Forside Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥2.43B
• Operating Income: ¥393M
• Net Income: ¥-26M
• EPS: ¥8.78

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

For FY2025 Q3 (consolidated, JGAAP), For-side (23300) delivered flat revenue at 2,433,455,000 yen (+0.0% YoY) while profitability showed a sharp divergence between operating and bottom-line results. Gross profit was 1,518,912,000 yen, implying a robust gross margin of 62.4%, indicative of a high-value or asset-light business mix. Operating income fell dramatically to 393,000,000 yen (-89.5% YoY), signaling heavy SG&A pressure and negative operating leverage despite stable top-line. Ordinary income of 407,000,000 yen exceeded operating income modestly, suggesting limited but positive non-operating contributions amid low interest expense (6,409,000 yen). Net income surged to 379,000,000 yen (+373.0% YoY), pushing the reported net margin to 15.6%; the magnitude of improvement versus operating income points to non-operating or tax effects, though underlying drivers are not fully disclosed. The DuPont decomposition shows ROE at 12.58%, built from a 15.57% net margin, 0.510x asset turnover, and 1.58x financial leverage, a healthy level for a small-cap with moderate leverage. Balance sheet strength looks solid with total assets of 4,771,000,000 yen, liabilities of 1,065,368,000 yen, and equity of 3,012,000,000 yen; this implies an equity ratio around 63% (despite the reported 0.0% equity ratio field, which appears undisclosed rather than zero). Liquidity is strong with a current ratio of 363% and working capital of 2,359,360,000 yen. Interest coverage is ample at 61.3x, reflecting modest financing costs against still-positive operating income. Cash flow statement items are undisclosed (zeros), so operating cash flow, free cash flow, and investing trends cannot be assessed from the provided data; consequently, cash conversion and earnings quality require caution. Dividends and outstanding shares are also undisclosed, limiting per-share and payout analysis aside from the reported EPS of 8.78. Overall, the period exhibits healthy gross economics and a solid balance sheet but substantial deterioration in operating profitability, with the bottom-line rebound driven by factors outside core operations. Sustainability of earnings will depend on normalizing SG&A, stabilizing operating margin, and confirming cash flow support. Data limitations—especially around cash flows and dividends—constrain the depth of quality-of-earnings assessment.

Profitability Analysis

ROE_decomposition: ROE 12.58% = Net profit margin 15.57% × Asset turnover 0.510 × Financial leverage 1.58. Asset turnover of ~0.51x (2,433m revenue / 4,771m assets) indicates moderate efficiency. Leverage at ~1.58x (assets/equity ≈ 4,771/3,012) is conservative-to-moderate, not the main driver of ROE. The ROE is therefore heavily reliant on the current net margin level, which includes non-operating/tax factors in this quarter. margin_quality: Gross margin of 62.4% is strong and suggests favorable unit economics or a high-margin content/service mix. Operating margin is approximately 16.1% (393m / 2,433m), but the YoY collapse (-89.5% at the operating income line) flags significant SG&A or other operating cost escalation. Net margin of 15.6% substantially exceeds what the deteriorated operating trend would imply, indicating non-operating contributions and/or a low effective tax in the period (exact tax rate not reliable from the provided fields). operating_leverage: With revenue flat and operating income sharply lower, the company experienced negative operating leverage in the period—small changes in sales (or unchanged sales) translated into outsized declines in operating profit due to higher fixed/semi-fixed costs. Restoring cost discipline (SG&A efficiency) is key to re-establishing operating leverage benefits.

Growth Assessment

revenue_sustainability: Revenue was flat YoY (0.0%), indicating stable but not expanding demand. Without segment disclosure, it is unclear whether mix shifts occurred; however, the high gross margin suggests the core offering retained pricing/premium positioning. profit_quality: Core profit quality is mixed: high gross margin is a positive, but the severe drop in operating income indicates cost pressures. The rebound at net income, despite weak operating profit, points to reliance on non-operating gains or tax effects that may not be structural. outlook: Near-term earnings trajectory hinges on normalizing operating expenses and preserving gross margins. If operating costs are brought back in line, the business can leverage its strong gross margin to rebuild operating profit. Absent that, sustaining the current ROE and net margin may be challenging without continued non-operating support.

Financial Health

liquidity: Current assets 3,256,967,000 yen vs. current liabilities 897,607,000 yen yields a current ratio of 362.9% and working capital of 2,359,360,000 yen—ample near-term liquidity. Quick ratio is reported equal to current ratio due to undisclosed inventories; interpret with caution. solvency: Total liabilities 1,065,368,000 yen and equity 3,012,000,000 yen imply a debt-to-equity of ~0.35x, indicating low leverage. Interest expense is modest, and interest coverage is strong at 61.3x, implying limited refinancing risk in the near term. capital_structure: Implied equity ratio is approximately 63% (equity/assets ≈ 3,012/4,771), supporting balance sheet resilience. Financial flexibility appears sound, with room to absorb volatility in operating earnings.

Cash Flow Quality

earnings_quality: Cash flow data (OCF/FCF) are undisclosed; therefore, we cannot corroborate earnings with cash generation. The large divergence between operating income and net income heightens the need to validate earnings through cash conversion once data are available. FCF_analysis: Free cash flow is not available (undisclosed). Capex intensity cannot be determined; however, the business appears asset-light given strong gross margins and modest interest expense. working_capital: Working capital is healthy at 2,359,360,000 yen, but without cash flow details we cannot assess whether changes in receivables/payables contributed to earnings volatility.

Dividend Sustainability

payout_ratio_assessment: Dividend data (DPS, payout ratio) are shown as zero, which we treat as undisclosed rather than actual zeros. With EPS at 8.78, any payout assessment is not possible without confirmed dividend declarations. FCF_coverage: FCF is undisclosed, so coverage of any potential dividends cannot be evaluated. policy_outlook: No dividend policy information is provided. Given the operating profit volatility, if the company pays dividends, sustainability would depend on restoring operating cash flows and maintaining balance sheet strength.

Risk Assessment

Business Risks:

• Operating expense inflation leading to negative operating leverage and margin compression
• Dependence on non-operating income or favorable tax effects to support net profit
• Potential demand cyclicality or customer concentration not visible in the data
• Execution risk in cost control and SG&A efficiency
• Product/segment mix shifts that could pressure gross margins

Financial Risks:

• Limited visibility on cash generation due to undisclosed cash flow statements
• Potential working capital swings that could drain liquidity despite headline ratios
• Small-cap market liquidity and potential reliance on external financing if profitability weakens
• Interest rate or credit spread increases, albeit mitigated by low leverage and strong coverage

Key Concerns:

• Severe YoY decline in operating income despite flat sales
• Net income outpacing operating trends, implying non-core earnings support
• Absence of cash flow data to validate earnings quality and sustainability

Investment Implications

Key Takeaways:

• Revenue stable YoY at 2,433m, but operating profit fell sharply (-89.5% YoY)
• Gross margin remains high at 62.4%, a key strength to rebuild earnings
• Net income improved (+373% YoY) and ROE reached 12.58%, aided by non-operating/tax effects
• Balance sheet solid: implied equity ratio ~63%, debt-to-equity ~0.35x, interest coverage 61.3x
• Liquidity robust with current ratio ~363% and sizeable working capital
• Cash flow, dividend, and share data are undisclosed; earnings quality and payout capacity cannot be confirmed

Metrics to Watch:

• Operating margin recovery and SG&A as a percentage of sales
• Non-operating income/expenses and tax rate normalization
• Operating cash flow and free cash flow once disclosed
• Working capital movements (receivables, payables, any inventory)
• Revenue growth trajectory and gross margin stability
• Leverage and interest coverage trends

Relative Positioning: Versus TSE small-cap peers, the company exhibits a stronger balance sheet and liquidity, attractive gross margins, but weaker near-term operating momentum with elevated reliance on non-operating factors to sustain net profitability.

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