FINDEX Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥4.37B
• Operating Income: ¥1.20B
• Net Income: ¥830M
• EPS: ¥33.72

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), Findex delivered resilient profitability on modest top-line growth. Revenue was ¥4,372 million (+1.5% YoY), while operating income rose faster at ¥1,195 million (+6.2% YoY), indicating positive operating leverage. Gross profit reached ¥2,601.7 million, translating to a high gross margin of 59.5%, consistent with a software/services–like mix and pricing power. Operating margin stood at 27.3%, and net margin at 19.5%, both robust and supportive of strong returns. Ordinary income of ¥1,240 million exceeded operating income by about ¥45 million, implying positive non-operating contributions. Net income was ¥853 million (+2.6% YoY), and EPS was ¥33.72. DuPont analysis points to ROE of 16.09%, driven by a healthy net margin (19.5%), moderate asset turnover (0.691x), and low financial leverage (assets/equity ≈ 1.19x). The balance sheet is conservative: total assets ¥6,328 million vs. total liabilities ¥1,076.9 million, implying an equity ratio of roughly 83.8% despite the reported 0.0% placeholder. Liquidity appears strong with current ratio at 462.7% and quick ratio at 438.9%, underpinned by relatively low inventories (¥184.2 million). Estimated effective tax rate is about 26–27% based on reported tax expense of ¥303 million and pre-tax income inferred from net income. Cash flow statement items (OCF/FCF/Financing CF) are not disclosed in the provided data, so cash conversion and FCF coverage cannot be validated from this snapshot. Similarly, depreciation, interest expense, cash balance, and share count/treasury shares are not disclosed here, limiting EBITDA and per-share balance sheet analytics. Despite these data gaps, the core P&L and balance sheet suggest high-quality earnings, low leverage, and ample liquidity. Revenue growth was modest, but cost discipline and mix supported margin expansion at the operating level. The company’s low leverage provides resilience but also means ROE is primarily earnings-driven rather than leverage-driven. Without cash flow and dividend disclosures, dividend capacity and payout sustainability cannot be directly assessed, though low liabilities and strong margins are supportive in principle. Overall, Findex demonstrates strong profitability and a solid financial position, with the key watchpoint being the sustainability of growth and cash conversion in the absence of disclosed cash flow data.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.1951
• asset_turnover: 0.691
• financial_leverage: 1.19
• calculated_ROE: 0.1609
• commentary: ROE of 16.1% is driven chiefly by a high net margin and moderate asset turnover; leverage is low, so returns are predominantly operational. margin_quality:
• gross_margin: 0.595
• operating_margin: 0.273
• ordinary_income_margin: 0.284
• net_margin: 0.195
• sg_and_a: 1406678000
• sg_and_a_as_pct_of_revenue: 0.322
• observations: High gross and operating margins indicate strong pricing power and/or a favorable revenue mix. Positive non-operating items (~¥45m) slightly lift ordinary margin. Estimated effective tax rate ~26–27% is in a normal range. operating_leverage: Revenue grew +1.5% YoY while operating income rose +6.2% YoY, indicating cost discipline and positive operating leverage. The gap suggests fixed-cost absorption or mix benefits enhanced operating margins despite modest top-line growth.

Growth Assessment

revenue_sustainability: Top-line growth of +1.5% YoY is modest; sustainability likely hinges on pipeline execution and retention/expansion with existing customers. High margins suggest a value-added offering, but growth acceleration is not evident from this quarter alone. profit_quality: Operating income growth outpaced sales, supported by strong gross margins and controlled SG&A. Ordinary income benefited from non-operating gains (~¥45m), but core profitability remains the main driver. outlook: With limited disclosure on order backlog and segment detail, a cautious base case is stable to mildly positive growth. Key swing factors include deal timing, renewal cycles, and potential normalization of non-operating gains.

Financial Health

liquidity:

• current_ratio: 4.627
• quick_ratio: 4.389
• working_capital: 2808193000
• notes: Large liquidity buffer with low inventories (¥184.2m) relative to current assets (¥3,582.5m). Cash balance not disclosed here. solvency:
• total_liabilities: 1076912000
• debt_to_equity_ratio: 0.2
• equity_ratio_estimated: 0.838
• notes: Low leverage; liabilities are ~17% of assets. Interest expense not disclosed, but capital structure suggests minimal financial risk. capital_structure: Assets ¥6,328m vs. equity ¥5,302m (A/E ≈ 1.19x). The company operates with substantial equity cushion, supporting resilience and flexibility.

Cash Flow Quality

earnings_quality: Cash flow data (OCF/FCF) are not disclosed in this snapshot, so accrual-to-cash conversion cannot be assessed directly. High margins and low inventories are supportive, but confirmation requires OCF detail. FCF_analysis: Free cash flow is not provided; capex and depreciation are also not disclosed, preventing an EBITDA or maintenance capex view. working_capital: Working capital of ¥2,808m and low inventory intensity suggest receivables and cash likely dominate current assets; without AR/AP details, collection efficiency and payables discipline cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed here; EPS is ¥33.72, but without DPS and OCF we cannot compute payout or cash coverage. FCF_coverage: Not assessable due to absent OCF/FCF data in this extract. policy_outlook: Given strong margins and low leverage, the capacity for distributions appears supported in principle, but any assessment of sustainability should await confirmed OCF and policy disclosures.

Risk Assessment

Business Risks:

• Modest revenue growth (+1.5% YoY) increases reliance on margin management for earnings progression.
• Potential timing volatility in order intake or project revenue could impact quarterly results.
• Concentration risks (customers or products) cannot be assessed from available data but are common in niche software/IT models.

Financial Risks:

• Cash flow conversion risk due to lack of disclosed OCF/FCF details in the period.
• Non-operating income contribution (~¥45m) may not be recurring.
• Tax rate variability (estimated ~26–27%) could affect net margins.

Key Concerns:

• Absence of cash flow statement details prevents validation of earnings quality and dividend capacity.
• Limited visibility on backlog, churn, and pipeline constrains forward growth assessment.
• Share count and book value per share not disclosed, limiting per-share balance sheet analysis.

Investment Implications

Key Takeaways:

• High profitability profile: gross margin 59.5%, operating margin 27.3%, net margin 19.5%.
• ROE 16.1% with low leverage (assets/equity ≈ 1.19x) underscores quality of earnings.
• Positive operating leverage evidenced by operating income growth (+6.2%) outpacing revenue (+1.5%).
• Strong liquidity (current ratio ~4.63x; quick ratio ~4.39x) and low liabilities (D/E ~0.20x).
• Non-operating gains (~¥45m) modestly support earnings; core operations remain the main driver.
• Key data gaps: OCF/FCF, depreciation/capex, cash balance, dividend details, and share count.

Metrics to Watch:

• Order backlog and new bookings vs. churn to gauge revenue sustainability.
• Operating cash flow and free cash flow to confirm earnings-to-cash conversion.
• SG&A efficiency (SG&A/revenue ~32%) and gross margin stability.
• Effective tax rate and the magnitude/recurrence of non-operating gains.
• Working capital turns (AR days/AP days) once disclosed.

Relative Positioning: Within TSE-listed software/IT peers, the company appears to operate with above-average margins and low leverage; revenue growth is modest, so relative performance hinges on sustaining high margins and converting earnings to cash.

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