Fixstars Corporation FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥9.62B
• Operating Income: ¥2.58B
• Net Income: ¥1.69B
• EPS: ¥60.34

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

Fixstars delivered a strong FY2025 Q4 (full-year) under JGAAP on a consolidated basis, with double-digit top- and bottom-line growth and robust returns. Revenue rose 20.3% YoY to ¥9.62bn, evidencing healthy demand across its high-performance computing/software optimization offerings. Operating income increased 11.9% YoY to ¥2.58bn, while net income advanced 30.2% to ¥1.95bn, implying favorable below-operating line items and/or tax effects. Profitability remains a key strength: gross margin was 43.4% and EBITDA margin 28.3%, supporting a high operating income margin of roughly 26.8%. DuPont analysis shows ROE at 22.82%, driven primarily by a high net margin of 20.22% and near-1.0x asset turnover, with only modest financial leverage (1.16x). Liquidity is exceptionally strong, with a current ratio of 443.1% and working capital of approximately ¥6.02bn, reflecting a low-liability balance sheet. Solvency indicators are conservative: total liabilities of ¥1.79bn against equity of ¥8.52bn (D/E ≈ 0.21x on a liabilities basis) and interest coverage of over 1,000x. Operating cash flow of ¥1.98bn tracked net income closely (OCF/NI ≈ 1.02), signaling solid earnings quality, and free cash flow of ¥1.35bn provides ample internal funding. Investing cash outflows of ¥0.63bn likely reflect growth investments (including capex and possibly intangibles), and financing outflows of ¥1.04bn suggest distributions or share-related cash movements; however, reported DPS is 0, highlighting incomplete disclosure alignment or a retained-earnings focus. The reported equity ratio of 0.0% and cash & equivalents of 0 are not actual values; based on balance sheet data, the implied equity ratio is roughly 86% and cash likely positive given cash generation and moderate outflows. The effective tax rate in calculated metrics is shown as 0.0%, but based on income tax expense of ¥0.75bn and the implied pre-tax figure, the effective rate appears closer to the high-20s percent range. Asset efficiency remains high, with asset turnover at 0.974x, indicating good utilization of a relatively light asset base typical of a software/services model. Operating leverage is evident but moderated this year, as opex investment outpaced gross profit growth relative to revenue growth. The company’s balance sheet provides meaningful strategic flexibility for hiring, R&D, and selective M&A. Dividend distribution is currently not evidenced in the provided data (DPS 0), suggesting reinvestment prioritization; sustainability is therefore not an issue, though policy visibility is low. Overall, Fixstars exhibits high-quality earnings, superior capital efficiency, and low financial risk, though growth remains sensitive to project timing, utilization, and talent supply. Data gaps (e.g., equity ratio, cash, share count) limit precision on certain per-share and capital allocation analyses, but the available non-zero data points underpin a positive fundamental profile.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 20.22%
• asset_turnover: 0.974
• financial_leverage: 1.16
• calculated_ROE: 22.82%
• commentary: ROE of 22.82% is largely driven by a high net margin and strong asset turnover, with only modest leverage contribution. The business operates with an efficient, asset-light model. margin_quality:
• gross_margin: 43.4%
• EBITDA_margin: 28.3%
• operating_margin: 26.8%
• observations: Gross margin supports substantial operating margin, indicating disciplined delivery/utilization and pricing power in specialized services. Net margin expansion vs. operating growth suggests favorable non-operating and/or tax influences. operating_leverage: Revenue grew 20.3% YoY while operating income grew 11.9% YoY, implying some reinvestment and/or higher operating costs (e.g., hiring, SG&A). Structural margins remain high, indicating manageable operating leverage with capacity to invest without eroding profitability.

Growth Assessment

revenue_sustainability: 20.3% YoY revenue growth indicates healthy demand across core optimization/HPC offerings, likely supported by secular themes (AI/HPC, semiconductors, embedded systems). Project-based visibility can be lumpy; sustainability hinges on backlog, repeat business, and headcount utilization. profit_quality: Net income grew 30.2% YoY versus 11.9% for operating income, pointing to a quality uplift from non-operating items and/or tax rate dynamics. Core profit quality is underpinned by strong gross and operating margins and OCF tracking net income (OCF/NI ≈ 1.02). outlook: Near-term outlook appears constructive given high margins, strong liquidity, and FCF generation. Key to sustaining growth will be talent acquisition/retention, utilization, and expansion with large technology clients and overseas accounts. Monitor normalization of tax rate and any FX exposure from international business.

Financial Health

liquidity:

• current_ratio: 443.1%
• quick_ratio: 441.4%
• working_capital: 6018663000
• interpretation: Exceptional liquidity with sizeable current asset buffer relative to current liabilities, consistent with a net cash, asset-light services profile. solvency:
• total_assets: 9871000000
• total_liabilities: 1786561000
• total_equity: 8522000000
• debt_to_equity_ratio: 0.21x (liabilities/equity basis)
• interest_coverage: 1064.8x
• equity_ratio_comment: Reported equity ratio of 0.0% is undisclosed; implied equity ratio ≈ 86% (8.522bn/9.871bn), indicating very low leverage. capital_structure: Minimal reliance on debt financing, strong equity base, and significant capacity for organic investment or bolt-ons without stressing the balance sheet.

Cash Flow Quality

earnings_quality: OCF/Net Income ≈ 1.02 indicates earnings are well supported by cash. Limited working capital drag and modest D&A (¥146m) relative to EBITDA suggest low non-cash distortion. FCF_analysis: Free cash flow of ¥1.35bn (OCF ¥1.98bn minus investing CF of ~¥0.63bn) is robust and comfortably covers typical growth investments. Investing CF likely includes capex and possibly software/intangible development. working_capital: Current assets ¥7.77bn vs current liabilities ¥1.75bn; inventories minimal (¥30m) consistent with services model. Focus on receivables management and DSOs to sustain OCF conversion.

Dividend Sustainability

payout_ratio_assessment: Payout ratio reported as 0.0% and DPS 0.00 suggest no dividend recognized in the provided period. With NI ¥1.95bn and strong liquidity, capacity exists, but policy appears to favor reinvestment. FCF_coverage: FCF ¥1.35bn would readily cover a modest dividend if introduced; current reported coverage is 0.00x because DPS is 0 (unreported/none). policy_outlook: Absent explicit policy disclosure, assume earnings retention to fund growth and talent acquisition. Monitor any capital policy updates, buyback activity in financing CF, and board guidance.

Risk Assessment

Business Risks:

• Project timing and utilization risk inherent to services and solution delivery.
• Client concentration in semiconductor/HPC/tech ecosystems leading to revenue volatility.
• Talent acquisition and retention pressures driving wage inflation and delivery risk.
• Technology transition risk (e.g., AI accelerators, new architectures) requiring ongoing skill investment.
• Overseas expansion and execution risk, including compliance and localization.

Financial Risks:

• FX exposure from foreign clients and offshore operations affecting margins and reported results.
• Working capital concentration in receivables; DSO spikes could pressure OCF.
• Potential normalization of effective tax rate could dampen net margins.
• Limited disclosure on cash balances and share count constrains capital allocation assessment.

Key Concerns:

• Operating income growth trailing revenue growth suggests reinvestment; needs to translate into future margin-accretive growth.
• Visibility on dividend/capital return policy is low given DPS 0 and financing outflows that are not fully detailed.
• Data gaps (equity ratio, cash, share count) limit precision on per-share metrics and capital structure nuances.

Investment Implications

Key Takeaways:

• High-quality growth: revenue +20.3% YoY with strong margins (OPM ~26.8%).
• ROE 22.82% underpinned by high net margin and efficient asset turnover, not leverage.
• Robust cash generation: OCF ≈ NI and FCF ¥1.35bn.
• Very strong balance sheet with implied equity ratio ~86% and interest coverage >1,000x.
• Operating leverage moderated by reinvestment; margin durability remains solid.
• Dividend visibility limited; earnings likely retained for growth.

Metrics to Watch:

• Backlog/book-to-bill and utilization rate trends.
• Headcount growth versus revenue per employee.
• Gross margin stability and SG&A intensity.
• OCF/NI conversion and DSOs.
• Mix of domestic vs. overseas revenue and FX impact.
• Effective tax rate normalization and non-operating income/expense.
• Capex/intangible investment and its payback in margin/growth.

Relative Positioning: Within TSE-listed IT services and niche HPC/software optimization peers, Fixstars exhibits above-average profitability and ROE with a conservative balance sheet, reflecting an asset-light, specialty capability set.

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