess cash conversion or runway. Inventories are modest at 11.1 million yen, indicating limited balance sheet risk from stock obsolescence. The interest coverage ratio is negative (-184.8x), reflecting the operating loss; however, absolute interest burden is low (1.3 million yen). Annual dividends are not paid (DPS 0), which is appropriate given the loss position and need to preserve capital. Overall, the profile is characterized by stable revenue, weak operating leverage due to high SG&A, adequate short-term liquidity, moderate leverage, and equity at risk if losses persist. Data limitations include the absence of cash flow figures, D&A, and share count, which constrain earnings quality and per-share analysis.

Profitability Analysis

ROE decomposition: ROE ≈ Net margin (-40.0%) × Asset turnover (1.005x) × Financial leverage (2.76x) ≈ -111%. Profitability (negative margin) is the dominant driver of the negative ROE, not asset efficiency or leverage. margin_quality: Gross margin is 27.0% (148.3 million yen GP on 550.0 million yen sales), indicating acceptable unit economics. Operating margin is -43.8% (operating loss of 241.0 million yen), implying SG&A and other operating costs of roughly 389.3 million yen, or about 70.8% of revenue. Ordinary margin (-39.8%) is slightly better than operating margin due to net non-operating income (~+22 million yen net). Effective tax rate prints at 0.0% with 1.0 million yen tax despite losses, likely reflecting minimum taxes or non-deductible items. operating_leverage: Revenue was flat YoY, but the cost base appears largely fixed, producing a sizable operating loss at current scale. The breakeven gap (operating loss of 241 million yen) suggests material operating leverage if revenue grows or costs are trimmed, but near-term profitability requires either significant volume uplift or meaningful cost control.

Growth Assessment

revenue_sustainability: Revenue was unchanged YoY at 550.0 million yen, indicating stable but stagnant demand. Without order backlog, pipeline, or segment detail, sustainability beyond the near term is unclear. profit_quality: Profitability is negative across operating, ordinary, and net income lines. Non-operating items (+~22 million yen net) partially cushion results, but core earnings are weak. D&A is undisclosed, so EBITDA quality cannot be assessed. Interest burden is small, so losses are primarily operational. outlook: Key to improvement is scaling revenue above a relatively fixed cost base and/or SG&A optimization. Maintaining the current gross margin while reducing opex intensity could rapidly narrow losses. Absent acceleration in orders or cost actions, FY close is likely to remain loss-making.

Financial Health

liquidity: Current assets of 481.9 million yen vs. current liabilities of 236.7 million yen yield a current ratio of 203.6% and quick ratio of 198.9%. Working capital is 245.2 million yen. Cash and cash flows are undisclosed, so near-term liquidity quality (cash vs. receivables) cannot be verified. solvency: Total liabilities of 246.7 million yen vs. equity of 198.0 million yen result in a debt-to-equity ratio of 1.25x and an implied equity ratio around 36.2%. Continued losses risk eroding equity and pressuring solvency metrics over time. capital_structure: Leverage is moderate; interest expense is low at 1.3 million yen, implying limited financial burden currently. However, negative operating income leaves little buffer if revenue softens or if working capital needs increase.

Cash Flow Quality

earnings_quality: Cash flow data (OCF, investing, financing) are not disclosed this period. As such, accrual vs. cash conversion cannot be assessed. Net loss (-220.0 million yen) coupled with adequate working capital suggests the company is funding operations through existing current assets and/or payables. FCF_analysis: Free cash flow cannot be computed due to missing OCF and capex. D&A is also undisclosed, preventing proxy EBITDA analysis. working_capital: Inventories are low at 11.1 million yen, reducing inventory risk. Receivables and payables detail are not provided; thus, the timing of cash collections/payments and their impact on OCF are unclear.

Dividend Sustainability

payout_ratio_assessment: DPS is 0.00 and payout ratio is 0.0%, which aligns with the loss position (EPS -150.16). Distributions would not be sustainable under current earnings. FCF_coverage: FCF coverage cannot be evaluated due to undisclosed cash flows; however, ongoing losses imply limited capacity for distributions. policy_outlook: Given negative earnings and the need to preserve capital, maintaining a no-dividend stance appears consistent with financial conditions until profitability and cash generation improve.

Risk Assessment

Business Risks:

• Revenue stagnation (0.0% YoY) implying potential demand softness or competitive pressures.
• High operating cost base (SG&A and other opex ~71% of revenue) leading to persistent operating losses.
• Dependence on non-operating income to partially offset operating losses.
• Limited disclosure on segments, backlog, and pipeline reduces visibility into growth drivers.
• Potential pricing pressure that could compress the 27% gross margin if competition intensifies.

Financial Risks:

• Erosion of equity from continued net losses (ROE ~ -111%), pressuring solvency over time.
• Negative interest coverage from operating loss, with risk if borrowing increases.
• Liquidity quality uncertain due to absent cash flow and cash balance disclosure.
• Possible covenant constraints if additional debt is sought amid losses.
• Working capital swings could strain cash in the absence of positive OCF.

Key Concerns:

• Scale and timing needed to bridge a 241 million yen operating loss gap.
• Lack of cash flow data impeding assessment of cash runway and funding needs.
• Sustainability of current cost structure without revenue growth acceleration.

Investment Implications

Key Takeaways:

• Stable revenue but insufficient scale versus a heavy fixed cost base.
• Gross margin of 27% is acceptable; operating margin of -44% highlights cost pressure.
• Moderate leverage and adequate headline liquidity, but equity is vulnerable to ongoing losses.
• Non-operating income provides only limited relief; core operations must improve.
• Disclosure gaps (cash flows, D&A, cash position) constrain evaluation of earnings quality and runway.

Metrics to Watch:

• Order intake/backlog and quarterly revenue growth trajectory.
• Gross margin trend and project mix.
• SG&A efficiency (opex-to-sales) and progress on cost initiatives.
• Operating income breakeven progress and interest coverage.
• Equity ratio and D/E as losses accumulate.
• Operating cash flow, capex, and cash balance once disclosed.

Relative Positioning: Within small-cap JGAAP reporters, Will Smart shows moderate balance sheet leverage but weaker operating profitability versus peers due to a high cost base; near-term positioning hinges on improving operating leverage and restoring positive OCF.

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