AZOOM CO.,LTD FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥13.48B
• Operating Income: ¥2.61B
• Net Income: ¥1.61B
• EPS: ¥153.62

Income Statement

Balance Sheet

Cash Flow Statement

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

Azzoom Co., Ltd. (TSE: 3496) delivered strong FY2025 Q4 consolidated results under JGAAP, with clear evidence of operating leverage and high capital efficiency. Revenue grew 27.9% year over year to ¥13,479 million, while operating income rose 43.0% to ¥2,613 million, indicating margin expansion from disciplined cost control and scalable operations. Gross profit of ¥4,416 million implies a gross margin of 32.8%, supporting a robust operating margin of roughly 19.4%. Net income increased 42.2% to ¥1,831 million, yielding a net margin of 13.6%, which, combined with high asset turnover, is driving standout ROE. DuPont analysis shows net margin of 13.58%, asset turnover of 1.516x, and financial leverage of 1.30x, resulting in a calculated and reported ROE of 26.8%, well above typical TSE small/mid-cap service peers. Ordinary income of ¥2,607 million is effectively in line with operating income, and modest interest expense of ¥1.0 million yields an exceptional interest coverage ratio above 2,600x, pointing to negligible financial burden. The effective tax rate implied by reported numbers is around 20.7% (¥540 million tax on ¥2,607 million pre-tax), despite the provided “0.0%” effective tax metric; this appears to be a calculation display limitation rather than economics. The balance sheet is conservative, with total liabilities of ¥1,805 million against total equity of ¥6,831 million, implying an equity ratio near 76.8% by calculation (the reported 0.0% equity ratio is not reflective of the actual figures). Liquidity appears ample with a current ratio of 311.5% and working capital of approximately ¥2,966 million, supporting growth without near-term refinancing risk. Cash flow quality is solid: operating cash flow of ¥1,948 million exceeds net income (OCF/NI 1.06x), and free cash flow of ¥1,489 million demonstrates good conversion from earnings. Investing cash outflow of ¥459 million suggests continued growth investment at a disciplined pace, while financing inflow of ¥1,178 million indicates external capital activity; without detailed breakdown (debt vs. equity), the mix is unclear. Dividend payout remains 0%, consistent with reinvestment of cash to fund growth, and FCF capacity provides optionality for future policy changes. Some data items (e.g., equity ratio, cash and equivalents, shares outstanding, DPS metrics) display as zero due to non-disclosure under specific tags or naming differences; these are not actual zero balances. Even with these limitations, the available non-zero data points depict a high-ROE, asset-light model with strong growth and prudent financial management. Key watchpoints include sustaining revenue growth at scale, maintaining margin discipline, and monitoring the balance between organic investment and any external financing.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 13.58% x Asset turnover 1.516x x Financial leverage 1.30x = ROE 26.8%. The main ROE driver is healthy profitability and efficient asset utilization, with only modest leverage. Gross margin is 32.8%, and the operating margin is ~19.4% (¥2,613m / ¥13,479m), highlighting strong unit economics and operating efficiency. EBITDA of ¥2,746m implies an EBITDA margin of 20.4%, consistent with scalable, asset-light characteristics. Margin expansion YoY is evident as operating income growth (+43%) outpaced revenue growth (+27.9%), indicating positive operating leverage and effective cost containment or mix improvements. Ordinary income closely tracks operating income, showing limited non-operating noise and minimal financing drag (interest expense ¥1.0m). The implied effective tax rate is ~20.7% (¥540m tax over ¥2,607m pre-tax), supporting after-tax profitability and stable earnings conversion. Overall profitability quality appears high, with solid through-cycle resilience suggested by low financial leverage and strong coverage.

Growth Assessment

Top-line growth of +27.9% YoY to ¥13,479m signifies robust demand and/or market share gains. Operating income grew +43.0% to ¥2,613m, reflecting operating leverage as scale benefits lowered relative operating costs. Net income advanced +42.2% to ¥1,831m, demonstrating that growth is translating to bottom-line expansion with limited dilution from non-operating items. Revenue sustainability appears supported by strong customer traction; however, absence of segment/mix disclosure limits assessment of repeatability and churn dynamics. Profit quality is reinforced by OCF exceeding net income (1.06x), indicating earnings are backed by cash. Investment of ¥459m in the period points to ongoing growth initiatives (e.g., platform, technology, or business development) at a controlled pace. Outlook hinges on maintaining acquisition of supply/demand on the platform and preserving take-rates/margins; the company’s operating model appears scalable with room for continued margin improvement if growth persists. Key sensitivities include macro conditions affecting parking/real estate-related demand, competitive pricing pressure, and customer concentration if applicable.

Financial Health

Liquidity is strong: current assets ¥4,368m vs. current liabilities ¥1,402m give a current ratio of 311.5% and quick ratio equivalently high (inventory not reported). Working capital stands at ~¥2,966m, providing a buffer for growth and contingencies. Solvency is conservative: total liabilities ¥1,805m vs. equity ¥6,831m (calculated equity ratio ~76.8%), and interest burden is de minimis (interest expense ¥1.0m; coverage >2,600x). The stated debt-to-equity ratio of 0.26x likely uses total liabilities as a proxy in the absence of interest-bearing debt disclosure; true net leverage cannot be determined due to unreported cash/interest-bearing debt tags. Capital structure is equity-heavy, affording flexibility for further investment without balance sheet strain. Financing cash inflow (¥1,178m) indicates access to capital; mix between borrowings and equity not disclosed here.

Cash Flow Quality

Earnings quality is good with OCF/Net income at 1.06x (¥1,948m / ¥1,831m), indicating accruals are modest and earnings are cash-backed. Free cash flow of ¥1,489m (OCF minus investing CF) is solid, funding growth and potential strategic options. Working capital management appears sound given positive OCF; detailed drivers (receivables/payables/deferred revenue) are not disclosed, limiting granularity. Depreciation and amortization of ¥133m suggests limited capital intensity, consistent with an asset-light operating model. The minimal interest expense underscores low reliance on interest-bearing debt, supporting clean cash generation. Overall, cash conversion supports the sustainability of earnings and reinvestment capacity.

Dividend Sustainability

The company paid no dividends (DPS ¥0; payout ratio 0%), consistent with a reinvestment-oriented stance at this growth stage. With free cash flow of ¥1,489m, current cash generation could support dividends in the future if policy shifts, while still funding growth. FCF coverage of dividends is effectively ample given no current payout; the reported 0.00x figure is not economically meaningful when DPS is zero. Balance sheet strength and low interest burden provide capacity for future shareholder returns if strategic priorities allow. Absent an explicit policy, we assume capital allocation will continue to prioritize growth investments, platform enhancements, and potential M&A over near-term cash returns.

Risk Assessment

Business Risks:

• Sustainability of high growth amid potential market saturation or competitive entry in parking/real-estate adjacencies.
• Pricing and take-rate pressure from competitors or large platform players.
• Customer concentration risk if top clients/landowners contribute outsized revenue (not disclosed).
• Macroeconomic sensitivity affecting mobility, real estate utilization, and transaction volumes.
• Execution risk in scaling operations and maintaining service quality as volumes rise.
• Regulatory or contractual changes impacting property usage or brokerage/intermediary models.
• Technology/platform reliability and cybersecurity risks.

Financial Risks:

• Uncertainty around net cash position due to unreported cash and debt details in the provided data.
• Potential dilution or leverage increases if relying on external financing to accelerate growth (financing CF +¥1,178m).
• Working capital swings that could affect OCF even with strong profitability.
• Tax rate normalization or changes from the implied ~20.7% affecting net margins.

Key Concerns:

• Data limitations (equity ratio, cash, and share data reported as zero) constrain precision on capital structure and per-share metrics.
• Maintaining operating leverage while investing for growth; risk of margin compression if growth slows.
• Visibility on revenue mix, retention, and cohort quality is limited without segment disclosures.

Investment Implications

Key Takeaways:

• High ROE at 26.8% driven by solid margins and efficient asset use with modest leverage.
• Revenue growth (+27.9% YoY) translating into outsized operating income growth (+43.0%), evidencing operating leverage.
• Strong liquidity (current ratio ~3.1x) and conservative solvency (calculated equity ratio ~76.8%).
• Cash generation quality is robust with OCF/NI at 1.06x and FCF of ¥1,489m.
• Minimal interest burden (coverage >2,600x) reduces financial risk.
• Dividend currently nil, with significant optionality for future capital returns if policy evolves.

Metrics to Watch:

• Revenue growth rate and customer/segment mix to gauge sustainability.
• Operating margin trajectory and cost-to-serve metrics for evidence of persistent operating leverage.
• OCF/Net income conversion and working capital days (AR/AP) to validate earnings quality.
• Equity vs. debt mix in financing flows to monitor dilution and leverage.
• Tax rate evolution from the implied ~20.7% and any policy changes.
• Equity ratio and cash balance disclosures in future filings for clarity on net cash position.

Relative Positioning: Relative to TSE small/mid-cap service and platform peers, Azzoom exhibits above-average ROE, strong growth, low financial leverage, and solid cash conversion, consistent with an asset-light, scalable model; continued momentum depends on sustaining top-line growth and margin discipline while managing reinvestment and financing balance.

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