GAKUJO CO.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥11.02B
• Operating Income: ¥2.33B
• Net Income: ¥1.89B
• EPS: ¥139.97

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

Gakujo Co., Ltd. (23010) reported FY2025 Q4 (full-year) single-entity results under JGAAP with modest top-line growth but margin compression at the operating level. Revenue rose 2.7% YoY to ¥11.019bn, while operating income declined 12.2% YoY to ¥2.332bn as SG&A growth outpaced gross profit expansion. Gross profit margin remained strong at 64.7%, underscoring a high-value, asset-light business model, but the SG&A ratio was elevated at 40.5% of sales. Ordinary income fell 13.1% YoY to ¥2.654bn, though non-operating income of ¥414m provided a meaningful buffer (about 18% of operating income). Net income declined 15.1% YoY to ¥1.892bn, implying YoY margin pressure despite solid gross margins. DuPont analysis shows net margin of 17.2%, asset turnover of 0.644x, and financial leverage of 1.15x, yielding an ROE of 12.7%, which is healthy given the conservative balance sheet. Liquidity is very strong: current ratio 420% and quick ratio 420%, with sizable cash and deposits (¥4.93bn) and investment securities (¥4.79bn). The company has no interest-bearing debt and a high equity buffer; equity/asset ratio, calculated from balance sheet, is about 87% (14.879bn/17.106bn). Cash generation is solid, with operating cash flow of ¥1.898bn roughly matching net income (OCF/NI ~1.0), and low capital intensity (capex ¥258m). Free cash flow, by a conventional definition (OCF − capex), is approximately ¥1.64bn (~15% FCF margin), though the dataset also presents an FCF figure of ¥2.266bn that appears to include investing inflows. Capital allocation included share repurchases of ¥528m; no dividends are recorded in the cash flow statement despite a reported payout ratio data point, suggesting reporting or classification differences. EPS (basic) was ¥139.97, flat YoY per the data, despite lower net profit—a sign of share count effects or data rounding. Reported ratios such as equity ratio, ROA and effective tax rate appear inconsistent with line items, likely due to disclosure taxonomy differences; analysis below relies on directly calculable figures. Overall, results reflect resilient revenue and strong balance sheet strength, offset by near-term operating deleverage and reliance on non-operating income to support ordinary profit. Outlook sensitivity centers on SG&A discipline, sustainability of non-operating gains, and revenue momentum into the next hiring cycle. Data limitations include several zero or placeholder values in reported ratio fields; conclusions focus on non-zero, internally consistent items.

Profitability Analysis

ROE_decomposition: Net margin 17.17% × Asset turnover 0.644 × Financial leverage 1.15 = ROE 12.72% (matches reported ROE). margin_quality: - Gross margin: 64.7% (¥7.124bn GP on ¥11.019bn sales), indicative of strong pricing/premium service mix.

• Operating margin: ~21.2% (¥2.332bn/¥11.019bn), down YoY given operating income −12.2% vs sales +2.7%.
• Ordinary margin: ~24.1% (¥2.654bn/¥11.019bn), supported by sizable non-operating income (¥414m; dividends/gains likely).
• Net margin: 17.17%, solid but down YoY in line with net income decline. operating_leverage: Negative in the period: revenue +2.7% YoY but operating income −12.2% YoY. SG&A was ¥4.467bn (40.5% of sales), consuming 62.7% of gross profit. This indicates cost growth and/or mix effects offsetting gross profit gains.

Growth Assessment

revenue_sustainability: Low single-digit growth (+2.7% YoY) suggests stable demand but limited acceleration. Given the business model, seasonality and hiring cycle timing are key drivers; sustaining growth will hinge on client activity and event/media monetization. profit_quality: Core profitability remains high at the gross level, but operating profit is pressured by elevated SG&A. Ordinary profit benefited from ¥414m non-operating income; reliance on such income reduces quality if not recurring. outlook: Maintaining or improving operating margin will require SG&A discipline or mix shift to higher-yield services. With a strong cash/securities position, the company has flexibility to invest in growth or support shareholder returns. Watch for commentary on cost normalization and the persistence of non-operating gains.

Financial Health

liquidity: - Current assets ¥8.534bn vs current liabilities ¥2.030bn; current ratio ~420% and quick ratio ~420% indicate ample near-term liquidity.

• Cash & deposits ¥4.929bn provide a strong buffer; working capital ¥6.505bn. solvency: - No interest-bearing debt; interest expense not disclosed (likely negligible). Calculated equity ratio ~87% (14.879/17.106). Financial leverage (A/E) ~1.15x aligns with DuPont input. capital_structure: Equity-heavy with significant investment securities (¥4.790bn). Reported debt-to-equity of 0.15x likely reflects a different definition; by interest-bearing debt, leverage is effectively zero.

Cash Flow Quality

earnings_quality: OCF/Net income ≈ 1.00 (¥1.898bn/¥1.892bn), supporting good accrual quality. D&A of ¥211m is modest vs EBIT, consistent with asset-light operations. FCF_analysis: - Conventional FCF (OCF − capex): ~¥1.64bn, ~14.9% of revenue. The provided FCF of ¥2.266bn appears to include investing inflows (+¥368m), which may be non-recurring (e.g., securities redemptions).

• Investing CF positive suggests portfolio activity; capex remains low (¥258m, ~2.3% of sales). working_capital: Large positive working capital (¥6.505bn). Absence of detailed AR/other current asset disclosures in this dataset limits line-by-line analysis, but liquidity metrics imply no stress.

Dividend Sustainability

payout_ratio_assessment: The dataset shows Annual DPS = ¥0 and total dividends paid = ¥0, yet includes a calculated payout ratio of 53.5% and DOE of 6%. Given the inconsistencies, we cannot confirm the actual cash dividend. If payout were ~53.5% of EPS ¥139.97, implied DPS would be ~¥75. FCF_coverage: On a conventional basis, FCF of ~¥1.64bn would comfortably cover a hypothetical dividend of ~¥1.0bn (if implied by DOE) and the ¥528m buyback; actual cash dividends in the period are shown as zero, making coverage effectively ample. policy_outlook: Balance sheet strength and consistent cash generation support capacity for stable or flexible shareholder returns. However, given conflicting data points on dividends, outlook comments should be anchored to management guidance once available.

Risk Assessment

Business Risks:

• Operating leverage risk if SG&A growth outpaces revenue in a slowing demand environment
• Dependence on hiring cycles and client recruiting budgets, introducing macro sensitivity
• Revenue mix and event/media timing risk that can create quarterly volatility
• Potential overreliance on non-operating income (e.g., securities income) to sustain ordinary profit

Financial Risks:

• Market risk in investment securities portfolio (¥4.79bn) affecting non-operating income and equity valuation
• Concentration of assets in cash and securities, with reinvestment/return variability
• Limited disclosure granularity (e.g., AR breakdown), complicating working capital trend analysis

Key Concerns:

• Operating margin compression despite high gross margins
• Sustainability and recurrence of non-operating income supporting ordinary profit
• Inconsistencies in reported ratios (e.g., equity ratio, effective tax) requiring reliance on recalculated metrics

Investment Implications

Key Takeaways:

• Solid revenue resilience (+2.7% YoY) but negative operating leverage (OP −12.2% YoY)
• High gross margin (64.7%) underscores strong value proposition
• Ordinary profit supported by sizable non-operating income (¥414m)
• Healthy ROE of 12.7% with conservative leverage (A/E ~1.15x)
• Robust liquidity (current ratio ~420%, cash & securities ~¥9.7bn combined)
• Strong cash generation; conventional FCF ~¥1.64bn with low capex
• Active buybacks (¥528m) within a strong balance sheet context

Metrics to Watch:

• SG&A as a percentage of sales and trajectory into the next fiscal year
• Non-operating income composition (dividends, gains/losses) and sustainability
• Order intake/sales pipeline indicators tied to recruiting cycles
• Operating cash flow conversion vs net income
• Capex intensity and digital/product investments
• Shareholder return mix (dividends vs buybacks) given conflicting payout data

Relative Positioning: Operationally asset-light with superior margins and liquidity versus typical service peers; profitability remains attractive, but near-term operating deleverage and exposure to non-operating income temper the quality of earnings.

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