Broadleaf Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥15.23B
• Operating Income: ¥1.49B
• Net Income: ¥855M
• EPS: ¥9.71

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

Broadleaf (3673) reported FY2025 Q3 consolidated IFRS results showing solid topline growth and sharp profit recovery. Revenue was 152.31, up 17.5% YoY, reflecting healthy demand and likely progress in subscription/solution sales. Operating income reached 14.92, up 418.3% YoY, indicating strong operating leverage as revenue growth outpaced cost escalation. Net income was 8.72, up 442.5% YoY, aided by a low effective tax rate of 10.8% and modest non-operating headwinds (profit before tax of 13.01 below operating income). Gross profit was 84.09 with a gross margin of 55.2%, supporting the notion of an improving mix or pricing power. EBITDA was 36.29, implying an EBITDA margin of 23.8% and substantial non-cash charges, with D&A of 21.37. DuPont analysis yields a net profit margin of 5.7%, asset turnover of 0.368, and financial leverage of 1.74x, combining to an ROE of 3.6% (reported and calculated). Cash generation was strong: operating cash flow (OCF) of 35.42 equates to 4.06x net income, and free cash flow (FCF) was positive at 3.42 despite sizable investing outflows. The balance sheet remains conservative with total assets of 414.32, equity of 238.78, and an equity ratio of 57.6%, providing balance sheet resilience. Liabilities of 167.51 imply a reported debt-to-equity ratio of 0.70x (note: likely total liabilities/equity as interest-bearing debt details were not disclosed). Liquidity appears adequate with cash and equivalents of 43.06, though current liability details were not disclosed, limiting ratio analysis. Dividend outflows were modest at 0.89, with a calculated payout ratio of 22.5% and FCF coverage of 1.75x, suggesting near-term sustainability. Operating leverage is clearly visible as SG&A growth lagged revenue, driving a step-up in profitability. Non-operating details were not disclosed, but the delta between operating income and profit before tax suggests modest net non-operating expense. There is some presentational inconsistency between the reported cost of sales and gross profit; analysis relies on the provided gross profit and margin metrics given IFRS classification differences. Overall, Broadleaf is exhibiting improving profitability, sound cash flow, and a solid capital structure, though ROE at 3.6% remains below typical software/IT peers, pointing to ongoing room for capital efficiency improvements.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.7%
• asset_turnover: 0.368
• financial_leverage: 1.74x
• calculated_ROE: 3.6%
• commentary: ROE of 3.6% reflects modest margins and low asset turnover partially offset by moderate leverage. Improvements in margin and turnover are key levers for ROE expansion. margin_quality: Gross margin of 55.2% indicates a healthy value-add profile. Operating margin is approximately 9.8% (14.92/152.31), a significant YoY improvement consistent with the 418% surge in operating income. EBITDA margin of 23.8% underscores sizable non-cash charges (D&A 21.37), typical of software/intangible-heavy models under IFRS. Note: reported cost of sales and gross profit do not reconcile arithmetically; analysis follows the disclosed gross profit figure and margin. operating_leverage: Revenue rose 17.5% YoY while operating income surged 418.3% YoY, evidencing strong operating leverage from better fixed-cost absorption and SG&A discipline. The step-up suggests that prior investment spending is scaling, with incremental revenue dropping through to profit.

Growth Assessment

revenue_sustainability: Topline growth of 17.5% YoY indicates robust demand and likely ongoing customer migration to newer platforms. Sustainability will hinge on subscription renewal rates, cross-sell, and new logo acquisition within core verticals (e.g., automotive aftermarket). profit_quality: Net income growth (+442.5% YoY) is supported by improved operating profitability and positive OCF/NI (4.06x), implying earnings are cash-backed. The low 10.8% tax rate contributed; normalization would reduce net growth optics. outlook: With EBITDA margin at 23.8% and continued revenue momentum, further operating margin expansion is plausible if SG&A remains contained. Non-operating items remain a swing factor given PBT (13.01) below OI (14.92). Monitoring bookings, ARR, and deferred revenue would clarify forward visibility.

Financial Health

liquidity: Cash and equivalents of 43.06 provide a buffer; current assets are 82.11. Current liabilities were not disclosed, so current and quick ratios cannot be reliably assessed. Working capital cannot be validated without current liabilities. solvency: Equity ratio is 57.6%, indicating a conservative balance sheet. Total liabilities are 167.51 vs equity 238.78. Interest-bearing debt was not disclosed, so leverage must be interpreted using total liabilities. capital_structure: Reported debt-to-equity of 0.70x appears to reflect total liabilities/equity. With substantial equity and no disclosed debt breakdown, the company maintains ample solvency headroom for investment or shareholder returns.

Cash Flow Quality

earnings_quality: OCF of 35.42 vs net income of 8.72 (OCF/NI 4.06x) indicates strong cash conversion, aided by working capital inflows and non-cash charges (D&A 21.37). FCF_analysis: FCF was positive at 3.42 despite sizable investing outflows of -32.00. Reported capital expenditures were minimal (-0.05), implying investing cash outflows likely reflect intangible development, acquisitions, or financial asset movements under IFRS. working_capital: Accounts receivable are 33.65 and inventories 1.86, consistent with a software/solutions model. Current liabilities are unreported, limiting full working capital cycle analysis; nonetheless, positive OCF suggests no acute WC stress this period.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 22.5%, modest relative to earnings and suggests headroom. EPS (basic) is 9.71 JPY with average shares of ~89.85 million, aligning with net income of 8.72. FCF_coverage: FCF coverage of dividends is 1.75x, indicating cash dividends are covered by internally generated cash this period. policy_outlook: With an equity ratio of 57.6% and improving profitability, the company appears positioned to maintain dividends. Future dividend capacity will depend on the balance between growth investments (notably intangible development) and FCF consistency. DPS specifics were not disclosed.

Risk Assessment

Business Risks:

• Execution risk in transitioning customers to new platforms or cloud subscriptions, impacting churn and ARR growth.
• Vertical concentration in automotive aftermarket/related customers, exposing revenue to sector cyclicality.
• Pricing pressure from competitors in ERP/vertical software and potential slowdown in new orders.
• Dependence on continued SG&A discipline to sustain margin gains.

Financial Risks:

• Potential normalization of the low effective tax rate (10.8%) could dampen net income growth.
• Non-operating items reduced PBT below OI; lack of disclosure adds uncertainty.
• High non-cash charges (D&A 21.37) tied to intangibles; impairment risk if project returns underperform.
• Limited visibility on interest-bearing debt and current liabilities constrains precise liquidity and coverage analysis.

Key Concerns:

• Inconsistency between reported cost of sales and gross profit suggests classification differences; reliance on provided margins is necessary.
• Investing CF (-32.00) materially exceeds reported capex (-0.05), implying significant intangible or investment outlays; sustainability and returns should be monitored.
• ROE remains modest at 3.6%, below typical software peers, highlighting a need for improved capital efficiency.

Investment Implications

Key Takeaways:

• Strong revenue growth (+17.5% YoY) with pronounced operating leverage (operating income +418% YoY).
• Healthy gross margin (55.2%) and EBITDA margin (23.8%) indicate improving unit economics.
• Cash generation is robust (OCF/NI 4.06x) with positive FCF despite heavy investing outflows.
• Conservative balance sheet (equity ratio 57.6%) supports resilience and optionality.
• ROE at 3.6% remains a medium-term improvement area.
• Non-operating and tax items are swing factors for bottom-line volatility.

Metrics to Watch:

• ARR growth, churn, and ARPU for subscription products.
• Operating margin trajectory and SG&A-to-revenue ratio.
• Deferred revenue and bookings as leading indicators.
• OCF margin and working capital turns (DSO/collections).
• Intangible development spend and capitalized R&D within investing CF; D&A trend.
• Effective tax rate normalization and details of non-operating items.

Relative Positioning: Within Japan’s vertical software/IT solutions space, Broadleaf exhibits improving profitability and strong cash conversion with a conservative balance sheet, but current ROE and disclosure gaps around non-operating items and liability structure place it mid-pack versus peers emphasizing higher capital efficiency and clearer subscription KPIs.

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