ROXX,inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥4.51B
• Operating Income: ¥-721M
• Net Income: ¥1.05B
• EPS: ¥144.55

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

Verdict: Headline net profit turned positive due to one-time gains, but core operations remain loss-making with weak cash conversion, making FY2025 Q4 a low-quality earnings print. Revenue grew 29.8% YoY to 45.13, demonstrating solid top-line traction. Gross profit reached 29.81 with a high gross margin of 66.0%, but SG&A of 34.51 exceeded gross profit, driving operating loss of -7.21. Operating margin was approximately -16.0% and EBITDA margin -15.7%, underscoring negative operating leverage. Ordinary income was -7.67, and profit before tax was -4.98, yet net income came in at 10.51, implying sizable extraordinary gains in Q4 that swung the bottom line. EPS (basic) was 144.55 JPY on average shares of 7,273,170, broadly consistent with reported net profit. Despite the positive net income, operating cash flow was -10.23, resulting in an OCF/Net Income ratio of -0.97x, a clear earnings quality red flag. Free cash flow is reported at 6.46, supported by a large positive investing cash flow of 16.69, likely from asset disposals or redemptions rather than recurring operations. Liquidity appears sound with cash and deposits of 25.95 and a current ratio of 193.7%, while leverage is moderate at a D/E of 1.43x, though interest coverage is deeply negative (-28.1x) due to operating losses. Equity remains thin (19.55) with retained earnings of -25.68, magnifying ROE to 53.8% on the back of one-time gains and low equity base—this is not indicative of sustainable returns. The effective tax rate is distorted (-0.5%), further signaling the presence of non-recurring items. With ROIC reported at -229.0%, capital efficiency is very weak on a core basis. The quarter’s key achievement is strong revenue growth, but margin structure and cash burn suggest the business has not yet reached an economically self-funding profile. Forward-looking, the company must credibly execute SG&A discipline and improve unit economics to achieve operating breakeven; otherwise, dependence on asset sales and financing will persist. Investors should treat the positive net income as non-recurring and focus on operating loss trajectory, cash conversion, and visibility on cost actions.

Profitability Analysis

ROE decomposition: Net Profit Margin (NPM) 23.3% × Asset Turnover (ATO) 0.802 × Financial Leverage 2.88x = ROE 53.8%. The largest driver is NPM, inflated by one-time extraordinary gains that flipped PBT (-4.98) to NI 10.51 despite operating and ordinary losses. Asset turnover at 0.80x is fair for a light-asset model, while leverage at 2.88x reflects a thin equity base (negative retained earnings) rather than aggressive debt usage alone. Business reason: extraordinary gains (likely asset disposals or similar) elevated NPM, while SG&A exceeding gross profit suppressed operating earnings. Sustainability: the elevated NPM and ROE are not sustainable; absent non-recurring gains, ROE would be negative. Concerning trends: SG&A (34.51) exceeded gross profit (29.81), implying negative operating leverage; interest coverage is negative; EBITDA is negative despite high gross margin, indicating customer acquisition or fixed cost burden remains heavy.

Growth Assessment

Revenue growth was strong at +29.8% YoY to 45.13, indicating solid demand or successful expansion initiatives. However, profitability did not keep pace: operating income was -7.21 and ordinary income -7.67, showing that growth is currently dilutive to operating margins. Gross margin is high at 66.0%, suggesting pricing power or favorable mix, but SG&A intensity is the bottleneck to profitability. The bottom-line profit of 10.51 is driven by non-recurring factors, not underlying earnings power. Outlook hinges on: 1) SG&A rationalization (personnel, marketing, and overhead) to align with revenue scale, 2) improved unit economics and customer retention to leverage the high gross margin, and 3) stabilization of cash conversion to reduce reliance on asset sales/financing. Without meaningful cost actions, growth may continue to translate into operating losses.

Financial Health

Liquidity: Current ratio 193.7% and quick ratio 193.7% indicate healthy short-term liquidity; cash and deposits (25.95) exceed current liabilities (18.37), limiting near-term refinancing pressure. Solvency: D/E 1.43x is within the stated conservative threshold (<1.5x) but close to the boundary; total liabilities 27.92 vs equity 19.55. Interest-bearing debt detail is limited; long-term loans total 9.55. Interest coverage is deeply negative (-28.1x), signaling inability to service interest from operating earnings. Maturity mismatch: Low, given strong cash vs current liabilities; the presence of 9.55 in long-term loans reduces near-term rollover risk, but persistent operating losses could erode buffers. Off-balance sheet obligations: Not reported; no disclosure available in the data provided.

Cash Flow Quality

OCF was -10.23 versus net income of 10.51, yielding OCF/NI of -0.97x (flag), indicating poor earnings quality and likely working capital outflows or non-cash gains driving NI. Investing CF was +16.69, implying asset sales/redemptions or one-off inflows; Capex was minimal at -0.07, pointing to low capital intensity. Reported Free Cash Flow was +6.46, but this is driven by non-operating inflows; on a core basis (OCF - Capex), FCF would be approximately -10.30, underscoring cash burn. Financing CF was +7.88, suggesting reliance on external funding alongside asset monetization to support operations. No granular working capital breakdown was provided; however, the divergence between NI and OCF suggests either receivables growth, other current asset buildup, or non-cash gains (extraordinary). Sustainability: Current FCF is not sustainably positive absent recurring OCF improvement.

Dividend Sustainability

No dividends were reported; payout ratio and DPS are unreported. Given negative operating income, negative OCF, and thin equity with accumulated deficits (retained earnings -25.68), discretionary shareholder returns would be difficult to justify near term. Even with reported positive FCF (driven by investing inflows), consistent dividend capacity would require stable positive OCF. Policy outlook: Expect a conservative stance prioritizing reinvestment and liquidity preservation until operating breakeven and cash flow normalization are achieved.

Risk Assessment

Business Risks:

• Execution risk in reducing SG&A intensity to achieve operating breakeven despite rapid top-line growth
• Dependence on non-recurring gains (extraordinary/investing cash inflows) to deliver net profit and positive FCF
• Potential customer acquisition cost and churn dynamics impairing unit economics despite high gross margin
• Talent and platform scalability risk if headcount or infrastructure costs remain elevated

Financial Risks:

• Negative operating and EBITDA margins leading to structurally negative interest coverage (-28.1x)
• Cash burn at the operating level (OCF -10.23) necessitating asset sales or financing (FinCF +7.88)
• Thin equity base with accumulated deficits (retained earnings -25.68) amplifying ROE volatility
• Leverage near internal threshold (D/E 1.43x) with potential to rise if losses persist

Key Concerns:

• Earnings quality flagged by OCF/NI of -0.97x
• ROIC extremely negative (-229.0%), reflecting weak core capital efficiency
• Extraordinary items likely drove NI 10.51 despite PBT of -4.98, indicating non-recurring profit dependence
• Interest coverage well below safe levels, implying vulnerability if financing conditions tighten

Investment Implications

Key Takeaways:

• Top-line growth strong (+29.8% YoY) but currently dilutive to operating margins
• Net profit positive due to one-time gains; core profitability remains negative
• Cash conversion is weak with OCF negative and FCF supported by asset disposals
• Balance sheet liquidity is adequate near term (cash 25.95; current ratio 193.7%)
• Leverage moderate (D/E 1.43x) but interest coverage is deeply negative

Metrics to Watch:

• Operating margin and EBITDA margin progression toward breakeven
• SG&A as a percentage of revenue and absolute cost trajectory
• OCF and OCF/NI ratio improvement toward >1.0
• Recurring vs non-recurring profit mix (extraordinary gains, investing CF sources)
• Cash balance and financing inflows vs outflows
• Customer unit economics (LTV/CAC) and retention, if disclosed

Relative Positioning: Within growth-stage, asset-light platforms, ROXX exhibits strong revenue expansion and high gross margins but lags peers that have achieved operating breakeven and positive OCF; liquidity is better than some loss-making peers, yet earnings quality and capital efficiency materially trail best-in-class operators.

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