Schoo,inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥3.36B
• Operating Income: ¥290M
• Net Income: ¥175M
• EPS: ¥14.31

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: A solid top-line and operating rebound, tempered by an unusual tax benefit and a year-on-year decline in bottom-line, yields a mixed but improving FY2025 Q4 finish. Revenue rose 17.8% YoY to 33.6, while operating income surged 149.8% YoY to 2.90, evidencing clear operating leverage. Gross profit was 19.58 with a strong 58.3% gross margin, pointing to resilient unit economics. Operating margin expanded to roughly 8.6% (2.90/33.6), up about 456 bps from an estimated ~4.1% a year ago (inferred from YoY rates). EBITDA reached 2.92, translating to an 8.7% margin, in line with operating margin and indicating limited D&A drag (D&A only 0.02). Ordinary income improved to 2.58 (+196.7% YoY), but profit before tax was 0.87, implying heavier non-operating expenses (0.33) and interest burden (0.23). Net income declined 4.9% YoY to 1.75 as the prior year benefited more at the bottom line; current NPM is 5.2% vs an estimated prior ~6.5%, a compression of about 195 bps. A notable factor is the negative effective tax rate (-111%), suggesting a one-off tax credit/benefit that boosted net income relative to PBT; without it, bottom-line would have been weaker. Cash flow quality is healthy: operating cash flow of 2.49 exceeded net income (OCF/NI 1.42x), and free cash flow was positive at 1.14 after modest capex (0.06). Liquidity is strong with a current and quick ratio of 207% and cash of 20.45 against current liabilities of 11.01. Leverage is manageable (D/E 0.95x) with long-term loans of 6.64 and interest coverage of ~12.9x. Financing CF was sizable at 7.86, partly offset by share repurchases of 1.39, indicating both growth funding and capital returns. Book value per share is ~¥150, with calculated ROE at 9.4%, supported by nearly 1.0x asset turnover and moderate leverage (1.86x). Reported ROIC of 61.2% appears high, likely reflecting a narrow invested capital base; nonetheless, it underscores improving capital efficiency. Forward-looking, revenue momentum and operating leverage are positive, but the reliance on tax benefits is not a sustainable earnings driver. Key watchpoints include sustaining gross margin, managing interest costs, and converting growth to consistent free cash flow without one-offs.

Profitability Analysis

Step 1 (ROE decomposition): ROE 9.4% = Net Profit Margin 5.2% × Asset Turnover 0.976 × Financial Leverage 1.86x. Step 2 (biggest change): The largest YoY swing is in operating margin (OI up 149.8% vs revenue +17.8%), implying the margin component (feeding into NPM) improved the most at the operating level. Step 3 (reason): SG&A grew slower than gross profit, yielding operating leverage; however, non-operating expenses and an unusual tax benefit distorted the bridge from operating income to net income. Step 4 (sustainability): Operating margin gains are more sustainable if revenue growth persists and SG&A discipline holds; the tax benefit (negative ETR) appears one-time and should not be extrapolated. Step 5 (flags): Watch for SG&A growth re-accelerating above revenue growth; also, interest expense (0.23) partially offsets operating gains—rising rates or debt could dampen NPM.

Growth Assessment

Revenue grew 17.8% YoY to 33.6, suggesting healthy demand and/or improved monetization. Operating income surged 149.8% YoY to 2.90, evidencing strong operating leverage as gross margin held at 58.3%. Despite higher ordinary income, net income fell 4.9% due to below-the-line effects and a distorted tax line; headline net growth understates operating progress. Estimated operating margin expansion (~456 bps) indicates improved cost efficiency or scale benefits in delivery. EBITDA margin at 8.7% aligns with operating margin, reflecting minimal non-cash charges and implying earnings are largely cash-backed. Financing inflows (7.86) point to growth funding capacity, while buybacks (1.39) signal management confidence. Outlook: If top-line momentum persists and non-operating headwinds normalize, profit growth should track operating trends; absence of recurring tax credits will likely lower NPM vs this quarter’s print.

Financial Health

Liquidity is robust: current ratio 207% and quick ratio 207%, supported by cash of 20.45 versus current liabilities of 11.01. No warning for current ratio (<1.0) or excessive leverage (D/E 0.95x is within conservative ranges). Solvency: total liabilities 17.65 vs equity 18.55 imply an equity ratio of ~54%, healthy for a growth company. Long-term loans are 6.64; short-term loans are unreported, but large cash balance mitigates near-term refinancing risk. Maturity mismatch risk appears low given cash > current liabilities. Interest coverage is strong at ~12.9x, cushioning rate or spread volatility. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

OCF/NI is 1.42x (>1.0), indicating quality earnings with good cash conversion. Free cash flow of 1.14 is positive after modest capex (0.06), suggesting internally funded growth is feasible at current scale. Working capital dynamics appear benign: cash rose with positive OCF, and accounts receivable (1.95) are modest relative to revenue, though lack of payables/inventories disclosure limits deeper analysis. Financing CF was large (7.86), partly offset by buybacks (1.39), implying net capital raised to support growth and liquidity. No signs of aggressive working capital manipulation are evident from the limited disclosures.

Dividend Sustainability

Dividend metrics are unreported; thus, payout ratio and DPS cannot be assessed. Given positive FCF (1.14), the company could theoretically fund modest shareholder returns, but the priority appears to be growth funding and occasional buybacks (1.39) rather than cash dividends. Policy outlook: Without stated guidance, expect flexibility between reinvestment and opportunistic buybacks; dividend initiation or increases would hinge on sustaining positive FCF and stabilizing bottom-line without one-off tax effects.

Risk Assessment

Business Risks:

• Revenue growth durability risk in a competitive digital education/enterprise training market
• Pricing pressure and client churn risk affecting gross margin sustainability
• Execution risk in scaling sales capacity while keeping SG&A growth below revenue growth
• Product/technology refresh cadence risk impacting conversion and retention

Financial Risks:

• Interest expense drag (0.23) and potential rate increases affecting NPM
• Dependence on non-recurring tax benefits (negative ETR) inflating bottom-line volatility
• Refinancing and covenant risk tied to long-term loans (6.64), albeit mitigated by cash
• Potential dilution or balance sheet changes from ongoing financing activities

Key Concerns:

• Net income declined 4.9% YoY despite strong operating improvement, highlighting below-the-line volatility
• Effective tax rate is highly negative (-111%), unlikely to be sustainable
• Reported ratios inconsistencies (e.g., reported operating margin 0.1%) suggest caution; rely on calculated margins
• Data gaps (SG&A breakdown, payables, dividend policy) limit granular analysis

Investment Implications

Key Takeaways:

• Strong revenue growth (+17.8%) and operating leverage drove operating margin up to ~8.6%
• Cash conversion is solid (OCF/NI 1.42x) with positive FCF (1.14)
• Leverage is manageable (D/E 0.95x) and liquidity is strong (current ratio 207%)
• Bottom-line decline (-4.9% YoY) and negative ETR reveal non-sustainable boosts and volatility
• Capital allocation mix includes growth funding and buybacks (1.39)

Metrics to Watch:

• Revenue growth rate and cohort retention metrics
• Gross margin stability vs customer mix and pricing
• SG&A growth vs revenue (to sustain operating leverage)
• Interest expense trend and net debt to EBITDA
• Effective tax rate normalization and impact on NPM
• OCF/NI ratio and FCF consistency

Relative Positioning: Within growth-oriented, asset-light service models, the company exhibits healthy unit economics and liquidity with improving operating profitability, though bottom-line volatility from taxes and financing effects keeps reported NPM below peers that show cleaner below-the-line items.

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