Billing System Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.33B
• Operating Income: ¥436M
• Net Income: ¥303M
• EPS: ¥43.36

Income Statement

Balance Sheet

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

Billing System Co., Ltd. (TSE:3623) posted FY2025 Q3 (cumulative) revenue of ¥3.33bn, up 7.1% YoY, indicating resilient top-line momentum in its payments/settlement-related businesses. Gross profit reached ¥1,123m, translating to a 33.7% gross margin, which remains healthy for a transaction-fee driven model. Operating income was ¥436m, down 1.9% YoY, implying some margin compression despite revenue growth. Operating margin stands at 13.1%, suggesting controllable, but rising, operating costs (e.g., system, personnel, partner fees) or a take-rate mix shift. Ordinary income of ¥435m is almost identical to operating income, reflecting minimal net non-operating effects; interest expense is small at ¥3.3m with strong coverage (132x). Net income decreased 5.5% YoY to ¥272m (EPS ¥43.36), pointing to a heavier tax burden and slight operating softness. The effective tax rate, inferred from reported tax expense, is about 32%, consistent with domestic norms for profitable entities. DuPont outputs show net margin of 8.17%, asset turnover of 0.115x, and financial leverage of 9.22x, yielding ROE of 8.67%. This ROE is largely leverage-driven given low asset turnover typical of settlement-heavy balance sheets. The balance sheet is dominated by current items (current assets ¥25.56bn; current liabilities ¥22.94bn), consistent with settlement receivables/payables; computed equity ratio is approximately 10.9% (total equity ¥3.14bn on assets ¥28.93bn). Liquidity appears adequate with a current ratio of 1.11x and positive working capital of ¥2.62bn, though underlying cash conversion cannot be assessed due to undisclosed cash flow statements in this snapshot. Cash flow metrics (OCF, FCF) are unreported here, so the OCF/NI ratio and FCF cannot be evaluated. Dividend appears nil year-to-date (DPS ¥0; payout 0%), aligning with a cautious capital return stance while maintaining balance sheet flexibility. Overall, the company is growing revenue modestly, preserving double-digit operating margins, and sustaining a mid-to-high single-digit ROE, albeit with leverage magnifying returns. Key watchpoints are operating cost discipline, take-rate/mix, and settlement-cycle working capital swings, given the nature of the business. Data limitations (notably cash flow and per-share base data) mean conclusions on cash flow quality and dividend capacity must remain provisional.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.17% (¥272m / ¥3,330m)
• asset_turnover: 0.115x (¥3,330m / ¥28,929m)
• financial_leverage: 9.22x (¥28,929m / ¥3,138m)
• calculated_ROE: 8.67%
• operating_margin: 13.1% (¥436m / ¥3,330m)
• ordinary_margin: 13.1% (¥435m / ¥3,330m)
• tax_burden: 0.625 (¥272m / ¥435m pretax)
• interest_burden: 0.998 (¥435m / ¥436m)
• ROA_proxy: 0.94% (NPM 8.17% × ATO 0.115x) margin_quality: Gross margin at 33.7% supports monetization via transaction/usage fees. Operating margin at 13.1% has compressed slightly YoY despite revenue growth, indicating higher operating costs or weaker take-rate mix. Net margin at 8.17% reflects a normalized tax rate (~32%), with negligible non-operating drag. operating_leverage: Revenue grew 7.1% while operating income fell 1.9%, suggesting negative operating leverage in the period—incremental costs outpaced gross profit contribution. This may be due to elevated system expenses, sales investments, or partner fee structures.

Growth Assessment

revenue_sustainability: Top-line growth of 7.1% YoY indicates steady transaction volume or merchant expansion. Given the industry context, growth likely stems from increased payment volumes and service adoption rather than price increases. profit_quality: Ordinary income tracks operating income closely, implying clean earnings without reliance on non-operating gains. The primary drag from operating to net earnings is the tax line (~32% effective rate). outlook: Maintaining double-digit operating margins is feasible if cost growth is contained and take-rates stabilize. Continued merchant acquisition and higher throughput should support mid-single to high-single-digit revenue growth near term; margin trajectory hinges on operating efficiency and pricing power.

Financial Health

liquidity: Current assets ¥25.56bn vs current liabilities ¥22.94bn yields a current ratio of 1.11x and positive working capital of ¥2.62bn. Quick ratio matches current ratio as inventories are not reported. This is adequate, though settlement-cycle items can introduce volatility. solvency: Total liabilities ¥22.996bn vs equity ¥3.138bn implies a debt-to-equity of 7.33x and an equity ratio of ~10.9% (computed from totals). Such leverage is typical for settlement businesses where payables/receivables dominate; interest expense is minimal with very strong coverage (132x). capital_structure: Balance sheet is heavily weighted to current items, consistent with pass-through settlement funds. Structural leverage is high in accounting terms but financial risk from interest-bearing debt appears low given tiny interest expense.

Cash Flow Quality

earnings_quality: With ordinary income ≈ operating income and limited non-operating effects, earnings appear operationally driven. Tax expense aligns with pretax profit. FCF_analysis: Operating CF and investing CF are not disclosed in this dataset (zeros indicate unreported), preventing direct FCF assessment. Capex intensity in this model is typically modest, but confirmation requires CF detail. working_capital: Positive working capital of ¥2.62bn provides a buffer, yet the magnitude and direction of settlement receivable/payable swings are critical determinants of reported OCF in payments businesses. Monitoring settlement balances and pay cycles is key.

Dividend Sustainability

payout_ratio_assessment: DPS is reported at ¥0 with a 0% payout ratio. Given EPS of ¥43.36 YTD, the company retains earnings fully in this snapshot. FCF_coverage: FCF is unreported here; thus, dividend coverage cannot be assessed quantitatively. Absence of disclosed OCF/FCF data limits visibility into distributable cash. policy_outlook: Given the leverage profile driven by settlement liabilities and the need to preserve liquidity for growth and system resilience, a conservative dividend stance is plausible near term unless sustained FCF visibility improves.

Risk Assessment

Business Risks:

• Take-rate compression due to competitive pricing and partner negotiations
• Regulatory changes in payments/settlement and data security requirements
• Concentration risk with key platforms, acquirers, or merchant verticals
• Operational risk from system downtime, cyber security, and fraud
• Slower transaction volume growth if consumer spending weakens

Financial Risks:

• Large settlement-related current liabilities and receivables drive balance-sheet volatility
• Working capital timing risks impacting reported OCF
• Potential pressure on margins from rising personnel and infrastructure costs
• Tax rate variability versus assumptions (~32%)

Key Concerns:

• Negative operating leverage in FY2025 Q3 despite 7.1% revenue growth
• High accounting leverage (D/E 7.33x) despite low interest burden
• Limited cash flow disclosure in this snapshot, constraining FCF assessment

Investment Implications

Key Takeaways:

• Revenue up 7.1% YoY with steady gross margin (33.7%) indicates resilient transaction activity.
• Operating margin at 13.1% compressed slightly; cost discipline is a priority.
• ROE 8.67% is leverage-amplified given low asset turnover (0.115x).
• Liquidity adequate (current ratio 1.11x), with strong interest coverage (132x).
• Cash flow unreported here; dividend currently nil with 0% payout.

Metrics to Watch:

• Take-rate and gross margin trends
• Operating margin and cost-to-revenue ratio
• Transaction volumes and merchant count (proxy for revenue growth)
• Settlement receivables/payables balances and OCF when disclosed
• Effective tax rate versus ~32% inferred
• Ordinary income to operating income gap (non-operating items)

Relative Positioning: Within domestic payment processors/fintech enablers, the company shows modest top-line growth, double-digit operating margins, and ROE in the high single digits. The balance sheet is settlement-heavy with high reported leverage but low interest burden, a profile typical for the space.

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
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