LIFULL Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥28.13B
• Operating Income: ¥3.81B
• Net Income: ¥5.31B
• EPS: ¥41.51

Income Statement

Balance Sheet

Cash Flow Statement

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

LIFULL (21200) reported FY2025 Q4 consolidated results under IFRS with revenue of 281.27 billion yen-equivalent units (281.27 in 100M JPY), up 6.9% YoY, indicating modest top-line momentum. Gross profit reached 249.48, implying a very high gross margin of 88.7%, consistent with a platform/advertising-heavy revenue mix and low direct cost structure. SG&A was 226.81, resulting in operating income of 38.15 (+26.1% YoY), demonstrating operating leverage as revenue growth translated into disproportionately higher operating profit. EBITDA was 57.89 (20.6% margin), supported by D&A of 19.74, which suggests manageable non-cash charges relative to operating profits. Profit before tax was 38.05 and income tax expense 10.34, implying continuing operations after-tax profit around 27.71; however, reported net income was 53.17, indicating material contributions below the PBT line (most plausibly profit from discontinued operations or other one-off items under IFRS). The effective tax rate on continuing operations is shown as 27.2%, broadly reasonable, but the net income/PBT divergence underscores item(s) outside continuing operations. Total comprehensive income was 20.31, significantly below net income, indicating sizable negative OCI (e.g., securities valuation losses or FX translation), which did not affect net but reduced equity. On the balance sheet, total assets were 409.15 and total equity 262.23 (equity ratio 63.6%), pointing to a conservative capital structure. Interest-bearing debt detail is partial (short-term loans 35.72, long-term loans 2.53), and the provided debt-to-equity ratio of 0.65x suggests broader debt/lease obligations may exist beyond disclosed loan balances. Operating cash flow was solid at 48.08, but investing cash flow was a large outflow at -118.52, with only -2.50 in capex; this implies M&A, financial investments, or large intangible investments drove cash burn. Free cash flow was negative at -70.44, funded by positive financing cash flow of 38.90 and existing liquidity (cash and equivalents 107.02 at period-end). The DuPont-calculated ROE is 20.3% (net margin 18.9%, asset turnover 0.687x, leverage 1.56x), reflecting strong profitability and modest leverage; the very low reported ROE (0.2%) likely stems from differing definitions (e.g., comprehensive income basis, average equity definitions, or ordinary income denominator). Despite a calculated payout ratio of 1.8% and dividends paid of 5.45, FCF coverage is negative given the heavy investment program. Overall, the quarter reflects improving operating momentum, disciplined cost management, and strong balance sheet strength, tempered by investment-led FCF outflows and volatility between net income and comprehensive income. Revenue growth appears sustainable in the near term, but profit quality warrants focus given the gap between operating and bottom-line drivers. Liquidity appears adequate for ongoing investments, but sustained negative FCF would eventually require either higher OCF or reduced investment pace. Data limitations (several unreported line items) restrict granular conclusions on working capital and interest burden. The outlook hinges on monetization efficiency, stability of core advertising/listing businesses, and returns on recent investments.

Profitability Analysis

ROE_decomposition: DuPont indicates ROE of 20.3% = Net profit margin 18.9% x Asset turnover 0.687 x Financial leverage 1.56x. The high net margin is boosted by items below PBT (likely discontinued operations or non-recurring gains), while operating margin implied by OI/Revenue is 13.6% (38.15 / 281.27). Reported ROE of 0.2% is inconsistent with the DuPont result and is likely based on a different profit metric (e.g., ordinary income or comprehensive income) and/or average equity denominator per XBRL. margin_quality: Gross margin of 88.7% is structurally high and consistent with a listings/portal model. EBITDA margin at 20.6% and operating margin circa 13.6% indicate decent operating efficiency. The gap between operating income (38.15) and net income (53.17) suggests non-operating or discontinued gains; total comprehensive income of 20.31 signals negative OCI, lowering quality of equity accretion. operating_leverage: Revenue grew 6.9% YoY while operating income rose 26.1% YoY, indicating positive operating leverage from SG&A discipline and scale benefits. D&A (19.74) is moderate vs revenue (7.0%), supporting EBITDA expansion.

Growth Assessment

revenue_sustainability: Top-line growth of 6.9% appears steady. The high gross margin profile suggests pricing power and/or mix benefits; sustainability depends on traffic, advertiser demand, and housing market activity in core segments. profit_quality: Operating profit growth outpaced sales, but the elevation of net income over PBT points to one-off or non-core items. Comprehensive income trails net income materially, implying market-driven OCI headwinds; recurring profitability should be gauged at the operating level. outlook: With strong equity and liquidity, investment capacity is intact. Returns on the -118.52 investing outflow (largely non-capex) will be key to sustaining growth and margin expansion. Near-term trajectory likely hinges on advertising spend trends and success of new products or M&A integration.

Financial Health

liquidity: Cash and equivalents were 107.02; operating CF 48.08 supports working capital and dividends. Current assets are 215.89, but current liabilities are unreported, so current and quick ratios are not computable. solvency: Equity ratio of 63.6% indicates low balance-sheet risk. Debt-to-equity is reported at 0.65x, higher than the sum of disclosed loan balances would imply, suggesting additional lease/other interest-bearing liabilities; leverage remains manageable given equity base. capital_structure: Total equity 262.23 vs total assets 409.15, leverage (assets/equity) 1.56x per DuPont aligns with conservative funding. Short-term loans of 35.72 dominate, with long-term loans of 2.53; refinancing risk appears limited but tenor detail is sparse.

Cash Flow Quality

earnings_quality: OCF/Net income is 0.90x, reasonably healthy but impacted by below-PBT items inflating net income relative to cash generation. The divergence between net income (53.17) and total comprehensive income (20.31) also points to valuation-driven OCI effects. FCF_analysis: Free cash flow was -70.44 (48.08 OCF minus 2.50 capex), driven by substantial non-capex investing outflows (-118.52), likely M&A or financial investments/intangibles. Financing inflows (38.90) and existing cash funded the deficit. working_capital: Working capital cannot be precisely assessed due to unreported current liabilities; however, positive OCF indicates no acute working capital stress this period.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is low at 1.8% (reported 0.3%), suggesting dividends are modest relative to net income; however, the quality of earnings is influenced by non-recurring items. FCF_coverage: FCF coverage is negative (FCF coverage metric -71.81x), meaning dividends were not covered by free cash flow in this period due to heavy investing cash outflows. On an OCF basis, coverage appears adequate. policy_outlook: Given strong equity (equity ratio 63.6%) and cash on hand (107.02), the company can maintain dividends near current levels short term. Medium-term sustainability will depend on normalization of investment spending and improved recurring cash generation.

Risk Assessment

Business Risks:

• Advertising and listings demand cyclicality tied to housing and macro conditions
• Competition in online platforms potentially pressuring pricing and customer acquisition costs
• Execution risk around M&A or new service launches given large investing outflows
• User traffic and lead quality volatility affecting revenue conversion

Financial Risks:

• Negative free cash flow driven by high investing cash outflows
• Potential hidden leverage from leases or other liabilities (D/E reported at 0.65x)
• OCI volatility impacting equity and book value
• Short-term loan reliance (35.72) raises some refinancing and interest rate sensitivity

Key Concerns:

• Net income materially exceeds profit before tax, indicating reliance on items outside core operations
• Total comprehensive income significantly below net income
• Limited disclosure on current liabilities, interest expense, and cash composition, constraining liquidity analysis
• Sustainability of operating leverage if revenue growth slows

Investment Implications

Key Takeaways:

• Healthy top-line growth (+6.9% YoY) with strong operating leverage (OI +26.1% YoY)
• High gross margin (88.7%) consistent with platform economics
• Strong balance sheet with 63.6% equity ratio supports investment capacity
• Net income boosted by non-operating/discontinued items; comprehensive income weaker
• Negative FCF (-70.44) due to sizable non-capex investing outflows
• OCF/Net income at 0.90x suggests reasonable but not stellar earnings cash conversion

Metrics to Watch:

• Core operating margin and EBITDA margin trends excluding one-offs
• Organic revenue growth vs contribution from acquisitions
• Return on invested capital for recent investments (linking to the -118.52 investing CF)
• Cash conversion cycle and OCF sustainability
• Leverage including leases; interest coverage once interest expense is disclosed
• Gap between net income and total comprehensive income

Relative Positioning: Within Japanese internet/platform peers, LIFULL exhibits superior gross margins and a conservative equity base, but trails on free cash flow resilience this period due to aggressive investment; profit quality appears more volatile given the divergence between operating profit, net income, and comprehensive income.

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