SOFTMAX CO.,LTD FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥5.24B
• Operating Income: ¥541M
• Net Income: ¥394M
• EPS: ¥16.44

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

Softmax Co., Ltd. (36710) delivered strong FY2025 Q3 single-entity results under JGAAP, with notable top-line acceleration and outsized profit growth. Revenue reached ¥5,238 million, up 53.3% YoY, indicating robust demand and/or successful execution on projects and product sales. Operating income rose 113.2% YoY to ¥541 million, highlighting significant operating leverage and disciplined cost control. Gross profit of ¥1,017 million implies a 19.4% gross margin, while the operating margin expanded to roughly 10.3%, evidencing improved efficiency versus scale. Ordinary income was ¥576 million, exceeding operating income by about ¥35 million, suggesting net positive non-operating contributions that more than offset ¥3.0 million of interest expense. Net income was ¥394 million (net margin 7.52%), with EPS of ¥16.44. The DuPont decomposition yields a calculated ROE of 10.52%, driven by a net profit margin of 7.52%, asset turnover of 0.619x, and financial leverage of 2.26x. Liquidity appears solid, with a current ratio of 167% and working capital of approximately ¥2,266 million, supported by a quick ratio of 167% (inventories undisclosed). Capital structure is moderate, with total liabilities of ¥4,018 million against equity of ¥3,744 million (D/E 1.07x); the implied equity ratio from reported balances is around 44%, despite a reported equity ratio figure of 0.0% that reflects non-disclosure in XBRL rather than an actual zero. Interest coverage is strong at roughly 177x, indicating low immediate refinancing pressure. On an asset base of ¥8,464 million, net profit implies ROA of about 4.7%, consistent with healthy returns for a single-entity software/IT-style business. Cash flow statements were not disclosed (OCF/FCF shown as zero placeholders), limiting assessment of cash conversion, capex, and FCF coverage. Dividend information likewise shows zeros, indicating non-disclosure rather than an actual nil payout policy; therefore, dividend sustainability cannot be inferred this quarter. Overall, the quality of earnings looks favorable based on margins and leverage dynamics, but confirmation via operating cash flow would strengthen confidence. The outlook hinges on the sustainability of the 53% revenue growth, the stickiness of gross margins, and the repeatability of non-operating gains. Given data gaps in cash flows, depreciation, and share counts, conclusions are anchored to the income statement and balance sheet items available, with explicit caution applied to undisclosed line items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.52% (¥394m / ¥5,238m)
• asset_turnover: 0.619x (¥5,238m / ¥8,464m)
• financial_leverage: 2.26x (¥8,464m / ¥3,744m)
• calculated_ROE: 10.52%
• context: ROE is balanced across margin, turnover, and leverage, with margin expansion the key current driver. margin_quality:
• gross_margin: 19.4% (¥1,017m / ¥5,238m)
• operating_margin: 10.3% (¥541m / ¥5,238m)
• ordinary_margin: 11.0% (¥576m / ¥5,238m)
• net_margin: 7.52% (¥394m / ¥5,238m)
• SG&A_ratio: ~9.1% (SG&A ≈ ¥476m = GP − OI)
• tax_rate_observation: Implied effective tax ~15.8% (¥91m / ¥576m) despite a system-reported 0.0% placeholder. operating_leverage: Revenue +53.3% YoY versus operating income +113.2% YoY indicates strong operating leverage and cost scalability; the gap between gross margin (19.4%) and operating margin (10.3%) shows SG&A efficiency supporting margin expansion.

Growth Assessment

revenue_sustainability: The 53.3% YoY revenue increase suggests robust demand and/or project delivery momentum; sustainability will depend on backlog replenishment, recurring revenue mix, and client concentration dynamics. profit_quality: Operating income growth outpaced sales, aided by SG&A discipline and positive non-operating items (~¥35m). Confirmation via cash collections and deferred revenue trends is needed due to undisclosed cash flow data. outlook: With improved operating margins and strong interest coverage, the business appears well-positioned to convert growth into earnings, assuming stable pricing and cost structure. Key to the outlook are order intake, project timing, and the stickiness of gross margins amid scale.

Financial Health

liquidity:

• current_ratio: 167.2% (¥5,640m / ¥3,374m)
• quick_ratio: 167.2% (inventories undisclosed)
• working_capital: ¥2,266m
• commentary: Ample near-term coverage of obligations; receivables and cash granularity not disclosed. solvency:
• debt_to_equity: 1.07x (¥4,018m / ¥3,744m total liabilities/equity)
• interest_coverage: ≈177x (¥541m / ¥3.049m)
• equity_ratio_implied: ≈44.2% (¥3,744m / ¥8,464m), notwithstanding a reported 0.0% placeholder
• commentary: Moderate leverage with strong coverage; balance sheet resilience appears sound at the single-entity level. capital_structure: Liabilities roughly match equity in scale, supporting a balanced WACC profile; absence of detailed debt maturity and cash balances limits deeper assessment.

Cash Flow Quality

earnings_quality: Earnings quality appears solid on margin and coverage metrics, but lack of disclosed operating cash flow, depreciation, and capex prevents triangulation of accrual intensity. FCF_analysis: Free cash flow cannot be derived (OCF and investing CF undisclosed). EBITDA is not available due to undisclosed depreciation and amortization. working_capital: Working capital is positive and sizable; without receivables/payables detail, we cannot assess cash conversion cycle or potential revenue cut-off effects.

Dividend Sustainability

payout_ratio_assessment: Reported payout ratio and DPS are zeros due to non-disclosure; they should not be interpreted as actual nil dividends. FCF_coverage: Not assessable this quarter because OCF and capex are undisclosed, precluding FCF computation. policy_outlook: Without dividend policy guidance or historical DPS, we cannot evaluate consistency or alignment with earnings growth; watch for year-end guidance and cash flow disclosure.

Risk Assessment

Business Risks:

• Revenue concentration in key customers or large projects could amplify volatility.
• Project timing and acceptance risk affecting quarterly revenue recognition.
• Pricing pressure or input cost inflation compressing gross margins.
• Execution risk in scaling delivery capacity alongside rapid growth.
• Technological change and competition in vertical software/IT markets.

Financial Risks:

• Undisclosed cash flow and cash balances limit visibility into liquidity buffers.
• Potential working capital build (receivables) during high growth could strain cash conversion.
• Exposure to interest rate changes is low currently (strong coverage) but debt mix and maturities undisclosed.
• Single-entity reporting may omit risks present at a consolidated level if applicable.

Key Concerns:

• Sustainability of 53% YoY revenue growth trajectory.
• Retention of gross margin at ~19–20% amid scale-up.
• Absence of operating cash flow data to validate earnings quality.

Investment Implications

Key Takeaways:

• Strong topline growth translated into disproportionate operating profit expansion, evidencing operating leverage.
• Healthy profitability profile: GM 19.4%, OM 10.3%, NPM 7.5%, ROE 10.5%.
• Solid liquidity (current ratio 167%) and moderate leverage (D/E 1.07x) with very strong interest coverage (~177x).
• Positive non-operating contribution (~¥35m) supported ordinary income.
• Data gaps (cash flow, depreciation, DPS) constrain full quality-of-earnings and capital allocation assessment.

Metrics to Watch:

• Order backlog and new bookings growth to gauge revenue durability.
• Gross margin trajectory and SG&A ratio to assess operating leverage sustainability.
• Operating cash flow, receivables days, and contract liabilities for cash conversion.
• Debt composition and cash balance to refine solvency analysis.
• Dividend policy updates and capital allocation signals.

Relative Positioning: Versus domestic small-cap vertical software/IT peers, Softmax shows above-peer revenue growth with improving operating margins and a balanced balance sheet; confirmation via cash flow would strengthen its relative profile.

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